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October 2022, No. 101


Global Economy

Link to the Global Economy


No investor or entrepreneur is willing to risk their capital in uncertain conditions and unpredictable political risk.


Dr. Mousa Ghaninejad, Economist


Irans position in the international arena has been affected by the nuclear issue for almost two decades and this issue has weakened the economic position of our country. The globalization of the economy, which has accelerated significantly since the years after World War II, has progressed to such an extent that no country can continue to exist as a modern economy independently of the relations governing the global economy.

Unfortunately, outdated and dangerous theories such as self-sufficiency still have supporters in our country; unaware that this concept has no scientific or practical content in the direction of national interests except for its own ideological message. This favorite saying of some politicians that we do not tie the economic fate of the country to the nuclear agreement is obviously a propaganda-election slogan; because in todays world, no country can keep its economy isolated from the interaction of the global economy. Politicians often tend to present their aspirations as objectively achievable realities; although people do not see any trace of them in their daily life.

The close relationship between nuclear issues and Irans economy does not depend on anyones will to talk about tying or not tying the two. To understand this relationship, there is no need to examine extensive and complex economic data; it is enough to take a look at the daily and obvious impact of exchange rate fluctuations in the free market and news and rumors related to nuclear negotiations.

Exchange rate fluctuations in such conditions are nothing but a sign or a symbol of the very complex relations between Irans national economy and international relations, or in other words, the tip of the hidden iceberg that determines the fate of the economy. If the economic growth of our country has been close to zero in the past decade, the welfare level of households has decreased drastically and the employment of young people and educated people has become a big problem. All of this, apart from incorrect economic policies, is largely due to Iran being at the center of political tensions. Economic growth requires investment and the activity of entrepreneurs; but uncertainty about the future works like a deadly poison in this regard. No investor or entrepreneur is willing to risk their capital in uncertain conditions and unpredictable political risk.

Also, the suspension of the nuclear negotiations and the delay in bringing them to conclusion and ending the matter, whatever the political reason, brings huge economic losses for our country. In todays conditions of the global energy market, where due to the war in Ukraine, there is an urgent need to export Iranian oil, the delay in the nuclear agreement costs our country a lost opportunity; because with an increase of at least one million barrels per day of oil exports and the resulting income, most of the governments budget deficit can be compensated and the dangerous inflationary process that the society is caught in can be ended to a large extent.

Of course, the mentioned opportunity cost is not limited to the issue of re-opening the lost markets during these years of sanctions and also the quantity of the governments revenues, but its quality is also very important, which oversees the issue of circumventing the sanctions. We remember that the fact of keeping a lot of information hidden in the past and resorting to unconventional methods of sales and marketing has polluted our society. The corruption case of Babak Zanjani has not been closed yet. In the current situation, professional sanction traders are lurking and it is not clear what they are cooking for the poor economy of the country.

The necessity of reaching a nuclear agreement is an issue that the fate of the national economy is tied to, and it should not be used as a pretext for factional and partisan narrow-minded competitions and settlements. We hope that the relevant authorities will not forget that they are at an important historical moment for beloved Iran.

 

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