As an opportunity to capture by the state and its associated special interests. And possibly get up to no good abroad. Iran is a large and sophisticated economy. About the same size in terms of population and income as turkey. An economy about 40 larger and 40 richer perperson roughly than egypt. It is much more than an oil economy or an oil state. Presanctions, it produced 1. 6 million cars. That is almost three times as many as italy produces today. Admittedly, italy is not a good example of efficiency. [laughter] i was working in italy when they were producing 2 million cars. 1975. Opening up iran has an effect on world trade and investment at a time when world trade is stuttering. The report says iran could attract the number could be much higher than that. Turkey attracted 13 billion in 2013 and turkey does not have huge oil reserves in need of technology and money to restart and expand. As for the effect on oil markets, the report stresses the biggest gain for the world economy. I have to say i have my doubts as to whether this is good for the world today. I understand the point that it improves the incomes of oil importers, including the United States. It reduces the incomes of Oil Exporters. But the point is we live now in a lowinflation, low price world. We live in a low price world. Low oil price world. I believe you can have too much of a good thing. The oil price has already fallen so fast and so low that the wellknown destabilizing effects on the budgets of Oil Exporters and on the income statements and Balance Sheets of companies and the oil sectors are already very significant. They could outweigh the positive effects of consumer demand. Looked at another way, oil is today a much more a part of the smaller part of the Family Budget but it is absolutely critical at the margin for Oil Producers. I am also concerned this is slightly below the belt, chanta, i am concerned about the effect of Even Lower Oil prices on Carbon Emissions and the increased Oil Consumption that it implies. As i mentioned in a report last month in this room, it is amazing to me how the ifi, International Financial institutions, can submit analysis to put climate on the top of the list and then to ignore the next. Finally, a word about business and about economic policies. Businesses have already assumed that the deal is going to go ahead and have been flocking to tehran for months. The opportunities in investment in the Energy Sector and in providing all manner of goods and especially services. How big the opportunities turn out to be depends on the Energy Investment regime iran put in place on the evolution of the Real Exchange rate on the International Investment regime and on the growth of the iranian economy. Obviously the numbers on these policies are in the hands of iranian politicians. But the International Community is not without tools to help influence this process. Iran throughout this period has continued to receive article four missions from the imf and cooperate with them. And apparently to listen to them. The message we have is that in all respects they are moving in the right direction on Macro Economic policies. Businesses will be looking for sound fiscal monetary policy. A sense that inflation under control. That the Exchange Rate is simple. The Exchange Rate regime is simple and nondiscriminatory. The Exchange Rate must be realistic. Imf can help on all of these. As important is the fact that iran has renewed its bid as it already has several times to join the world trade organization. Its a multiyear process. Its a very frustrating process. But it is also one that provides a unique opportunity to reshape irans economy for modern times. A tough wto negotiation will result in an iranian economy with more uniform tariffs, more liberal investment regime, affecting particularly trade service, a reduction in the role of state run enterprises, respect for International Standards and norms, including intellectual property. Crucially, if it is done well, the wto negotiation will greatly strengthen the hands of reformers in iran. For the World Bank Iran would represent the single most important active program in the middle east region. There will be large lending opportunities, and these are obviously important for the banks efforts. In the end the money will be secondary in iran. The bank will bring enormous experience in analytical resources on irans most pressing challenges. Reforming the trade regime, improving competitiveness, upgrading infrastructure, modernizing the education system, established a more transparent governance mechanism, reforming the labor market and the list goes on. I want to say the developing economies learned the hard way that the Economic Analysis is not the most important. It is the politics, stupid. I may be naive but i like to believe that if iran can make substantial progress in terms of growth and economic integration and that the benefits are felt by families and the young, that the politics will gradually change. Chantas report helps clarify everyones thinking. Let me start with a simple question which probably doesnt have a simple answer. If irans Oil Production and exports are projected to double at a time when the price of oil has been cut by more than half, could we look back a few years from now and see this opening up with a negative. That the gdp was higher when there were sections . Not in the case of iran. If you think about it, iran is still currently in oildependent economy. Their comparative advantage was oil and that was the one thing they cannot produce. Or they were not able to export much. Even if the price of oil falls, it will not fall so far that iran will