WEBVTT 1 00:00:01.400 --> 00:00:04.960 Irans attack on Israel has raised questions over its military 2 00:00:04.960 --> 00:00:08.240 capabilities and its potential readiness for an escalated 3 00:00:08.240 --> 00:00:09.860 conflict in the region. 4 00:00:09.920 --> 00:00:12.830 The country, which has been under international sanctions for years, 5 00:00:12.840 --> 00:00:16.060 has been suffering from high inflation and low growth. 6 00:00:16.120 --> 00:00:19.230 But over the past few months it's also been showing increasing 7 00:00:19.239 --> 00:00:22.029 readiness to flex its military muscles, 8 00:00:22.040 --> 00:00:25.720 carrying out attacks on tankers near the Strait of Hormuz and reinforcing 9 00:00:25.720 --> 00:00:28.510 its support for a range of militant groups, including 10 00:00:28.520 --> 00:00:30.300 Hamas and Hezbollah. 11 00:00:30.790 --> 00:00:34.030 To talk more about this, I'm joined now might Javaid Salehi Isfani, 12 00:00:34.030 --> 00:00:37.630 professor of economics at Virginia Tech and an expert in Middle 13 00:00:37.640 --> 00:00:39.490 East economics. 14 00:00:39.640 --> 00:00:42.420 Javad Perhaps we could begin by looking at the economic 15 00:00:42.430 --> 00:00:44.580 backdrop to this latest escalation. 16 00:00:44.590 --> 00:00:48.670 What state is the Iranian economy in right now, and how ready is it for 17 00:00:48.670 --> 00:00:51.449 a potential military escalation with Israel? 18 00:00:53.690 --> 00:00:58.170 Well, generally it's not ready for an extended military conflict, 19 00:00:58.410 --> 00:01:02.970 which is why they have been very careful to not get too involved 20 00:01:02.970 --> 00:01:04.470 in the Gaza war. 21 00:01:05.920 --> 00:01:09.440 They the attack they had on Israel sounded more symbolic than 22 00:01:09.440 --> 00:01:11.420 one intended to do harm. 23 00:01:13.480 --> 00:01:19.640 Inflation is very high and it's very sensitive to tensions in the region, 24 00:01:20.200 --> 00:01:24.280 so just for the last 2-3 weeks when people have been expecting. 25 00:01:24.830 --> 00:01:26.490 Tensions to rise. 26 00:01:27.390 --> 00:01:33.110 The dollar has appreciated in value by about 15% is 25%, 27 00:01:33.110 --> 00:01:35.690 up from a few months ago. 28 00:01:35.750 --> 00:01:37.890 And these inflationary, 29 00:01:39.520 --> 00:01:43.040 the exchange rate devaluation very quickly translates into 30 00:01:43.640 --> 00:01:49.680 higher prices because Iran imports a lot of types of commodities and 31 00:01:49.680 --> 00:01:54.400 many of the commodities it produces inside Iran also have 32 00:01:54.400 --> 00:01:56.580 an import component. 33 00:01:57.030 --> 00:02:02.150 So I think the country is bracing for higher inflation at this moment. 34 00:02:02.710 --> 00:02:09.660 Last year, which ended on 21st of March, registered 35 00:02:09.669 --> 00:02:15.220 inflation of 40% and it has been higher than that before. 36 00:02:15.840 --> 00:02:20.830 And I my expectation is that this new round of tensions and the devaluation 37 00:02:21.120 --> 00:02:24.150 is going to at least keep the inflation that high, 38 00:02:24.150 --> 00:02:26.450 if not raise it some more. 39 00:02:27.600 --> 00:02:31.680 Iran is not self-sufficient in food so. 40 00:02:32.560 --> 00:02:38.470 Any shock to world prices or any shock to the ability to import 41 00:02:38.470 --> 00:02:42.150 food is going to raise food prices, which is going to have 42 00:02:42.150 --> 00:02:47.510 a big impact on the welfare of the poor because food occupies 43 00:02:47.510 --> 00:02:50.170 some half of their expenditures. 44 00:02:51.639 --> 00:02:51.830 Right. 45 00:02:51.840 --> 00:02:53.390 I want to learn a little bit more about 46 00:02:53.400 --> 00:02:55.270 how Iran's economy works. 47 00:02:55.280 --> 00:02:58.320 It is largely controlled by the Islamic Revolutionary Guards. 