Envisioning the possible: how exactly would the Iranian economy look like without sanctions?

Published January 15th, 2014 - 07:48 GMT
According to Leylaz, Iran has sold $34 billion worth of oil and byproducts during the past nine months, earning $32 billion
According to Leylaz, Iran has sold $34 billion worth of oil and byproducts during the past nine months, earning $32 billion

Unblocking billions of dollars in funds to Iran under a landmark six-month nuclear deal with the West will have a significant economic and psychological impact on the Islamic republic, experts said Monday. Iran and Western powers announced on Sunday that the deal will take effect from January 20.

Tehran had agreed in November to roll back parts of its nuclear program and halt further advances in exchange for the release of billions of dollars in frozen assets and limited relief from economic sanctions.A senior U.S. administration official told AFP that the first $550-million (400-million-euro) installment of $4.2 billion in frozen assets would be released early next month.
"The installment schedule starts on February 1 and the payments are evenly distributed" across 180 days, a senior U.S. administration official told AFP. Analysts say unblocking the funds will breathe new life into the economy and provide much-needed relief across Iran.
"The political and psychological effect will be (more) considerable," than the amount of funds involved, economic expert Saeed Leylaz said."It will be easier to sell our oil, our petrochemical products and recover our petrodollars. And all the products we buy abroad will cost 10 percent less," Leylaz told AFP.
The deal between Iran and the six world powers known as P5+1 foresees the six-month suspension of "certain sanctions on gold and precious metals, Iran's auto sector, and Iran's petrochemical exports."
It will also "license safety-related repairs and inspections inside Iran for certain Iranian airlines" and unblock the $4.2 billion from sanctioned Iranian oil sales, according to an official statement released in November.
Oil, inflation and the auto sector 
Leylaz says sanctions relief could bolster state coffers in the long run, and estimates that annual revenues will raise by $20-25 billion dollars.The increase will help the government control inflation, which officials put at 40 percent, and meet the demands of a population hungry for more consumer goods, he said.
The head of international relations at Iran's national oil company, Mohsen Qamsari, expects oil exports will grow if sanctions relief becomes a long-term exercise.Qamsari, in comments published by Iranian newspapers, said oil exports had already increased in recent months to 1.3-1.4 million barrels per day compared to 1.2 mbpd.
According to Leylaz, Iran has sold $34 billion worth of oil and byproducts during the past nine months, earning $32 billion.Former Tehran Chamber of Commerce official Mohammad Reza Behzadian said that with this "supplementary revenue, the government will be able to import consumer products which are needed by the population."
"The government will also be able to pay its debts to private firms, and this will breathe new life into the economy," he told AFP.
 Iran's auto sector -- which accounts for 10 percent of its gross domestic product and is the country's second-biggest industry after oil -- is also likely to benefit from sanctions relief. 
Iran manufactured 1.6 million cars in 2011, but a year later production was halved."By 2016 we could reach our 2011 production level and we will certainly have more access to new technologies," said Leylaz.
In a sign of things to come, major international car makers and parts suppliers showed up in Tehran for a conference in late November, hot on the heels of the nuclear deal, to assess future potential.

You may also like