suddenly discover its comparative advantage with Something Else. There will be a game. Gain the magnitude of the benefits will be lower. There is no question about that. I think there is still a net gain. Those figures are debated about the price of oil for the iranians to be able to balance its budget. Do you have an assessment of that at the bank . Let me ask my colleague. I dont think we have an for iran. 100 . Do you have an assessment let me move the subject slightly. Both of you have been working in the field of developing economics for a long time. There was an interesting piece about myanmar, burma in the wall street journal about how the countrys economic opening has enriched government cronies and military cronies and it has not trickled down to the population of myanmar. If you can kind of project it two or three years forward based on a comparative perspective that you have, how do you see this potential removal of economic sanctions playing out within iran . What other kind of countries which often times people who do Political Science like to invoke 1970s china or the soviet union, is there another country or region in which you find most applicable to irans potential . I can answer a little bit on the first part of the question which is we have done some analysis on several other countries in the region, particularly tunisia and europe egypt. We find the unemployment problem is directly related to crony capitalism. We find that if the ben ali regime in tunisia had control family connections that on the banking sector, the telecom sector, and the transport sector. As a result those sectors stood in the way of export. There is some work by kevin harris at princeton that is trying to do a similar kind of analysis of iran. It is preliminary work. He is finding various connections in the private sector with the regime. That could lead to similar consequences. I think there is a concern it is really transferable competition so that elite capture does not get in the way of promoting. I agree completely with what he said. What i would add is that on principles, not having means to iran now or ever, im just looking at the data. And comparing it with other countries. You have a country that that has been closed for a while there has been a big shift in resources. You can import. This is somewhat artificial. Im sure that a lot of positions have been developed and is highly distorted and relatively isolated economy. In the course of the last three or four years. In this sense this is why i have put so much stress on the wto negotiations. Which the iranians are really very keen on and they keep coming back to it. That is precisely what the wto negotiations can help offset to a degree. By putting forward the interest of exporters and creating a Binding Mechanism for the reformers in the country to change things. That is what is happened in china, vietnam, a number of other countries. They underwent serious wto negotiations. The other point i would make is that this is drawing a little bit from the recent experience in egypt. If the regime is confident and well entrenched, a can take on its special interests more easily. If the regime is feeling threatened, and secure, and youre the best judge of that, not me, then its capacity to confront cronies and special interests is more compensated. Complicated. I sense there has been an evolution in the thinking in washington about the wisdom of irans acceptance of the wto. Because in the past, during the bush administration, that was received as a carrot and we should not offer that to them. Now there is a sense there is an economic mafia joining wto and is not necessarily in your interest. A couple more questions were handed over to all of you simply set your questions ready. We talk a little bit there were the potential winners and losers as a result of the removal of sanctions. The winners are major oil importers, china, europe. The potential losers are the Oil Producers. Maybe other countries that are not necessarily in the obvious categories that this economic category might have. Now, ge the pattern of winners and losers. There are people who are saying that this could actually lead to Greater Peace in the middle east region. There are some huge winners there like all of us. We dont analyze but could definitely be part of the story. Dudash i want to stress with a set at the beginning. What i said we have already had this big boom from oil prices. Actually the result of been quite disappointing in terms of economic growth. In part because, im talking about the decline in oil prices that has already occurred, in part because the effects on investment and many Oil Exporters has been more important than many had anticipated. They cut back quite a bit in part because in many instances the benefits of Lower Oil Prices had not filtered down to consumers. Sometimes for good reason because they would use subsidies. In the case of iran as well they have a very Serious Energy subsidy reform program. In part because some governments just needed more taxes. They have increased taxes. The effects have been quite disappointing. What worries me most now is that there are a lot of precarious situations among the Oil Producers. I dont assume i und stand the logic of the transfer of resources being from low spenders to high spenders. Being positive for world demand in the short term. I question that is the case now. I am concerned that further Oil Price Declines will mean no effect on the world aggregate demand and perhaps a decline in world aggregate demand because of the effect it has on Oil Producers at this low level of oil prices. Devarajan i meant to respond to one of your comments