48 00:02:58.320 --> 00:03:02.120 They manage everything from oil and banking to healthcare even. 49 00:03:02.280 --> 00:03:05.320 What is the impact of essentially having the armed forces 50 00:03:05.669 --> 00:03:07.370 in charge of the economy. 51 00:03:09.650 --> 00:03:13.730 Well, I wouldn't say the armed forces are in charge of the economy. 52 00:03:13.730 --> 00:03:16.120 I think people exaggerate sometimes. 53 00:03:16.130 --> 00:03:18.880 The influence of the guards, I don't think is any more than 54 00:03:18.889 --> 00:03:20.710 in Egypt or Pakistan. 55 00:03:21.490 --> 00:03:26.889 When you have an authoritarian state, the armed forces can operate with 56 00:03:26.889 --> 00:03:31.169 more freedom and on top of that because of sanctions 57 00:03:34.520 --> 00:03:38.200 the power, economic power has shifted from private sector. 58 00:03:39.030 --> 00:03:42.630 Especially the smaller producers to bigger producers and from 59 00:03:42.670 --> 00:03:48.670 private sector to government entities like the IRGC which has 60 00:03:48.750 --> 00:03:53.830 a big operation in terms of building of dams, roads, 61 00:03:54.350 --> 00:03:55.380 ports and so on. 62 00:03:55.390 --> 00:04:01.830 And also because of sanctions in export of oil, you know, 63 00:04:01.830 --> 00:04:04.620 exporting oil and bringing the money back, given 64 00:04:04.630 --> 00:04:08.600 all the restrictions on transfer of money is very difficult. 65 00:04:08.990 --> 00:04:14.830 So you can't expect private traders to do that and it's the guards 66 00:04:14.830 --> 00:04:16.100 that control that. 67 00:04:16.110 --> 00:04:20.790 But there is still a very sizeable private sector. 68 00:04:21.029 --> 00:04:24.910 The agricultural sector is mostly private. 69 00:04:26.680 --> 00:04:30.760 Distribution, you know, maybe 80% of the population or 70 00:04:30.760 --> 00:04:34.830 the working force is not working for the IRGC or for the government. 71 00:04:35.360 --> 00:04:39.320 So I think that's something that people don't quite realize, that 72 00:04:40.150 --> 00:04:43.990 as we speak now, Iran still is characterized 73 00:04:43.990 --> 00:04:47.950 as a market economy with a big influence from the state and 74 00:04:47.950 --> 00:04:49.000 the armed forces. 75 00:04:50.480 --> 00:04:51.910 That's an interesting correctional right. 76 00:04:51.920 --> 00:04:54.230 We know that in the past Iran has been carrying out a lot of 77 00:04:54.240 --> 00:04:56.750 its military activities but proxy as well as 78 00:04:56.760 --> 00:04:58.270 the Islamic Revolutionary Guards. 79 00:04:58.279 --> 00:05:02.800 It also supports a range of militants in Syria and Iraq as well as 80 00:05:02.800 --> 00:05:06.560 Hezbollah, Hamas and the Houthi rebels in Yemen for example. 81 00:05:06.800 --> 00:05:11.440 Together these groups form a powerful network of anti US and. 82 00:05:11.870 --> 00:05:14.060 Anti Israel and militants, she thought. 83 00:05:14.070 --> 00:05:17.630 What portion of Iranian state spending goes into this kind of 84 00:05:17.630 --> 00:05:20.350 financial backing and what level of support for it is there among 85 00:05:20.360 --> 00:05:21.690 the Iranian people? 86 00:05:24.310 --> 00:05:27.310 That's a very good question but also very difficult to answer. 87 00:05:27.670 --> 00:05:32.470 You know these financial transfers are obviously by nature hidden. 88 00:05:32.750 --> 00:05:35.250 The government doesn't publish any numbers. 89 00:05:35.790 --> 00:05:41.510 We do know that of the 50 to $70 billion a year 90 00:05:41.510 --> 00:05:45.910 that Iran earns in terms of foreign exchange, a good deal of it goes 91 00:05:45.910 --> 00:05:51.470 to import of food and import of other commodities, necessary commodities 92 00:05:51.710 --> 00:05:57.140 and maybe about 10 billion is exported. 