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7 Charts That Challenge the Distorted View of Iran's Economy

7 Charts That Challenge the Distorted View of Iran's Economy

Esfandyar Batmanghelidj
Economy

◢ There is a growing sense that Iran has squandered its chance to join the ranks of the BRICs—Brazil, Russia, India, and China—which count as the great emerging markets of the world. As sanctions return, as the rial sheds value, and as protests become routine, Iran is increasingly portrayed as an economic basket case where state collapse is just around the corner. But comparing Iran’s macroeconomic performance with Brazil, another country that has contended with widespread protests and economic angst for over three years, paints a very different picture.

For Payment Service Venmo, 'Persian🍕' Raises Alarms

For Payment Service Venmo, 'Persian🍕' Raises Alarms

Samira Damavandi
Economy

◢ Venmo is a “digital wallet” connected to one’s bank account that allows users to instantly send and receive money. Venmo users commonly include little messages when sending money to friends. But as a recent experience shows, including the words “Iranian” or “Persian” in a memo, even in reference to a pizza dinner among Iranian friends, can have transactions blocked for further review. Yet including the word “cocaine” in a payment memo will not lead to a compliance review, despite the violation of Venmo’s user agreement. This reflects the unique stigma around Iran transactions.

Iran's Currency Crisis is a Supply-Side Story

Iran's Currency Crisis is a Supply-Side Story

Esfandyar Batmanghelidj
Economy

◢ On Monday, the Iranian rial sank to a historic low. But those Iranians who scrambled to convert their rials into dollars found it difficult to do so—as they have for months. This important detail of the current crisis has gone largely unexamined. While the determinants for demand for foreign exchange are well understood, the second determinant of market prices—foreign exchange supply—remains subject to mere passing mention. This is a mistake. Iran’s currency crisis is a supply-side story.

Can Chinese Investment Bring Sunshine Back to Iran's Solar Industry?

Can Chinese Investment Bring Sunshine Back to Iran's Solar Industry?

Sepehr Arefmanesh
Economy

◢ Renewable energy has been one of the brightest sectors in the Iranian economy, achieving 70 percent growth in the last Iranian year according to official data. But this encouraging growth is now in doubt. The Trump administration’s unilateral withdrawal from the JCPOA nuclear deal has brought economic uncertainty for local investors and made foreign direct investment increasingly difficult. While there are steps the government can take to reassure local and foreign investors, as with other sectors of Iran’s economy, the withdrawal of European investors from Iran’s solar industry may mean that “Chinese money turns out to be the only option.”

Europe's SWIFT Problem

Europe's SWIFT Problem

J.P. Koning
Economy

◢ German foreign minister Heiko Maas recently penned an article in which he said that "it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system." So what exactly is Maas's quibble with SWIFT, the Society for Worldwide Interbank Financial Telecommunication? SWIFT is a proprietary messaging system that banks can use communicate information about cross border payments. This November, U.S. President Trump has threatened to impose sanctions on SWIFT if it doesn't remove a set of Iranian banks from the SWIFT directory. 

International Airlines Are Leaving Iran. Here’s Why.

International Airlines Are Leaving Iran. Here’s Why.

Esfandyar Batmanghelidj
Economy

◢ News that British Airways and Air France are axing their service to Iran was met by anger from Iranians, who felt the airlines were bowing to political pressure from the Trump administration. To better understand whether commercial or political considerations are driving these decisions, Bourse & Bazaar spoke to an executive from one of the international airlines now withdrawing from Iran. The executive’s account provides a more precise picture of why numerous airlines have determined that flying to Tehran is no longer commercially viable. 

Despite Political Drama, Iran's Private Sector Banks Continue March on Compliance

Despite Political Drama, Iran's Private Sector Banks Continue March on Compliance

Esfandyar Batmanghelidj
Economy

◢ The political drama surrounding the FATF action plan has overshadowed the role of Iran’s private sector banks in improving their compliance protocols while actively pushing for stronger regulatory requirements. Banks such as Bank Pasargad, Middle East Bank, and Saman Bank enjoy both large market capitalizations and a crucial role as intermediaries with the international financial system, lending these relatively young institutions considerable influence. But policymakers in Europe, scrambling to preserve banking ties with Iran in the face of returning U.S. sanctions, have overlooked the imperative of engaging Iran’s private sector banks as agents for change.

