Survey Shows Iranian Pessimism on Economy, Pride in Healthcare Response

Recent Western reporting and analyses of Iran depict dire circumstances and make natural assumptions about how the population must be reacting to an economy battered by sanctions from the United States and ravaged by the COVID-19 pandemic. A public opinion survey conducted in September and early October by the University of Maryland’s Center on International and Security Studies and IranPoll provides data to compare with these assumptions. The telephone survey included a national probability sample of 1,004 respondents. Some results are surprising, and some are remarkably similar to public attitudes about the pandemic in the United States and European countries.

The survey finds that Iran’s public is more pessimistic about the economy than they were earlier in the Trump administration’s maximum pressure campaign. But domestic mismanagement and rising inflation appear to be bigger factors in this shift than the sanctions per se. Those most directly affected by COVID-19 are more negative about the economy. Yet, the Iranian public is generally satisfied by the government’s response to the pandemic and support public health efforts, even when they make a bad economic situation worse. 

Reactions to the Economy

Those Iranians who believe the economy is very bad and getting worse are more numerous now than at any time since CISSM first asked these questions in 2015. When asked to rate Iran’s economic situation, 74 percent called it either somewhat bad (22 percent) or very bad (now a 53 percent majority). Throughout 2018 and into fall 2019, those seeing the economy as “very bad” fluctuated between 40 and 45 percent. The October 2020 level of those saying “very bad” is a marked increase—13 points higher than a year ago. When asked about the direction of economic conditions, 72 percent said they were getting worse—18 points higher than a year ago (October 2019). Only 22 percent said they were getting better.

Optimism about Iran’s economic future has declined unevenly over time. The last time our polls recorded a plurality thinking the economy was getting better was in May 2015, shortly before the nuclear deal was signed. When JCPOA conditions for suspension of nuclear-related sanctions were met in January 2016 but the economy did not show tangible gains, pessimism began to gain ground. Its previous peak was in April 2018, shortly before the Trump administration fulfilled its threat to withdraw from the JCPOA if Iran did not make more concessions. As the Trump progressively ratcheted up its maximum pressure campaign by reimposing sanctions the Obama administration had lifted and adding new sanctions on Iran, the public remained generally pessimistic. Yet, the percentage holding that view declined ten points from April 2018 to October 2019 as the negative effects of new sanctions had less impact on everyday life than anticipated, unemployment decreased, and currency devaluation slowed. 

Respondents with higher nominal monthly incomes were progressively more likely to see Iran’s economy as very bad and getting worse. For example, of those in the highest income bracket (average household monthly income over 6 million tomans), 64 percent said the economy was “very bad” and 88 percent said it was “getting worse.” In the lowest income bracket (under 1 million tomans), a lesser 52 percent said the economy was currently “very bad” and 60 percent thought it was getting worse.

This suggests that the recent jump in economic pessimism is related to Iran’s steep currency de-valuation. Average consumer prices have increased by 30 percent this year, which is high – but lower than 41 percent last year. Higher-income Iranians have experience even steeper inflation, because the currency has depreciated sharply despite government efforts to stabilize it in mid-2019. The open exchange rate went from 11,369 tomans to one U.S. dollar in October 2019 to 29,740 tomans to one dollar in October 2020--a 162 percent increase.

We periodically ask Iranians what has the greatest negative impact on their economy: foreign sanctions and pressures, or domestic economic mismanagement and corruption. Given the emphasis placed by Western media and policy experts on “crippling economic sanctions,” it would be natural to expect that a majority of Iranians see this factor as paramount, but that has never been true in CISSM surveys.

In our most recent survey, 57 percent saw domestic issues as the bigger factor, while 36 percent blamed sanctions more. Before the Trump administration withdrew from the JCPOA, a slightly higher 63 percent called domestic mismanagement the more important issue. If the renewed US sanctions have affected general public attitudes at all, they have caused more Iranians to blame foreign pressures rather than their own government. Iranians with higher monthly incomes, however, are progressively more likely to attribute bad economic conditions to domestic mismanagement, with 75 percent of those at the top holding this view. 