93 00:05:57.670 --> 00:06:01.589 Through various means, which we put under capital flight. 94 00:06:02.190 --> 00:06:08.790 So it's very hard to put a number on what these proxy forces cost Iran. 95 00:06:09.190 --> 00:06:15.029 But again, I suspect that the media numbers exaggerate. 96 00:06:16.839 --> 00:06:20.640 Iran does whatever it does on the cheap, you know, 97 00:06:20.640 --> 00:06:25.513 working with Houthis doesn't take a whole lot of money. 98 00:06:25.513 --> 00:06:34.070 Supplying the Hamas with military equipment or military know how doesn't cost 99 00:06:34.070 --> 00:06:35.090 the whole money. 100 00:06:35.430 --> 00:06:40.750 I think Hezbollah at one point either they declared or was in the news that 101 00:06:40.750 --> 00:06:45.190 they get $100 million a year and if you think of 100 million compared 102 00:06:45.190 --> 00:06:49.990 to 50 to 70 billion which is my estimate of what Iran's 103 00:06:49.990 --> 00:06:54.350 earnings are in foreign exchange is not is not huge other there are 104 00:06:54.350 --> 00:06:57.950 other countries who spend a lot more in either 105 00:06:57.950 --> 00:07:00.090 foreign aid or foreign influence. 106 00:07:00.589 --> 00:07:05.430 I think a lot of Iran's power, if you like, 107 00:07:05.430 --> 00:07:12.150 in projecting its power outside, comes from an ideological source, 108 00:07:12.150 --> 00:07:16.830 the fact that it is, especially now, one of the very few countries 109 00:07:16.830 --> 00:07:21.150 that openly supports the Palestinian cause. 110 00:07:22.223 --> 00:07:22.870 Sure. 111 00:07:22.870 --> 00:07:25.180 Let's return then to the issue of oil. 112 00:07:25.190 --> 00:07:27.420 It is, of course, by far the country's most important 113 00:07:27.430 --> 00:07:30.340 source of revenue, a commodity that is very vulnerable 114 00:07:30.350 --> 00:07:31.780 to geopolitical tensions. 115 00:07:31.790 --> 00:07:35.710 If we look at the past few years, we did see a steep decline in exports 116 00:07:35.710 --> 00:07:39.230 after the US pulled out of the Iran nuclear deal and reimposed 117 00:07:39.230 --> 00:07:41.100 sanctions in 2018. 118 00:07:41.110 --> 00:07:43.340 But in recent years, we have seen an optic again, 119 00:07:43.350 --> 00:07:46.670 and that's mainly due to an increase in purchases from China, 120 00:07:47.110 --> 00:07:50.710 which have enabled Iran to maintain a positive trade balance. 121 00:07:51.390 --> 00:07:53.860 I'm wondering if you could give some insight into this. 122 00:07:53.870 --> 00:07:57.590 Oil prices did initially rise after the Iranian attack on Israel, but 123 00:07:57.590 --> 00:08:01.150 they've since stabilized again amid a lot of talk of de escalation. 124 00:08:01.550 --> 00:08:04.590 To what extent is Iran factoring in its heavy dependence on 125 00:08:04.590 --> 00:08:07.170 oil as it assesses its next move? 126 00:08:09.350 --> 00:08:16.317 I'm sure they are very worried that if the war damages 127 00:08:16.790 --> 00:08:20.470 the infrastructure to export oil that that would take, 128 00:08:21.430 --> 00:08:24.910 that would hit a hard blow to the economy. 129 00:08:25.150 --> 00:08:29.830 I must say that your chart was very, very good, very informative, 130 00:08:29.830 --> 00:08:35.510 you know, especially the fact that Iran has been able to recover like 131 00:08:35.510 --> 00:08:38.140 80% of its oil exports. 132 00:08:38.150 --> 00:08:43.350 And most people attributed that to a softening of the sanctions 133 00:08:44.110 --> 00:08:46.719 since Biden has been in power. 134 00:08:47.309 --> 00:08:49.980 Iran's economy, in fact, has been growing, 135 00:08:49.990 --> 00:08:53.390 partly as a result of this increase in oil exports. 