The Ahmadinejad Presidency and the Future of Iran’s Economy

Georgetown Journal of International Affairs - January 28, 2016

Nader Habibi is the Henry J. Leir professor of the economics of the Middle East in the Crown Center at Brandeis University.

Over the past three decades, it has become commonplace to hear a newly elected Iranian president blame his predecessor for the economic hardships and shortcomings that the country has endured. The first two years of President Rouhani’s term is no exception. He and his team of economic advisors have repeatedly blamed former president Mahmood Ahmadinejad for the country’s economic ills, including record-high inflation rates, a severe recession, and the near bankruptcy of the banking system. But are these claims warranted?

Under normal circumstances, it would not be difficult to assess the economic legacy of an Iranian president, but Ahmadinejad’s presidency – particularly his second term (August 2009 -July 2013) – was anything but normal. This period coincided with a sharp escalation in economic sanctions against Iran. Any assessment of Ahmadinejad’s economic management, therefore, must carefully take into account the impact of the multifaceted economic sanctions imposed on the country by the United States, the European Union, and the United Nations.

Another important factor that must be taken into account is the abundance of oil revenues during Ahmadinejad’s presidency. During the first six years of his term (from mid-2005 to mid-2011), Iran enjoyed record-high oil revenues, significantly larger than those collected during Khatami’s presidency. However, a combination of economic mismanagement and escalating economic sanctions prevented Iran from taking full advantage of this windfall gain. ... Read the Full Text