Iran Country Risk Report Q4 2018
The re-imposition of US sanctions will substantially weaken Iran's economy and further fuel popular discontent inside the Islamic Republic. That said, with long-standing partners such as China and Russia still maintaining engagement, a severe multi-year depression or resultant political destabilisation appear unlikely to occur – at least over the next few years.
Outbursts of unrest across the country are likely to persist in the weeks and months ahead as protesters' grievances remain unanswered.
The Iranian rial will remain subject to depreciatory pressures over the months ahead, as re-imposed US nuclear-related sanctions reduce the availability of hard currency. A multi-tiered exchange rate system will emerge to ensure basic goods are available at reasonable prices, albeit at an elevated cost for the broader economy, as opportunities for arbitrage flourish and the private sector's access to materials and financing becomes increasingly constrained.
Drastically tighter international compliance with re-imposed US nuclear-related sanctions on Iran would exacerbate already-dire economic conditions inside the country. In turn, risks of internal political destabilisation would rise.
Should Tehran decide to aggressively pursue a nuclear weapon, or take steps perceived as credible threats to Middle Eastern stability, a US/Israeli military attack on Iranian territory could be possible.
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