The International Department of GPTT recently convened a meeting titled “The Interrelationship of Economy and Foreign Policy in the Islamic Republic of Iran,” featuring insights from two former Directors General of the Political and International Studies Office at the Ministry of Foreign Affairs, Abbas Maleki and Sohrab Shahabi, under the moderation of Dr. Majid Afshani. The discussion focused on the challenges facing Iran’s economy and the optimal strategies for its foreign policy during Donald Trump’s presidency.
Dr. Abbas Maleki, former Deputy Minister of Foreign Affairs highlighted several pressing issues regarding the relationship between foreign policy and the economy in Iran. He pointed to declining foreign exchange earnings, restrictions on energy infrastructure development, ineffective monetary policies, economic corruption, managerial inefficiency, isolation, lack of transparency, sanctions, unemployment, and environmental crises such as climate change and water scarcity. These factors illustrate the intricate relationship between foreign policy and economic stability in Iran.
In light of these challenges, Maleki advocated for a measured response to developments in the Middle East. He cautioned against provocative statements from military officials that could undermine Iran’s foreign policy objectives. “It would be prudent for Iran to temporarily distance itself from regional Arab nations,” he suggested, while also noting a potential thaw in relations with Saudi Arabia, particularly as the Saudi Crown Prince appears committed to reducing tensions.
This well-experienced Iranian diplomat emphasized that despite Iran’s modest population and landmass—accounting for just one percent of both globally—it possesses seven percent of the world’s resources and ranks first in total oil and gas reserves. He also argued for a more proactive stance in the energy sector.
“Our geographical neighbors are an inescapable reality,” he stated, stressing the importance of improving relations with them irrespective of social media narratives. He also pointed out that prioritizing the service sector and supporting small and medium-sized enterprises could serve as significant economic advantages for Iran.
Drawing parallels with India’s experience, Maleki noted that despite facing U.S. sanctions following its nuclear tests, India managed to secure a comprehensive agreement on scientific and technical cooperation with Washington within three years. This underscores the potential for long-term diplomatic engagement despite short-term challenges.
He concluded by remarking that U.S. sanctions against Iran are strategically implemented through a network of non-governmental organizations. “Our governance and democratic structures are often seen as temporary,” he observed, suggesting that establishing an entity akin to a Senate could provide greater continuity and stability in governance moving forward.

Trump Initiates Negotiations: Comprehensive Deal with Iran Unlikely

Dr. Sohrab Shahabi, economist and former Director General of the Institute for Political and International Studies (IPIS) at the Ministry of Foreign Affairs, and professor at the School of International Relations, emphasized that Iran’s economy has long been compromised by its foreign policy, a situation that can no longer be sustained. “The time has come for foreign policy to support the economy,” he asserts.
Amidst these challenges, various strategies have emerged to enhance Iran’s external standing:
Declaring Neutrality: Dr. Shahabi argued that neutrality is impractical given the current state of conflict with Israel. He pointed out that neutrality requires international endorsement and agreements, which Iran lacks. Historical precedents indicate that neutrality has not proven successful for the country.
Pursuing Nuclear Capabilities: The potential costs of pursuing a nuclear program remain unclear and could exceed Iran’s capacity, risking military conflict. Dr. Shahabi warned that such a move would likely intensify global consensus against Iran, leading to broader sanctions and worsening economic conditions. He added that while nuclear capabilities might mitigate existential threats, they do not eliminate the specter of war, as evidenced by the ongoing conflict between nuclear-armed states like Russia and Israel. Furthermore, he suggested that both Russia and China may not respond positively to Iran’s nuclear ambitions, based on past experiences.
Seeking a Comprehensive Agreement with the West: Dr. Shahabi realistically assessed the prospects for a comprehensive agreement with the West as unlikely in the short term, given the current internal dynamics in both Iran and the United States. However, he believed there are opportunities to reduce tensions. Recent exchanges indicate a mutual preference for negotiation over confrontation, offering a glimmer of optimism. He argued that managing tensions with the West could significantly stabilize and improve Iran’s economic conditions, especially since financial markets remain heavily influenced by Western powers; especially US.
Enhancing Relations with China: Dr. Shahabi acknowledged China’s status as a powerful nation with a promising future, advocating for a relationship that extends beyond mere trade to include significant investment in Iran’s infrastructure. In this multipolar world, he stressed the importance of preventing a one-sided trade dependency on China by fostering relationships with countries like India, Brazil, and Japan as counterweights.
Moreover, he cautioned against expecting military or security support from China. Despite substantial trade volumes—over $500 billion with the U.S., $350 billion within the region, and about $15 billion with Iran—China has demonstrated a diplomatic approach in regional conflicts. Dr. Shahabi warned that excessive Iranian vulnerability may not be tolerated by China, as highlighted by various Western analysts.
In conclusion, Dr. Shahabi called for a reevaluation of Iran’s foreign policy priorities, urging a shift toward economic considerations that can bolster the nation’s stability and growth in an increasingly complex global landscape.