136 00:08:55.120 --> 00:08:59.400 Not all of that increase in GDP, which is about 5% per year, 137 00:09:00.120 --> 00:09:02.870 which is not bad compared to what's happening in the region 138 00:09:02.880 --> 00:09:08.400 overall after COVID, Not all of that has translated into. 139 00:09:09.270 --> 00:09:12.870 Higher living standards by the population because I think 140 00:09:12.870 --> 00:09:19.270 the government has been building up, its military has been has 141 00:09:19.270 --> 00:09:20.380 a lot of expenditures. 142 00:09:20.390 --> 00:09:25.350 We do see in the GDP data a more vibrant economy than we see in 143 00:09:25.840 --> 00:09:30.420 household expenditures for which we have data with a year of back. 144 00:09:31.910 --> 00:09:38.270 But if there is any decrease in oil prices or in oil exports 145 00:09:38.350 --> 00:09:39.809 that will have. 146 00:09:40.230 --> 00:09:44.790 An impact similar to the tensions that have raised the exchange rate, 147 00:09:45.429 --> 00:09:48.790 the value of the real Iranian currency and it will again 148 00:09:48.790 --> 00:09:50.719 translate into inflation. 149 00:09:51.270 --> 00:09:53.860 Then, with some delay, it will affect 150 00:09:53.870 --> 00:09:55.140 people's living standards. 151 00:09:55.150 --> 00:09:58.630 We will see food prices rising, people buying less food. 152 00:09:59.470 --> 00:10:04.750 We look very carefully into the household budgets in a book 153 00:10:04.750 --> 00:10:08.910 that recently published on how sanctions work. 154 00:10:09.270 --> 00:10:14.990 And Iranian living standards are back to 20 years ago because of sanctions, 155 00:10:15.270 --> 00:10:16.020 not the GDP. 156 00:10:16.030 --> 00:10:20.350 The GDP is about the same level or maybe a couple of percent higher 157 00:10:20.350 --> 00:10:21.250 than that. 158 00:10:21.350 --> 00:10:26.540 But I would say that the economy is very sensitive to 159 00:10:26.550 --> 00:10:29.490 any further declines, so. 160 00:10:30.960 --> 00:10:35.520 I don't know what is going to be the balance between tensions 161 00:10:35.520 --> 00:10:38.550 or military conflict reducing the oil output. 162 00:10:39.110 --> 00:10:44.030 And raising the oil price, clearly there's a place where you lose 163 00:10:44.030 --> 00:10:50.070 20% of your oil exports and prices go up by 20% and you come out even. 164 00:10:50.429 --> 00:10:52.089 But there's going to be a delay. 165 00:10:52.840 --> 00:10:58.190 Oil that Iran sells now is going to be delivered in two months, 166 00:10:58.190 --> 00:11:00.420 three months, and the money is probably going to come 167 00:11:00.429 --> 00:11:02.060 back a couple of months later. 168 00:11:02.070 --> 00:11:08.541 So Iran is looking into an economic shock and negative economic shock. 169 00:11:08.708 --> 00:11:11.401 If there is a military conflict. 170 00:11:11.723 --> 00:11:13.510 I want to talk to you about 171 00:11:13.510 --> 00:11:16.020 the role of China as well, because it is of course 172 00:11:16.030 --> 00:11:18.100 is the biggest buyer of Iranian oil. 173 00:11:18.110 --> 00:11:21.130 Talk to me about the importance of that relationship. 174 00:11:23.450 --> 00:11:25.880 Well, it's very important because what happened with 175 00:11:25.890 --> 00:11:29.530 sanctions is that Iran shifted its imports from Europe. 176 00:11:29.970 --> 00:11:34.610 Iran's economy has been very was very closely integrated into 177 00:11:34.610 --> 00:11:35.750 Western Europe. 178 00:11:35.890 --> 00:11:40.410 But in the last decade, Iran has slowly shifted 179 00:11:40.410 --> 00:11:45.690 its connections, trade connections to the east, 180 00:11:45.730 --> 00:11:47.189 especially to China. 181 00:11:47.970 --> 00:11:52.730 China is able to provide Iran with a variety of goods. 182 00:11:53.030 --> 00:11:54.490 That Iran needs. 183 00:11:54.510 --> 00:11:58.390 It hasn't been as active in investing in Iran. 184 00:11:58.390 --> 00:12:01.290 There's been much talk but not much action. 