How Biden Can Safely Help #Iran’s Economy - Bloomberg

How Biden Can Safely Help Iran’s Economy - Bloomberg

After the assassination of its top nuclear scientist last week, the leadership of the Islamic Republic is expected to hold off domestic pressures for retribution, and instead hold out for some consideration from the incoming administration of President-elect Joe Biden. The regime knows any retaliatory strike — whether directly against Israel, which it blames for Mohsen Fakhrizadeh’s killing, or more symbolically against American or Arab targets — will greatly complicate its efforts to get out of the straitjacket imposed by President Donald Trump’s “maximum pressure” campaign.

Iran desperately needs access to money to shore up an economy devastated by the combined effect of Trump’s sanctions and the pandemic. For Tehran, the immediate access to capital is a precondition for any negotiations with the new dispensation in Washington. Biden, for all that he wants a return to diplomacy, can loosen the straps only so much: His own hands are tied by strong opposition at home and pressure from American allies in the Middle East.

The best he can do in the short term is encourage Iran's access to multilateral credit—specifically, from the International Monetary Fund. Opposition from the Trump administration prevented Tehran from getting the roughly $1.5 billion in special drawing rights (SDR) to which it is entitled as a member-nation, and a $5 billion line of credit to fight the pandemic. By signaling its encouragement, Biden would give the government of President Hassan Rouhani a chance to save the Iranian economy from the immediate danger of hyperinflation.

In turn, it would give Rouhani an opportunity to demonstrate, to the U.S. and the world, that it can use external finance for government spending that serves its people, rather than line the pockets of the Islamic Revolutionary Guard Corps and its extractive businesses and foreign activities.