Iran's re-emergence as a significant regional power is not likely to result any time soon in a fundamental shift in its post-1979 foreign policyby Andrew Hammond / November 4, 2015 / Leave a comment
This Wednesday marks the first anniversary of the 1979 seizure of the US Embassy in Tehran since Iran’s landmark nuclear deal in July with world powers, including China, Russia and the United States. Some three and a half decades after the US hostage crisis began, Tehran is reasserting itself significantly more forcefully on the international stage following years of international estrangement.
However, it remains unclear exactly what course the country will chart as it opens itself up more to the world, and the degree to which influential conservatives in Iran might thwart the greater engagement desired by the Rouhani government. Tehran’s choices will have a major impact not just politically, but also economically, as it potentially transforms into what some assert is a nascent Middle Eastern superpower.
The latest sign of thawing in Iran’s former diplomatic and economic isolation came last Friday when Foreign Minister Javad Zarif joined, for the first time, multi-country talks to try to bring resolution to the Syrian crisis. The change in US policy concerning Tehran’s involvement in the discussions is a political dividend of the Summer’s nuclear agreement. Although some powers, especially Saudi Arabia, resent Iran being given a seat at the table, it is increasingly acknowledged internationally that Tehran is key to any eventual political deal given its staunch support for the regime of President Bashar al-Assad.
In the economic sphere too, Iran has major forward potential. The IMF indicated last month that the economy could grow by 4 per cent to 5.5 per cent in 2016-17, in the context of international sanctions relief, if oil production is raised by up to 1 million barrels per day (bpd).
As sanctions begin to be rolled back in 2016, Tehran could receive a financial bonanza of around $100bn dollars in currently frozen assets. However, because the country has significant existing financial obligations and needs to strengthen financial reserves, the amount of useable liquid assets is estimated to be nearer a third or quarter of this amount.
This is still significant, but needs to be seen in the context of the massive $1 trillion estimates of Iran’s infrastructure investment that is needed, much of which will require foreign…