185 00:12:01.309 --> 00:12:06.350 So it can't help the economy grow, but it can't buy the oil and send 186 00:12:06.350 --> 00:12:09.209 back commodities in exchange. 187 00:12:09.870 --> 00:12:13.710 Iran is also depending more and more on Chinese 188 00:12:13.710 --> 00:12:15.729 political support globally. 189 00:12:15.870 --> 00:12:19.990 You know, China was instrumental in getting 190 00:12:19.990 --> 00:12:22.060 Iran and Saudi Arabia together. 191 00:12:22.070 --> 00:12:27.030 That has been a big boom for Iran's diplomatic power. 192 00:12:27.910 --> 00:12:31.910 Iran was invited again by China into the BRICS, 193 00:12:33.369 --> 00:12:35.708 which is a alliance of 194 00:12:36.590 --> 00:12:39.420 semi industrialized or emerging economies. 195 00:12:39.429 --> 00:12:44.990 And that has been a big source of hope for Iran, that getting 196 00:12:44.990 --> 00:12:48.230 out of the Western orbit, there's some other place to go. 197 00:12:48.429 --> 00:12:51.990 And that place is kind of vaguely defined by China, Russia. 198 00:12:52.309 --> 00:12:57.550 BRICS and others, we haven't seen actual influence or actually impact 199 00:12:57.550 --> 00:13:00.329 from that shift of alliance to China. 200 00:13:00.429 --> 00:13:03.380 All we have now is here's a big country that can buy 201 00:13:03.390 --> 00:13:06.130 the oil and can actually ship goods to Iran. 202 00:13:06.630 --> 00:13:10.350 But in terms of generating economic growth, we're not sure. 203 00:13:11.030 --> 00:13:14.670 Would it be fair to say then that one effect of the American sanctions 204 00:13:14.670 --> 00:13:18.350 is actually to to strengthen another regional bloc that has 205 00:13:18.350 --> 00:13:20.050 no interest in strengthening? 206 00:13:22.073 --> 00:13:23.630 Yes, absolutely. 207 00:13:23.640 --> 00:13:26.700 I think that's again one of the messages that 208 00:13:28.640 --> 00:13:36.273 our book emphasises not only there's a shift externally from the West to 209 00:13:36.480 --> 00:13:39.559 East and China and Russia in particular, but there's 210 00:13:39.559 --> 00:13:43.720 also a shift inside Iran from private sector and 211 00:13:43.720 --> 00:13:45.780 the middle class to 212 00:13:47.480 --> 00:13:50.099 Big state authorities, including the IRGC. 213 00:13:52.010 --> 00:13:54.000 To that extent, then, would you declare 214 00:13:54.010 --> 00:13:57.030 those American sanctions a success or a failure? 215 00:13:59.410 --> 00:14:02.770 What it definitely a failure if they wanted to create 216 00:14:02.770 --> 00:14:07.090 more moderate Iran, which in some way was the ultimate 217 00:14:07.090 --> 00:14:10.490 aim of sanctions to get Iran to behave 218 00:14:11.210 --> 00:14:13.949 more to the liking of Western powers. 219 00:14:14.010 --> 00:14:16.550 And Iran has defied that. 220 00:14:17.170 --> 00:14:21.770 Although I must say sanctions were very successful in doing 221 00:14:21.770 --> 00:14:26.570 their first job, which was to cripple Iran's economy, bring 222 00:14:26.570 --> 00:14:28.750 his growth to a halt and 223 00:14:30.040 --> 00:14:32.700 hurt the ordinary Iranians. 224 00:14:33.670 --> 00:14:36.729 Hoping that they would then put pressure on their own government 225 00:14:36.830 --> 00:14:40.670 to moderate with respect to investment demands. 226 00:14:40.710 --> 00:14:42.850 That also has not happened. 227 00:14:42.910 --> 00:14:45.990 So there are success points. 228 00:14:45.990 --> 00:14:48.890 Yes, US has got a big power. 229 00:14:49.150 --> 00:14:53.990 The dollar is the king, and if you defy the US, you better 230 00:14:53.990 --> 00:14:58.350 be ready for economic contraction, economic crisis. 231 00:14:58.670 --> 00:15:02.670 But can that then translate into a country 232 00:15:02.670 --> 00:15:04.420 subjugated, being subjugated? 