IMF: Months of Sanctions-Busting Oil Exports Have Stabilized Iranian Economy

Agence France-Presse (AFP) on Monday outlined the details of a new International Monetary Fund report concluding – pre the outlet – that “Iran’s economy is stabilizing” and will grow in 2014 “even if sanctions relief under [the interim Joint Plan of Action (JPA)] deal proves short-lived.”

Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said that Iran’s economic woes were “beginning to level off” but that much depends on whether the country reaches a comprehensive nuclear deal.

“We do think that if there is a permanent improvement in that international environment… this should have an impact in terms of generating growth rates in the medium term that are substantially higher,” Ahmed told reporters at the IMF/World Bank spring meetings in Washington.

The assessment details a wide range of already-known macroeconomic indicators converging on the conclusion that Tehran is managing to mitigate the economic pressure that Western negotiators have said is critical to securing nuclear concessions.

Xinhua’s coverage the report, published under the headline “UAE seeks more trade ties with Iran after IMF’s positive outlook,” linked the economic improvements to long-standing fears that the JPA’s partial sanctions relief would trigger a kind of gold rush in which no entity wanted to be the last to access Iran’s newly reopened markets.

Bloomberg had already reported over the weekend that Tehran is engaged in extensive discussions with European and Asian businesses over future economic initiatives.

The New York Times today published an article that, at the bottom of the piece, gestured toward the IMF report and conveyed assessments from a range of experts evaluating the significance of Iran’s ongoing, five month streak of surging past its permitted levels of oil exports.

Mark D. Wallace, the chief executive of United Against Nuclear Iran, an advocacy group in New York that has argued for far stricter sanctions, said the administration’s assurances had been “wholly contradicted by reality.”

Mark Dubowitz, executive director of the Foundation for Defense of Democracies, another pro-sanctions group that contends that Iran is seeking the ability to make nuclear weapons, said he viewed the increased oil exports as an ominous sign for the nuclear talks because, in his view, Iran’s leaders are feeling less economic pain.

“This enhances Iranian nuclear negotiating leverage and makes it more difficult to conclude a diplomatic deal that dismantles Iran’s military-nuclear program and persuades Tehran to come clean on its past military-nuclear activities,” he said.

The top of the Times article, meanwhile, was devoted to evidence suggesting that ”the Iranians have seen little in the way of a boost from the sanctions relief they had been expecting.” This is the second such article published in as many weeks by a top U.S.-based media outlet. It is not clear how to reconcile such assertions – which presume that Tehran has yet to see relief from a sanctions regime so crippling that it coerced hardline mullahs into conducting negotiations – with the broad range of quantative economic indicators indicating that Iran’s economy has stabilized.

Suggestions that the Iranians just got really lucky seem unlikely to rise to the level of social scientific rigor that analysts would find persuasive. Some observers have also made the point that Iranian economic improvement erodes Western leverage regardless of its cause, a risk that diplomats and lawmakers have urged Congress to offset by passing legislation locking in future pressure should negotiations fail.

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