The Abrupt Removal of Sanctions Will Only Solve Half of Economic Problems

Most economic analyses published in Iranian publications this week have examined the Iranian economy in the post-sanctions period; economic analysts believe that while the removal of sanctions is considered necessary for changing Iran's economic environment, it is not sufficient to address the "structural problems" of the economy. In this week's "In the Notes," we have summarized several analyses and notes published: Removing sanctions solves half of the economic problems. Morteza Imani Rad, an economist and professor at the Industrial Management Organization, in an analysis written for the "Bamdad" website, discussed the economic excitement following the Lausanne statement. This economics professor begins his note by emphasizing the need to reduce excitement in the economic environment, especially in Iran's decision-making space, and stresses that "Western countries will not easily lift sanctions on Iran." According to Morteza Imani Rad, "If sanctions are to be lifted in a solid agreement, the West will make them dependent on Iran's performance and will consider a gradual lifting of sanctions." He also emphasizes that "Iran's economic issues are less than fifty percent dependent on sanctions" and continues that even "assuming the sudden removal of sanctions, the country's economic problems will remain and may even worsen in some areas." Morteza Imani Rad identifies "key issues of the Iranian economy" as problems other than sanctions, citing "legal opacity and statistical opacity" as "serious problems of the country." This member of the faculty of the Industrial Management Organization considers "one of the serious problems of the Iranian economy to be the efforts of all political managers and policymakers to 'fix the economy,' which, according to Mr. Imani Rad, leads to the imposition of personal ideas and tastes." Imani Rad concludes his analysis by deeming the "created atmosphere" in Iran as irrational, which he believes can lead to incorrect strategic decisions. This economist describes the year 1394 (2015) as a "hard" year, although he emphasizes that "this hardship will itself be a source of greater rationality in Iran's economy." The positive appearance of sanctions and potential negative outcomes. Kamal Ataari, an economist in an analysis published in "Khabar Online," has emphasized that "the rentier economy is not related to sanctions." According to Mr. Ataari, rent has spread as a "public culture" in Iran. In his analysis, this economist expressed hope that "as a result of the lifting of sanctions, the happiness of returning rent to the pockets of a specific group, and the comfort of policymakers that they can provide subsidies on time, will not create a new obstacle for the development of society." According to Kamal Ataari, "the positive appearance of lifting sanctions may lead to negative outcomes." This economic expert emphasizes that if structural problems are not resolved, both politically and economically, a worse situation will arise. According to Mr. Ataari, if before the lifting of sanctions, all blame was placed on sanctions and their effects, after the sanctions are lifted, "if policymakers cannot implement development programs, they will have no excuse." Economic stability precedes the unification of the currency rate. Ali Dini Torkamani, an economist and assistant professor at the Institute for Trade Studies and Research, in an analysis published by the "Shargh" newspaper, referred to the remarks of Valiollah Seif, the head of the Central Bank of Iran, who stated that the unification of the currency rate is not currently on the bank's agenda, discussing the impossibility of this policy under current conditions. According to Dini Torkamani, the Iranian economy is "entangled in fundamental structural imbalances," including the imbalance between production sectors and the real estate sector. This economist further stated that "there is a severe imbalance between the volume and amount of imports compared to the volume and amount of non-oil exports and a fundamental imbalance between government expenditures and revenues." He emphasizes that "as long as these imbalances persist, the policy of currency liberalization will fail." The assistant professor at the Institute for Trade Studies and Research, referring to the failed experience of currency unification in the early 1990s, writes: "To unify the currency, the aforementioned fundamental imbalances must be resolved." He recommends that "absorption capacity" and "productivity of the real economy" be improved. Because, according to Ali Dini Torkamani, in this case, the productive industrial and agricultural sectors will have more attraction for investment; as a result, the structural imbalance between these two sectors and the real estate sector will be resolved. This economist believes that "with the improvement of the performance of these two tradable sectors, non-oil exports will increase and the imbalance in foreign trade will be resolved, ultimately leading to an increase in economic growth rate and, according to Mr. Dini Torkamani, "with increased production, the government's tax base will increase and the imbalance in the budget will also be resolved."