Oil, governmental involvement damaging Iranian economy

Business Materials 17 May 2015 14:06 (UTC +04:00)

Tehran, Iran, May 17

By Mehdi Sepahvand - Trend:

Iran has huge hydrocarbon reserve. In fact, the country holds the world's fourth-largest proven crude oil reserve and the world's second-largest natural gas reserve.

Nevertheless, the hydrocarbon reserves seem to have obviated a willingness from Iranians to seek wealth in other spheres which are largely categorized as the non-oil sector.

"Our non-oil exports are very scanty," Director of Iran's World Trade Center Mohammad Reza Sabzalipour told Trend May 17.

He expressed regret that most of the time, Iran's presidential administrations boast of how high the country's ranking is in some economic terms, while if the oil sector is deducted from the Iranian economy, there will remain virtually nothing to boast of as most of Iran's economic life comes from oil revenues.

A governmental, oil-based economy is the main reason for lack of productivity in Iran, he said. "Right now over 60 percent of the country's economy is monopolized by the government or semi-governmental organizations."

He added that since Iran's oil revenue stands at $60 - $70 billion a year, the country's GDP must be $650 billion to ensure a good productivity record.

But productivity has been at a low level in the energy and industrial sectors, he noted.

Sabzalipour added that oil price fluctuations have hurt the Iranian people a lot. "If we were not dependent on oil revenues, the sanctions would not have proved effective, since the western countries' utmost pressure is centralized around oil industries and how oil is exported," he stated.

Despite the country's abundant reserve, Iran's oil production has substantially declined over the past few years, and natural gas production growth has slowed. International sanctions have profoundly affected Iran's energy sector. Sanctions have prompted a number of cancellations or delays of upstream projects, resulting in declining oil production capacity.

The sanctions are a result of alleged doubts cast by Western powers on Iran's nuclear program.

Tehran, however, maintains that its nuclear program is completely peaceful and complies with international regulations.

"I, and many top economic experts, believe that the non-oil economy will benefit Iran more than an oil-based economy. So, we believe that if the government doesn't pin hopes only on oil revenues ... radical changes are sure to take place in our ... management and governmental approaches," the director of Iran's World Trade Center concluded.


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