SCOTT SIMON, HOST:
Economics have once again pushed people onto the streets in Iran. There had been simmering resentment over a stagnant economy and high unemployment - now a dramatic rise in gas prices after the government reduced fuel subsidies. Government response to the protests has been severe. Human rights groups say at least a hundred people have been killed. Meanwhile, authorities declared victory over the protesters. The government is also now giving money to low-income Iranians to help make up for the gas subsidies.
Djavad Salehi-Isfahani is a professor of economics at Virginia Tech, and we asked him if the crackdown spelled the end of the protests.
DJAVAD SALEHI-ISFAHANI: Well, it may be the end of this phase, but I don't think the grievances are gone. Iran faces a very substantial economic challenge. Its ties to the global economy have been cut. Its oil exports are driven to near zero. Iran is known as an oil exporter, but, in fact, it supplies twice as much oil to its own population domestically. And if it were able to collect money for that distribution of oil and gas, it would be quite rich. And the way to do it is to raise the price, give some of the money back to the people and keep some of it for government functioning.
SIMON: And to understand as clearly as we can, how much of Iran's cresting economic problems can be traced to the effect of U.S. sanctions, do you think?
SALEHI-ISFAHANI: Well, you know, Iran is a developing country. So like all developing countries, they have problems and they operate way below their potential. There's no question about that. There's corruption. There's mismanagement. So it's hard to apportion blame. But I would say the U.S. sanctions that came about in May 2018 when President Trump withdrew the U.S. from the Iran nuclear deal have played a large role.
SIMON: What could the government do to try and mollify people and make economic changes?
SALEHI-ISFAHANI: I think the cash transfer that they just started can go a long way. But the real question is how to get the economy going again, not just giving people money. To create jobs, the government needs to create an environment in which people are optimistic about the future. And here, sanctions play a big role. Until that is settled, it's going to be very hard for people to make investment decisions that are going to affect their fortunes for the next five to 10 years.
SIMON: What's the effect of instability in Iran in the region?
SALEHI-ISFAHANI: Well, I'm not an expert in that area, but it is very large. Iran has influence in Lebanon and Iraq, in Yemen. Iranian businesses are operating in Afghanistan. Iran sells a lot of stuff in the region. It's a major country. So if this instability expands, there are dangers that the force of terrorism that operate on the eastern side of Iran can connect with those operating on the western side. It's not good. If Iran becomes unstable, nobody wins.
SIMON: How are you eyeing events from this distance? Do you foresee a tipping point?
SALEHI-ISFAHANI: I don't think these protests and disturbances have a revolutionary potential. Iranians also, especially the middle-class Iranians, are very afraid of the kind of change that foreign influences brought to Iraq and to Syria. That's why when they see the level of destruction that was wrought the last few days, they back off and they want to go back. So it's possible that if they can generate a good business climate, keep a minimum of global connections to Europe and to Asia that they might be able to have 2%, 3% growth rate, which may go on indefinitely until Iranians find a way to settle their differences through the ballot box as opposed to the streets.
SIMON: Djavad Salehi-Isfahani, who's a professor of economics at Virginia Tech and a nonresident senior fellow at the Brookings Institution. Transcript provided by NPR, Copyright NPR.