Iran (Washington Insider Magazine)—Iran has emerged as an important friend for several countries in recent years. With a large number of Shahed drones, Iran saved Russia from an early loss in Ukraine, aided terrorism in the Middle East, and made life tough for Israel. However, significant sanctions have been imposed on the country for several decades. The current situation of the Iranian economy may be a warning sign for Russia.
The restrictions caused a two-year slump in Iran. The value of the national currency, the rial, had declined dramatically, and at times, inflation reached about 50%. The International Monetary Fund (IMF) estimates that in April 2024, it was approximately 37.5%. Food was disproportionately impacted: according to Business Insider, since the year’s beginning, the price of red meat has increased by 25%, the price of lentils has increased by 130%, and the price of beans has increased by 30%.
Oil Sector and China’s Role
According to Fr.de, despite sanctions, Iran remains a significant oil producer with China emerging as its primary buyer. However, Iran’s reliance on oil exports has not shielded it from economic strain. Climate change-induced droughts, along with higher prices for imports, pose additional hurdles for the Iranian economy. Russia’s shifting focus to China for trade exacerbates Iran’s economic challenges.
Implications for Russia and Putin’s Regime
Iran’s economic woes are a warning lesson for Russia, especially as it faces Western sanctions and geopolitical tensions. Despite contrasts in size and economic power, Russia’s high debt and reliance on China, North Korea, and Iran create concerns about the country’s long-term financial viability. Reports of economic deterioration, including Soviet-style grocery lineups, highlight Russia’s urgent need to address its economic weaknesses.
The Iranian example demonstrates the negative impact of long-term sanctions on a country’s economy, offering as a stern warning to Russia as it faces its own economic issues amid geopolitical tensions. Addressing these weaknesses will be critical for Iran and Russia to maintain long-term economic development in the face of international pressure.
