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Esfandyar Batmanghelidj Profile picture
@yarbatman
Aug 19, 2019 • 5 tweets • 2 min read • Read on X
2019 will probably be the first year in #Iran's modern history where non-oil export revenue will exceed that of oil exports, reaching >$40bn.

Iran's non-oil exports have doubled in the last 10 years under sanctions. This is the future of Iran's economy.
datawrapper.de/_/a36Es/
For comparison, total exports in 1995:

Pakistan: $8bn
Egypt: $3bn
Iran: $4bn

In 2018, total exports were:

Pakistan: $23bn
Egypt: $29bn
Iran: $33bn

Iran arguably faced greater geopolitical headwinds, but it's non-oil exports now exceed total exports for both Egypt/Pakistan.
State policy is prioritizing non-oil growth. Iranian companies are learning how to be exporters. The rial is cheaper and so are Iranian goods. Iraq and Afghanistan are more stable. Transport links emerging to Far East and Central Asia. There's a case for optimism here.
The narrative is that Iran is a total economic basketcase, but Egypt and Pakistan are sitting there having had years of US aid, no sanctions, support from the IMF and have let their total exports fall below Iran’s non-oil exports.
Iran is well behind the likes of Russia, Turkey, Thailand, and Vietnam in terms of non-oil exports. But the reorientation of the economy away from oil is something not many energy-rich countries have managed.

Basically, Iran’s economy is a mess, but not a lost cause.

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More from @yarbatman

Esfandyar Batmanghelidj Profile picture
Dec 16, 2024
1. Iran is in the midst of a slow-moving energy crisis.

Sanctions are partly to blame. They have prevented investment and access to technology.

But regulation is a bigger challenge. More than 60% energy generation in Iran is undertaken by quasi-private companies. Image
2. This is a legacy of Iran's long and tortured push for market liberalization, which gained momentum in the early 2000s only to a hit wall when sanctions began to isolate the economy.

Officials knew that liberalization could lead to greater competitiveness and efficiency.
3. But by the time the privatization plan was ready in 2013, financial sanctions had put Iran into a recession. The private sector was on the back foot.

A total of 22 power plants were transferred, mainly to quasi-state companies that had been opportunistically created. Image
Read 9 tweets
Esfandyar Batmanghelidj Profile picture
Nov 27, 2024
1. The new sanctions targeting key Russian banks have caused a sharp devaluation of the ruble. Russia's central bank isn't going to be able to keep devaluation and inflation in check as FX revenues are interrupted.

Does this mean sanctions are finally working?

Probably not... Image
2. To know if sanctions are working, we need to be precise about the goals.

The primary goal of sanctions is to create enough economic pain to convince Putin to change his behavior and cease the war in Ukraine. This is the coercive aim.
3. However, if Putin cannot be coerced, then the secondary goal is that the sanctions deprive him of the resources he needs to pursue his war aims.

It is highly unlikely that either goal will be achieved, even if Russia now enters a period of "stagflation."
Read 25 tweets
Esfandyar Batmanghelidj Profile picture
Oct 10, 2024
1. Sanctions are meant to crush industrial output. But sometimes the opposite occurs.

In Iran, the white goods industry has a problem: sanctions-induced overcapacity.

For @phenomenalworld, @BarzinJafartash and I explore how sanctions and industrial policy can collide. Image
2. As an oil exporter, Iran has long struggled to develop its manufacturing base.

In the early 2000s, it suffered from a classic case of "Dutch disease." An oil boom led to appreciating currency, more purchasing power, and rising imports at the expense of domestic producers.
3. But then the sanctions hit.

For the most part, sanctions have been a drag for Iranian industrial firms. Output in the automotive sector has fallen significantly, as Iranian automakers are cut-off from global supply chains and starved of investment.
Read 14 tweets
Esfandyar Batmanghelidj Profile picture
Oct 1, 2024
1. Coming events may prove me wrong, but I continue to believe that Iran seeks to avoid a war with Israel.

Israel may now have the pretext to take the fight to Iran, but if Iran considered a war inevitable, tonight's attack would have looked very different.
2. Tonight's attack was not what the opening salvo of a war looks like.

It was less telegraphed than the April attack than I expected and used more advanced missiles, but the strike came only from Iran and was limited in scope, a point Iranian officials are now emphasizing.
3. There has been no declaration of war, no messages to begin mobilizing Iranian society for war, and no sign that further attacks are imminent.

Compared to April, we are one rung higher on the escalation ladder, but no more.
Read 23 tweets
Esfandyar Batmanghelidj Profile picture
Aug 30, 2024
1. The Biden admin wants to "responsibly manage" the rivalry with China. But it's relying upon coercive policies like sanctions and export controls that are inherently unmanageable. US officials are also framing policies in ways that drive escalation.

We're on a worrying path. Image
2. Typically, the US has used coercive tools like sanctions and export controls to deny economic opportunities and impose economic pain on target countries in response to some "malign behavior"—nuclear proliferation, terrorist financing, human rights abuses etc.
3. The aim is to create tradeoffs that provide a basis for diplomatic negotiations. If the targeted country ceases engaging in the problematic behavior, the sanctions and export controls will be lifted.

The targeted country knows it can make concessions for economic relief.
Read 14 tweets
Esfandyar Batmanghelidj Profile picture
Jul 31, 2024
1. The Haniyeh assassination is unlikely to drag Iran into a wider war. Iranians leaders understand that Israel is achieving tactical wins in the midst of a strategic defeat.

Israel is making rash and escalatory moves because it is increasingly isolated, divided, and weak. Image
2. The spate of Israeli attacks and assassinations may be humiliating, but Iran has repeatedly calibrated its responses to these provocations, avoiding a wider war.

In the weeks after October 7, this was because of Iran's own reluctance to bear the costs of a larger conflict.
3. But now, Iranian leaders have come to understand that Netanyahu and other senior leaders in Israel are seeking a way out from the strategic defeat they face.

Their only path to victory is a wider war. @glcarlstrom makes an important observation here:
Read 7 tweets

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