Tough times for Iran

The first stage of imposing sanctions on Iran again was activated this week with a decision U.S. President Donald Trump took in May this year. The U.S.'s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) that was signed in 2015 with a union of forces and senses, despite all the grounds of compliance to the agreement that were presented, damaged hopes for regional stability. This also resulted in an economic dimension that negatively impacts several countries, primarily Iran.

Looking at the situation especially in terms of Iran, the first stage of the sanctions is expected to seriously impact the automotive sector, a lifeline in the country. Thus, we know that European companies, which have been long continuing its operations in Iran and dominate a significant portion of the market, have decided to throw in the towel as a result of the developments.

Meanwhile, the massive expectations in the aviation sector have also been crushed in this period. Iran, which has long been in dire need of renewing its worn-out air fleet, is, in this case, facing the cancellation of the agreement it finally made for more than 200 aircraft. In the current situation, which the sanctions are also preventing the import of aircraft parts, it possible to state that increasingly gloomy days await the country's aviation industry. In addition to these two difficult circumstances, it needs to be noted that the first stage of the sanctions include other items such as rugs, food and metal trade.

Opening such wounds in the Iranian economy, which is frankly already going through tough times, openly and clearly reveals the U.S.'s intention to drag Tehran to the dumps. The pressures ongoing with the discourse of reaching a new agreement, the depression since the decision was announced in May and the protests are creating an increasingly pessimistic atmosphere in the country. The people struggling with the black market and high prices, along with increasing poverty, is escalating the already present disturbance in the country, exacerbating the current vicious circle. The increasingly rising unemployment problem in the industries that have shrunk with the sanctions will continue to add insult to injury in this tension.

While the situation has currently reached quite a difficult point, the U.S. is going to carry into effect an even rougher process in terms of Iran and many countries in early November. Thus, in those days in which the second stage will be activated, the impact of the sanctions on energy, to which Iran's economy and importers are largely dependent on, will be tested.

While this tough period, which the Tehran administration needs to manage with great sensitivity, depends on the attitude of the other partners of the JCPOA agreement, the EU side's contacts with Washington for the last few months are yet to yield any results. The statement from Europe yesterday that efforts to continue the nuclear agreement by fighting against the U.S. sanctions in question will continue, shows that this determination is continues.

On a different note, big partner China is also giving signals that it is going to prefer to maintain relations with Iran. The Beijing administration that attaches importance to Tehran in terms of plans in Eurasia, signals that in November, it is going to continue relations with respect to energy imports. Hence, the kind of stance China and other actors will be taking against U.S. sanctions is going to be an important factor in the course of the economy in Iran as well as other domestic developments based on this.

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