Reactions to the Pandemic

Iran’s weak economy and the ravages of COVID-19 are mutually reinforcing. When Iranians think about how their society should respond to the pandemic, large but not overwhelming majorities endorse strong measures, while a significant minority disagrees—a pattern similar to that found in Western countries. This is striking given the severity Iranians clearly see in the country’s economic situation. A clear majority of 58 percent thought the government should close restaurants and “workplaces where people work in close proximity” to prevent the virus’ spread--“even if this would damage Iran’s economy.” Twenty-nine percent disagreed, saying “it is more important for the government to encourage economic activities, even if this would lead to more people getting sick.” 

Experience of the virus in one’s own circle is a majority phenomenon in Iran. Fifty-nine percent knew someone who has gotten sick “among…family, friends, and acquaintances,” while 41 percent did not. Over a third (37 percent) report personally knowing someone who has died from the disease. The virus’ economic impact has also been harsh, with one in five (19 percent) Iranians reporting that someone had lost a job in their own household. Iranians who know somebody who has died from the virus or who have suffered a pandemic-related job loss are about ten points more likely to say that economic conditions are very bad than those who have not had these experiences.

For comparison with the United States, Kaiser Family Foundation found in September that a lesser 24 percent of Americans knew someone who has lost their life to COVID-19. On the pandemic’s job costs, Kaiser asked a broader question in the United States—whether someone in one’s household had “lost a job, [has] been placed on furlough, or had…income or hours reduced because of the coronavirus outbreak.” In October, 45 percent of Americans said yes. It appears that in the early fall, somewhat more Americans had been affected by job loss, while somewhat fewer had lost somebody they knew to COVID-19 than was the case in Iran. 

Despite the strain that the coronavirus has placed on Iran’s public health care system, we did not find widespread dissatisfaction. Asked to “rate the performance of the public healthcare system in Iran,” a strikingly high 85 percent called it “very good” (38 percent) or “somewhat good” (47 percent), with only 15 percent calling it somewhat poor (9 percent) or very poor (6 percent). Rural respondents viewed the system especially warmly, with 45 percent calling it “very good” (urban respondents, 35 percent). This may reflect past investments Iran has made in building out basic healthcare in more isolated areas.

Although Iran has been hard-hit compared to other countries in the region, most Iranians seem relatively satisfied with their government’s performance. We asked respondents to think of “other countries that are similar to Iran” and then ponder whether Iran’s response has been more effective, less effective, or about the same. Given this subjective yardstick, only 25 percent thought Iran had been less effective. Thirty percent thought it had been about the same, and 40 percent thought Iran had been more effective than other similar countries. The more dissatisfied quarter of respondents tended to be more urban, and more pessimistic about the economy than the average Iranian.

These numbers suggest that Iranians are less pleased with their government’s handling of the pandemic that citizens of some advanced countries are, but more positive than people in the United States and the United Kingdom. The Pew Summer 2020 Global Attitudes Survey asked respondents in 14 advanced countries whether their country had done a good job or a bad job with COVID-19. Top scores went to Denmark (95 percent) and Australia (94 percent), and Sweden (71 percent) was comparable to Iran, while the U.S. (47 percent) and U.K. (46 percent) had the lowest satisfaction levels.

We asked about personal compliance with COVID-19 guidelines and about closing schools during the pandemic. The responses were similar to attitudes in the United States. A clear majority of Iranians supports public health measures, but this is not unanimous. Thus, 91 percent said they “wear a mask over [their] mouth and nose” when going out in public, but only 57 percent said they “always” do so. When a vaccine “becomes available in Iran and is approved by Iran’s Ministry of Health,” only 10 percent said they would not take it; however, less than two thirds (62 percent) said they would definitely get themselves vaccinated. Nearly two-thirds (67 percent) said schools should remain closed while 27 percent responded that they should be open for in-person classes.

In conclusion, Iran’s public has a consensus that the country’s economic situation is worse than any time since at least 2015. But they do not see the United States as the primary cause of the country’s troubles. Iranians also seem quite aware that Iran is not the only country in crisis now. Their attitudes toward the pandemic are not different in kind from those found in richer countries, and they are generally proud of their public health service’s response. 

