Iranians Sink Back Into Economic Gloom as U.S. Sanctions Return

On a stifling hot morning almost four years ago, Alireza Mowlapasandi headed to Tehran’s Mehrabad Airport to fly to the small desert town of Tabas in eastern Iran, a trip he made regularly as an engineer. The plane to be used on the route was a locally built Antonov — not built for Iran’s searing summer temperatures, but usually reliable enough. Not this time, however; shortly after takeoff, the pilot realized one of the two turboprop engines had stopped, and despite his best efforts the remaining engine was just not powerful enough for the plane to return. Sephan Airlines Flight 5915 crashed a short distance away from Mehrabad Airport and all but 9 passengers perished. Alireza, sitting at the front, never stood a chance.

His brother Akbar was told by one of Alireza’s colleagues he was missing. “We didn’t know if he was among the wounded or the dead, so some of his colleagues and I divided into teams and started checking the hospitals where the wounded had been taken to,” Akbar, now 35, said. “It was late afternoon when it became increasingly obvious my brother hadn’t made it.”

Alireza Mowlapasandi was just one of nearly 2,000 Iranians to have lost their lives in aviation accidents, many of which were, to a great degree, due to a decades-old U.S. sanction on sale of aircraft and spare parts to Iran, making the Islamic Republic’s civil aviation fleet one of the oldest and least reliable in the world.

The lifting of this particular sanction in the wake of the 2015 nuclear deal forged between Iran and six world powers was one of the agreement’s more tangible results. Within months Iranian airlines had signed contracts or made agreements to purchase more than 300 planes from Airbus and Boeing, among others.

But when President Donald Trump announced in May the U.S. would withdraw from the nuclear deal, those plans quickly collapsed. By the time the first round of sanctions were re-imposed on Aug.6, which included the sale of airplanes and parts, Iran had only received 16 new planes.

The renewal of Iran’s creaking commercial air fleet is just one victim of the U.S. U-turn on the nuclear deal. When the U.S. President declared he would make good on his campaign promise to tear up the agreement, the already wobbly Iranian economy went into freefall. The rial fell to a third of its original value at the beginning of 2018, and draconian fiscal policies implemented by the government to arrest its fall made things worse. And that was before the first round of sanctions, which also restricted the purchase of U.S. dollars and precious materials, were restored.

For Iranian President Hassan Rouhani, who staked his political future on the promised benefits of a nuclear deal, things could scarcely have gone worse. Yet despite Trump’s offer of talks without preconditions, Islamic Republic statesmen, from the western educated foreign minister Javad Zarif, to the nominally moderate president, to Supreme Leader Ayatollah Seyyed Ali Khamenei, who has final say on all matters of foreign affairs, are all adamant that there can be no talks with the Trump administration in the present circumstances.

Within hours of Trump signing the sanctions back into effect, Rouhani went on state TV on Tuesday to explain to Iranians why he believes the offer of talks without preconditions is not sincere. “How can someone re-impose sanctions and claim they want to negotiate at the same time?” he said. “You can’t stick a knife into someone’s arm and claim you want to talk with them.”

The faltering economy, under pressure both from sanctions and unpopular attempts to rescue it, has driven some Iranians to the streets to demonstrate. But others still believe renewed negotiations with the U.S. could prove fruitful. “Trump needs a foreign policy success now, so Iran should try get the U.S. back into the nuclear deal, with the offer of also talking on regional influence and its missile program should it do so, all within national interests of course” said Soheil Fadaie, a 37 year old electric engineer.

In truth, there are few alternatives available to Iran’s leaders. The U.S. has promised to bring in even more severe sanctions in November targeting Iran’s oil exports, and has warned its allies anyone doing business with the Islamic Republic will suffer too. Iran might yet respond by closing access to the Straits of Hormuz, the waterway through which 30% of the world’s seaborne oil supply passes every year. But such an action would certainly cause a global energy crisis, and could even provoke a military response by the U.S.

Fadaie believes if the worst comes to the worst the Islamic Republic should consider some sort of dialogue, even if it’s just to wait out the current administration. “If the situation becomes uncontrollable,” he said, “then the government should sit down to talks with Trump, even if it’s just to stretch it on till another U.S. administration takes over or the situation changes for the better. Who knows,” he added, “maybe Trump will turn out to be much more reasonable when you speak to him directly.”

That appears to be a vanishing possibility. Trump’s aggressive actions have forced Rouhani to swing to the right to accommodate hardliners who see the reimposition of sanctions as proof they were right all along to distrust the United States. Speaking to a gathering of Iranian ambassadors last month, Rouhani — once known as the “diplomat sheikh” — didn’t mince his words. “Today, negotiating with America is paramount to capitulation.”

His change of stance did not go unnoticed inside Iran. The Revolutionary Guards’ most famous general and the head of its extraterritorial Quds Force, Qasem Soelimani, sent him a letter lauding him for his return to the revolutionary fold. Even as the economy begins to disintegrate, Iran’s moderates and revolutionary stalwarts are more united than they have been in years.