The saying “a picture is worth a thousand words” is evident from a news photograph carried by various newspapers in Pakistan and elsewhere on August 27, 2018. This picture shows Iranian legislators are raising their hands during a speech by economy minister in the Majlis or parliament before a vote that saw his impeachment. Masoud Khabasian is the second member of President Hassan Rouhani’s cabinet to be impeached this month. Labour minister Ali Rabaie was removed on August 8. That Iran’s economy is in dire straits is a fact. Its economic indicators show that the country has a growth rate of 4 percent which is much lower than what the country achieved two years ago: over 10 percent. The country’s inflation rate is 12.1 percent while unemployment rate is 13.1 percent. The critics of President Rouhani argue, and rightly so, that he squandered the opportunities that the 2015 nuclear deal had thrown up for Iran. He is also being criticized for failing to deal with the challenges of rising inflation and unemployment. Several European companies, particularly those from France and Germany, have left Iran after US President Donald Trump unilaterally withdrew his country from the Iran nuclear deal in May. Rouhani also faces criticism for failing to articulate the right strategy or do the required planning ahead of the second phase of US sanctions starting in November this year. According to his critics, his governance is characterized by inefficiency and corruption. This phase of US sanctions seeks to hit Iran’s oil exports. Oil constitutes the principal source of a US sanctions-hit Iran. China, the largest importer of the Iranian crude, has so far shown ambivalence to the US threats to all those who are still doing business with Iran. But it is quite likely that Beijing will be reducing Iranian crude imports anytime soon. Insofar as India, another major importer of Iranian crude, is concerned, there is a strong possibility that New Delhi will buckle under growing pressure from Washington.
One of the opportunities that the 2015 Iran nuclear deal had presented was how to attract more and more foreign investors. Iran needs massive inflows of foreign investments in order to primarily modernize its dilapidated energy infrastructure. Although Iran has the world’s largest gas reserves, the irony is such that it has to buy gas and electricity from two of its neighbours to help overcome its energy deficit. Hamstrung by lack of investment, it has been unable to increase crude output since the removal of Shah of Iran. Its economy has suffered badly since the early 1980s on account of many reasons, one of which was its war with neighbouring Iraq that lasted for eight years. In recent years, the Islamic republic has invested heavily — both in political and financial terms — in the Middle East and beyond with a view to protecting its geo-strategic and geo-political interests. As of now, it is an active player in the Yemen conflict and a key participant in the Syrian civil war theatre. It is also the principal source of financing for the Hezbollah in Lebanon and the Hamas in Palestine. In other words, Iran has been overstretching itself in financial terms because there has been little or no increase in its revenue receipts to pursue such overseas objectives without taking a hit on its domestic development and non-development plans.
It is noteworthy that the European Union has vowed to counter the second phase of US sanctions on the Islamic republic, including by means of a new law to shield European companies from punitive measures. But Tehran is required to successfully persuade European companies such as Siemens of Germany and Renault of France to come back without any further loss of time in order to give credence to the EU’s extraordinary bold stance viz-a-viz growing US belligerence against the Islamic republic. In this regard, President Rouhani has made the right move by urging the remaining signatories to the nuclear deal to work towards protecting and preserving the pact.