Ayatollah Ruhollah Khomeini once said that the purpose of the Iranian revolution in 1979 was to promote Islam, not the economy. According to the founder of the Islamic Republic, focusing on the latter will reduce humans to animals.

More than four decades later, the regime’s ideology and hostility to the United States are still intact, but the economy is very much on the minds of leaders.The new president, Ebrahim Raisi, has tried to reassure Iranians that his priority is to address economic woes and improve their welfare.

The solution is a “resistance economy” to sanctions imposed by Washington, which accuses Tehran of developing an atomic bomb and inciting terror in the Middle East. Iran could thwart hundreds of U.S. penalties by focusing on its domestic market; reducing its reliance on imports; increasing its exports of non-oil products to its neighbors; and selling more oil to China.

Iran’s leaders say the economy has thus resumed growth. In fact, the Islamic Republic has withstood some of its greatest economic and military threats in recent years, and this resilience is partly reflected in the latest World Bank report.

In its economic forecast released last week, the international bank said Iran’s economy “is recovering gradually after experiencing negligible economic growth over the past decade (2011-2020).”

After two years of contraction, Iran’s GDP grew by 6.2% year-on-year in the March-May period in the first quarter of the 2021-22 fiscal year. This is thanks to expansion in the oil and services sectors and less stringent Covid-19 restrictions.

Meanwhile, Iran’s lifeline oil production is on the rise: to 2.4 mbpd in January-November 2021, although still below the pre-sanctions level of 3.8 mbpd in 2017, the bank said.

Positive developments keep Tehran at the mercy of its diplomats Negotiating with world powers in Vienna Reinstate the 2015 nuclear deal, from which the US under Donald Trump withdrew in 2018.Iran promises to roll back its huge nuclear advance Only the US lifts all sanctions first And assured that no other U.S. leader would abandon the agreement. If not, economic headwinds will remain.

Tehran’s hardliners, who control the Islamic Republic’s most powerful institution, have ignored domestic warnings that such a stance could cost the country and the regime dearly in the long run.

The World Bank report noted that GDP growth “comes from a low base”.It said real GDP in the last fiscal year to March 2021 was on par with a decade ago, “while the country was ahead of Population window of opportunity (young people with higher education)”. The report noted that the latest economic rebound “only marginally narrowed” the income gap with Gulf economies.

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Patience is running out in Iran. Iranians say the numbers are meaningless when their purchasing power is eaten up by 43.4% inflation (although it has started to fall). Inflation coupled with high unemployment and volatility in currency and capital markets are fueling pessimism.

The government’s plan to further cut subsidies for basic goods and medicines has added to inflation fears. Iran’s vice president for budget affairs, Massoud Mir-Kazemi, said Iran could earn up to $16 billion in net petrodollar revenue next fiscal year, just enough to import basic goods and pay civil servants. He said last week that “we are sanctioned and it is impossible” not to cut subsidies.

But for a regime that came to power through street protests, the fear of history repeating itself, this time against the Islamic Republic, was never far off. The educated middle class no longer sparks demonstrations demanding more social and political freedoms. The latest protests have largely been directed at economic woes, whether caused by the government or by a severe drought.

Mehdi Asgari, a member of parliament who opposes cuts to subsidies, said last week that more than 10 million households were battling poverty, “with millions more [were] Go in that direction. “They can no longer afford meat and rice, and now you want to take their bread and cheese too?”