The Fall of Oil Prices: An Opportunity for Iran's Economy?

Radio Farda - As oil prices have dropped to their lowest level in eleven years, 'Donya-e-Eqtesad', the most important economic newspaper in Tehran, writes in its editorial on Wednesday that the decline in oil revenue could turn into an economic opportunity for Iran. Mir-Ali Hosseini asked Fereydoun Khavand, a university professor in Paris, how it is possible for Iran to utilize the collapse of its most important source of foreign income as an opportunity? Fereydoun Khavand: Iran is currently experiencing one of the worst negative oil shocks in its contemporary history. Iran's oil exports remain low due to ongoing sanctions, and the value of these exports has decreased by sixty percent compared to a year and a half ago. The consequences of this event are clearly visible in various aspects of the country's economic life, including a severe recession that has engulfed all sectors of the economy. In this situation, many economic experts hope that this time the country's officials will learn from the current situation and implement reforms to free Iran's economy from its dependence on oil. However, there are countries that, despite having oil resources, did not become dependent on oil... This is entirely correct. The United States, the United Kingdom, and Norway have made the best use of their oil resources. In contrast, many developing countries, including Iran, have become addicted to oil and have stagnated in this addiction. In Iran, the currency derived from oil revenues replaced tax revenues, inflated the national currency, hindered non-oil exports, fueled corruption and rent-seeking, and strengthened anti-democratic tendencies. In summary, oil has become a plague for the country. Considering all these factors, the editorial of 'Donya-e-Eqtesad' states that policymakers should use the opportunity arising from the decline in oil revenues to boost other sectors of Iran's economy, including recognizing market forces in determining the exchange rate. Over the past few decades, oil prices have fallen several times, and Iran's dependence on this commodity has not changed. What reason is there for the country's officials to implement reforms this time by taking advantage of the fall in oil prices? This is a fundamental question. Unfortunately, to date, every time the country has faced a drop in oil prices, the consequences have been borne by the poorest segments of society, and then, with the subsequent rise in oil prices, the economy has sunk deeper into the quagmire of oil dollars. The essential will for reform is necessary, whether oil prices are low or high. Unfortunately, this will does not exist in the country.