Iranian authorities are doubling down on domestic production as a primary defense against a new wave of US economic sanctions. Despite the ongoing six-month conflict between the two nations, government officials maintain that Iran possesses the internal capacity to sustain its economy, even as they warn of a difficult year ahead.
Economy Minister Ali Madanizadeh outlined a two-year resilience plan on state television this past Monday. Emphasizing the country’s extensive history of navigating international restrictions, Madanizadeh stated, “We have our own tools and we also know the game.” He expressed confidence that many nations would disregard President Donald Trump’s threats to sever all ties with Tehran, suggesting that Iran could potentially shift to an offensive economic stance in a multipolar global environment.
The central strategy for Tehran involves the strategic stockpiling of gold, foreign currencies, and essential commodities. Central Bank Governor Abdolnasser Hemmati confirmed that while oil exports—the nation’s primary source of foreign revenue—have nearly ceased, the bank maintains cash reserves in secure, inaccessible locations to ensure the availability of funds for essential imports.
Hemmati acknowledged the severe domestic impact of these measures, citing runaway inflation and a sharp decline in purchasing power. However, he distinguished between current economic hardships and a total collapse, asserting that the latter is the ultimate goal of US policy. Government spokesperson Fatemeh Mohajerani echoed this sentiment on Tuesday, advising citizens that conditions are unlikely to improve over the next year. She added that the Supreme National Security Council must authorize the release of official poverty data.
The national currency reached a record low of 2.05 million rials to the US dollar on Tuesday, though it saw a minor recovery by Wednesday. Amid this instability, security chief Mohsen Rezaei has encouraged younger generations to bolster the economy by focusing on local manufacturing of household and community goods.
Self-sufficiency remains a cornerstone of Iran’s long-term development strategy. The government claims it can produce 85 percent of its agricultural needs, though experts remain concerned about the environmental impact of this push, particularly regarding the country’s severe water scarcity. Agriculture Minister Gholam-Reza Nouri stated on Tuesday that the goal is to increase this to 90 percent in the near term, eventually aiming for total independence in essential food production. Currently, Iran imports roughly $16 billion in agricultural goods while exporting $8 billion, though trade has been disrupted since the war began in March.
The UN Food and Agriculture Organization noted in March that rising import costs and logistical hurdles are driving food inflation. With food prices in July rising more than 128 percent compared to the previous year, household purchasing power has plummeted. Furthermore, the country faces significant medical challenges; in May, parliament health committee spokesperson Salman Eshaghi reported shortages of nearly 1,000 medicines, a situation exacerbated by the government’s decision to reduce subsidized currency allocations for pharmaceutical imports.
Infrastructure repairs are also a priority, as the government works to restore oil, gas, and utility facilities damaged by extensive bombing campaigns by the US and Israel. These strikes have worsened existing energy shortages, leading to frequent power blackouts in Tehran and other major cities. Natural gas supplies are expected to tighten further as winter demand approaches.
Fuel distribution has also faced disruptions, with numerous gas stations in cities like Tehran, Mashhad, and Karaj running dry this week, sparking long queues. Despite these pressures, Mohajerani promised on Wednesday that current fuel prices and quotas will remain fixed through September 22. Meanwhile, the National Iranian Oil Refining and Distribution Company announced that two new refineries in southern Iran are expected to launch by late March, potentially adding 12 million liters of daily production capacity.
Economist Sadegh Alhosseini warned on Tuesday that the government faces a difficult path, suggesting that painful reforms, including fuel price hikes, may be necessary to prevent widespread social unrest and the kind of economic chaos seen in other nations. He cautioned that failing to manage these issues could lead to a scenario far more difficult to control than current hardships. The report also notes that and was confidant that many countries would effectively reject US President Donald Trump’s threats to cut off all links with Iran, he added that Tehran could potentially “go on the offensive” in a world where the US was no longer the only dominant force. The report also notes that the government has also been forced to resort to rationing energy in one of the most resource-rich countries in the world. The report also notes that but Hemmati reassured the business leaders there was no shortage of foreign currency for essential goods as the central bank had cash stockpiles “in places [the US] cannot access”. The report also notes that despite the turmoil, Iran’s newly-appointed security chief Mohsen Rezaei urged younger Iranians during a state TV interview earlier this week to “enter the economy” and begin manufacturing goods needed by their households and communities at home. The report also notes that with national development plans repeatedly emphasising “self-sufficiency” and setting targets to achieve it at great cost, that mentality has permeated the Islamic Republic’s strategic thinking for decades. The report also notes that nouri said that Iran imports about $16bn and exports $8bn in agricultural products – although exports of some products were suspended in March shortly after the start of the war. The report also notes that including wheat, maize, rice and vegetable oils, iran relies on imports for essential foods and feed commodities.
Source: Al Jazeera
