From Resistance Economy to Iranian Neighbourhood Policy:  Iran’s New Economic Paradigm

After plunging into a serious recession in the early 2010s following increased international pressure to limit the Iranian nuclear programme, the Iranian state hastened by the edicts of the Iranian Supreme Leader, Seyyed Ali Khamenei, began to heavily redefine its role and responsibilities in the management of the economy under the auspices of the Supreme Leader’s Doctrine of Resistance Economy. With state policies failing to deliver on short- and long-term development goals, top leadership in Iran began to formulate a new economic paradigm, Neighbourhood Policy, that viewed the root to economic success as being Iran’s integration into its neighbouring markets.

Keywords

Iran, Iranian Neighbourhood Policy, Iranian Foreign Policy, Iranian Foreign Economic Relations, Khamenei’s Economic Thought, Islamic Economic Thought

Received

28.02.2024

Publication date

22.04.2024

Number of characters

15307

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GOST	Khataei D. From Resistance Economy to Iranian Neighbourhood Policy: Iran’s New Economic Paradigm // Oriental courier – 2024. – Issue 1 C. 142-147 [Electronic resource]. URL: https://oriental-courier.ru/S268684310030136-7-1 (circulation date: 18.05.2024). DOI: 10.18254/S268684310030136-7
MLA	Khataei, Danial "From Resistance Economy to Iranian Neighbourhood Policy: Iran’s New Economic Paradigm." Oriental courier 1 (2024):142-147. DOI: 10.18254/S268684310030136-7
APA	Khataei D. (2024). From Resistance Economy to Iranian Neighbourhood Policy: Iran’s New Economic Paradigm. Oriental courier (1), pp.142-147 DOI: 10.18254/S268684310030136-7

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1	Being a servant is not a natural way of making a living.
2	Trying to make money from buried and other treasures is not a natural way of making a living
3	Ibn Khaldun, Al Muqaddimah
4	My real wish — which of course may not be realized anytime soon — is that we would close our oil wells and base our economy on non-oil goods and products
5	Iranian Supreme Leader Seyyed Ali Khamenei, 1994
6	The New Continuity in Iranian Foreign Policy
7	When Ebrahim Raisi became the eighth Iranian president in 2021, he and his political circle disagreed with much of the foreign policy of his predecessor Hassan Rouhani. However, with regards to one policy the Raisi administration firmly stood by the directions and the framework set up by Rouhani and his foreign minister Mohammad Javad Zarif. It was the Iranian Neighbourhood Policy, a completely new paradigm of Iranian regional foreign policy that aimed to end Iran’s regional hostilities with Arab powers and recreate Iran’s position as an important component of the regional trade hub of the Middle East.
8	While academic literature has not yet adequately studied the origins and goals of Iran’s new regional policy that began developing in Iranian governmental foreign policy think tanks in 2015, this new regional policy is now an integral part of Iranian geopolitical and geo-economic calculations in the region. At its core this policy has two roots that led to its creation. Firstly, the Iranian realization that its rise has caused unprecedented levels of cooperation between its Arab rivals and Israel; this lead to the rethinking of Iran’s regional grand strategy and its desired long term goals and outlook in the region. Secondly, Iranian ‘Resistance Economy’ policy that aimed to develop the Iranian economy self-sufficiently in despite of US sanctions completely failed in achieving economic growth and only managed to keep the Iranian economy alive. The immense failure of ‘Resistance Economy’ led to two domestic crises with mass protests in 2018 and 2019 which were the largest of their kind since the 2009 Presidential Election in Iran. By 2019, it was becoming clear that serious readjustments are necessary with regards to Iran’s governmental economic planning.
9	Rouhani’s Realization
10	Hassan Rouhani’s administration more or less correctly understood that a remedy to these issues can be the serious changes to Iran’s regional economic positioning. Iranian think tanks and Iranian foreign policy intelligentsia at large recognized that the lack of any real integration of the Iranian economy in the region has led to the situation where Arab leaders do not have much to lose if they were to pursue deeper and official relations with Israel, in complete disregard of the overall negative public Arab sentiment towards Israel. The Abraham Accords of 2020, while were not directly responsible for causing the shift of attitude in Iranian leadership, were a testament to the fact that Israel had concrete economic and security benefits to offer to Arab countries which were wary of Iran’s rise in power.
11	Rouhani administration and Iranian governmental think tanks clearly understood that if Iran continues to be isolated in the regional economy, it will be more difficult to settle political disagreements with the Arab leaders. Especially considering that Iran has little to no economic leverage apart from its geopolitical tools such as its affiliated militias in the region. Integrating Iran into the regional economy would also serve as a measure against preventing further Israeli presence in the region [Khataei, 2022]. It was viewed that in the same way that increased Iranian economic engagement with Arab countries might be useful in delivering baseline agreements with Arab leaders on security and political issues, increased Israeli presence in Iran’s neighbouring markets could make way for swaying Arab leaders to pursue deeper political ties with Israel [Khataei, 2022].
12	What is Ayatollah Khamenei’s Resistance Economy?
13	In early 2014, in the face of greater domestic problems due to the tightening international sanctions regime on Iran, the Iranian Supreme Leader notified Iranian state bodies of his new economic plan of action named ‘Resistance Economy’ (interchangeable hereafter with ‘Economy of Resistance’ and ‘Resistance Policy’). By doing so Khamenei ordered the Iranian state to adopt on a radically new economic approach. The policy directive began by him stating that: “With the aim of providing dynamic growth and improving economic resistance indicators and achieving the goals of the Twenty-year Plan document, the general policies of the resistance economy are communicated with a jihadist, flexible, opportunistic, productive, endogenous, progressive and extroverted approach” [Khamenei, 2014a].
14	The policy aimed to make the Iranian economy resilient in the face of unprecedented international sanctions; but the short term aim of the policy was not the growth in despite of isolationism but rather economic survival in face of economic warfare with the West. Iran was to limit import of “necessary” and strategically significant products as much as possible, to diversify countries where it imports from and to create a storage of the most important products including pharmaceuticals.

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7. Khataei D. Saudi-Iranian Regional Rivalry in the Context of Abraham Accords. Bachelor’s dissertation. HSE University. HSE University Research Repository. 2022. URL: https://www.researchgate.net/publication/362103291_Saudi-Iranian_Regional_Rivalry_in_the_Context_of_the_Abraham_Accords (accessed 11.01.2024).