Hope meets caution as Tehran weighs economic impact of US deal
Behrouz Turani
Iran International
Economists in Tehran remain divided over the economic implications of the US–Iran Memorandum of Understanding ahead of the scheduled signing on Friday.
Iran International
Economists in Tehran remain divided over the economic implications of the US–Iran Memorandum of Understanding ahead of the scheduled signing on Friday.
State-controlled media initially struck an upbeat tone, highlighting the positive reaction in Iran’s foreign-exchange and gold markets. It also amplified reports about the repatriation of frozen assets and a $300 billion reconstruction package.
But the market rally was short-lived, and both stories about incoming cash were quickly dismissed as fake news and publicly refuted by Trump at the G7 summit in France.
Across Tehran’s media on Tuesday morning, coverage reflected a mix of cautious optimism and skepticism.
The debate is unfolding even as the memorandum itself remains unpublished and some of its key provisions unclear.
The agreement is expected to be formally signed on Friday, but it faces critics in both Tehran and Washington, where opponents have questioned everything from sanctions relief to the handling of Iran’s nuclear program.
The divide was especially clear in two interviews: one with economist Heydar Mostakhdemin-Hosseini in Jahan-e Sanat newspaper, and another with macroeconomist Hadi Haghshenas on the Khabar Online website.
Mostakhdemin-Hosseini’s core message was a warning: while a political breakthrough may calm market psychology and reduce short-term inflationary expectations, it will not resolve Iran’s entrenched structural problems, including chronic budget deficits, excessive money creation and a dysfunctional banking system.
He stressed that political calm can temporarily stabilize markets by reducing panic buying and war-related anxiety, but it cannot cure long-term inflation.
On the dangers of crisis financing, he said: “The greatest danger in wartime conditions is financing the costs of war through printing money… Almost all countries that experienced hyperinflation during periods of conflict repeated this exact mistake.”
He also warned that “capital flees from instability,” arguing that legal stability, respect for property rights, anti-corruption measures and reduced political risk must be top priorities.
“In times of economic crisis, the public’s psychological trust in the government’s economic stewardship is a far more powerful tool for market stabilization than physical gold or foreign currency reserves,” he added.
Offering a starkly different assessment, Haghshenas presented an optimistic outlook for Iran’s economy following what he described as a two-stage agreement with the United States.
He predicted that the post-war period could mirror the economic rebounds seen after the 1988 ceasefire with Iraq under UN Resolution 598 and the 2015 nuclear deal, potentially delivering single-digit inflation and double-digit growth.
He argued that a final deal could reduce inflation by stabilizing the foreign-exchange market and unlocking frozen assets to absorb excess liquidity.
Psychological relief and a decline in inflation would emerge during the current Iranian year ending in March 2027, he said, while more substantial macroeconomic gains, including double-digit growth, would likely materialize in the following year ending in March 2028.
“When blocked resources enter the economy, they will collect a portion of the existing liquidity,” he added. “Therefore, the potential agreement will lead to a reduction in the inflation rate from two directions.”
Whether that optimism proves justified remains uncertain. Even if a broader agreement is reached, many of the structural problems identified by Mostakhdemin-Hosseini—including fiscal imbalances, monetary expansion and weak investor confidence—would remain unresolved.
Tehran’s unveiling of a towering statue depicting the Roman Emperor Valerian kneeling before pre-Islamic Persian King Shapur I has renewed criticism of the Islamic Republic’s appeal to nationalist sentiment following the June war with Israel.
For over forty years, the theocracy purged ancient Persian history from schoolbooks, replacing it with post-Islamic narratives. But after the 12-day conflict with Israel, officials have turned to the distant pre-Islamic past to rally a divided society.
From murals of ancient kings and soldiers to patriotic songs added to Shi’ite mourning ceremonies performed before Supreme Leader Ali Khamenei, Tehran now embraces imagery once deemed heretical by its own revolutionary ethos.
'Kneel before Iran' campaign
Tehran’s Revolution (Enghelab) Square was the scene of an unusual spectacle on Friday as officials unveiled a massive bronze statue depicting Roman Emperor Valerian kneeling in submission before Sassanid King Shapur I, commemorating Iran’s victory at the Battle of Edessa (260 AD).
The event was held under the slogan “Kneel before Iran,” part of what authorities describe as a campaign to project “national unity and historical pride” following the June war with Israel.
Tehran Mayor Alireza Zakani, a staunch ultraconservative, said on X: “Enmity with Great Iran can only end in kneeling before this historic nation.”
Municipal official Davood Goodarzi said the installation would be accompanied by visual displays depicting “other victories of Iranians over foreign aggressors,” including the defeat of British forces by local commander Rais-Ali Delvari, Mirza Kuchak Khan’s resistance against Russian troops, and Surena’s triumph over Rome at the Battle of Carrhae in 53 BCE.
The goal, Goodarzi said, is “strengthening concepts such as national dignity, social unity, and Iranian identity.”
The statue, he said, would remain temporarily at Revolution Square before being moved to a city gateway “where it will stand as the first emblem of Iran before diplomats and foreign visitors.”
Unveiled women were allowed to attend the unveiling ceremony—an uncommon scene at events organized by Tehran’s ultra-hardline municipality.
The turn to the pre-Islamic past
The sharp reversal also recalls remarks once made by Khamenei. In a 2011 speech, he asserted that “all the great military victories of this nation came after Islam,” dismissing pre-Islamic accounts as “things that are not documented.”
In 1987, he had said that prophets triumphed over kings such as Cyrus and that “nothing remains of these monarchs in history but names remembered with derision.”
Nevertheless, pro-government social media accounts have now gone so far as to circulate posters equating Khamenei himself with Shapur, showing him standing with a staff as Benjamin Netanyahu and Donald Trump kneel before him. The caption reads: “You will kneel before Iran.”
'Hypocrisy'
Pro-government figures have hailed the move as a patriotic success. Conservative political reporter Hossein Saremi posted: “Today’s grand Iranian gathering showed that people and the state share one essence: Iran itself. Nothing can take our homeland away.”
Others, however, called the spectacle “hypocrisy.” Journalist Gholamhossein Pashaei wrote on X: “Every year you close Pasargadae to stop people from celebrating Cyrus Day, yet you unveil Shapur’s statue in Enghelab Square with drums and fireworks during Fatimiyya (mourning period)!”
Dissident commentator Hamid Asafi called the ceremony “a perfect snapshot of the Islamic Republic’s contradictions.”
On Telegram he wrote: “A week ago they closed Cyrus’s tomb out of fear of the crowds, and now they glorify Shapur in the same breath. The Islamic Republic fears living history but poses for selfies with its corpse.”
He added: “They know people no longer respond to rosaries and sermons. That’s why they’ve brought history back to the stage—in a controlled costume. If they can’t erase the past, they’ll try to own it.”
The irony deepened as UNESCO formally recognized Cyrus’s Charter as one of the earliest human-rights documents.
President Masoud Pezeshkian wrote on X: “Iran, the cradle of dialogue, justice, and coexistence, can still inspire peace today.”
Users swiftly replied, questioning how such pride could coexist with a government that blocks access to Cyrus’s tomb each year to those wishing to visit it on his birthday.