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Hope for Iran’s Impoverished With Potential Lifting of Sanctions

Iran's ImpoverishedIn the past decade, Iran’s impoverished have floundered due to an overwhelming bombardment of economic sanctions. Documented human rights violations and insincere promises to slow its uranium enrichment program have garnered the Iranian state’s pariah status. Iran’s tumultuous relationship with the West has only worsened following President Trump’s decision to abandon the multilateral nuclear agreement and impose harsher sanctions in 2018. Forced to pay the price of their government’s politics, Iranians have found themselves virtually isolated from the West. With the potential lifting of sanctions, hope is on the horizon for impoverished Iranians.

Potential Lifting of Sanctions

Iran’s reintegration into the international economy may be coming sooner than expected as the Biden administration has made concerted efforts to restore the nuclear deal and implement some stability in the region. Following initial negotiations, Iranian chief of staff Mahmoud Vaezi proclaimed to state media that more than 1,000 sanctions would be lifted. “An agreement has been reached to remove all insurance, oil and shipping sanctions that were imposed by Trump,” said Vaezi on June 23, 2021. With the lifting of sanctions, Iran’s impoverished will see their economic outlooks drastically improve.

Loss of Jobs

While U.S. sanctions are intended to target the hardliner regime, Iran’s most marginalized communities have paid the biggest price. Iran’s energy, shipping and financial sectors have been completely stifled, causing essentially all foreign investment to dry up. President Trump explained that the strict sanctions “intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.” Since 2018, Iran’s gross domestic product (GDP) has shrunk by nearly 15%. In addition, the unemployment rate has risen to nearly 20%. Unsurprisingly, the IMF reported zero growth in Iran’s economy in 2020.

Economic Downturn

The stagnancy of the economy can be felt everywhere, most notably in the rapid devaluation of the Iranian currency. The reinstatement of sanctions in 2018 has caused the Iranian currency to lose 50% of its value against the U.S. dollar. As a result, the rial (the Iranian dollar) is increasingly worthless. The effects of such extreme inflation have been disastrous, to say the least.

While the regime and its key supporters have been able to subsist due to rampant corruption, Iran’s most impoverished citizens have not been so fortunate. In Tehran, it is commonplace for the children of Iran’s impoverished to wait in a government-subsidized queue for free food. Parents simply cannot afford to feed their children at home due to the rapid increase in daily costs.

The costs of essential items such as meat and vegetables have more than doubled. Equally concerning, the price of healthcare has skyrocketed. Iran’s impoverished have no resources to access affordable healthcare, unable to pay the rising medical prices for tests. Even the prices of tobacco have increased by nearly 80%.

Reactions to Vaezi’s Claim

Understandably, Iranians were ecstatic upon hearing Vaezi’s claim that the infamous sanctions would be brought to an end. However, the U.S. has since denied that an official agreement has been reached. An unnamed spokesperson for the U.S. has emphasized that “During negotiations of this complexity, negotiators try to draft text that captures the main issues, but again, nothing is agreed until everything is agreed.” While there is still work to do, it seems that the conversation between the two countries is headed in the right direction, bringing the hope of reduced poverty in Iran.

– Conor Green
Photo: Flickr

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Economic Decline in the DRC Due to Conflict Escalation

Economic Decline in the DRCThe Democratic Republic of the Congo, otherwise known as the DRC, is blessed with abundant natural resources, advantageous geographical trade points and a booming youth population. It is also a nation struggling with economic and political tensions that threaten to tear it apart. Conflict within the sub-Saharan African continent is not new, as with many developing regions. Yet when it comes to the DRC, its current conflict takes on several different forms; from systemic economic mismanagement to tense ethnic divisions. The DRC has a series of underlying problems that both its leaders and regional partners need to resolve to make progress. One key issue, however, is the systemic economic decline in the DRC.

As noted by the U.N. Economic Commission for Africa, economic woes point out several grievances against the current government. For example, concerns highlight the hoarding and mismanagement of natural resources and inefficient governmental models. The models focus more on federal power rather than balancing out authority to local government. As the DRC borders conflict-ridden neighbors such as Rwanda and Sudan, it has to deal with incoming migrants and persistent border security threats. When analyzing the economic decline in the DRC, one must also consider the direct implications of the current escalating conflict.

