A week has now passed since the full reimposition of US sanctions on Iran. In “Bracing for the Storm” Part I, we present you with a detailed analysis of the impact of sanctions on Iran’s trade partnerships, energy sector and access to international finance, as well as a breakdown of sanctions and strategies that Iran is likely to adopt to circumvent sanctions.
In “Bracing for the Storm” Part II, we focus on Iran’s domestic political-economy and the economic impact of sanctions in Iran, with a focus on inflation. Relying on data compiled in Iran, interviews made with Iranian businessmen and top former US officials, our report aims at providing not only a clear picture of Iran’s current predicaments but also at sketching three different scenarios that might unfold up to 2024.
In part II, we explore three different scenarios that we envisage for the future. Our first scenario reflects the current roadmap followed by Tehran, which is outlasting Trump by relying on domestic resources and countermeasures to US sanctions devised by Iran’s trade partners. The success of this objective will depend on the ability of the Islamic Republic to tone down its factional disputes and the price of the oil barrel remaining above $60, which is broadly Iran’s budgeted price for the fiscal year 2018-2019.
Our second scenario assumes that the Trump Administration might adopt a more flexible and transactional approach, which Iran could use to its benefit before the long-run impact of sanctions starts to kick in and decrease its leverage in negotiations. This approach would require the US to strike a delicate balance between carrots and sticks, meaning increasing pressure on Iran while keeping the window of opportunity open for talks and compromise. Alternatively, our last scenario looks at the eventuality of no deal struck between Iran and the US in the next decade. If Iran still suffers from US sanctions but refuses to negotiate, the Middle Eastern nation is set to see an overhaul of its domestic power balance as well as the intensification of its regional activities and nuclear programme, with a political-economic takeover by the IRGC and reimposition of multilateral sanctions on the country being the likely outcomes.
What does the resurrection of Mr Mahathir & Ibrahim mean for the GCC’s interests?
The arrest of Najib Razak - July 2018 - and the spectacular comeback of Mahathir Mohamad are circumstances that leave a lot to be answered. For the past decade, Najib Razak has carefully steered Malaysia away from the influence of political Islam, which had a great role during the tenure of Mahathir Mohamad and his Vice-President Anwar Ibrahim.
Koerber Stiftung Perspectives on a Changing Middle East
On the 27th of November, our Managing Director, Dr. Adel Al Toraifi took part in the 2018 Berlin Foreign Policy Forum organised by the Koerber Stiftung. The debate also included participants such as Iran’s former nuclear negotiator Hossein Moussvian and Germany’s Federal Foreign Office’s Director-General for the Middle East, Philipp Ackermann. The talk was moderated by the FT’s Deputy Director, Roula Khalaf.
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