233 00:15:04.430 --> 00:15:09.590 You know, changing these policies, and that hasn't happened. 234 00:15:09.590 --> 00:15:13.390 If anything, I think Iran has become more aggressive, 235 00:15:13.390 --> 00:15:16.870 as it was demonstrated just a few days ago when it's 236 00:15:17.310 --> 00:15:18.820 attack on Israeli soil. 237 00:15:18.830 --> 00:15:23.230 I want to talk about the larger ramifications of this conflict 238 00:15:23.230 --> 00:15:25.620 now and what it could mean for the global economy. 239 00:15:25.630 --> 00:15:28.340 The Strait of Hormuz in particular has become 240 00:15:28.350 --> 00:15:30.300 a real flashpoint in this conflict. 241 00:15:30.310 --> 00:15:34.270 Around 1/5 of the world's oil passes through here, and in recent months 242 00:15:34.270 --> 00:15:36.700 we've seen a number of attacks on vessels there. 243 00:15:36.710 --> 00:15:39.870 Just last weekend, Iran's Revolutionary Guards seized 244 00:15:39.870 --> 00:15:42.700 a cargo ship it said was linked to Israel. 245 00:15:42.710 --> 00:15:46.670 Javad talked to me about the kind of disruption to global trade that could 246 00:15:46.670 --> 00:15:49.870 occur if Iran and the groups it backs were to step up their attacks in 247 00:15:49.870 --> 00:15:51.050 the Strait of Hormuz. 248 00:15:53.410 --> 00:15:58.410 But I suspect that Iran's greatest strength is in 249 00:15:58.650 --> 00:16:00.070 its own neighbourhood. 250 00:16:00.970 --> 00:16:07.570 So when push comes to shove, Iran may decide to close 251 00:16:07.570 --> 00:16:10.570 the Strait of Hormuz. 252 00:16:10.970 --> 00:16:14.570 It may decide to attack shipping that is closer 253 00:16:14.570 --> 00:16:18.467 to the southern Shore of Persian Gulf 254 00:16:18.467 --> 00:16:23.620 maybe even attack its new found allies. 255 00:16:23.790 --> 00:16:28.390 In terms of Saudi Arabia and UAE, we don't know that, 256 00:16:28.670 --> 00:16:33.750 but the closest target would be to cause a crisis in terms of 257 00:16:33.750 --> 00:16:38.870 oil exports, which would primarily hurt China and maybe India, 258 00:16:38.870 --> 00:16:42.630 but not necessarily Western Europe or or the US which 259 00:16:42.630 --> 00:16:44.330 is now self-sufficient in oil. 260 00:16:44.350 --> 00:16:47.180 So there is some complex calculation that's going on there. 261 00:16:47.190 --> 00:16:53.670 I'm not sure Iranians will would want to as first resort. 262 00:16:54.950 --> 00:16:57.650 Go to closing of the Strait of Hormuz. 263 00:16:57.750 --> 00:17:02.310 But then there are other groups like the Houthis which have 264 00:17:02.310 --> 00:17:06.430 now enough technology to disrupt shipping in the Red Sea. 265 00:17:06.430 --> 00:17:10.470 They could do similar disruptions in the Persian Gulf. 266 00:17:10.470 --> 00:17:15.190 So All in all, I think the region which is at the cost of becoming 267 00:17:15.190 --> 00:17:18.750 much more developed, the flow of oil money is facing 268 00:17:18.750 --> 00:17:21.990 a kind of disruption that may 269 00:17:23.760 --> 00:17:26.500 delay its economic development by a decade. 270 00:17:27.450 --> 00:17:30.810 You mentioned that Iranian backing of some of these groups isn't 271 00:17:30.810 --> 00:17:33.053 as significant as we might assume. 272 00:17:33.053 --> 00:17:36.650 On that, I'm wondering then how much control they really do have 273 00:17:36.660 --> 00:17:37.600 over those activities. 274 00:17:37.609 --> 00:17:40.890 If the Houthis choose to carry out attacks and Iran isn't in 275 00:17:40.900 --> 00:17:42.890 favour of that, to what extent do they have 276 00:17:42.900 --> 00:17:43.990 power over that? 277 00:17:46.200 --> 00:17:48.649 Well, they are allies in many ways. 278 00:17:48.680 --> 00:17:52.520 And that means just like Israel has quite a bit of independence from 279 00:17:52.520 --> 00:17:56.040 the US, Houthis have independence from Iran. 280 00:17:56.040 --> 00:17:58.910 But they don't want to completely break relations. 