The Dual Nature of Iran's Economy Amidst Sanctions and War As the war involving Iran, which began in early 2026, extends beyond two months, international experts' diagnoses of the future of Iran's economy are sharply divided. The Middle East Institute (MEI) analyzes that Iran can avoid economic collapse due to its decades-long experience in responding to sanctions, while Responsible Statecraft warns of a humanitarian catastrophe, stating that millions have fallen below the poverty line within six weeks of the war. These contrasting perspectives offer significant implications not only for the Middle East but also for the Korean economy, which is connected to the global energy market. Accumulated Economic Vulnerabilities Since Before the 2026 War A recent analytical report by the Middle East Institute points out that Iran's economy already suffered from severe structural problems even before the outbreak of war in 2026. According to the report, Iran has faced a triple challenge of chronic inflation, currency instability, and slowed growth due to years of sustained international sanctions. Particularly since 2018, when the U.S. 'maximum pressure' policy intensified, the Iranian rial has continuously lost value, leading to rising import prices and weakened purchasing power for its citizens. The vulnerability of Iran's economy is not solely a result of external sanctions. Internal factors such as an oil-dependent economic structure, inefficient state-owned enterprises, corruption, and limited foreign investment have also played complex roles. Past data from the International Monetary Fund (IMF) and the World Bank show that Iran's economy has barely grown since the mid-2010s, even recording negative growth in some years. Youth unemployment exceeded 20%, and the difficulty for university graduates to find jobs, in particular, fueled social discontent. However, the Middle East Institute assesses that despite these difficulties, Iran has developed unique survival mechanisms. The report analyzes that Iran has sustained economic activities by circumventing sanctions through informal trade networks, opaque financial channels, and unconventional shipping practices. For example, Iran has imported essential goods and exported oil through indirect trade with countries like China, Turkey, and the UAE. It has also partially overcome the constraints of the international financial system by utilizing new financial instruments such as cryptocurrencies. Six Weeks of War, Sharply Divided Economic Diagnoses The war that erupted in early 2026 delivered a new shock to Iran's already vulnerable economy. However, experts' opinions on the extent and significance of this shock vary greatly. The Middle East Institute argues that while the war 'intensified' existing pressures, it should be viewed as an 'amplification' of an already weakened system rather than a fundamentally new shock. From this perspective, Iran has decades of experience surviving sanctions and economic pressures, having learned how to function under constraints. MEI analysts assess that the Iranian economy is unlikely to collapse in the short term. They cite as evidence that the Iranian government continues to earn foreign currency through oil exports, and the domestic market maintains a certain degree of self-sufficiency. Furthermore, they note that Iran is partially breaking through economic isolation by strengthening cooperation with Russia and strategic partnerships with China. They also point out that self-sufficiency has improved in the agricultural sector, and import substitution is progressing in some manufacturing areas. However, Responsible Statecraft presents a completely different picture. According to studies cited by this outlet, Iran's economy contracted by 8.8% to 10.4% during the six weeks of war, causing 3.5 million to 4.1 million Iranians to fall below the poverty line. This represents a staggering 4-5% of Iran's total population (approximately 88 million). The report analyzes that the further plunge in the rial's value exacerbated inflationary pressures, and the destruction of production facilities and disruption of logistics due to the war led to income loss and unemployment. Responsible Statecraft particularly emphasizes that attacks on power and industrial infrastructure severely impacted both small and large businesses. Factory operating rates plummeted, and supply chains collapsed, leading to countless workers losing their jobs. Moreover, the uncertainty caused by the war dampened consumer sentiment, causing even the domestic market to fall into recession. The outlet criticizes the U.S. government's rhetoric of 'supporting the Iranian people' at the war's outset as being detached from reality, pointing out that ordinary Iranians are suffering the most. The Reality of Resilience: Adaptation or Prolongation of Suffering? Assessments of Iran's economic 'resilience' are also contradictory. The Middle East Institute evaluates that Iran has adapted to
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