Iran International
The US-Iran memorandum has raised expectations of oil waivers, access to frozen funds and a path toward sanctions relief, but economists warn that Tehran’s postwar economy will need far more than a diplomatic breakthrough to escape chronic inflation and structural weakness.
The reaction reflects a familiar hope in Iran: that lower tensions with Washington will strengthen the rial, cool inflation and ease living costs after years of sanctions, isolation and war. But economists are warning that the market rally may be pricing in more than the agreement can deliver.
Former Central Bank deputy governor Heydar Mostakhdemin-Hosseini put it succinctly. “An agreement is a necessary condition for economic improvement, but it is not a sufficient condition,” he told Jahan-e Sanat.
That warning has become more relevant since the 14-point “Islamabad Memorandum of Understanding” emerged on Wednesday. The document outlines an immediate halt to military operations, a 60-day negotiation period, steps toward reopening the Strait of Hormuz, US Treasury waivers for Iranian oil exports and talks over frozen assets and sanctions termination.
But the most sensitive economic promises are conditional. Senior US officials said after the text emerged that Washington is not committing to immediate sanctions relief, upfront access to frozen assets or direct funding for Iran. They said economic incentives would depend on Iranian compliance and progress toward a final deal, particularly on nuclear issues.
The $300 billion reconstruction and economic development plan mentioned in the memorandum has already become one of the most disputed parts of the deal. US officials said it does not mean Washington will provide money to Tehran. Instead, they described it as a possible future framework for third countries and private investors if sanctions are eased and Iran meets its commitments.
President Donald Trump and Vice President JD Vance have also rejected the idea that the United States would provide direct financial aid or war reparations to Iran.
The issue of frozen assets is similarly uncertain. Iranian officials have presented the memorandum as a route to usable funds, while US officials said no assets would be released automatically upon signing. Some funds could become available during the negotiation period, they said, but only if Iran takes concrete steps demanded by Washington.
Central Bank Governor Abdolnasser Hemmati said Wednesday that the memorandum had been drafted in a way that clearly defines US obligations over asset releases and makes them enforceable.
But he added a note of caution: “As with any international agreement, a final assessment will depend on observing implementation and conducting the necessary verification in practice.”
For economists, that is the core problem: even if some relief arrives, Iran’s economic problems are not only external.
Economic analyst Nasser Zakeri told Fararu that the long-term effect of any diplomatic opening will depend on domestic policymaking. He said Iran would need to reassess its internal and regional realities and reorient its economic strategy around whatever opportunities the agreement creates.
Ali Ghanbari, an economics professor, made a similar point. “We should not become excessively excited or optimistic,” he said. “We should not assume that simply signing an initial understanding can solve all of Iran’s economic problems. Sustainable growth requires structural reforms, and such reforms are impossible without careful planning.”
Iran’s inflation problem shows the scale of the challenge. The latest official point-to-point inflation rate stands at 83.9%, according to the Statistical Center of Iran, and 77.2% according to the Central Bank.
Inflation briefly fell to single digits in the two years after the 2015 nuclear deal took effect, but surged again after Washington withdrew from the accord in 2018 and reimposed secondary sanctions.
A new deal could ease some of those pressures if it restores oil exports, reduces shipping restrictions and gives Tehran access to some blocked revenues. Under the memorandum, the US Treasury would issue waivers for Iranian crude oil, petroleum products and related services, including banking, insurance and transportation, pending a final agreement.
But Mostakhdemin-Hosseini warned that even higher oil revenue and reduced sanctions would not resolve budget deficits, rapid money-supply growth, banking imbalances and weak productivity. Without political stability, better governance and restored public trust, he said, chronic inflation could return quickly.
Hossein Selahvarzi, the former head of the Tehran Chamber of Commerce, also warned against reading peace as prosperity.
“A peace agreement does not, by itself, revive the economy, and the end of military conflict does not automatically mean the beginning of economic prosperity,” he wrote in Etemad.
He pointed to energy shortages, lack of working capital, aging equipment, limited access to technology, unstable regulations, weak investment and low productivity across industry and mining.
“The war only deepened and exposed these problems,” Selahvarzi wrote. “If we are now speaking of a post-war era, we should not expect miracles.”
Hassan Mousavi Chalak told Khabar Online that worsening economic conditions were forcing more families to rely on their children's income to meet basic needs.
"We must accept that poverty in Iran has deepened," Mousavi said. "The more difficult economic conditions become, the more the use of children's labor capacity to cover family expenses increases."
Criticizing what he described as political efforts to downplay the issue, Mousavi said child labor extended far beyond children visible on city streets. He pointed to the use of children in slaughterhouses, livestock farms, underground workshops, orchards, farms and industrial settings, adding that many remained hidden from public view while facing dangerous and damaging working conditions.
There were no reliable statistics on the number of child laborers in Iran but that the phenomenon appeared more widespread in major cities and pilgrimage and tourist destinations, Mousavi said.
Physical and psychological toll
Children who work are deprived of the safety of school environments and normal socialization processes, Mousavi said, forcing them to adapt to harsh street conditions and sometimes engage in risky behavior to survive.
He warned that child laborers face serious health risks, including malnutrition, skin and infectious diseases, gastrointestinal problems and drug use, as well as different forms of violence and sexual exploitation.
"Social comparisons are also harmful," Mousavi said. "When a child compares themselves with others and sees peers enjoying ordinary and happy lives with their families, they experience psychological pressure and emotional suffering."
He cautioned that economic hardship increases the likelihood that children will be exploited, "sometimes even by those closest to them."
Economic strain fuels concerns
In recent weeks, multiple reports have highlighted the worsening economic situation in Iran, with citizens describing rising unemployment, sharp increases in the prices of essential goods and persistent economic stagnation.
Messages sent to Iran International have pointed to mounting pressure on household finances as living costs rise and employment opportunities decline, deepening concerns about livelihoods and the future of the labor market.
Research published in 2025 found that a combination of poverty, migration and marginalization, alongside ineffective support policies, was pushing both Iranian and Afghan migrant children into street work and workshops.
The study argued that child labor should be understood within the framework of profiteering from children in a dysfunctional economic structure, where shortcomings in the welfare system and ineffective social interventions have left the street to serve as a substitute for formal support mechanisms.
Mafia networks target some children
Addressing remarks about organized criminal involvement, Mousavi said the existence of mafia-like networks in the child labor sector could not be entirely dismissed, particularly when it came to homeless children.
However, he said field experience did not support the assumption that all working children were controlled by such groups.
Many children, he said, were sent by their families from poorer provinces to wealthier areas to help cover household expenses.
"Some children, especially those without guardians or effective caregivers, may fall under the control of such networks," Mousavi said. "In these circumstances, they may be forced into illegal or criminal activities."
