The history of oil-rich countries has shown that this energy resource, in the hands of despotic and anti-development rulers, turns into a curse. Iran, with its two reactionary dictatorships, serves as a lesson for others. In such countries, oil money leads to corruption, rulers’ extravagance, military adventures, and persistent instability. It’s no surprise that oil money fills the pockets of ruling gangs, keeps the poor in poverty, increases the gap between the poor and the newly wealthy class, and is spent on showy projects instead of welfare and progress.
Lost opportunities
The Iranian regime has laid waste to the country’s resources to the point that experts say squandering such underground reserves and human capital requires special skills.
On January 24, Jahan-e Sanat news website wrote, “Iran’s economy is neither in good shape in terms of decision-making structures nor in terms of the costs of managing the country’s economic environment. In such circumstances, it can be bitterly and unsatisfactorily said that Iran has lost its geoeconomic playing cards. Indeed, it requires great skill for a country with such a vast amount of geographical, natural, and human resources to play virtually no role in the global economy! However, due to the country’s move towards industrial, economic, human, and geopolitical erosion, a fundamental review of all economic governance practices is urgently needed.”
These experts do not hesitate to add that the rulers’ “economic governance technology is outdated, decayed, and rotten.”
Eliminating Iran’s Interests with Ease
In addition to suppressing the people of Iran and stifling talents, the regime has led to the loss of many unique geographical opportunities. According to a survey by the regime’s own institutions, “Iran is continuously and serially excluded from East-to-West land, rail, sea, and air transport corridor projects, and major energy transmission lines are being drawn away from Iran’s borders with the presence of new players.”
Moreover, due to the lack of necessary investment in the same resources that regime and its mafia gangs feed on, they will soon be scraping the bottom of the barrel and may have to import oil and gas in the not-so-distant future.
On January 24, Jahan-e Sanat news website reported: “Due to severe imbalance in various sectors of its energy economy, Iran has lost the ability to be a player in the fuel carrier market, not as a determining power or even an average one, but as a minor and ordinary player, and has shifted from being a major exporter to an importer of gas, electricity, gasoline, and diesel.”
Most economists acknowledge that due to the low rate of physical fixed capital formation in the last 12 years, depreciation has outpaced investment in the country, leading to infrastructure erosion. Additionally, the continuous decline in the regime’s social capital has resulted not in the migration of elite forces but in their flight from the country.
According to a report by the state-run Ham-Mihan newspaper on January 23, 2024, Iran faces a decline in investment in the oil and gas sector, and the urgent need for the oil and gas industry to reach an acceptable state (not even an optimal state) is approximately 200 billion dollars. The experience of recent years clearly shows that the focus on oil has been merely from the perspective of “financial returns,” and this instrumental view has led to the neglect of long-term planning for the continued exploitation of Iran’s oil industry capabilities through investment in infrastructure activities.”
The issue of reduced investment is not only related to the fund that the regime and the Islamic Revolutionary Guard Corps (IRGC) draw from, but investment in the country’s macroeconomy has reached a critical state.
The vice president of the Tehran Chamber of Commerce highlighted “investment” as the most important issue facing the country today.
On June 12, the official ILNA news agency quoted him as saying, “In the 2010s, the investment rate in the country decreased to the point that by the end of the decade and the beginning of the 2020s, the depreciation rate surpassed the investment rate.”
Iran’s Economy Has Entered the Phase of Infrastructure Erosion
With the death of regime president Ebrahim Raisi and the disruption of the succession project for Khamenei, the regime is busy staging the ridiculous election show, ignoring the dark and disastrous future of millions of people. Economists have long warned that the super-crisis of stagflation and accumulated imbalances in the macroeconomy will wreak havoc on Iran’s existence, especially considering the global transition away from fossil fuels, the pension fund crisis, energy imbalances, environmental issues, water tensions, the widening class divide, infrastructure decay, and financial constraints.
Economist Vahid Shaqaqi-Shahri has explained about the super-crises and serious challenges of Iran’s economy. On June 11, the state-run Etemad newspaper quoted him as saying, “Since 2018, the growth of depreciation compensation costs has outpaced investment growth, sending a warning signal to Iran’s economy, indicating that Iran’s economy has entered the phase of infrastructure erosion.”
Shaqaqi considers the financial constraints and the worsening decay of Iran’s economic infrastructure due to the lack of investment in recent decades a huge crisis that requires at least 500 billion dollars in the 2020s to address! However, Khamenei and the ruling mafia gangs are in a hurry to gulp down the last drops of Iran’s oil and underground resources. The perpetual delusion of being in control of the nation’s destiny will vanish when, like former dictators, they are forced to admit they have heard the voice of the Iranian people’s revolution… by then, it will be too late.