Bluefield Daily Telegraph, Bluefield, WV

National and World

November 28, 2013

Iran sanctions eased, but pinch still felt

DUBAI, United Arab Emirates — The sanctions relief offered to Iran by the U.S. and five world powers has begun to get the gears of commerce slowly turning again in an economy that remains in shambles.

The Obama administration estimates relief from some sanctions in exchange for a temporary pause in Iran’s nuclear enrichment program will amount to just $7 billion. That’s a meager amount for the economy of a nation of nearly 80 million people — it’s less than one month’s worth of Iran’s oil production and just 7 percent of Iran’s overseas cash that remains frozen under the sanctions.

Still, Iranians see the move as a much needed step toward a more normal economy after years of crippling inflation and job losses.

“Markets operate on a psychological basis,” says Ray Takeyh, an Iran expert at the Council on Foreign Relations and former U.S. State Department senior adviser. “The psychology of Iranian commerce has changed.”

Rahmat Dehghani, a glazier, says he has been invited to discuss a new hotel project in the northeastern city of Mashhad, 550 miles (900 kilometers) east of the capital, Tehran.

“For months, the owner had delayed any discussion about his project since the future was not clear for any investment,” he said.

The Iranian economy was already struggling under the weight of corruption, mismanagement and costly food, energy and cash subsides for the poor when the U.S. and Europe broadened economic sanctions against Iran to include its crucial oil and banking sectors in late 2011.

Oil sales plummeted by about 1.5 million barrels per day, depriving Iran of about $80 billion since early 2012, according to the White House. At the same time, much of the revenue Iran did earn from exports to a few Asian countries that were allowed to buy Iranian oil remained out of the country. The sanctions required oil buyers to pay into locked bank accounts that Iran can access only to purchase non-sanctioned goods or humanitarian supplies.

Manufacturers found it increasingly difficult to buy crucial components to make products or keep factories running. Inflation and unemployment soared and Iran’s national currency, the rial, lost more than half its value.

“People can’t save, they can’t invest, it’s hard to buy a home, no one can trust the currency, no one knows what they really earn,” says Anthony Cordesman, a Middle East and energy expert at the Center for Strategic and International Studies.

At the same time, Iran is believed to have provided the regime of Syrian President Bashar Assad with billions of dollars in economic aid and fuel over the past three years as Syria’s civil war erupted.

Public grumbling grew. Prices for staples such as chicken and lamb climbed out of reach of many low-income Iranians. Late last year, Iranian riot police were deployed at key intersections in Tehran after sporadic protests flared.  

That frustration led to the election of President Hassan Rouhani, who campaigned on economic reforms. Iranians blamed former President Mahmoud Ahmadinejad for mismanagement and corruption that many believe was at least as damaging to the economy as the West’s sanctions.

The bleak conditions may have also forced Rouhani — backed by Iran’s supreme leader Ayatollah Ali Khamenei — to back the nuclear deal struck Sunday in Geneva between Iran and the U.S., Russia, China, France, the U.K. and Germany.

Rouhani, in an address delivered this week on the occasion of his first 100 days in office, said the Iranian economy contracted 6 percent in the last year. That compares with a 4.7 percent decline in the U.S. economy during the Great Recession, which lasted from December 2007 to June 2009.Rouhani pledged to halt the recession by March of next year and reduce inflation to an annual rate of 25 percent by the end of next year.

The White House says the nuclear deal keeps in place “the overwhelming majority of the sanctions regime.” Almost all of Iran’s approximately $100 billion in foreign exchange holdings remains inaccessible or restricted by sanctions.

That means for the vast majority of Iranians, the deal will do little to alleviate the cost of daily life. Inflation hovers around 35 percent, pushing the price of goods ever higher. Officially, unemployment is around 13 percent, though that number is widely thought by experts to be much higher.  

“Iran will continue to bleed financially,” said risk consultancy Eurasia Group in a report.

But sanctions will be suspended on gold and precious metals, Iran’s auto sector and petrochemical exports. Restrictions on oil exports will get no tighter, as they were slated to, and restrictions on insurance were loosened, which will help make it easier for Iran to sell the oil it can. The agreement also gives Iran’s aviation industry a boost by allowing airlines to buy needed parts.

And, importantly, the deal began to restore some confidence in the Iranian economy after an extraordinarily dark period. The public reaction to the deal was largely positive, and the rial immediately gained about 3 percent against the dollar, according to money exchangers in Tehran.