Iran's Government Steps in to Address Paper Crisis, But Papers Over the Cracks

Iran's Government Steps in to Address Paper Crisis, But Papers Over the Cracks

Maziar Motamedi
Economy

◢ Iran is battling a paper crisis. Gradual price hikes have been increasing pressure on book and newspaper publishers over the last year, but the scale of the crisis became clear when Culture Minister Abbas Salehi announced on August 4 that the country has just enough newsprint paper in storage to meet two months worth of demand. The government has rolled out a support package that includes importing paper as an essential good. But the move defers real reform that is needed to address a decades-long problem of corruption and inefficiency.

Rising Prices Push Homebuyers Out of Iran's Capital

Rising Prices Push Homebuyers Out of Iran's Capital

Sepehr Arefmanesh
Economy

◢ A 41 percent rise in Tehran City’s average home prices has left some residents, especially renters, with no option but to leave the capital for more affordable housing units in suburban areas close to Tehran. As per the latest national census, Karaj was the top destination for residents moving out of Tehran during the five years to December 2017. In just the last three months, more than 53,000 individuals have moved from Tehran to Karaj City. In the first quarter of the Iranian fiscal year, the Karaj housing market recorded 65 percent growth in home sales and an 18 percent increase in the average price of residential units.

Iran Sanctions Hopes Fly on Possible Delivery of Eight ATR Aircraft

Iran Sanctions Hopes Fly on Possible Delivery of Eight ATR Aircraft

Esfandyar Batmanghelidj
Economy

◢ In a recent interview, French Economy Minister Bruno Le Maire expressed optimism for the delivery of eight ATR turboprops to Iran as part of a contract with Iran Air, the country’s national airline. Le Maire spoke of being “hopeful that the United States will provide authorization to deliver these aircraft.” The ATR deliveries, like the three Airbus deliveries made prior to President Trump’s withdrawal from the Iran nuclear deal, are highly symbolic of the hope and expectations for increased trade and investment following the implementation of the Joint Comprehensive Plan of Action (JCPOA).

Iranian Women Face Uphill Battle Toward Equal Pay

Iranian Women Face Uphill Battle Toward Equal Pay

Maziar Motamedi
Economy

◢ According to data compiled by IranSalary, the country's first specialized online platform for remunerations, Iranian women earned 27 percent less than their male counterparts in the previous Iranian year (ended March 2018). The wage gap has widened in recent years, rising from an average of 23 percent three years ago. For Aseyeh Hatami, Founder of IranTalent and IranSalary, bringing greater equality to Iran’s job market is a personal and professional mission.

Encouraged by Government, Iranian Entrepreneurs Dream of 'Smart Cities'

Encouraged by Government, Iranian Entrepreneurs Dream of 'Smart Cities'

Rana Jalali
Economy

◢ Spearheaded by the Ministry of Information and Communication Technology and the Ministry of Roads and Urban Development, the Iranian government is promoting the adoption of smart city technologies to improve the efficiency and livability of Iranian cities. Drawing on government support, major corporations and new startups alike are developing and implementing new technologies in Iran, many of them homegrown.

US Officials Warn of ‘Deceptive Web’ of Iran Business, But Hamper Transparency Efforts

US Officials Warn of ‘Deceptive Web’ of Iran Business, But Hamper Transparency Efforts

Esfandyar Batmanghelidj
Economy

◢ In a recent speech, Under Secretary of the Treasury Sigal Mandelker warned that foreign companies that maintain a presence in Iran must conduct “extra due diligence to keep them from being caught in Iran’s deceptive web.” But background conversations with several compliance specialists reveal that US sanctions are a major barrier to key AML/CTF reforms in Iran. Industry-standard compliance software is not accessible for Iranian end users, leaving some experts to conclude that Iran is being “set up to fail.”

