Scenarios in Iran in 2024: Regional Openness to Confront Sanctions

Supreme Leader Ali Khamenei meets with members of the Assembly of Experts for Leadership in February 2023. (Supreme leader’s website)
Supreme Leader Ali Khamenei meets with members of the Assembly of Experts for Leadership in February 2023. (Supreme leader’s website)
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Scenarios in Iran in 2024: Regional Openness to Confront Sanctions

Supreme Leader Ali Khamenei meets with members of the Assembly of Experts for Leadership in February 2023. (Supreme leader’s website)
Supreme Leader Ali Khamenei meets with members of the Assembly of Experts for Leadership in February 2023. (Supreme leader’s website)

Iran is hoping to continue in 2024 its policy of improving relations with its neighbors and consolidating economic cooperation with regional countries and its allies in an effort to ease the impact of the American and European sanctions and keep its nuclear negotiations alive as the US presidential elections draw near.

Unless Joe Biden’s administration makes an offer that upends the equation, Tehran and Washington will likely continue to exchange messages through their channels without really achieving a diplomatic breakthrough over the nuclear deal until the winner of the elections is announced on November 5.

The new American administration will take office in January 2025 and soon after, Iran will be gearing up to hold presidential elections in spring. President Ebrahim Raisi is likely to run again given the support he enjoys from Supreme Leader Ali Khamenei.

Iran is expected to continue its uranium enrichment at high levels and its “catch and release” policy with the International Atomic Energy Agency to prevent the file from being referred to the UN Security Council. The possibility that it may change course and head towards producing a nuclear weapon remains on the table if Iran decides to withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons and put the nuclear deal out of its misery.

The war on Gaza and its repercussions and the Russian-Ukrainian war will continue to impact Iran’s nuclear and diplomatic negotiations with the US and its western allies.

As it stands, the war on Gaza and conflict in Ukraine will help ease the pressure off Tehran when it comes to the nuclear file or even reining in the Revolutionary Guards’ development of ballistic missiles and drones or backing armed factions that are loyal to its ideology.

The strategy of teetering on the edge of a confrontation with the US and Israel, while exerting maximum pressure through armed groups will be at the top of Iran’s policies. So far, Tehran has steered clear of direct responsibility to avoid the consequences of the attacks on American forces or threats to marine navigation. Iran says it supports these groups, but claims they make their own decisions independently of it.

So, the nuclear file and economic sanctions will continue to dictate Iran’s foreign policy and internal balances.

Elections

Iran is set to hold parliamentary elections in March, marking one of the most important dates on its calendar. The elections will pit the Iranian street against their rulers some 529 days after the eruption of popular protests in wake of the death of Mahsa Amini.

The electoral campaign kicks off days after the 44th commemoration of the Iranian revolution. People will elect 290 lawmakers for a four-year term. Iran will also hold elections for the Assembly of Experts for Leadership. It is unclear how much the alliances of reformists and moderates or even conservative critics of the Iranian president will be able to change the balance of power in the parliament, including the ouster of its speaker Mohammad Bagher Ghalibaf.

The legislative elections are unlikely to lead to marked change in the political scene given the authorities’ insistence on unifying the directions of the government and parliament, with the decision-making powers that directly answer to Khamenei.

Khamenei and political powers are keen on increasing the voter turnout given the low numbers that showed up for the 2020 parliamentary and 2021 presidential elections. The polls witnessed the lowest ever turnout in four decades.

The last parliamentary elections witnessed a turnout of 42.5 percent and 25.4 percent in Tehran. The turnout in the presidential elections reached 48.8 percent and 26 percent in Tehran or one in four eligible voters took part. The turnout in the capital was the lowest across the country.

Reconciling the street and ballot boxes will be an arduous task, especially in wake of the protests over Amini’s death in police custody in September 2022. The authorities’ crackdown on the protests left over 500 people dead. The consequences of the crackdown persist to this day. Rulers blamed western forces for allegedly stoking the unrest and riots. The authorities ultimately view voter turnout as a “test” of the legitimacy of the regime, which it is missing more than ever before.

Khamenei’s successor

Along with the parliamentary elections, attention will be focused on the elections of the Assembly of Experts for Leadership, which is formed of influential clerics. One of the assembly’s main duties is selecting a successor to the supreme leader if he is no longer capable of carrying on the duties entrusted to him by the assembly. The assembly has been facing serious criticism that it was neglecting its duty to oversee the performance of the supreme leader.

The assembly elections will be very significant next year as Khamenei turns 85 in April. Some clerics affiliated with the moderate and conservative movement, all of whom are former executive members of the body, including former President Hassan Rouhani, are keen on running in the elections.

After Rouhani’s term as president ended, he did not become a member of the Expediency Discernment Council, whose members are chosen by the supreme leader. He will run in the Tehran province, while Raisi sought to avoid a battle in the capital and instead registered his candidacy in the southern Khorasan province. Raisi and Hassan Khomeini, who is backed by the reformist and moderate movement, are possible candidates for the position of supreme leader.



Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
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Borderless Europe Fights Brain Drain as Talent Heads North

Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo
Eszter Czovek, 45, packs up her house as she moves to Austria, in Budapest, Hungary, October 28, 2024. REUTERS/Bernadett Szabo

Until recently aerospace engineer Pedro Monteiro figured he'd join many of his peers moving from Portugal to its richer European neighbors in the quest for a better-paid job once he completes his master's degree in Lisbon.
But tax breaks proposed by Portugal's government for young workers - up to a temporary 100% income tax exemption in some cases - plus help with housing are making him think twice.
"Previous governments left young people behind," said Monteiro, 23, who is studying engineering and industrial management at the Higher Technical Institute in the Portuguese capital. "The country needs us and we want to stay but we need to see signs from the government that they are implementing policies that will help."
Monteiro cites in particular the cost of buying or renting a home amid a housing crisis aggravated by the arrival of wealthy foreigners lured by easy residency rights and tax breaks, Reuters said.
He is doubtful the government's new measures will be enough.
"Some of my friends are now working abroad and earn substantially more money... and have better career development opportunities," he said. "I'm a little bit skeptical concerning my job opportunities here in Portugal."
Portugal is the latest country in Europe to seek to tackle a brain drain holding back its economy. Tax breaks for young workers in the budget currently going through parliament will take effect next year and could benefit as many as 400,000 young people at an annual cost of 525 million euros.
Talent flight to wealthier countries of the north is a problem Portugal shares with several others in southern and central Europe, as workers take advantage of freedom of movement rules within the trade bloc. Countries including Italy have tried other schemes to counter the flight, with mixed results.
By exacerbating regional labor shortages and depriving poorer countries of tax revenues, it is yet another hurdle for the EU as it tries to improve its ebbing economic growth while addressing population decline and lagging labor productivity.
Donald Trump's victory in US elections this month raises the stakes, with the risk of across-the-board trade tariffs on European exports of at least 10% - a move that economists say could turn Europe's anaemic growth into outright recession.
About 2.3 million people born in Portugal, or 23% of its population, currently live abroad, according to Portugal's Emigration Observatory. That includes 850,000 Portuguese nationals aged 15-39, or about 30% of young Portuguese and 12.6% of its working-age population.
More concerning still is that about 40% of 50,000 people who graduate from universities or technical colleges emigrate each year, according to a study by Business Roundtable Portugal and Deloitte based on official statistics, costing Portugal billions of euros in lost income tax revenue and social security contributions.
DEMOGRAPHIC HELL
"This is not a country for young people," said Pedro Ginjeira do Nascimento, executive director of Business Roundtable Portugal, which represents 43 of the largest companies in the nation of 10 million people. "Portugal is experiencing a true demographic hell because the country is unable to create conditions to retain and attract young talent."
Internal migration within the EU is partly driven by the disparity in wages between its member states. Some economic migrants also say they are looking for better benefits such as pensions and healthcare and less rigid, hierarchichal structures that give more responsibility to those in junior roles.
Concerns are mounting over the long-term viability of Europe's economic model with its rapidly ageing population and failure to win substantial shares of high-growth markets of the future, from tech to renewable energy.
Presenting a raft of reform proposals aimed at boosting local innovation and investment, former European Central Bank chief Mario Draghi said in September the region faced a "slow agony" of decline if it did not compete more effectively.
Eszter Czovek, 45, and her husband are moving from Hungary to Austria, where workers earn an average 40.9 euros ($29.95) per hour compared to 12.8 euros per hour in Hungary, the largest wage gap between neighboring countries in the EU.
The number of Hungarians living in Austria increased to 107,264 by the beginning of 2024 from just 14,151 when Hungary joined the EU.
Czovek's husband, who works in construction, was offered a job in Austria, while she has worked in media and accounting at various multinationals. She cited better pay, pensions, work conditions and healthcare as motives for moving. She also mentioned her concern over the political situation in Hungary, which she fears might join Britain in leaving the EU.
"There was a change of regime here in 1989 and 30 years later we are still waiting for the miracle that will see us catch up with Austria," Czovek said of the revolution over three decades ago that ended communist rule in Hungary.
Since Brexit, the Netherlands has replaced Britain as a preferred destination for Portuguese talent while Germany and Scandinavian countries are also popular.
Many Europeans still head to the United States in search of better jobs - about 4.7 million were living there in 2022, according to the Washington-based Migration Policy Institute, which nonetheless notes a long-term decline since the 1960s.
In 2023, 4,892 Portuguese emigrated to the Netherlands, surpassing Britain for the first time, which in 2019 received 24,500 Portuguese.
At home, they face the eighth-highest tax burden in the Organization for Economic Co-operation and Development (OECD) even as house prices rose 186% and rents by 94% since 2015, according to property specialists Confidencial Imobiliario.
A single person in Portugal without children earned an average of 16,943 euros after tax in 2023 compared to 45,429 euros in the Netherlands, according to Eurostat.
Portugal will offer under 35s earning up to 28,000 euros a year a 100% tax exemption during their first year of work, gradually reducing the benefit to a 25% deduction between the eighth and tenth years.
Young people would also be exempted from transaction taxes and stamp duty when buying their first home as well as access to loans guaranteed by the state and rent subsidies.
"We are designing a solid package that tries to solve the main reasons why the young leave," Cabinet Minister Antonio Leitao Amaro said in an interview with Reuters.
'THINGS WON'T CHANGE'
Leitao Amaro said he did not know for sure if the tax breaks would work but that his government, which came into office in April, had to try something new.
"If we don't act ambitiously, things won't change and Portugal will continue down this path," he said.
The Italian government has already found that tax breaks used as incentives are costly and open to fraud.
In January, Italy abruptly curtailed its own scheme that was costing 1.3 billion euros in lost tax revenue, even as it lured tech workers such as Alessandra Mariani back home.
Before 2024, returners were offered a 70% tax break for five years, extendable for another five years in certain circumstances. Now, it plans to offer a slimmed-down scheme targeting specific skills after it attracted only 1,200 teachers or researchers - areas where Italy has a particular shortage.
Mariani said the incentives were key to persuading her to return to Milan in 2021 by allowing her to maintain the same standard of living she enjoyed in London.
"Had the opportunity been the same without the scheme, I would not have done it at all," said Mariani, now working at the Italian arm of the same large tech company.
With her tax breaks poised to be phased out by 2026 unless she buys a house or has a child, Mariani faces a drop in salary and she said she's once again eyeing the exit door.