How has Iran’s economy survived despite US war pressure

Al Jazeera | Maziar Motamedi

Iran’s diversified domestic economy of 92 million people continues to resist collapse despite five months of direct war with the United States and a severe naval blockade. Decades of state-enforced economic isolation have forced the country to rely on domestic manufacturing, Water-intensive agriculture, and informal trade networks to maintain basic functions.

This resilience has come at a devastating cost to local households, who absorb severe currency depreciation and a 90 percent inflation rate. While the state has leaned on self-sufficiency, systemic corruption and the theft of $11 billion by state-appointed oil trustees have severely undermined public trust. Although the conflict has now spread to the Caspian Sea, the government relies on economic ties with China and Russia to provide temporary breathing space. Ultimately, sustained economic recovery remains impossible without targeted diplomatic efforts to reduce geopolitical risks and restore vital international trade relations.

Comment

The closure of the Strait of Hormuz exposes the limits of Tehran's autarkic economic planning when confronted with sustained naval interdiction. While the Supreme National Security Council's reliance on informal oil trustees mitigates immediate supply shocks, these parallel networks introduce systemic transaction costs that hollow out Iranian fiscal reserves. This structural decay suggests that Iranian economic endurance is a wasting asset, where domestic capital flight eventually outpaces the state's capacity to subsidise basic consumer goods.

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