Photo: IRNA

Burned by Trump, Iranians Report Negative Views of the United States

Three new waves of nationally-representative surveys conducted by the University of Maryland over the past six months paint a damning picture of the Trump administration’s Iran policy. Negative perceptions of the United States among the Iranian public are at the highest recorded level in over a decade of public opinion research conducted by the university’s Center for International and Security Studies at Maryland (CISSM) and IranPoll.

Long considered one of the most “pro-American” populations in the Middle East, 86 percent of Iranians reported unfavorable views of the United States, of which 73 percent reported “very unfavorable” views. Perceptions of the United States were most positive in August 2015, shortly after the Joint Comprehensive Plan of Action (JCPOA) was agreed by Iran and the United States, France, Germany, the United Kingdom, Russia, and China. As frustrations grew over the implementation of sanctions relief and following the Trump administration’s withdrawal from the deal negative perceptions steadily increased.

Iranians believe that US sanctions policy is intended to cause direct harm to ordinary people. While the Trump administration claims that humanitarian goods and supplies may freely enter Iran, 70 percent of Iranians believe that US policy intends to block humanitarian trade.

“As the United States increases it pressure on Iran, Iranians are becoming more distrustful and disdainful of the United States, making them less likely to encourage their government to adopt conciliatory policies toward the United States and its allies,” said Ebrahim Mohseni, a research associate at CISSM and one of the report’s authors.

But the negative perceptions of the United States are not merely shaped by sanctions impacts. More fundamentally, Iranians are increasingly doubtful that the United States offers a model to emulate. In 2005, during the Iraq War, a Zogby survey found 37 percent of Iranians saying “America is a model country for its values and freedoms.” Now, the percentage expressing that view has plummeted to 12 percent.

This growing antagonism towards the United States tracks growing disillusionment with the nuclear deal. For the first time, a majority of Iranians (52 percent) disapprove of the JCPOA, and 59 percent believe Iran should withdraw outright.

To this end, three-in-four Iranians support the government’s new policy of gradually exceeding some JCPOA limits and threatening withdrawal unless other signatories do more to allow Iran to benefit from the deal. This new policy of escalation enjoys much higher levels of support than the policy of “strategic patience” which was in place until May of this year. That policy, which was based on the expectation that Europe, Russia, and China, would step in to mitigate the economic harm of sanctions, was supported by just 53 percent of respondents in May.

Given the failure of “strategic patience” to result in tangible economic support for Iran, a clear majority of respondents—69 percent—lack confidence that the remaining parties in the nuclear deal will uphold their obligations. This proportion has risen 33 points since January 2018. Recent European efforts, such as the establishment of a state-owned trade intermediary called INSTEX, are only looked upon positively by 24 percent of respondents. Nearly half of respondents do not even believe Europe is making a genuine effort to address Iran’s economic hardships.

However, despite the failures of Europe, Russia, and China to come to Iran’s economic aid, pessimism about the economic has not in fact increased among the Iranian public. A notable 68 percent of Iranians have negative views of the economy. But the proportion has fallen from 72 percent in April of last year, when the country was in the grips of an acute currency crisis.

The proportion of Iranians who believe the economy is getting worse has also fallen to 54 percent from 64 percent in April last year, lending credence to reports that an economic recovery is underway. Iranians continue to blame domestic mismanagement and corruption as a greater contributor to economic hardship than sanctions. But the proportion has shifted somewhat, with gap shrinking from 31 to 17 points since January 2018 as sanctions impacts become more pronounced and as the government seeks to address mismanagement more directly.

"One of the main objectives of the Trump administration’s ‘maximum pressure’ campaign is to increase economic and political dissatisfaction until the Iranian government either acquiesces to Secretary of State Pompeo’s twelve demands or is replaced by a form of government more to the United States’ liking,” said Nancy Gallagher, director of the Center for International and Security Studies at Maryland (CISSM), and one of the report’s authors.“Our data, however, indicate that contrary to what US officials anticipated, public dissatisfaction with the economy has gone back to where it was before US withdrawal from the JCPOA. More importantly, public attitudes in Iran are hardening against the types of policy changes that the Trump administration is trying to achieve.”

