Iran Pundits Explore Good And Bad Scenarios As New Year Begins

Fazeli, a sociologist who was fired from the Sharif University of Technology in Tehran in January for undermining the party line in his lectures, said "the government's competency, its social capital, and the international situation are three variables that determine the country's economic prospects."

He offered an optimistic and a pessimistic scenario. He ruled out that the government’s poor performance can improve, because a change in the combination of players is out of the question.

President Ebrahim Raisi came to office with the motto of hardliners uniting to run the government and his choice of officials is limited to leftovers of former controversial president Mahmoud Ahmadinejad’s aides.

In the light of public dissatisfaction with the Raisi administration, Fazeli argued that any improvement in the government’s standing should come with a change in its foreign policy to open doors for economic improvement. But so far there is no sign of a shift.

Although the paradoxical formula leaves little room for optimism, Fazeli said that there might be a tentative breakthrough if Iran reaches a nuclear agreement with the West, which would lend a new lease of life to the economy and help the government, similar to what happened after the nuclear deal in 2015.

Fazeli insisted that the benefits of an agreement would not last long as Donald Trump or someone like him could always win the presidency in the United States. During the short breakthrough, however, the government can put up a show of its competence by controlling inflation and prices, and boost the battered Iranian currency.

Nonetheless, Fazeli said that Iran is a country at the brink. The government needs political courage and honesty to confront interest groups who are used to getting unfair economic advantages.

Fazeli went on to say that the worst-case scenario will occur when government officials adopt policies or make statements that would erode its legitimacy further. The situation will become even worse if negotiations with the West are not fruitful and radicals take the upper hand in the government. This, he said, will lead to protests with unpredictable consequences.

Iran needs ‘a détente’

Meanwhile, Abdi, who regularly writes for Iran's reformist newspapers, said that Iran needs a process of detente in its international relations to reach a long-term solution for its nuclear crisis. However, he expressed doubt that such a change would occur in the new year.

Abdi added that Iran's economic problems need political rather than economic solutions. "We are talking about those political variables that will totally change the government's approach." He added that the key elements affecting Iran's situation include, foreign policy, domestic politics and managerial approaches which are interlinked.

A good solution to the nuclear question can give the economy a boost although its effect may not be as big as it was in 2015. However, a deal on the nuclear issue will not encourage foreign investment because the companies know that the situation may change in two years. Without a fundamental solution to the nuclear program, the economic crises will worsen, Abdi said.

On the domestic front, the hardliners' rise to power is irreversible. But the problem is that coalitions among hardliners are loose and unstable, so there is a chance that political instability and social tensions will rise. The year that just started will be a continued purgatory, he argued.

The managerial approach, which is based on reliance on managers less educated than average Iranians, cannot create any sustainable growth or boost employment. All they can do is wasting resources. This is the Iranian economy's main problem Abdi said, adding that even if nuclear talks lead to an agreement, not much can be done in the absence of good plans, management, and coordination.