Tehran – The Grand Bazaar in Iran’s capital bustles with shoppers strolling past stacks of gold brocade pillowcases, rows of gleaming coffeepots and bins filled with red barberries.
The din of afternoon chatter echoes off the bazaar’s high ceilings. But inside Mohsin Daliri’s small shop, only one or two customers linger to inspect his piles of lush Persian carpets; they eventually leave without a purchase.
Daliri tells Al Jazeera that despite expectations of a swift economic recovery after Iran’s landmark 2015 nuclear deal, many businesses are continuing to suffer.
“There have been no tangible changes in the market. There was hope upon hope that things would get better, but in reality, it stayed the same. My business is suffering from stagnation. There is no positive impulse in the market,” he says, noting that despite the lifting of sanctions, some Western countries were still not importing his wares.
“After Nowruz [the Iranian new year], business was really bad. Many merchants haven’t reopened their stores and have even laid off staff … People believe the nuclear deal was fake,” Daliri adds. “All we got were three aeroplanes and nothing else. Banking transactions, the use of credit cards – none of this was fixed, and this is very important for moving the market forward.”
The implementation of the nuclear deal in early 2016 was hailed by President Hassan Rouhani as a turning point for Iran’s economy. “The nuclear deal is an opportunity that we should use to develop the country, improve the welfare of the nation, and create stability and security in the region,” Rouhani said at the time, citing a “golden page” in the country’s history.
Indeed, there have been signs of improvement: According to a February report from the International Monetary Fund (IMF), the lifting of sanctions and consequent rebound in oil exports spurred growth in Iran, with expectations that it would reach 4.5 percent over the medium term. However, “banking system weaknesses, structural bottlenecks, and hesitation by foreign banks to re-establish financial links have held back expansion of non-oil activity”, the IMF noted.
And with unemployment in the country of 80 million people surpassing 12 percent last year, many average Iranians feel they have not personally benefitted from the nuclear deal.
Many haven't really seen the impact of sanctions relief on their own lives. Part of this is due to Iran's own economic and political challenges.
Amid this backdrop, the economy will be the single most important issue in next month’s presidential election, noted Ariane Tabatabai, an Iran political analyst and visiting professor at Georgetown University in Washington.
“Many haven’t really seen the impact of sanctions relief on their own lives. Part of this is due to Iran’s own economic and political challenges: corruption, mismanagement, lack of regulations and the [Islamic Revolutionary Guard Corps]’s presence in key sectors of the economy,” Tabatabai told Al Jazeera. “But part of it is due to external, primarily US, factors. President Trump’s rhetoric on Iran and the deal – the uncertainty surrounding his Iran policy and the future of the deal – all make risk-averse businesses less likely to jump into the Iranian market.”
Gholamreza Kiamehr, an economic expert and independent journalist who spoke to Al Jazeera from inside a modest financial office in central Tehran, maintained that the nuclear deal has provided a crucial opening in the Iranian economy. Domestically, inflation has fallen from more than 40 percent when Rouhani took office to just 7.5 percent last year.
“The nuclear deal was a breakthrough turning point, which laid the grounds for the lifting of sanctions, including banking sanctions, especially the SWIFT, which was very significant for banking systems to initiate real business,” Kiamehr said, referring to the reconnection of Iranian banks to a global transaction network. Still, major challenges remain, including the exclusion of foreign debit cards and credit cards from the market.
Regardless, Kiamehr said, the lifting of sanctions has offered “a prelude to the opening of future business” by removing many of the pre-existing concerns countries may have had about doing business with Iran.
“Some people criticise the government for continued stagnation of the economy, but I believe if this deal continues to live … there will be much more foreign investment and much more job creation in the country,” he said.
The key word is “if”, as US President Donald Trump has threatened to scrap the deal – a move that would have “unfathomable” consequences throughout the region, the International Crisis group recently warned.
Alex Vatanka, an Iran expert at the Washington-based Middle East Institute, told Al Jazeera that any such move would clearly undermine the progress made over the past two years in terms of attracting new foreign investment to Iran. However, the deal is just “one side of the equation” when it comes to Iran’s overall economic health, he added.
“There are some real, structural problems within the Iranian economy [that Rouhani] doesn’t control … There are things he does that are directly undermined by the actions of other centres of power, specifically the Revolutionary Guards, that are deeply vested in the Iranian economy … If you have corruption, if you have a vested interest group in Iran – which in the case of the Revolutionary Guards is definitely either against certain foreign investment or very timid about how it enters the economy – that right away is an obstacle,” Vatanka said. “How can you convince the big, major countries or major companies to come and invest in large, long-term volumes and projects when they don’t know who’s really running the show?”
Meanwhile, back at Tehran’s Grand Bazaar, opinions on Iran’s economy vary from shop to shop. Some business owners tell Al Jazeera that the market has improved somewhat since the nuclear deal; others say it has gotten worse; still others say they have seen no change.
Sayid Behnam Amin, who owns a small jewellery shop, says that he does not expect to see meaningful economic reforms until banking sanctions are fully lifted.
“Without that, nothing will change, and that won’t happen because the US is resisting it,” Amin tells Al Jazeera.
“As long as international debit and credit cards are not operational, tourists can’t make many purchases, and this means the [changes following the nuclear deal] will not have a tangible impact.”
Follow Megan O’Toole on Twitter: @megan_otoole