Those who say the sanctions are negatively impacting Iran’s economy are not more supportive of Iran making major concessions than those who say the sanctions are having little or no negative impact. This may be in part because Iranians believe that “maximum pressure” is maxed-out. A notable 63 percent of Iranians believe the United States has sanctioned Iran to the fullest and “cannot make Iran’s economic conditions more difficult…even if it tries,” while only 35 percent think the United States can “greatly worsen” the economy.

Iranians also continue to believe in the resiliency of their economy. A clear majority see a silver lining to the sanctions. A resounding 81 percent of Iranians agree with the statement: “While it’s unfortunate that some outside powers are still blocking Iran’s participation in the world economy, we can use current circumstances to build up our domestic industries to meet our own needs. This will reduce unemployment and make our society more resilient.”

Troublingly for those hoping for a second chance at diplomacy, 72 percent of Iranians now think that the JCPOA shows “it is not worthwhile for Iran to make concessions” because other powers will not follow through—a five point increase from January of 2018. However, did express support for Iran returning to full compliance with the JCPOA if other parties to the deal—and the United States—were to do the same. Only 45 percent said they would approve of Iran fully complying with all of its JCPOA obligations if European signatories made specific commitments to increase trade and investment, but an additional 24 percent would approve of Iran’s return to full compliance if the United States also allowed Iran’s main customers to resume purchasing oil.

Fifty-three percent would be willing to enter negotiations on a broader deal with the P5+1 signatories of the JCPOA is all parties were to fully honor their side of the original bargain. However, only 18 percent would negotiate with the Europeans on broader issues before the United States had rejoined the JCPOA and lifted all nuclear-related sanctions.

The survey’s first wave was conducted one week after the Trump administration designated the Iranian Revolutionary Guard Corps (IRGC) a terrorist organization. The responses showed extensive public support for the IRGC. Sixty-one percent thought the IRGC “performed very well” in response to the severe spring floods. Three quarters of Iranians said in May 2019 that the IRGC’s activities in the Middle East have made Iran more secure; five months later, as regional tensions approached a fever pitch, the number holding that view rose to 81 percent.

The three new waves were conducted by telephone interview and each included a sample size of over 1000 respondents. The resulting data, and the trends that can be illustrated over years of research, give lie to the Trump administration’s assurances that “maximum pressure” is advancing American interests. Not only has the administration’s policy turned Iranian sentiments towards the United States more negative, but the regional insecurity that has resulted from that policy has improved perceptions of the role of the IRGC.

Photo: IRNA

Poll Shows Iranian Attitudes Towards Europe Becoming More Negative

A new survey conducted by research firm IranPoll offers the first insights into Iranian public sentiment following the reimposition of US secondary sanctions on Iran. The representative survey, conducted between December 4 and December 12 of last year, was derived from telephone interviews over 1,000 Iranians and included questions that IranPoll has been asking over a period of several years as part of its “State of Iran” series.

The new wave of polling helps confirm recent reporting from Iran that suggests support for the JCPOA has fallen, with just 51 percent of respondents approving of the deal compared to 55 percent in January 2018. The proportion of respondents who “strongly disapprove” of the agreement has risen to 16 percent, up 2 percent from April of this year. Negative views of the JCPOA can be explained in part by the fact that Iranians do not feel that they have received any benefits from the agreement. A clear 81 percent of respondents say that living conditions have not improved, the highest proportion recorded since June 2016.

However, views of the economy have improved slightly when compared to April 2018, a finding that may reflect the recent stabilization in currency markets after the rial’s sharp slide in the first half of 2018. While most Iranians continue to believe that economic conditions are “getting worse,” the proportion is down to 60 percent from 64 percent in April 2018.

Notably, following the full reimposition of US secondary sanctions on Iran in November 2018, there has been a shift in views regarding which factors are most to blame for Iran’s economic hardships. Iranians continue to believe that “domestic economic mismanagement” has the “greatest negative impact on the Iranian economy,” but the proportion has fallen from 63 percent in January 2018 to 59 percent in the latest survey. Meanwhile, the proportion of those who see “foreign sanctions and pressures” as having the greatest negative impact on the economy has risen from 32 percent to 36 percent.

