Ever since the late 1990s, Iran analysts have pointed out that Iran was a land of young people, with one of the largest populations in the world under 30. But that is no longer the case. The median age in Iran is now 31. And as the generation born in the baby boom that followed the 1980-88 Iran-Iraq War grows older, their priorities are changing.
The idealistic young people who once turned out to support the social reforms of President Mohammad Khatami and his would-be successors are now more concerned with finding adequate employment. One legacy of years of economic troubles is that many of them have had to postpone getting married and having children. Now, they fear running out of time.
These changes have been evident in Iran’s 2017 presidential campaign, in which rivals of President Hassan Rouhani have leveled claims of economic mismanagement, accusing him of overselling the benefits of Iran’s 2015 nuclear settlement with the West (which is known as the JCPOA, or Joint Comprehensive Plan of Action). Whereas Rouhani had promised a bonanza of sanctions relief, his critics claim, too few Iranians have seen the benefits.
“Rouhani probably had to oversell the nuclear agreement,” says Djavad Salehi-Isfahani, a professor of economics and Virginia Tech. “It was a very tough agreement to pass by Iran’s conservatives, so it wasn’t a mistake to try hard to get that deal. But he is paying a price for it.”
Even so, he says, Iran’s economy has definitely got better thanks to the nuclear agreement. “It's got better in two ways: one, the economy is not going down anymore. But people don’t consider the counterfactual [i.e how things would be if there had been no agreement]. Number two, things have improved in the last 12 months. While the economy stopped sinking during Rouhani’s first year in power and the fruits of the JCPOA started coming in almost immediately, Salehi-Isfahani says, it has not necessarily been obvious to Iranians. Throughout Rouhani’s second year in office, little changed because most nuclear sanctions were still in place. After the JCPOA, Rouhani pursued an economic policy known as “contraction”—a reduction in government spending—in order to reduce inflation. This, he says, overturned the early positive effects of the JCPOA agreement.
But Iran, he says, has been on the right course. “By 2016, the contraction had done its work and inflation was way down. Rouhani began making more expenditures. And then the effects of the JCPOA kicked in, and the economy grew by 6.6% according to the International Monetary Fund, and a little higher according to Iranian data.”
Many of Iran’s poor, however, say they have seen no benefits from the JCPOA. “The poor haven't benefitted yet,” Salehi-Isfahani says. “I doubt that this latest growth rate went all the way down the income ladder. It rarely does. When you get oil money—which is the case with this growth spurt because oil exports have nearly doubled since JCPOA—the money first starts going to the rich, and then to middle class. Eventually it gets to the poor. So I suspect that the poor are going to benefit next year. Rouhani’s main achievement was to stop the bleeding, but he has not been able to articulate this well enough.”
The Politics of Demography
According to an Iranian population census taken last fall Salehi-Isfahani says, Iran’s youth population is shrinking relative to the population. The post-war baby boom generation is now in its late twenties and early thirties. And Rouhani, he says, is at risk of losing them this election. “This generation is not focused on poverty as such, but they are focused on unemployment. If Rouhani had come up with a more serious plan for what he wants to do about employment, he might have won over these people.”
Over the next four years, as this generation moves into its thirties, Salehi-Isfahani says, it will likely become less concerned with the social freedoms Rouhani has emphasized in his first term—such as restrictions on women’s clothing—and more concerned with finding good jobs and good schools.
“This is going out on a limb,” he says, “but I think it’s going to be a bit like China in a way. The late President Rafsanjani was always interested in the Chinese model. In China, they deliver the economy, and they get away with political restrictions. Anyone who can create a vibrant economy to take care of the youth bulge is going to have wide support.”
In the coming years, this is going to be the generation that inherits the Islamic Republic, along with all the demographic difficulties that are brewing now. “When they are in their fifties and sixties, they are going to dominate the political discourse. And when they get older, that's when the real problem will arise, because the people who are coming behind them who are supposed to pay for their social security are going to be fewer.”
Right now, older people in Iran are not doing badly. People in their sixties still have the baby boom generation to look after them in the coming years. But those baby boomers will have a much tougher time. “When this youth bulge becomes old, there are going to be many, many fewer people in the position to support them.”
The solution, he says, will be much the same as in many other countries: immigration. “Iran is lucky in some ways,” he says. “It can always allow more Afghans in. They speak Persian and they will be younger, because Afghanistan is going to have a young population for another two or three decades. So, like Americans, they can enjoy the fruits of immigration to take care of their old people. But there's certainly going to be a lot of change. It's a rocky future, demographically-speaking.