Islamic Republic’s stockpiling of imports ahead of war hasn’t yet curbed bank withdrawals or rationed necessities; still, spiraling joblessness may fuel regime’s fear of protests
DUBAI, United Arab Emirates (Reuters) — Weeks of conflict have aggravated Iran’s dire economic problems, risking calamity after the war, but the Islamic Republic looks able to survive a standoff in the Gulf for now, despite a US blockade that has cut off energy exports. With major fighting paused by an April 8 truce, Iran is locked in a stalemate with the US and Israel, with talks for a lasting ceasefire stalled while Tehran keeps the Strait of Hormuz shut and Washington blockades Iranian Gulf ports. Despite bad damage to infrastructure and industries and an oil-export squeeze, Iran has plentiful internal supplies, steady trade with neighbors and only limited signs of immediate stress from state-revenue losses caused by the blockade.
If US President Donald Trump expects Iran to blink first in their game of economic chicken, with global inflation rising and midterm elections approaching, he may be waiting a while. “I think that they have calculated a longer runway than I think economists or Western policymakers are anticipating,” said Sanam Vakil, head of the Middle East program at the Chatham House think tank in London, referring to Iran’s leaders. Facing what they see as an existential threat to the Islamic Republic, Iran’s ruling clerics and Revolutionary Guards are able to use their iron grip on the country to hold out for a sustainable deal from Washington, Vakil said.
“They are quite known to use repressive capacity. They’re relying on people using their savings,” she said, adding that Tehran was falling back on its “resistance economy” approach of relying on internal resources and trading across land borders. The extent of economic damage from the war – and the likelihood of imminent economic crisis – is hard to gauge given the lack of reliable official data and a partial internet blackout since January. (Read More)
