Trump’s Iran Strategy Depends on Economic Pain. The Pain is Mounting.

• On Sunday, US President Donald Trump made clear that inflicting economic pain on Iran is part of Washington’s strategy. “We are only semi-negotiating with (Iran). We are just watching Iran with its huge inflation and the fact they have no money,” he said.
• President Masoud Pezeshkian has frequently warned of the social consequences of Iran’s economic meltdown, and even state media acknowledge the risk of renewed social unrest. As long as inflation, unemployment, declining purchasing power and a sense of inequality persist, “social discontent will continue to reproduce itself,” state news agency IRNA reported last month.
• Earnings are certainly not keeping up with inflation, according to government statistics. The rate of inflation for food has soared by nearly 130% over the past 12 months; the wages of low-paid workers have grown by less than half of that.
• The government has recently warned it may add to the pain by reducing gasoline subsidies, which would trigger a new wave of inflation and potentially lead to higher unemployment.
• Even a swift resolution of the conflict with the United States would take months to feed into a better economic picture, according to analysts. Tehran could secure “up to $20 billion of frozen assets, $8 billion a year from a US oil-sales license, and $5-10 billion a year from Strait of Hormuz fees,” according to the Eurasia Group, a think tank.
• The International Monetary Fund has projected that the Iranian economy will shrink 6% this year, largely due to lost output and physical damage caused by the conflict. At the scale of a national economy, that figure represents an enormous destruction of wealth and livelihoods.

(Source: CNN)