President Trump’s withdrawal from the nuclear deal has likely contributed to Iranians holding far more negative views of the United States. A significant 72 percent of respondents viewed the United States “very unfavorably,” the highest proportion since July 2014. This proportion is up 5 percent from January 2018 and 14 percent since June 2016, the final survey prior to Trump’s election.

While the deterioration in views of the United States was to be expected, the increasingly negative view of Europe among Iranians is perhaps both more surprising and more concerning.

When asked how confident they are that “European countries will live up to their obligations toward the nuclear agreement,” just 43 percent of respondents expressed confidence, down from 60 percent in January 2018. There remains a belief that Europeans should be able to do more—particularly in economic terms—to save the nuclear deal, with 81 percent of respondents saying that European countries are moving slower than they can to trade and invest in Iran, up from 78 percent in April 2018.

These results suggest that Europe’s inability to keep the United States in the nuclear deal, and the subsequent failure mitigate the effect of secondary sanctions, has become part of Iranian public consciousness. This is further reflected in changes in the favorability ratings of Germany, France, and the United Kingdom—the European parties to the nuclear deal.

Germany continues to be viewed favorably, with 55 percent of respondents reporting positive views, although this proportion is down 6 percent since January 2018. France has reverted to being viewed mostly unfavorably, with just 46 percent of respondents reporting positive views, down from 55 percent in January 2018. Similarly, while in January 2018 negative views of the United Kingdom had fallen to the lowest levels measured across seven IranPoll surveys, the December 2018 results saw unfavorable views rise 6 percent to 73 percent.  

Meanwhile, views of China and Russia are stable—the other remaining parties to the JCPOA registered 55 percent and 63 percent favorability respectively.

Overall, the increasing doubts over the nuclear deal and the credibility of the European parties have pushed a growing number of Iranians to turn their back on the international community, particularly when it comes to Iran’s economic development.

When asked which strategy Iran should adopt if it could only pursue one, 69 percent of respondents answered that the country should “strive to achieve economic self-sufficiency.” This is the highest proportion IranPoll has measured to date and is a remarkable 16 percentage points higher than the level in July 2014 when the nuclear negotiations were first gaining momentum. Today, just 29 percent of Iranians believe that Iran should “strive to increase its trade with other countries.”

For European policymakers, the new polling presents a stark warning that they must refocus their political and economic efforts to save the nuclear deal. Unless European diplomacy can restore trust with the Iranian electorate, it is possible that popular support for the nuclear deal will continue to atrophy even as extraordinary efforts, such as the establishment of the INSTEX special purpose vehicle, are pursued to save the JCPOA. With Iran’s parliamentary elections fast approaching, the embitterment of the Iranian public could become a political liability with long-term implications.

Photo Credit: IRNA

In First Survey Since Iran Protests, Expressions of Solidarity as Economic Outlook Darkens

A timely new survey published by the University of Maryland’s Center for International and Security Studies (CISSM) offers the first insights into Iranian public sentiment following last month’s protests. The representative survey, conducted by research firm IranPoll between January 16 and January 24, was derived from telephone interviews of over 1,000 Iranians and covered a broad range of issues.

The results underscore the central role that economic frustration played in the recent mobilizations and illuminate a common thread of economic concern around domestic issues, such as corruption and mismanagement, and the perception of foreign interference, particularly around the implementation of the Joint Comprehensive Plan of Action (JCPOA).  

A clear 58 percent of respondents believe that Iranians economic conditions are worsening, the highest proportion since May 2015. In a refutation of the characterization of the protests as a political uprising, just 15 percent of respondents agreed with the sentiment that “Iran needs to undergo a fundamental political change.” Economic grievances elicited far greater sympathy. Moreover, respondents were generally satisfied with the response of authorities, with 66 percent responding that the police responded well to the unrest.

