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ViewpointJanuary 2 2020

Robert Mogielnicki: the grim outlook for Iran’s economy

Stagflation and high unemployment have led Iran to raise fuel prices – resulting in violent protests. But while US sanctions are not helping, Iran must tackle serious economic reforms, says the resident scholar of the Arab Gulf States Institute.
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Protests in Iran over new fuel pricing measures introduced in November 2019 quickly evolved into violent confrontations between the regime and Iranian protesters. According to some observers, the unrest reached levels not witnessed since the Islamic Revolution in 1979. Officials from US president Donald Trump’s administration viewed these protests as evidence that the 'maximum pressure' campaign against Iran is weakening the regime. The US strategy to inflict a heavy economic and political toll on the Iran through a coordinated sanctions policy is unlikely to change during the early months of 2020.

Although US sanctions on Iran have exacerbated the country’s deteriorating economic situation, the precise objective of the sanctions policy remains unclear. Iran’s decision to resume uranium enrichment at its underground Fordow nuclear plant further obscures a pathway out of the crisis between the two countries. With Mr Trump potentially remaining in office until 2024, the prospects for a durable agreement between the US and Iran appear remote.

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John Everington is the Middle East and Africa editor. Prior to joining The Banker, John was the deputy business editor of The National in the UAE, and has also worked for Dealreporter, Arab News and The Telegraph. He has also covered the telecom sector in Africa and the Middle East, living and working in Qatar and the UK. John has a BA in Arabic and History and an MA in Middle Eastern Studies from the School of Oriental and African Studies (SOAS) in London.
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