Although talk of Iran’s “economic crisis” is commonplace among the
regime’s critics, thanks to smart macroeconomic policies and rising oil
revenues, the Iranian government is now earning high marks from outside
observers such as the World Bank and Economist Intelligence Unit 1.
This is for implementing politically risky cuts in cumbersome
subsidies, financial discipline, robust foreign exchange reserve, debt
reduction and the pursuit of job growth in its mixed economy, thanks in
part to its sanction-busting foreign trade and foreign investment.
Iran last year attracted about US$10 billion in foreign investments,
and it has just concluded six new agreements with China worth $20
billion. The volume of Iran-China trade, currently at $30 billion, is
expected to double by 2015.
Iran and its neighbors, above all Turkey and Iraq, are enhancing
their bilateral relations, with Tehran and Ankara signing an
agreement for shared power generators, while energy and trade ties are
expanding between Tehran and Baghdad.
As a result, it is not “crisis” but rather growth and opportunity
that lies in the near future, even though some fundamental problems
pertaining to inadequate privatization, excess subsidy of quasi-state
firms, and double-digit inflation remain.
This w…