281 00:17:58.920 --> 00:18:02.760 So if Iranians really want to say we don't want any more. 282 00:18:04.480 --> 00:18:07.560 Ships being hit, I'm sure the Houthis will agree. 283 00:18:07.720 --> 00:18:11.560 The only group that Iran has close alliance with, 284 00:18:11.560 --> 00:18:14.640 close relationship with, is the Hezbollah. 285 00:18:15.950 --> 00:18:19.710 You know, everybody knows that Hamas is a so new organization 286 00:18:19.920 --> 00:18:24.859 that has not, in times of crisis, been allied with Iran. 287 00:18:25.030 --> 00:18:29.030 Now they appear as allies, or recently they have, but 288 00:18:30.720 --> 00:18:36.520 they're always side with the general Palestinians are more likely to like 289 00:18:36.520 --> 00:18:40.160 they did with Saddam Hussein when he was fighting Iran. 290 00:18:40.410 --> 00:18:47.109 So Iranians are aware that besides the ideological anti Israel, 291 00:18:47.119 --> 00:18:48.100 anti US 292 00:18:48.920 --> 00:18:52.090 Alliance they have with some of these groups, 293 00:18:52.350 --> 00:18:56.070 only the Shia groups can be trusted with 294 00:18:57.310 --> 00:19:00.330 Reliance when the going gets tough. 295 00:19:01.800 --> 00:19:03.430 I'd love to end on a personal note. 296 00:19:03.440 --> 00:19:04.590 You grew up in Iran. 297 00:19:04.600 --> 00:19:07.270 I imagine you still have family and friends there. 298 00:19:07.280 --> 00:19:10.480 How are ordinary people faring amid this ongoing tension? 299 00:19:13.850 --> 00:19:15.080 Well, they're not faring well. 300 00:19:15.090 --> 00:19:19.490 In fact, most of what our book is about is talking to various people, 301 00:19:19.490 --> 00:19:23.530 women, young people, to find out how they 302 00:19:25.680 --> 00:19:26.980 imagine their future. 303 00:19:27.240 --> 00:19:32.280 And one of the things that sanctions and this kind of tensions tell young 304 00:19:32.280 --> 00:19:35.180 people is that the future is bleak. 305 00:19:37.000 --> 00:19:40.830 I think I don't blame them to want to study 306 00:19:40.840 --> 00:19:42.859 more English so they can emigrate. 307 00:19:43.070 --> 00:19:48.150 When they get an offer from a university, either in the West or 308 00:19:48.160 --> 00:19:52.190 India or Singapore or Malaysia, they pack their bags and leave. 309 00:19:53.470 --> 00:19:57.030 If the young people, especially the educated young people, 310 00:19:57.030 --> 00:20:00.190 cannot see a future for themselves in the country, 311 00:20:00.430 --> 00:20:06.100 the country has a lot of difficulties to grow and to become 312 00:20:06.109 --> 00:20:10.430 a normal country, and I don't know if it's possible for Iranians 313 00:20:10.430 --> 00:20:11.780 to feel that way. 314 00:20:11.790 --> 00:20:14.810 They have the sanctions, they have the looming 315 00:20:15.060 --> 00:20:19.300 regional conflict, if not war, but they also have on top of that 316 00:20:19.300 --> 00:20:22.460 a lot of social restrictions that the government of Iran imposes 317 00:20:22.460 --> 00:20:24.450 on people, especially women. 318 00:20:24.460 --> 00:20:30.090 So all of this together is very hard to be optimistic about Iran. 319 00:20:31.150 --> 00:20:32.020 Growing, 320 00:20:32.030 --> 00:20:35.270 becoming a kind of happier nation for the time being. 321 00:20:35.750 --> 00:20:38.020 A real tragedy of lost potential there. 322 00:20:38.030 --> 00:20:41.430 Javad Salehi, Isfahani professor of economics at Virginia Tech. 323 00:20:41.430 --> 00:20:43.450 Thank you so much for talking to us today. 324 00:20:45.950 --> 00:20:46.340 Thank you. 325 00:20:46.350 --> 00:20:46.990 My pleasure.