Iran's economy is showing signs of foundering just as the country prepares to inaugurate its first new president in eight years, with Western sanctions cutting ever deeper into the Islamic republic's financial lifelines and increasing pressure for a nuclear deal with the West.
A welter of new data shows accelerated financial hemorrhaging across multiple sectors, from plummeting hard-currency reserves to steadily falling oil exports, Iran's main source of foreign cash. U.S. officials and analysts say the tide of bad news will complicate the task awaiting Hassan Rouhani, the incoming president, but it could also increase Iran's willingness to accept limits that would preclude it from developing nuclear weapons.
Although many Iran experts believe that the chances for a bargain remain small, recent warnings about the economy from within the regime suggest that the nation's leaders may be looking for a way out, analysts say.
"The Iranian elite now publicly admits that the economy is in serious trouble, and this president was elected with a mandate to do something about that," said Clifford Kupchan, a former State Department official and a private consultant on the Middle East. "Despite Iranian rhetoric, that can only make the prospect of a deal more attractive."
Rouhani, a cleric and a moderate within the clique of conservative advisers to Iran's supreme leader, Ayatollah Ali Khamenei, assumes the presidency on Sunday at a critical juncture in the country's decade-long struggle with the West over its nuclear policies. The Obama administration, which has imposed a succession of increasingly harsh economic sanctions on Iran in the past two years, hopes to find a more accommodating negotiating partner in Rouhani, who campaigned on a promise of a more pragmatic foreign policy.
But the White House has been repeatedly outflanked by Congress, as lawmakers from both parties have pushed for still-tougher sanctions even before Rouhani takes office. Brushing aside warnings from U.S. diplomats, the House on Wednesday voted 400 to 20 to adopt measures intended to further decimate Iran's economy by virtually shutting off the export of Iranian oil.
"If President Rouhani truly has the will and authority to make a bold gesture on Iran's nuclear program — such as suspending enrichment — he has a small window of opportunity before this bill becomes law," said Rep. Eliot L. Engel (D-NY), one of the sponsors of the legislation.
An Iranian government spokesman on Friday called the punitive measures "counterproductive" and said they lessen the chance of a nuclear deal.
"There is no doubt that such decisions will unnecessarily complicate the current situation between the two countries," said Alireza Miryousefi, a spokesman for Iran's diplomatic mission to the United Nations in New York.
The grim economic reports contrast with a relatively buoyant atmosphere in Tehran on the eve of inaugural festivities for Rouhani, who scored a surprise victory over a slate of more-conservative politicians in the June presidential election. In speeches after his win, the president-elect repeated his promises to expand political and social freedoms for ordinary Iranians, reversing policies that defined the eight-year tenure of his predecessor, the deeply unpopular Mahmoud Ahmadinejad.
