Despite Iran being a resource-rich country, 28.1% of the population lives in poverty with an additional 40% of the population being at risk of falling into poverty. Most of the country’s poverty is concentrated in rural areas where almost 50% of the population lives in poverty with a large segment of them having no access to modern infrastructure. The socioeconomic gap between the rural and urban populations is significant, however, where they intersect is that both populations’ purchasing power is decreasing. Economic sanctions and government corruption are factors that play a role in why the majority of the Iranian population is poor. Here is everything you need to know about poverty in Iran.
Economic Sanctions and Corruption
The United States has implemented sanctions as an attempt to curb Iran’s nuclear program and regional influence and as punishment for the country’s human rights violations and support for terrorist organizations in the region. However, these sanctions have been shown to exacerbate poverty in Iran.
Western sanctions have put Iran in economic isolation and have harmed crucial parts of the economy such as oil and banking. Oil in particular is the backbone of Iran’s economy and sanctions have restricted oil production and exports which in turn has led to a loss of government revenue. The country is also enduring mass inflation, leading to the prices of basic necessities like food skyrocketing and has in turn reduced the purchasing power of low and middle-income Iranians.
While sanctions play a major role in exacerbating poverty in Iran, the actions of the government play an equally large role. The economy operates as a kleptocracy where the government owns most corporations and economic projects which has fostered an environment where one’s political connections largely determine their access to economic opportunities. Additionally, taxpayer money often goes into the pockets of government officials and those close to them. As a result of misallocated public funds, little goes into infrastructure improvement and social services which in turn curbs any prospects of poverty alleviation.
Alleviating Poverty in Iran
Despite sanctions and government corruption negatively impacting the economy, some organizations inside and outside the country aim to alleviate poverty in Iran.
Established in 1994, the Child Foundation regularly creates campaigns to help children access education and pay for medical treatments and campaigns for citizens affected by natural disasters. Its financial reports showcase that 75% of the it sends to Iran goes towards food and cash for those the organization helps, and 92% of the money that remains in the United States goes towards the costs of creating programs.
The World Food Program (WFP) assists 3.4 million refugees in Iran. It covers 80% of the food necessities for male-headed households and 100% of food costs for female-headed households. Additionally, the organization has supplied food to 8,000 refugee children and 600 teachers. This initiative helps families save money to spend on other necessities while their children receive food at school.
Founded in 1979, the Imam Khomeini Relief Foundation (IKRF) helps 4.4 million Iranians who live under the poverty line with basic needs including water, food, housing and medical bills. However, it has received criticism for its lack of financial transparency.
The Future
Considering the factors contributing to Iran’s poverty, the future looks uncertain with government corruption likely to persist as the Islamic Republic does not want to compromise its domestic policies, even for ease of sanctions.
In 2015, the U.S. lifted sanctions on Iran which positively impacted its economy by allowing it to return to the global oil market and allowed for them to trade with a wider range of countries. The Trump administration reimplemented the sanctions which put Iran back into economic isolation leading to a loss of revenue for the country. Kamala Harris on the other hand holds the same views as the Obama administration, stating that the Joint Comprehensive Plan of Action (JCPOA) is one of the biggest achievements of the democratic party, meaning that she may likely lift sanctions if she were to win the election, according to DW.
– Floria Persis
Floria is based in London, UK and focuses on Good News and Politics for The Borgen Project.
Photo: Wikimedia Commons