About Islamophobia: Iran and the USA

Introduction

One sentence about political structure power had balance – outlining how the JCPOA played a role and how it has negatively impacted Iran’s government. The government structure has its own checks and balances. People are so upset. The most salient issue Iran faces are the renewed economic sanctions caused by the United States’ withdrawal from the JCPOA.

These economic sanctions, although not fully enacted until November, will have sweeping implications for the economy in two ways: high unemployment coupled with high inflation.

The simultaneous combination of these two economic disasters is referred to as stagflation in macroeconomic theory.

The Iranian government is a hierarchical system in which each key politician maintains checks and balances of power to keep the different branches of the political structure controlled. This hierarchical structure was established after the 1979 Revolution, which was dedicated to overthrowing the monarchy that lasted 2,500 years prior.

This revolution established an Islamic Republic government. The governmental bodies within the state political structure can be divided into two sides: the bodies that deal with religion and the bodies that are clerical in nature. Within this theocratic government, the voters are able to elect the president, the parliament, and the assembly of experts. Although voters have the power to elect the President, he must answer to the Supreme Leader for all governmental decisions (“The Structure of Power in Iran”, PBS). The highest level of Iran’s political structure is the Supreme Leader, who is not elected by the voters, but chosen by the Assembly of Experts.

The current Supreme Leader is Ali Khamenei, who has been in power since 1989. The Supreme Leader has full control over the Iranian economy, foreign policy, and education. Since the revolution, there have only been two Supreme Leaders: Ruhollah Khomeini and Ali Khamenei. Ruhollah Khomeini reigned from 1979 until his death in 1989, which resulted in Ali Khamenei assuming power. The Supreme Leader is constitutionally granted sweeping powers with the final say on decisions relating to the economy, environment, foreign policy, education, elections, and, most notably, Iran’s nuclear program.

Furthermore, the Supreme Leader is also responsible for the appointment of half of the Guardian Council. The Guardian council, in turn, protects the constitution, controls elections, and vets potential candidates for parliament and presidency. On the clerical side of Iran’s political structure, the president leads the government and the Cabinet. He is in charge of the economy and is the face of Iran concerning intra-state diplomacy. Both the president and the parliament are directly elected by voters, however, they are required to answer to higher powers.

Managing both the President and the Supreme Leader is the Assembly of Experts, comprised of 86 clerks. This powerful political group is elected by the public every eight years. Furthermore, this body is in charge of appointing and supervising the Supreme Leader. Collectively, they also have the power to replace him (The Structure of Power in Iran, PBS). In essence, all of these political positions are placed to balance powers within Iran’s political structure. Sanctions and JCPOA Since the late 1970’s, the United States has put forth several sanctions that have limited commercial trade with Iran. Particularly, the Department of State’s Office of Economic Sanctions Policy and Implementation is responsible for “enforcing and implementing a number of U.S. sanctions programs that restrict access to the United States for companies that engage in certain commercial activities in Iran” (Sen, Ashish Kumar, 2018).

For example, in 1979, the United States created sanctions after an Iranian student forcibly entered the Embassy in Tehran and took diplomats hostage. As a result, the United States froze $12 billion in Iranian assets (Sen, Ashish Kumar, 2018). In 1992, the United States Congress passed the Iran-Iraq Arms Nonproliferation Act. This act declared that the United States had the power to stop the transfer of any goods, services or technology to Iraq or Iran if this transfer activity could lead to the country gaining any “chemical, biological, nuclear, or advanced conventional weapons” (Sen, Ashish Kumar, 2018). The prohibition of exports from the United States to Iran was continued in 1996 and 1997 under the democratic United States President Bill Clinton (Sen, Ashish Kumar, 2018). In July of 2015, the Joint Comprehensive Plan of Action (JCPOA) went into effect. This deal included China, France, Russia, the United States, the United Kingdom, and Germany. Essentially, this deal, created under the Obama Administration, sought to ban Iran’s usage of nuclear weapons.

The United States monitored Iran’s nuclear weapon activity and also set forth incentives that would benefit Iran. Within the Iran Deal, the United States set forth five conditions that Iran would have to adhere to uphold their end of the deal. First, the United States required Iran to reduce its uranium stockpile by giving up 97% of its enriched uranium. Then, the United States limited Iran’s uranium enrichment to 3.67% for 15 years (Young, 2018). Next, the deal required Iran to reduce the number of centrifuges, which are used to enrich uranium. This step required Iran to give up two-thirds of its centrifuges, causing Iran to take up to 12 months to produce enough fuel for a nuclear weapon (Young, 2018). After that, Iran was to commit to an inspection of nuclear production by the United Nations.

Finally, the United States, the European Union, and the United Nations would remove energy, economic, and financial sanctions from Iran. However, this step was only completed if Iran was compliant with the other steps in the Nuclear Deal. Removing the sanctions from Iran would ultimately increase economic growth, boost trade, and encourage foreign direct investment to flow into Iran. This deal also marked an easing of tensions between the Islamic Republic and the rest of the world, which ultimately is critical for regional stability (Young, 2018). In 2016, the International Atomic Energy Agency (IAEA) confirmed that Iran had accomplished their side of the nuclear deal. Therefore, the United States removed the secondary sanctions on Iran while leaving the primary sanctions still in effect (Sen, Ashish Kumar, 2018). The primary sanctions’ purpose is to limit most commercial and export activities between the United States and Iran.

