Ah, so does this mean Iran is particularly dependent on oil to finance itself?
79% of their exports is unrefined crude oil. While exports are not always the whole story, in this case it is extremely relevant.
If Iran's economy was 99% domestic and 1% trade, (essentially autarkic) then it wouldn't really matter at all what the price of oil is, as Iran makes everything it needs for itself, whether that be automobiles, medical equipment, financial services, concrete, etc.
However, Iran is not autarkic and trade is about 50% of its GDP. In order to complete international trade it requires foreign currency. At the start of the year, Iran had $85B in foreign reserves, according to FRED anyways. It was expected to lose $15B this year, but that was supposed to be while exporting $30B of crude oil. If that $30B is now only $10B, then Iran could lose $35B of foreign reserves this year.
They can reduce domestic spending (potentially lowering quality of life for citizens), or they can spin up domestic industry to replace imports, or they can figure out how to increase the $$ value of their exports (potentially by refining the crude oil into higher value products, for example).
If they don't do anything, and the trend continues in a straight line, they'd run out of foreign reserves within 3 years. At that point, it would be very difficult for them to buy any of the imports they need and they'd face a venezuela-style situation where citizens would find it impossible to get whatever goods used to be imported.
For Iran, this is food, cars, durable goods & machinery, electronics, and textiles: https://atlas.cid.harvard.edu/explore?country=107&product=un...
I am not an expert on it, but it seems to me that while Iran may have been offered a "path" to join the global economic system, they were not mature enough to "play nice" in the global playground.
"All excess heavy water which is beyond Iran's needs for the modernised Arak research reactor, the Zero power heavy water reactor, quantities needed for medical research and production of deuterate solutions and chemical compounds including, where appropriate, contingency stocks, will be made available for export to the international market based on international prices and delivered to the international buyer for 15 years. Iran's needs, consistent with the parameters above, are estimated to be 130 metric tonnes of nuclear grade heavy water or its equivalent in different enrichments"
Refer to IAEA reports [6] dated 26 February 2016 [7], 9 November 2016 [8] for the two occasions that are referenced. Iran's needs of heavy water were estimated to be 130 metric tonnes. Beyond that, they would have to sell and deliver the water to an international buyer. IAEA reports indicate that this is what Iran was doing. Paragraph 10 of the Nuclear section of the JCPOA contains more language relating to heavy water. From page 9 of the PDF:
"There will be no additional heavy water reactors or accumulation of heavy water in Iran for 15 years. All excess heavy water will be made available for export to the international market"
Again, it appears that this is in-line with what Iran was doing. Heavy water in excess of 130 metric tonnes was sold and delivered to international buyers. In addition to the 130 metric tonnes stored within Iran, heavy water was allowed by the Joint Commission to be stored outside of Iran, with some sources [9] calling this a loophole in the cap. Regardless of whether or not you believe that exceeding the 130 metric tonnes of heavy water constitutes a violation, there's a dispute resolution mechanism included in the JCPOA. See paragraphs 36-37 on pages 19-20 of the PDF. The US could have used this dispute resolution process to address concerns about violations of the agreement, but did not.
I will take your "path" to refer to the JCPOA. It should be clear that rather than Iran first stepping off this path, it was the US that did so. It was not after all processes set forth in the agreement were exhausted that the US left the agreement, but instead the decision is made in lieu of engaging in dispute resolution. Note that in the withdrawal briefing [4] President Trump made no references to violations of the JCPOA by Iran, but instead lists criticisms of the JCPOA itself. Given that the US did not utilize the dispute resolution mechanism process established by the JCPOA, and the fact that criticisms of the JCPOA greatly outnumber the Iranian violations of the JCPOA, it is my view that the withdrawal from the JCPOA by the US was not in response to Iran straying from the path.
There are a couple of other grievances that President Trump cited in his October 2017 [3] briefing, but I could find no support for them, and so I don't address them here.
[0] https://www.iaea.org/sites/default/files/19/06/gov2019-21.pd...
[1] https://news.yahoo.com/iran-still-holding-end-nuclear-deal-i...
[2] https://www.reuters.com/article/us-iran-nuclear-iaea/iran-st...
