The Impact of a Potential Nuclear Agreement on Iran's Economy

Nuclear negotiations between Iran and the United States are still ongoing in Lausanne, Switzerland. However, what economic impacts and results will the success of these negotiations bring? Ahmad Alavi, an economist in Sweden, has explained the economic consequences of this potential agreement in an interview with Reza Valizadeh. Alavi states that the combination of external and internal factors has led to a "persistent recession" in the country, and he believes that sustainable growth is contingent upon internal structural changes and improved foreign relations. He describes the Iranian economy as "exogenous, introverted, state-centered, and rent-seeking," which are among the internal obstacles to economic growth. A significant portion of Iran's economy, according to Alavi, is "opaque" and non-transparent, controlled by military and paramilitary institutions; the involvement of these entities in the economy has made it "non-competitive" and has redistributed the profits of these economic activities in the form of "rent." Alavi emphasizes that even if sanctions are lifted, Iran will still grapple with internal economic obstacles. Nevertheless, if sanctions are lifted, he suggests that Iran will achieve "limited economic growth"; he adds that facilitating trade with the outside world and increasing foreign investment are among the consequences of a potential agreement. Alavi points out that the average economic growth in Iran has not exceeded three percent over the past 30 years, stressing that, for instance, to address unemployment, growth must reach eight percent.