Iran’s deteriorating economic situation under heavy US sanctions have become a daily subject of discussion in the country, even in government-controlled media.
More pundits and economists warn that the country cannot continue in this manner a few more months, with some openly saying that talks with the United States are an urgent matter, while others implicitly convey the same message.
Ali Bigdeli, a respected professor of politics in Tehran told Fararu website on Wednesday that Iran should avoid making new demands in talks with the West over its nuclear program. He was commenting about remarks by Foreign Minister Hossein Amir-Abdollahian who on October 2 told the state television that while in New York last month he had refused to meet with US officials demanding that Washington unfreeze $10 billion of Iran’s assets.
Bigdeli said the important issue is a return to the talks in Vienna, which Iran hass suspended since June. He added that $10 billion is a small issue compared with the much larger gain awaiting Tehran if it reaches a deal with the West.
Since 2018, US banking and oil export sanctions have left Iran with very little income in foreign currency, forcing the government to print money which has led to almost 50 percent annual inflation, and impoverished millions of people.
Bigdeli said that the United States and Europe appear to be ready for a deal and overall, Iran also seems to have moderated its demands. Otherwise, he said, the West will not make any new concessions. Even in current circumstances, he said, any deal would be based on a step-by-step approach of reducing sanctions in return for Iran to giving up its uranium enrichment and returning to the requirements of the Joint Comprehensive Plan of Action (JCPOA).
A financial analyst, Maysam Radpur told Khabar Online website said Iran’s Central Bank is no longer able to control the national currency. The US dollar has hit 280,000 rials, rising 20 percent since May and unlike in the past when the central bank had foreign currency reserves to have an impact on the market, now it can no longer play a role. She added that the Iranian rial will further lose its value.
In answer to whether a nuclear deal would help strengthen the Iranian currency, Radpur expressed doubt. She argued that when the 2015 nuclear agreement was reached, the rial gained just 10-15 percent, while there were much higher hopes about the effects of the deal at that time than there is now.
The financial analyst said she believes that in case of an agreement over the nuclear issue Iran would increase its crude oil exports and the central bank would be able to stabilize the rial, however, there is no expectation in the local market that the currency could recoup its losses.
The rial has fallen from around 35,000 to the dollar in 2017 to 280,000 now.
“A nuclear agreement can postpone the impact of long-term economic pressures, and even if the rial gains, it would only be a 10-20 percent uptick,” Radpur said.