These sanctions were governed primarily by the Iranian Transactions and Sanctions Regulations (ITSR). Although Iran has complied with the rules and regulations set by the Nuclear Deal, the United States Congress still passed a ten-year extension of the Iran Sanctions Act (ISA) on December 15, 2016. Lastly, in 2017, President Trump and his administration renewed sanction waivers that were created by the Secretary of State, John Kerry. The United States House of Representatives passed the Countering Adversarial Nations Through Sanctions Act that imposes new sanctions on Iran, North Korea, and Russia. These sanctions are snapping back into place, and stagflation is an effect that will happen within the Iranian economy as a direct result (Habibi, Nader, 2018; Sen, Ashish Kumar, 2018).

Stagflation in Iranian Economy

Iran is facing one of the worst economic problems a country can face: stagflation. According to the Oxford Dictionary, stagflation is a “persistent high inflation combination with high unemployment and stagnant demand in a country’s economy” (Oxford Dictionaries). Stagflation consists of both inflation and stagnation in an economic cycle. Inflation tends to occur when the economy’s prices increase, while stagnation occurs when manufacturing of goods and services decrease.

This would be known as a period of no growth or development for Iran. Ultimately, stagflation causes an increase in unemployment as the country does not require workers to produce goods and services that people are not buying. Stagflation is a grave economic cycle that should not be taken lightly. The system that the economic world has in place to fix inflation usually causes stagnation and unemployment to worsen. Conversely, the systems the economic world has in place to fix stagnation and unemployment often exacerbate inflation.

Thus, resolving employment and inflation issues work against each other (Staff “Stagflation” 2018). Even though the Iranian economy has grown since the Nuclear Deal due to resumed oil exports, growth outside the oil sector has decreased (Washington Post). Not having active sanctions in effect has negatively affected the Iranian people. A combination of inflation and scarcity has caused the cost of essential goods to soar. Eggs, a basic necessity good typically affordable for consumers, have risen about 40% (“Iranian economy collapsing” 2018). Groceries are not the only good or service that has been affected. Real estate along with electronic goods have both almost doubled in prices (Cronin & Flanagan 2018).

Due to the increasing cost of basic needs, the value of the Iranian currency, also known as the rial, is decreasing. The Iranian currency has drastically decreased, given the fact that the Iranian rial was at 112,000 and is about 90,000 within one week. This is a 22,000 decrease in rials. The Arab News reported: “Iranian rial has lost more than 50 percent of its value against the US dollar in the unofficial market since January 2018” (Cronin & Flanagan 2018). Figure — shows an influx of the United States dollar rate in Iran. From 1968-2011, the United States Dollar Rate in Iran stayed around or just below 10,000 rials, but a drastic peak hit in 2011-2012 and caused rials to almost reach 40,000.

Around 2012, the unofficial United States dollar rate became a jagged line, increasing then decreasing, fluctuating until 2017 when the United States dollar rate skyrocketed to 80,000 rials. Although Iran is gaining more income, the government is forced to spend its liquidity to pay for debts and terror organizations like Hamas and Hezbollah, leaving the economy in shambles (“Iranian economy collapsing” 2018). In addition to economic hardship, Iranian citizens are suffering from unemployment. Although all citizens in Iran are being affected by the high unemployment rate, the younger generation is getting hit the hardest as they make up the majority of the population in Iran. Unemployment for the younger generations is at 26.20% (“Iran Youth Unemployment Rate” 2018).

Several working-class Iranians are demanding a solution to the fact that they are extremely frustrated that the economy has seen little to no change despite the “lifting sanctions under an international nuclear deal” (Habibi, 2018). Some business owners in Iran claim that Iranian factories should focus on development and export more products to allow more factories to be put online, ultimately increasing employment. This idea goes hand in hand with the main goal of shifting Iran’s economy from an agriculture-based economy to a more self-sufficient one where Iran is able to develop and fine-tune its ability to make and sell mandated goods (Basravi, 2018).

Conclusion

In conclusion, Iran’s current unstable economy benefits Khomeini’s regime, as it fuels the people’s hatred of the United States. As middle-class workers can no longer afford basic necessities, the Iranian government scapegoats the US for high prices, thereby deflecting attention from corruption and poor leadership within their ranks. The movie Our Man in Tehran accentuates this sentiment, as it depicts scenes of Iranians burning American flags, while angrily shouting “Death to America”. The United States withdrawing from the JCPOA further isolates Iran, reducing the likelihood of Ali Khamenei’s legitimacy being questioned. It is a form of regime survival – until Iran runs out of money entirely.

Similarly, Kim Jong Un, the Supreme Leader of North Korea, follows the same strategy. He isolates his population from the rest of the world, blaming external powers for problems he has caused in his country. One viable policy recommendation could be for the United States to provide assistance to Iran given the country’s dire economic situation, causing the economy to crumble and populace to live in inhumane conditions. The Iranian President should approach the United Nations and negotiate a new Joint Comprehensive Plan of Action (JCPOA). The new JCPOA should stipulate that the United States would lift its sanctions if Iran complies with the agreed regulations. Such a negotiation, facilitated by the United Nations, could potentially bolster the Iranian economy and improve living conditions for its citizens.

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