A Flawed Economic Policy and Aid Agenda

One of the central weak points of the DRC is its flawed economic policy. The issues of the policy include the disproportionate distribution of natural resources, lack of adequate investments in capital and infrastructure and lackluster trade agreements. In addition, the DRC has a long way to go before it can overcome its systemic economic woes.

The DRC’s inefficient federal government barely understands the complexity of localized economies. The federal economy and general stock market are important. However, local markets and financial growth are also vital, if not more important. For instance, while the DRC is one of the largest suppliers of natural resources such as diamonds and cobalt, it is one of the top eight countries struggling with hunger and humanitarian assistance deficits.

Analysts argue that conflict and hunger are interdependent. This is due to conflict limiting agricultural production and disrupting one’s income. As a result, it is increasingly difficult for economically challenged nations such as the DRC. Due to recent wars in the Eastern Congo and a series of political conflicts around its borders, the DRC bears a severe brunt in its ability to generate ample economic income.

Violence and Conflict

Violence and conflict contribute to the economic decline in the DRC. Ethnic violence, the spread of Ebola and high levels of corruption hurt the overall economic benefit of cobalt mining. In contrast, it sponsored those who benefit from the current conflicts in the DRC. The U.N. Economic Commission found that despite an increase in prices for rare minerals, the DRC still struggles economically due to inadequate pro-poor development programs and mass unemployment.

Nigerian economist, Dambisa Moyo, argues that the fatal flaw in international aid and intervention is a lack of focus on regional infrastructure projects, targeted educational and job skill programs and communal credit programs. Moyo states further that when it comes to the DRC specifically, the IMF has a history of giving more than $700 million to the developing nation, only for it to be misused by kleptocrats.

The individuals are susceptible to several factors that escalate conflict and increase the influence of conflict entrepreneurs. The economic decline in the DRC creates an environment most profitable for conflict entrepreneurs and profiteers. The mass hunger and poverty in the DRC feed into several factors that contribute to conflict. For example, corrupt warlords who prey on struggling workers to militias who target local villages further worsen the issue.

A prime example is the Allied Democratic Forces (ADF), an armed group that has terrorized the Eastern Congo for years, brutally murdering more than 100 people. The ADF feeds off of two main causes. The first is the lack of governmental authority. The second is the DRC’s insecurity, armed groups with murky agendas and the government’s failure. It is more important than ever that international aid groups take action to put a stop to mass poverty and the violence it causes.

Policy Reforms for the Future

Although the DRC is in a dark spot, the reforms of the government and international community can help improve the situation. First, the DRC needs to localize its credit lines and monetary policy. A big issue for state factions and communal governments is a lack of financial authority. Ensuring a gradual decentralization process will increase income flow and help legitimize local elections and state power.

The International Finance Corporation, a branch of the World Bank, recently started a program that gave small credit loans and financed new investment credit lines in local areas within West Africa. This initiative helps fund hundreds of small and micro-businesses and shake off the potential risks of debt or inflation.

Another potential solution is to focus more directly on local infrastructure investments. Recent studies show the four most effective ways to combat poverty in the DRC. These include emphasizing the accumulation of job creation, macroeconomic stabilization, rehabilitation of key infrastructure and structural reforms for a healthy market environment. Thus, if the government undertakes the following reforms, the aforementioned goals will be within reach.

Economic recovery amid conflict in the developing world is difficult. Oftentimes, nations like the DRC must resolve a series of ethnic and political conflicts before they can become top-tier economies. However, the DRC’s leaders must be aware of the role the declining economy plays in the escalating conflict. They should also acknowledge the necessity of reforming key policies. Reaching out to regional NGOs, the African Union and working with international partners is a step in the right direction. Additionally, supporting bills such as the International Affairs Budget and the Girls Lead Act also promotes transformative growth and provides essential resources and support.

– Juliette Reyes
Photo: Flickr