Middle East & North Africa

In the past 10 years, oil exports have averaged about $67 billion in Iran. Last year, they dropped by two-thirds, and they are expected to drop below $30 billion this year.  There are reasons to believe that, with appropriate policies, the country can live with this level of oil exports, albeit at a reduced standard of living, and even do itself some good in the long run by reducing its dependence on oil.

Iran has been there before. In 2012, when President Obama ratcheted up U.S. sanctions against Iran, oil exports dropped by 27.5 percent, and GDP fell by 6.2 percent. In 2015, sanctions and the collapse of oil prices further reduced oil exports to $32 billion, a decade-long low, and GDP declined by 1.6 percent. If Iran’s leadership is to successfully resist U.S. demands, it must do more than find ways to evade sanctions. A lot depends on its ability to adopt a plan that reduces the economy’s dependence on oil, while distributing the burden of restructuring equitably across social groups.

Societal insecurity, stemming from historical and functional realities has emboldened the identity-based gap of states vs. societies in the Arab region. The division of the Ottoman Empire into new states without much attention to identity lines, created a historical identity challenge in those states. On the other hand, Arab ruling elites’ efforts to enforce state-centred identities failed to prevent the challenge of conflicting identities. Later on, their functional inefficiencies emboldened the identity dichotomy.

As a result of threats perceived by Arab societies against their collective identity as well as separate challenges facing each state, the state-society gap continues to challenge state identities. Collectively perceived threats create and strengthen collective frameworks intended to address those threats. And among other frameworks come radical and terrorist organisations.

Unlike the socialist revolutions of the last century, the Islamic Revolution of Iran did not identify itself with the working class or the peasantry, and did not bring a well-defined economic strategy to reorganize the economy. Apart from eliminating the interest rate from the banking system, which was achieved in name only, the revolution put forward few specific economic policies that could be called an Islamic economic development strategy. To be sure, its populist and pro-poor rhetoric was quite distinct from the Pahlavi regime it replaced, but its actual policies could be found in the toolboxes of most developing countries and international organizations.

During the Cold War, Iran and Saudi Arabia formed the twin pillars of U.S. foreign policy in the Middle East, but this changed abruptly with the 1979 Iranian Revolution. Ever since, the IRI has pursued a foreign policy independent from the West, which pitted Tehran against the West, and the U.S. in particular, as well as with pro-Western states in the region, including Saudi Arabia. In this blog post to Iran Matters, Ali Fathollah-Nejad, Associate at the Iran Project, examines the mutual perspectives of Iran and Saudi Arabia towards one another and how recent regional developments in Syria, Iraq, and elsewhere have impacted this "hegemonic rivalry."