Looking to international affairs, public confidence in the JCPOA has plummeted, and Iranians are beginning to perceive the agreement in more absolutist terms. Iranians continue to blame the lack of economic progress on the hostile posture of the United States. A clear majority of respondents, 73 percent, believe that multinational companies are “moving slower than they could to invest in Iran.” Of these respondents, 82 percent attribute the slowdown to businesses encountering “pressure or fear of the United States,” a proportion that has risen from 75 percent in May of last year.

President Trump’s decertification of the Iran nuclear agreement in October of last year has no doubt compounded doubts about American intentions. Just 12 percent of Iranians express confidence that the United States will live up to its obligations under the agreement, down from 24 percent in May of 2017 and 45 percent when the deal was first agreed in September of 2015.

In December of last year the largest proportion of respondents, 51 percent, believed that the United States had “lifted the sanctions it agreed to lift in the JCPOA” but was “finding other ways to keep the negative effects of those sanctions.” In this latest survey, the attitudes have shifted. The majority of respondents, 60 percent, now believe that the United States “has not lifted all of the sanctions it agreed to lift in the JCPOA.” This shift in opinion may reflect Iranian perceptions regarding the postures of the Obama and Trump administrations towards the deal. On a scale out of ten, 69 percent of Iranians rated Trump’s Iran policy at zero, or “completely hostile.” This compares to 50 percent in December 2016, before Trump formally entered office and had the opportunity to put his rhetoric into action. 

Overall, while more than half of Iranians still approve of the JCPOA, support is wavering, now measures at just 55 percent approval, down from 67 percent in June of last year. The decline in approval for the deal is tied to the fact that Iranians have yet to see the promised economic benefits. A resounding 74 percent of respondents believe that living conditions have not improved “as a result of the JCPOA.”

Troublingly, these frustrations are making Iranians more comfortable with possible drastic political responses. When asked what Iran should do in the event the "United States decides to withdraw from the JCPOA agreement and reimpose sanctions on Iran, but other P5+1 countries remain committed to the agreement and do not reimpose sanctions," 52 percent of respondents suggests that the Iran should withdraw from the JCPOA. The inability for policymakers to demonstrate the value of the deal is opening political space and burnishing popular support for those factions in Iran who wish to see its demise. 

However, Iranians do not intend to lay blame for economic stagnation at the hands of outside forces alone and 87 percent of respondents believe that the Iranian government should take “steps to make Iran’s business environment more appealing to foreign businesses and investors.” Despite strong public support for such reforms, only 58 percent of Iranians report knowledge that the government is taking such steps.

Moreover, Iranians consider “domestic economic mismanagement and corruption” as having a greater negative impact on the economy than “foreign sanctions and pressures” with 63 percent of respondents highlighting the former as the primary concern. To this end, Iranians wish their government to prioritize efforts to alleviate poverty, stabilize food prices, and better manage the environment. In addition there is strong agreement that the government should not cut cash or fuel subsidies. A definitive 96 percent of Iranians want the government to do more to fight financial and bureaucratic corruption. Encouragingly, most Iranians remain optimistic about the future. When asked whether today’s children will be financially better or worse off than their parents, 49 percent respond that they will be better off, whereas 43 percent believe they will be worse off.

For the Rouhani administration and for Iran’s wider political establishment speak to the urgency of economic reforms. In recent statements, Rouhani has admonished his fellow politicians on the utmost importance of heeding the demands of the people, suggesting that the Islamic Revolution itself resulted from the inability of the Pahlavi monarchy to respond to the popular will. Such surveys offer a clear assessment for the administration of the challenges at hand. The question remains whether Iran’s various political factions can find sufficient common ground to find solutions.

Photo Credit: Tasnim

The Politics of Sanctions Relief in Iran: Three Roles for the Private Sector

As politicians and analysts consider the wisdom of offering Iran sanctions relief in exchange for restrictions on the country’s nuclear program, a key stakeholder group remains unaccounted for in the debate – the private sector.

Iran’s private sector stands to gain the most from sanctions relief, and they are uniquely positioned to advance the agenda of normalization through their interactions with both domestic and international business people. Corporate leaders are poised to play three vital roles— interlocutors, stewards, and creators—without which the long awaited nuclear deal will not successfully improve the economic situation in Iran in the way many Iranians anticipate. Policymakers must take account of the relationship between sanctions relief and private sector leadership for the deal to have its much-awaited impact.

