Friday, February 14, 2014

Iranian Economy Bouncing Back

by Max Boot

When he met with French President Francois Hollande, President Obama threatened to come down “like a ton of bricks” on companies that violate sanctions against Iran. Just how hollow those words are is clear from this IMF report today on the bounceback the Iranian economy has experienced since Obama reached an “interim” deal with the mullahs to lift some sanctions in return for a slowdown in the Iranian nuclear program.

The Wall Street Journal reports that “the fund said it expects the economy to grow by 1% to 2% this year after contracting by a similar amounts over the past two years.”

Not only is growth up, but inflation is down:
By the end of 2012, the value of the rial plunged, stoked hyperinflation that topped 45% last July. The contracting economy ratcheted up pressure on Tehran, playing a role in Hasan Rouhani’s election as president last year.
But after the interim deal in November, the fund said inflation pressures eased as the rial stabilized. The fund said the inflation rate could fall to 20% by March.
And that’s only the beginning. The interim deal is still brand new. The longer it lasts, the more foreign companies will rush into Iran (such as the delegation of French business leaders who already arrived), the more relief the Iranian economy will experience–and the less pressure the mullahs will feel to actually give up their nuclear program.

Max Boot


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