Obstacles to Iran's Economic Growth

Israel and the US have agreed to cooperate in order to strengthen the economic embargo against Iran. The assumption behind this strategy is that the economic embargo will contribute to thwarting Iranian efforts to develop a nuclear weapon.

The Reut Institute identifies emerging tensions within the Iranian economy that are derived from the imposition of sanctions. These tensions arise in the following fields:

  • Ideology -Khomeini ideology dictates policy in Iran. Ideology supersedes professional economic considerations and complicates Iran's ability to overcome phenomena like corruption, brain drain and increasing inflation.

  • International Relations - Successful sanctions necessitates international cooperation. However, states such as Italy and Germany, which currently have many economic ties with Iran, are avoiding implementation of the sanctions, knowing that other states, such as China and other Asian states, will quickly fill the void.

  • Nuclear Program - The development of the Iranian nuclear program derives from aspirations to build regional power and global status, and not only from military considerations. Therefore, economic and military pressure against Iran for the purpose of thwarting its nuclear ambitions is liable to ignore Iran's broader aspirations.

  • Political Stability -Protecting the Iranian regime is the central purpose of the government. Economic, political and defense interests are neglected for the sake of the Regime's stability.

The Reut Institute contends that it is incumbent to pay attention to the developing tensions between economics and other fields in Iran. While Iran's ambition to become a regional power requires an adequate economic status, the regime's devotion to its ideology is liable to complicate Iran in its path to become a regional power.


Aluf Benn, Haaretz, 3/4/07, full text (in Hebrew).

Herb Keynon, Jerusalem Post, 3/5/07

Aluf Benn, Haaretz, 3/5/07, full text (in Hebrew).