[3] https://www.whitehouse.gov/briefings-statements/remarks-pres...
[4] https://www.whitehouse.gov/briefings-statements/remarks-pres...
[5] https://assets.documentcloud.org/documents/2165399/full-text...
[6] https://www.iaea.org/newscenter/focus/iran/iaea-and-iran-iae...
[7] https://www.iaea.org/sites/default/files/gov-2016-8-derestri...
[8] https://www.iaea.org/sites/default/files/16/11/gov2016-55.pd...
[9] https://isis-online.org/uploads/isis-reports/documents/Closi...
I would add that, in order to spin up domestic industry or increase the value of their exports they need expertise and technology. Due to the sanctions that will not be easily available to them. This is really economic warfare.
Countries with both a large, long-term energy-export sector (that is, oil) and a significant high-end industrial base are ... rare.
The US and Norway come to mind. Few others.
The US was the first country to the oil game, Norway one of the last. And Norway's industrial capacity ain't tremendous, but does exist.
The UK had already fallen enough by the time North Sea oil came online, and its economic policy was sufficiently poor, that it didn't recover.
Most major industrial countries have, or had, a large coal resource. Japan being a notable exception.
Saudi Arabia, Venezuela, Russia (mostly), Nigeria, Iran, Libya, Indonesia: little industry.
Even in the US, oil states (Texas, Oklahoma, Louisiana, California, Alaska) tend not to be heavy-industry states (CA being the possible exception). Those were Michigan, Pennsylvania, New York, Ohio, Illinois, mostly, old rust belt.
>...The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund.
https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
EDIT: To be clear I am glad the fund exists. It has been and is a much better way of using the natural resource bonus. However, I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer.
My very cursory understanding of the Fund is that cushioning that known inevitable circumstance was the entire point in the first place.
Dutch disease is common, but hardly universal. There are known mitigation techniques that can be applied, including a sovereign wealth fund.
1. The US ceased being a net oil exporter, and began importing oil, in 1950, over 70 years ago.[2]
2. When the US was an oil exporter, both global oil use and industrial capacity were far lower than today, and cargo shipping costs much higher. The US was among the early industrialised nations (with the UK, Germany, France, and Italy, generally), all (save Italy) with major coal reserves. For the US to meet industrial demand it largely needed to self-provision.
3. WWII.
4. Even within the US, oil-producing regions and industrial regions tended to be quite distinct.
Norway became an oil exporter quite recently (major production largely coming online in the 1990s), and its economic and industrial policy has been excellent. The UK similarly, though it's arguably been hindered by a legacy industrial system as well as its role as a major finance centre (another form of Dutch disease).
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Notes:
1. https://news.ycombinator.com/item?id=23060290
2. With fracking, over the past 5 years or so, the US has exported ... some petroleum-based products, mostly lease condensate and natural gas liquids (NGLs), very light fractions of petroleum. This is unsuitable for motor fuel (its octane rating is too low, and much is sold to Venezuela and Canada, effectively to make their tar-like oil more soluble. This is likely a tem-orary circumstance.
Heck, the fact that America setup an industrial economy while being an oil producing nation is a fascinating counter example to Dutch disease.
There are several powerful mechanisms, however, of which Dutch Disease / resource curse is one. (There's also Twyla Tharp's wonderful "Whom the gods wish to destroy, they give unlimited resources.")
Understanding how it does apply, and why, and where it doesn't, is useful. I've pointed at mitigations for both. exceptions you note, though you don't appear to consider them.
Paper, pen, and ink are useful in communications. But neither paper, pens, or ink do this exclusively, nor by themselves. The blank page, the one uniformly covered in ink, or the one scribbled on at random, communicate nothing. This doesn't mean paper, pens, and ink useless. Markings made according to rules of recognised charactersets, words, spelling, grammar, reference to existing facts, references, and concepts, logic, narrative, metaphore, nuance, and culture ... may succeed in communicating something. Occasionally truth.
Theory of political economy operates similarly. Beware those offering blank pages, spilt ink, random scribbles, or writing lacking, or ignoring, coherence or correspondences.
The city I live in has nearly twice the people and making more at an astonishing rate.