Iran After the Islamic Revolution

The Islamic Revolution in Iran shook the world. The revolution led to the overthrow of the Shah of Iran, Mohammad Reza Pahlavi, who was a close ally of the United States. The revolutionaries saw the United States not as an ally but as an imperialist enabler of the Shah's regime. This sentiment culminated in a pivotal moment on November 4, 1979, when Iranian militants stormed the U.S. Embassy in Tehran, taking 52 American diplomats and citizens hostage. The hostage crisis lasted 444-days and had a lasting impact on U.S.-Iran relations.

During the Islamic Revolution, Ayatollah Khomeini, the leader of the revolution, proclaimed that he would be the one appointing the government. This declaration, rooted in Shia belief, advocates for vesting political and religious authority in the most knowledgeable religious figure. Khomeini assumed the role of Supreme Leader, as outlined in the constitution, with subsequent leaders chosen by an Assembly of Experts comprising senior clerics. While this process bears resemblance to the papal election in Roman Catholicism, there are stark differences. Unlike the pope, the Supreme Leader assumes command over the nation's armed forces and holds the power to declare war—a task that the ayatollah had to undertake a year after he came to power.

So, what happened? Alarmed by Khomeini’s call for Islamic revolutions in Arab countries, Saddam Hussein cracked down on Iraq’s Shia majority. In 1980, shortly after the revolution, Saddam also invaded Iran, hoping to capitalize on revolution’s chaos. Saddam expected a quick victory and control over the oil-rich province of Khuzestan. What Saddam didn’t expect was an eight-year bloodbath resulting in more than 1 million deaths, with both sides ultimately ending up where they started.

The eight-year-long Iran-Iraq War coupled with the reversal of many Shah-era policies that aimed at strengthening the economy, brought about economic challenges, including a decline in oil production and exports, high inflation, unemployment, and economic hardships for the population.

Poverty and unemployment:  Over the years, Iranian governments have implemented poverty alleviation programs to address socio-economic disparities, though their effectiveness remains a subject of debate. Factors such as contraband, administrative controls, widespread corruption, and other restrictions impact the outcomes of these initiatives. Essentially, the same issues that fueled public anger, leading to the revolution and the ousting of the shah, continue to affect people's livelihoods today, exacerbating socio-economic struggles.

With the poverty rate estimated to be 27% (or much more), the population faces significant challenges. Meanwhile, the government increases spending on media and propaganda, security apparatus, and clerical commercial operations to quell protests and maintain domestic control.

Recent data reveals that only about 27.5% of Iran's population is formally employed, leaving 72.5% either jobless, retired, or working in the informal sector. Women encounter greater obstacles, with only one out of eight employed in either formal or informal economy.

Women:  The Islamic Revolution of 1979 marked a profound shift in the country's political, social, and cultural landscape. Under the Shah's regime before the revolution, notable advancements were achieved in women's rights, including voting rights and access to education and employment. However, following the revolution, conservative Islamic values resulted in restrictions on women's involvement in specific professions and public spheres, along with the enforcement of strict dress codes, such as the mandatory hijab.

In September 2022, Mahsa Amini, 22, died in Iranian morality police custody for not wearing a hijab. Her death set off some of the most sweeping anti-government protests Iran has experienced in decades. According to human rights experts and activists, government security forces violently suppressed the unrest, resulting in 527 deaths and nearly 20,000 arrests.

Economy:  Iran's oil and gas sector remains a vital component of its economy, constituting more than 80% of Iran’s export. This heavy reliance on oil and gas makes Iran vulnerable to fluctuations in the global oil market and susceptible to international sanctions targeting its energy sector.

Iran has been under international sanctions due to concerns over its nuclear program. In 1996, the Iran and Libya Sanctions Act was passed, which expanded an existing U.S. embargo on the import of Iranian petroleum products and imposed bans on investment in Iran by both American and non-American companies. The sanctions limited trade and economic cooperation, the export of high technology to Iran and, overall, targeted key sectors, affecting trade, finance, and foreign investment.

U.S. sanctions severely impacted the Iranian economy, with estimates suggesting losses of around $160 billion by 2015. In 2015, Iran, the U.S., and other world powers signed the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran Nuclear Deal. The JCPOA aimed to restrict Iran's nuclear program in exchange for relief from economic sanctions. However, hardliners within Iran sought to undermine the agreement, and Supreme Leader Ali Khamenei rejected negotiations on security matters related to Iran's regional activities and missile program. Consequently, U.S. President Donald Trump used these developments as justification to withdraw from the JCPOA in 2018.

This decision, coupled with plummeting oil revenues due to sanctions, triggered a fiscal crisis in Iran. Iran's oil exports dropped from over 2.7 million barrels a day in June 2018 to less than half a million barrels a day in April 2019, largely due to secondary sanctions. The subsequent rise in the price of imported goods due to sanctions also caused a price hike. The unemployment and inflation rate rose above 40% (more recently Iran's Misery Index, the combination of unemployment and inflation, has risen to 60.4%).

In recent years, Iran has faced a severe and prolonged economic crisis, one of the deepest and longest in its modern history. As relations with Western countries, particularly the United States, have deteriorated, Iran has increasingly turned its focus towards strengthening ties with eastern countries, particularly China. China has become one of Iran's significant economic partners, with collaborations in various sectors such as energy, infrastructure, and telecommunications.

Iran’s other big partners include Russia and Turkey. Russia and Iran cooperate in sectors like energy, technology, and defense. Iran and Turkey maintain significant economic ties, with mutual interests in trade, energy, infrastructure projects and transportation. Other partners include some European Union countries, India, South Korea, United Arab Emirates, Pakistan and Iraq.

The efforts of international cooperation thus far have proven insufficient to revive the economy. Iran has a relatively young and educated population, offering considerable potential for economic growth and development if effectively leveraged. However, whether Iran will succeed in cultivating a more balanced and diversified economy, coupled with a comprehensive foreign policy to harness its potential and overcome socio-economic and environmental challenges, remains to be seen.

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