Amin Naderi, who imports sportswear, has been shrinking his business for months in fear that the economy would continue to slide and fewer people would buy his product. Now, he says, the situation is looking brighter.

When — and whether — a brighter outlook will turn into real gains for Iranians, though, remains to be seen. Reza Ghazinouri, a former Iranian student activist now at the Washington-based human rights group United For Iran, says Iranians seem overwhelmingly happy with the deal and what it could mean for the economy. But with sanctions relief so limited, he worries hopes are too high.

“A very very small percentage of people are unhappy with this,” he says. “The rest of the people are really happy. But they are hoping too much.”

Text Only
National and World
  • House GOP weighs tough new immigration bills

    August 1, 2014

  • Poll: Foreign policy no longer Obama strong point

    August 1, 2014

  • US employers add 209K jobs, rate rises to 6.2 pct.

    August 1, 2014

  • Thousands rally for coal

    The echo of people chanting, “Hey, hey, EPA, don’t take our jobs away” could be heard in downtown Pittsburgh, Pennsylvania, on Thursday.
    The voices came from about 5,000 United Mine Workers of America (UMW) members and their families along with other unions such as the Boilermakers Union and the Brotherhood of Electrical Workers International (IBEW) marching through the streets.

    August 1, 2014

  • West Africa Ebola outbreak tops 700 deaths

    Security forces went house-to-house in Sierra Leone’s capital Thursday looking for Ebola patients and others exposed to the disease as the death toll from the worst recorded outbreak in history surpassed 700 in West Africa.
    U.S. health officials urged Americans not to travel to the three countries hit by the medical crisis:  Guinea, Sierra Leone and Liberia.

    July 31, 2014

  • Sunburn isn't the only sign of summer that can leave you itchy and blistered

    You've got a rash. You quickly rule out the usual suspects: You haven't been gardening or hiking or even picnicking, so it's probably not a plant irritant such as poison ivy or wild parsnip; likewise, it's probably not chiggers or ticks carrying Lyme disease; and you haven't been swimming in a pond, which can harbor the parasite that causes swimmer's itch.

    July 31, 2014

  • The virtues of lying

    Two computational scientists set out recently to simulate the effects of lying in a virtual human population. Their results, published in the Proceedings of the Royal Society B, show that lying is essential for the growth of a cohesive social network.

    July 31, 2014

  • lockport-police.jpg Police department turns to Facebook for guidance on use of 'negro'

    What seems to be a data entry mistake by a small town police department in western New York has turned into a social media firestorm centered around the word "negro" and whether it's acceptable to use in modern society.

    July 31, 2014 3 Photos

  • Screen Shot 2014-07-31 at 2.12.55 PM.png VIDEO: Five-year-old doesn't want her brother to grow up

    Sadie, an adorable 5-year-old from Phoenix, wants her brother to stay young forever, so much so that her emotional reaction to the thought of him getting older has drawn more than 10 million views on YouTube.

    July 31, 2014 1 Photo

  • Comiskey.jpg Sterling not the only bad owner

    As the Donald Sterling era in with the Los Angeles Clippers looks to be winding down, many are calling him the worst owner in sports history. From being cheap with the players to his most recent racist comments, it's hard to argue against.
    Yet, there are a few owners of athletic teams who can give Sterling a run for title of worst in history.

    July 31, 2014 1 Photo

Local News
AP Video
Escaping Email: Inspired Vision or Pipe Dream? Obama Calls on Hamas to Release Israeli Soldier Hispanic Caucus Slams GOP for Border Bill Shifts Obama: GOP Not Even Trying to Solve Immigration Emory Prepares to Treat American Ebola Cases US Employers Add 209K Jobs, Rate 6.2 Pct House GOP Optimistic About New Border Bill Four Rescued From Crashed Plane Clinton Before 9-11: Could Have Killed Bin Laden Couple Channel Grief Into Soldiers' Retreat WWI Aviation Still Alive at Aerodrome in NY Raw: Woman Who Faced Death Over Faith in N.H. Russell Simmons, LL Cool J Visit Youth at Jail Raw: Obama Gets Hug From Special Olympian US, UN Announce Deal on Gaza Cease-Fire Despite Moratorium, Detroit Water Worries Remain Faith Leaders Arrested at DC Deportation Protest Family Dispute Cripples Northeast Grocery Chain CDC Warns Travelers Amid Ebola Outbreak US Stocks Plunge, Wiping Out July's Gains
Sister Newspapers' News