Iranians hope eased sanctions lift economy | World| Breakings news and perspectives from around the globe | DW | 31.01.2014
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Iranians hope eased sanctions lift economy

An initial round of $550 million for Iran will be released with more relief to come if progress continues to be made in nuclear talks. The break in sanctions could spell the beginning of an economic boom for Iran.

"When sanctions against Iran were partially lifted on January 20 as part of the Geneva agreement, the euphoria on Iran's markets was tangible," Atabak, a trader in the Iranian city of Kerman in the southeast of the country told DW. "But disillusionment soon took over."

So far there has not been a fundamental improvement for the Iranians and experts still expect an inflation rate of 40 percent. "The costs for essential goods are still very high," Atabak said. "Many products the people need are still not available."

The Iranian rial has increased in value compared to the euro. While a euro used to get 4,500 rial, it's now worth well under 4,000 rial. That makes the imports cheaper, which has led some Iranian money traders to complain that their business has been ruined, according to Michael Tockus of the German-Iranian Chambers of Commerce.

The effects of easing sanctions

car production in Iran (Foto: ILNA)

The Iranian car industry will benefit from the easing of the sanctions

Tockus said he expects positive effects for the Iranian economy despite the fact that key sanctions against Iranian oil exports and the country's financial sector will remain in place. Loosening of sanctions placed on exports of petrochemical products, such as those used in the plastics industry, will be significant with at least 20, Tockus added.

Some 20 Iranian petrochemical firms will benefit from the change and will again be able to import equipment. Additionally there are the released assets in China, India and the United States, which input some $10 billion in the Iranian economy in the next months.

Tockus called a contract with a German trade an example of Iranian companies' expanded financial breathing room. A company signed a deal for 14 million euros worth of soybeans to be delivered to Iran every month. The goods will be paid for with money that had been held up in a bank in India.

More food and medical imports will improve Iranians' daily lives and loosening sanctions on the important car industry will create jobs.

Released assets are a drop in the ocean

The Iranian economic expert Ahamd Alavi of the University of Stockholm was less optimistic.

"The amount of money that will be released in the next six months won't be enough to noticeably improve the situation for the Iranians," he told DW. He said that $100 billion were needed.

The Maroun Petrochemical facilities (Foto: Vahid Salemi7ddp images/AP Photo)

Iran's petrochemical industry is allowed to export again

The World Bank said it expects economic growth of 1 percent in Iran this year, 1.8 percent for 2015 and 2 percent for 2016. Iran's leadership is working to present the nuclear deal as an economic opportunity for the country. In his speech at the World Economic Forum in Davos, Iranian President Hassan Rouhani invited foreign investors to his country.

Investors need predictability

Stability is a precondition for investments, Scott Lucas, an Iran expert at the University of Birmingham, told DW. "While most foreign companies care little about the human rights deficit, they pay even more attention to the government's predictability," he said. Investors want to see a clear policy. If investors feel that Iran could change its course any time it would discourage them."

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