Pooria Asteraky, an engineer in Tehran, has watched his small software company fall apart in the five weeks that war has ravaged Iran. His staff stopped coming to work for fear of air strikes. Clients cancelled contracts, and no new orders came in.
With banks being bombed and the Internet shut down by the government, checks would not clear. Asteraky, 50, said he has not paid salaries since the war started and has struggled to make rent.
Facing the prospect of having to close down his company, he has spent hours explaining his plight to his employees. Sometimes they all cry.
“The economic impact of the war has been devastating; it’s hard to put into words. Every sector has been affected,” Asteraky said in a telephone interview from Tehran.
When Iranian officials meet with Vice-President J D Vance and other Americans on Saturday to negotiate an end to the war, Iran’s economy will be high on their agenda.
As part of a peace deal, Iran has demanded that the US lift all sanctions against it. Iran will also ask for reparations for financial losses from the war, and the release of billions of dollars in blocked funds, officials have said.
Sanctions imposed years ago by the US, and more recently by the United Nations, depleted government resources and contributed to the collapse of the currency. An energy crisis brought widespread power cuts. Rampant mismanagement and corruption worsened inflation, which recently spiked to 50 per cent.
The war, however, has delivered a staggering blow. Intense US and Israeli bombardment has destroyed or damaged petrochemical plants, steel manufacturing plants, pharmaceutical factories, universities, schools, hospitals, banks, seaports, airports, parts of the power grid, bridges, railroads, shops, homes and more.
Iran is still assessing the cost of the calamity since the fragile ceasefire took hold, but early estimates are between $300 billion and $1 trillion, according to three Iranian officials who were not authorised to speak publicly, and two economists. Recovery will take years.
Economists said that attacks on Iran’s largest petrochemical complexes and steel plants, which, according to Iranian media, employed more than 200,000 people, were among the most damaging to the economy, with far-reaching consequences. The agricultural, manufacturing, textile and other industries that bought their products will have to import supplies instead, slowing production and driving up prices. Furloughed workers will provide less business to shopkeepers.
The three Iranian officials estimated that more than 1 million people have lost their jobs.
“The pathway for Iran’s economic development has been closed by this war,” said Esfandyar Batmanghelidj, the CEO of the Bourse & Bazaar Foundation, a London-based think tank that tracks the Iranian economy. “The reality is that Iran is going to have a very difficult time rebuilding or reconstructing critical infrastructure if it remains under sanctions.”
He said the economic losses from the war would reinforce Iran’s resolve to demand sanctions relief in negotiations. Iran will need foreign investment and the ability to buy machinery from abroad if it is to recover and address public discontent that has led to waves of protests. None of that will be possible without a comprehensive deal with the US that removes sanctions, Batmanghelidj said.
Iran’s president, Masoud Pezeshkian, had acknowledged in speeches before the war that the government faced a budget crisis. “We don’t have money; we don’t have it,” he said when struggling to explain how his administration could address a multitude of crises like inflation and acute shortages of energy and water.
For legions of ordinary Iranians, financial struggles have taken a critical turn. Many people who work in service jobs or are day labourers have not been paid since February. Shops and businesses, and the bazaars that are the pulse of the economy, have been shuttered. Iran’s flourishing e-commerce, particularly businesses reliant on social media platforms, has been all but wiped out.
“My friends, I’m in dire financial need and have put these four items up for sale. If anyone wants an urban/road bike or a car model, I’m at your service,” Nima Omrani, a web programmer, wrote in a social media post.
Sepehr, 19, a musician in Tehran who made a living by uploading music videos and songs to SoundCloud and social media, said in an interview that “this Internet blackout has pushed all our future monthly incomes to essentially zero, and we don’t know what’s going to happen.” - New York Times
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