Could Trump Deliver Iran an Oil Windfall?

Could Trump Deliver Iran an Oil Windfall?

Richard Nephew
Economy

◢ The president’s recent statement that OPEC may have something to do with the president’s own decision to create a crisis with Iran. While attention is duly paid to how much Americans have to pay at the pump, a more subtle and complicated story will soon play out with respect to Iran and the reapplication of US sanctions ordered by Trump on May 8, 2018. In fact, unless oil prices are contained, the primary result of the president’s action may be to ensure that Iran profits from the oil market risks that sanctions have created.

Europeans Beat Back Americans as FATF Gives Iran More Time on Financial Reforms

Europeans Beat Back Americans as FATF Gives Iran More Time on Financial Reforms

Esfandyar Batmanghelidj
Economy

◢ At its plenary meeting in Paris, the Financial Action Task Force (FATF) opted “to continue the suspension of countermeasures” related to Iran’s inclusion in the so-called “blacklist” of countries with deficiencies in anti-money laundering (AML) and combating financing of terrorism (CFT) standards.  The suspension will be in place until October 2018. The suspension can be seen as a victory for European and Iranian multilateral cooperation in the face of the increasingly hostile American posture. 

As Trump Goes Nuclear On Iranian Oil, Europe Must Match His Brinkmanship

As Trump Goes Nuclear On Iranian Oil, Europe Must Match His Brinkmanship

Esfandyar Batmanghelidj
Economy

◢ As the US chooses the "nuclear option" on Iran's oil, Europe must find leverage and force the US to walk back on its announced policy of driving down Iranian oil exports to zero. The negative consequences for European economy could prove significant, and the risks of regional escalation are high. There are three measures that the EU can pursue to pressure Trump and prevent a dangerous escalation.

Closure of Tehran Bazaar Reflects Fierce Elite Competition, Not Popular Politics

Closure of Tehran Bazaar Reflects Fierce Elite Competition, Not Popular Politics

Esfandyar Batmanghelidj
Economy

◢ The bazaar of today is not the bazaar of forty years ago, and no longer plays the same role as a key actor in Iran’s popular political mobilizations. The recent bazaar closures reflect primarily the economic self-interest of bazaar elite, who sense an opportunity to put the brakes on reforms that threaten their unique capacities for lucrative arbitrage. Protests are being co-opted as a political tool at the expense of genuine civil society mobilization.

FATF Faces Test of Fairness on Iran at Plenary Meeting

FATF Faces Test of Fairness on Iran at Plenary Meeting

Fatemeh Mahjourian
Economy

◢ Iran is facing the end of a four month extension given by the Financial Action Task Force (FATF) for the reform of the country’s AML/CFT regulations. Iran will be hoping for a further extension of the suspension of countermeasures at the June plenary of the FATF. Some FATF members have sought to characterize such extensions as exceptional. However, extensions are a common procedure, and FATF ought to treat Iran’s case in fair recognition of this fact.

New US Sanctions Target Operator of Iran's Presidential Aircraft

New US Sanctions Target Operator of Iran's Presidential Aircraft

Esfandyar Batmanghelidj
Economy

◢ The US Treasury Office of Foreign Asset Control on Thursday announced a new round of targeted sanctions designations, including sanctions on Dena Airways, the company which operates the Iran’s presidential aircraft used by Hassan Rouhani for official travel. The new sanctions follow the designation of Iran’s central bank governor, Valliollah Seif, and reflect a further targeting of the Rouhani administration.

Increased Competition Squeezes Air France in Iran

Increased Competition Squeezes Air France in Iran

Amir Noorbakhsh
Economy

◢ Air France recently announced the reduction of its flights from Paris to Tehran after first switching the service on the route to its subsidiary airline JOON. At a time of uncertainty surrounding the future of the Iran nuclear deal, the reduction of flights led to speculation that the move may have been influenced by the return of sanctions. But a look to the current competitive environment shows other significant changes to the market to which Air France was forced to react. 

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