In the aftermath of a deal, Iran’s private sector business leaders will be the ideal actors to pick up where the diplomats leave off. These individuals, with global outlooks and ambitions, have already begun reaching out to their peers in the West. And while this outreach is primarily about securing new investment and business opportunities for themselves, it also offers an opportunity to present Iran in a new light, and undo the effects of political vilification and cultural misconception. 

The notion of “business diplomacy” has emerged in the last decade as a serious topic of strategic thought, suggesting that the business executive can serve as a special kind of “ambassador.” And in the transition from high-stakes diplomacy to the “business as usual” mentality expected from a détente between Iran and the West, business diplomacy is the essential intermediate step. 

But in order to take on this role, Iran’s private sector business leaders will need a place at the table.  They must be welcome to visit Western countries much the same way American and European trade delegations have begun visiting Iran. Sanctions, stigma, and arcane visa policies should not prevent an Iranian CEO from coming to London, Paris, or New York to discuss his country and his company in the hope of finding an investor or partner. On the contrary, this should be welcomed as a necessary and productive kind of engagement.  

If Iran’s private sector business leaders can consolidate their economic position on the back of foreign investment and trade, they will be able to take on a vital role as stewards of a nuclear deal.  

For the average Iranian, the nuclear deal has one fundamental promise: greater prosperity. The mechanism embraced by the United States and its allies of using sanctions as a coercive policy tool has had the effect of conditioning Iranians in an almost Pavlovian way— geopolitical strife begets economic pain. Consequently, the signal of political accord and the “relief” of sanctions seems to be triggering the expectation of the relief of this economic pain, and even that of economic reward. Indeed, as opinion polls suggest, President Rouhani’s legitimacy in the eyes of the Iranian public hinges on his rebuilding of the economy.  

But the rollback of sanctions will not bring about relief unless it translates directly into an increased flow of goods, services, and capital into Iran. Following the change in the Iran regulatory environment, only private sector companies will be able to establish the flows necessary for economic growth— whether to introduce vital pharmaceuticals, the latest fashions, or investment funds into the country.

Iran’s private sector is uniquely positioned to create value for Iran’s long-term development. Value creation, as a concept of management, entails the proper treatment of shareholders, employees, and customers as part of corporate social responsibility. When value creation is more than the policy of a single business, and instead reflects the ethos of a whole industry or economic sector, private enterprise can take on a true social significance.

In this sense, Iran’s private sector firms, if properly empowered, can serve as the anchor for Iranian civil society. Through a commitment to corporate citizenship, companies can become advocates for the citizenry within the context of Iranian political economy.

In the current situation, the Iranian state and private enterprise compete for access to limited resources and capital. Livelihoods are either tied to a state affiliate or to a private concern Knowing this, class and cultural divisions are exacerbated by economic antagonism. Issues of public health, environmental degradation, educational policy, and legal protection will not be effectively addressed.

The Islamic Republic’s support for privatization has been surprisingly persistent, if unfulfilled. The technocrats are well aware that state owned enterprises struggle to generate economic gains of real value.

The Rouhani administration is committed to privatization and to the success of the non-governmental sector in Iran. The aim is to give new actors a voice in the wider arena of public affairs.  

This commitment has been signaled since the early days of the administration's tenure, and in Rouhani's cabinet’s engagement of the current crop of Iran’s private sector business leaders. The logic is clear. The Iranian state ought to focus on security and governance, and rent seeking should be formalized through taxation. 

But in the history of modern Iran, and especially in the age of globalization, economic policy has never been a national prerogative.

The imposition of sanctions and their aftermath are testament to this fact. As key actors in Iran try to turn over a new leaf, it is up to the P5+1 to empower Iran’s private sector as interlocutors, stewards, and creators, and thereby ensure that policy treats such empowerment not as an afterthought, but as an intended effect of a nuclear deal. Sanctions relief ought not to be seen as merely the quid-pro-quo of any final nuclear agreement. It is truly the sine-qua-non of everything promised by the ongoing détente. 

Photo Credit: AP Photo/Michael Euler