The mood stays glum on Tehran’s streets, even after sanctions ease

Majid Rafizadeh says that the mood in Tehran after the lifting of sanctions is anything but festive

Iranians walk at a shopping center in Tehran. The mood is not festive after international sanctions have been lifted from the country. Abedin Taherkenareh / EPA

There were no major celebrations in the streets of Tehran after international sanctions were lifted last week. In fact, the mood on the streets was noticeably subdued.

As Hassan Rouhani’s crowning foreign policy objective has become reality, Iranians have begun to ask tough questions about whether the cost of living will come down. The truth of the matter is that nothing will change soon.

The average monthly salary in Tehran is about $472 (Dh1,733), while the rent for a small one-bedroom apartment outside the city is about $450 (Dh1,653).

This means that 95 per cent of an average salary goes directly to paying rent. Many young people have put aside their dream of buying a house as the mortgage interest rate is 23 per cent.

Mr Rouhani came to power with the promise of lowering unemployment, creating more jobs, reducing inflation and improving people’s economic prospects.

Although Iran has the second largest economy in the Middle East and North Africa, the inflation rate is still high (about 15 per cent) and unemployment is bout 12 per cent. The gloomy mood in Tehran reflects the years of unfulfilled promises that Iranian leaders have been feeding to the people.

“We have been hearing promise after promise in the last few years, but we have not seen any results,” said a 29-year-old professional, who shares a rented house with five housemates and works part-time as a computer engineer.

Thanks to the lifting of sanctions, Iran will recoup about $90 billion of assets, re-enter the international financial system and be able to sell oil on the open market.

The Islamic Republic has the fourth largest oil reserves and the second largest gas reserves in the world, but questions remain as to who will benefit from such bounty.

“Who do you think is going to get the billions of dollars? The people? We have one of the highest levels of corruption. The government has been selling oil and gas for many years and nothing has come to our pockets,” a student told me.

Iran is desperate for extra cash to balance its budget, particularly against a backdrop of low oil prices. Some believe that the extra revenue will be heading to the pockets of the hardliners.

Iran’s Revolutionary Guard has the monopoly on major commercial and government institutions such as construction, telecommunications and the oil and gas industries.

Ali Khamenei, Iran’s supreme leader, is more likely to be concerned with securing his assets, including the Bonyad organisation, which controls an estimated 20 per cent of Iran’s GDP, and Setad, an economic empire worth an estimated $95bn.

Tehran is also spending billions of dollars to keep Bashar Al Assad in power in Syria.

In addition, the Islamic Republic is using some of its revenues on utilising the Revolutionary Guard and the Quds forces elsewhere in the region, including Iraq. Since Iran views Syria and Iraq as linked to its national security, both will be considered among the government’s most critical priorities.

Iran also has the highest level of “brain drain” in the world, according to the International Monetary Fund.

About 150,000 university graduates leave Iran every year to live in more developed countries. The economic cost to the Iranian government is approximately $150bn a year.

Unsurprisingly, many of the younger generation also see the lifting of sanctions as irrelevant to their long-term goals.

“Even if the economic situation becomes better, I still want to live in a western country where I can wear what I like, listen to music, and dance without fearing that I will be arrested and sent to prison,” a 21-year-old art student told me.

About 60 per cent of Iranian people are under 30 years old, and value civil liberties and freedom of speech highly.

As the post-implementation day reality settles in, the mood on the streets of Tehran has been flat. For many young people, in the short-term at least, there will be no great change to their lives.

Dr Majid Rafizadeh is an Iranian-American scholar and president of the International American Council on the Middle East

On Twitter: @dr_rafizadeh