earlier. I think it is important to separate two things which is the effect of an increase in oil supply in the market and its effect on oil prices. From the secular decline in those prices we saw towards the end of 2014 and we are seeing again now, which is more on the demand side. One of the reasons we are not seeing this growth has a result of the Lower Oil Prices is because its a lack of growth that is putting oil prices down. We have to separate those two. They are two different phenomena. Low inflation is also as a result of the lack of growth. We are seeing a slowdown in china, lower growth in china, lower growth in europe. And a nacent recovery in the United States. Sadjadpour i remember when the major financial crisis happened, the Global Crisis happened in 2008. It did not really affect the Economic Situation in tehran. Iran bragged about having was basically immune to Global Economic trends. Putting aside the price of oil, some of these major collapses were happening in emerging markets. How do you see that impacting the Economic Situation in iran moving forward . Devarajan it is still the case that iran is not all the intricate it integrated into the Global Financial system. I think the effect of the current turmoil, iran in the near future will be through the oil prices. That is the main channel were going to see until iran becomes more integrated in the Global Financial system. Sadjadpour hand it over to all of you. If you just introduce yourself and be as brief as possible. Michael gordon. Under this following up on the notion of winners and losers, under the jcp airway, in the iran agreement which is a rather complicated document, there is a long list of banks, companies, individuals, enterprises of various sorts on whom sanctions are removed. And it is a phased process. Some are removed right away on implementation day when the nuclear conditions are met. Some are removed on transition day eight years down the line. And in some cases they are to be removed by the European Union but not necessarily by the United States, depending on the entity involved. Many, if not most of these enterprises are linked to the irtc and people that have been involved in nuclear program. The question i have is did you examine within the framework of the iranian economy what the effect is on removing these sanctions in terms of strengthening or weakening areas players . Various does the agreement strengthen the irtclinked companies and if this strengthens the weaker of these companies encourages economic reform in iraq . Discourages it, or has no effect . Devarajan it is a big question and a very important one. We did not look at that. Mainly for the reasons that you alluded to. It is very collocated and there is a lot of uncertainty even over how much money there is that is being blocked. I read an article in the New York Times about the range of estimates. We really did not we ducked that issue. Its potentially very important. We also dont want a mix of stocks. We are talking about the effect of the lifting of sanctions on the productive capacity of the economy. These are assets that are sitting there, the money is sitting there in the question is will they be able to use it rather than have it frozen . Its a question of how much money there is and also its a political judgment for how they will use it. We dont have any prior independent assessment of how those resources will be used. Dudash because of the fact that they had benefited from economic isolation, they fell behind by the International Oil companies. Somehow this economic opening will be integral to the juice of the revolutionary guard. And a rising tide all boats rise, and the guard will stand to benefit from this as well. The question is if they stand to benefit from opening up more than the population. That remains to be seen. Thats why i asked about burma. These things happen and often times we look back if it is russia or burma in retrospect and we say to cronies got very wealthy but it did not necessarily trickle down to the people the way they anticipated. I will come back to the back. My question is a bit more with regards to domestic politics and its effect with regards to Economic Reforms. Iran has talked about Economic Reforms for years. Part of why there has not been a lot of success has been there is not been this sort of consensus is among the different political actors. And basically the lack of political will. Rouhani has quite an extensive economic reform plan in my question is what are some areas where iran will have an easier time politically instigating some of these reforms, basically developing the productive factor as well . What are some areas where they might have to wait a bit longer to do later on . Sadjadpour great question. \ hello, you mentioned the implications of the iran deal as an economic regime change. You acknowledge that relies on choices. I want to take it one set backwards. How can we say that the postdeal economic environment constitutes economic regime change when a run will be facing stronger sanctions in place for the next several years than it did before the 2001 when the 2010 with the two sections regime with put in power was put in power . Even if they managed to insert a clause in case of sanctions. And when the u. S. Implementation sanctions on other issues have become much stronger and much more effective over the years . Is it economic regime change or other going back to something similar to what it was before 2010 one there were still a lot of restrictions in place . Sadjadpour lets take one more. We did a study on iran and i think one of the implications of lifting the sanctions, it will strenght