Coronavirus: Iran’s hardliners entrenched by health crisis

Economic impact driving concentration of power in most vulnerable nations Iran and Turkey

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The two countries worst hit by the coronanavirus outbreak in the region are set to experience the most far-reaching consequences of the pandemic.

Already the emergency response has seen hardliners in Iran solidifying their position in the country while a likely fall in tourism revenue means a grim economic year for Turkey, Middle East experts have warned.

The pandemic has led to a virtual lockdown in the region but Iran and Turkey have been the most affected, with tens of thousands of cases and collectively thousands of deaths. Tehran in particular has come under fierce criticism for its response during the initial days of the outbreak and claims it is underreporting cases.

The crisis has been compounded by the pummeling of oil prices.

Iran’s Islamic Revolutionary Guards Corps were tasked last month with enforcing strict quarantine measures as the regime ramped up its measures.

“When you look at Iran, the fact that the revolutionary guard has supplanted the ministry of health is taken, at least among Iran watchers in this [US government] administration, as basically the revolutionary guard seizing or solidifying its control on Iran in addition to the outsized role it plays in the Iranian government and economy is kind of being seen as a sort of slow, creeping coup,” said Professor David Des Roches of the Near East South Asia Centre for Security Studies.

He was speaking at a webinar organised by the Geneva Centre for Security Policy (GCSP).

Already in a precarious financial situation because of renewed US sanctions, Iran’s economic situation has suffered because of the pandemic.

Marc Finaud, head of arms proliferation at the GCSP, said the fall in the oil price, aggravated by the sanctions, could force the Iranian government to resort to printing more money. In turn, this would lead to inflation.

“The economic impact of course is still very early to evaluate clearly but it will be much worse than in the other Middle East countries where now it is assessed it will reach around 11 per cent while in Iran, probably a decrease in (Gross Domestic Product) of 25 per cent,” he said.

Dr Karen Young at the American Enterprise Institute told the webinar that the economic pinch from falling tourism revenues would be felt across the region in places like Lebanon, especially with Summer approaching.

Tourism markets will be “completely destroyed,” she warned, with countries reliant ton tourism seeing “very, very sharp decreases”.

Warns that tourism will drop as you look across the middle east. “it means tourism markets are completely destroyed and many of the economies” reliant on tourism are “very, very sharp decreases.”

“If you think about a case like Turkey, so traditionally when oil prices are low, emerging market countries or oil importers across the Middle East would get some boost from cheap oil prices. But we’re not seeing that because of the overall lack of transportation demand and overall demand destruction for all kinds of products,” she said.

“Tourism revenues for a country like Turkey are about £26 billion dollars a year, largely earned in the summer months, which is about 3.5 per cent of GDP. So this will be a very, very hard year for Turkey.”

Separately the Royal United Services Institute (Rusi), a London think tank, has said the crisis will mean a rethink of Europe's relationship with Iran in a briefing paper issued ahead of its own webinar.

"Thus far, Europe, led by London, Paris and Berlin, has held on to the nuclear deal with Iran, even as it has been hollowed out by Washington’s withdrawal from the agreement and Iran’s gradual reneging on its commitments to it," it said. "It seems clear that a new agreement would have to go beyond the nuclear deal and include Iran’s regional activities. Its support for the Houthis in Yemen, which in turn is driving the Saudi-led intervention in the war, is an important part of this."