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A year later, Raisi from Iran finds himself in economic difficulties

#year #Raisi #Iran #finds #economic #difficulties

A year after Iranian President Ebrahim Raisi took power, his government has contained the Covid pandemic but is facing a sharp downturn in the sanctions-hit economy as nuclear talks continued to stall.

After promising to focus on helping the poor, the ultra-conservative cleric is now faced with skyrocketing consumer prices that have sparked protests.

Raisi was elected in June last year in an election that drew fewer than half the voters, after his main rivals were disqualified by electoral bodies.

He was sworn in by Supreme Leader Ali Khamenei on August 3 and sworn in as head of government of the Islamic Republic two days later.

As he formed his cabinet, Raisi identified his top two priorities: controlling the region’s worst Covid outbreak and turning the tide in the struggling economy.

Iran’s vaccination campaign, which has long been hampered by US sanctions, has been massively reinforced with Chinese and Russian drugs.

For Hamidreza Taraqi, a top official of the Islamic Coalition Party, which is part of the conservative coalition supporting the Raisi, the government is “successful in containing the coronavirus and eliminating its effects.”

The UN World Health Organization says more than 58 million Iranians, or around 70 percent of the population, are now fully vaccinated.

“The Raisi government has overseen widespread coronavirus vaccination after the state changed course and approved foreign vaccine imports,” said Henry Rome of US-based consultancy Eurasia Group.

But on the economic front, Raisi’s record is more mixed, as Iran remains gripped by harsh sanctions that keep it isolated from global financial systems.

– nuclear talks –

Iran had hoped for greater prosperity after its landmark 2015 nuclear deal with major powers gave it sanctions relief in exchange for curbs on its nuclear program.

But former US President Donald Trump unilaterally withdrew Washington from the deal in 2018 and re-imposed a punitive sanctions regime.

Economic pain has deepened popular distrust in Iran’s government, both under former president, moderate Hassan Rouhani, and Raisi.

The darker mood, analysts say, was reflected in record abstention rates in last year’s elections, which came after protest movements were suppressed, particularly from December 2017 and again in November 2019.

Iran had returned to economic growth after the 2018-2019 recession under Rouhani.

But with Trump’s sanctions dramatically curbing key oil exports, Iran’s GDP per capita is unlikely to return to pre-crisis levels until next year, according to the International Monetary Fund.

– “Social Unrest” –

In April 2021, talks to save the nuclear deal began in Vienna with President Joe Biden in the White House.

Negotiations resumed in November 2021 after a pause around Iran’s presidential election, but have yet to make a breakthrough while the Raisi government faces a budget deficit that economists say is abysmal.

Inflation, which has been eroding households’ purchasing power for years, reached 54 percent year-on-year in June, according to the latest official data.

And the rial currency, which rallied a bit early this year on hopes of a deal at nuclear talks, has since resumed its rapid descent, hitting a new low against the dollar in June.

Then, in May, the government began removing state subsidies for flour and raising prices for staples like oil and dairy products — measures that particularly disadvantaged the poor that Raisi had campaigned for.

“The country’s economic horizon is far from clear… and economists are predicting that we will face further rising prices,” Mehdi Rahmanian, editor of the reformist newspaper Shargh, told AFP.

The rising cost of living has sparked protests in several Iranian cities in recent months.

A lot now depends on how the nuclear talks go, said Rome.

“If the nuclear talks fail, as seems likely,” he said, “Iran is likely to face major economic and social turmoil.”

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