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Will Iran Weather the Economic Storm?

(Foreign Policy) Patrick Clawson - The conventional wisdom that the collapse of the Iranian rial will have disastrous consequences for the Islamic Republic has it wrong. Propping up the rial hurt domestic producers. The rial's collapse means that Iranian firms may finally have a fighting chance against their foreign competitors. The wise policy would be to encourage the rial to fall even further. The falling rial benefits the government more than anyone else. With each dollar of exported oil now worth more rials, the government's rial revenue rises, offsetting at least in part the lower volume of exports. Twice before, the Islamic Republic of Iran faced serious foreign exchange problems, arguably as bad as the current one. Yet difficult economic times did not bring a change in Iranian security policy. The record suggests tempering one's optimism that economic pressure will bring Iran to change its adventurist nuclear stance. The writer is director of research at the Washington Institute for Near East Policy.
2012-10-17 00:00:00
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