Economic Pain Looms Large for Iranians in Nuclear Negotiations

TEHRAN — Mohammad Heydarian, an Iranian contractor, still has work finishing off a single-family home. But things look bleak after that, he said. He has already fired his workers, and he is struggling to make ends meet, providing for his wife and two teenage children.

“My life became a fight trying to prevent regression, but I lost,” said Mr. Heydarian, 46.

For more than a year, President Hassan Rouhani has been dangling the prospect of a bright economic future before the middle classes that elected him, promising to negotiate a deal with the West to limit Iran’s nuclear program and in that way end the sanctions hobbling the Iranian economy.

With the deadline of Nov. 24 fast approaching, it is far from clear whether the two camps will agree on a pact that would meet the West’s demands to extend the time it would take Iran to make a bomb, and fulfill Iran’s demand that it have the nuclear rights other nations enjoy. But American and European officials say they think they have some new leverage: falling oil prices that are adding to Iran’s pain at a time when its oil revenue has dropped by more than half because of sanctions.

With oil prices projected to fall even further, the oil-dependent government of Iran faces growing pressure to settle the nuclear standoff.

“This is a new wild card, and we don’t know how it will play out,” one of the senior Western negotiators said the other day, as officials mapped out a strategy that they hope can achieve a deal in less than a month’s time.

Obama administration officials and the chief American negotiator, Wendy R. Sherman, were briefing lawmakers and allies last week on what has been agreed to and what issues remain in dispute, hoping to build support before an announcement.

The Iranians may be preparing the way as well. The Iranian news media reported in recent days that the United States had agreed to allow Iran to operate about 4,000 of its most basic centrifuges. American officials have not confirmed the figure, but they have said that if they permit a higher number of centrifuges, the machines that enrich uranium, then Iran would have to blend down or change the form of its current stocks of nuclear fuel.

That would lengthen the time it would take to produce a weapon’s worth of fuel, and after that it would take more time, months or years, to turn the fuel into a bomb. That would be a huge concession for Iran, which currently has 19,000 centrifuges, about 10,000 of which actually operate.

Iranian officials would never admit that sanctions or low oil prices have any effect on their bargaining position. But for a country that by some estimates needs an oil price of more than $140 a barrel to balance its budget, the roughly 25 percent drop in oil prices to around $80 a barrel since last summer has to be deeply concerning.

The precipitous decline could force the government to cut back popular benefits, like subsidies for gasoline and utilities and the $12 monthly cash benefit that many Iranians have come to consider a birthright. And it could have even broader effects, possibly sending the economy into recession.

“Oil prices are bound to go down even further, and already the government faces big financial shortcomings,” said Jamshid Edalatian, an economist and member of the chamber of commerce in Tehran, which is close to the government. “We need this nuclear deal, or we will face very hard times.”

Mr. Rouhani and his chief negotiator, the foreign minister, Mohammad Javad Zarif, seem acutely attuned to the damage done by sanctions. In an interview in Vienna in July, and again in appearances in New York last month, Mr. Zarif talked about the cost to Iran — while insisting that the country’s reaction to pressure had been to build more centrifuges and a larger nuclear infrastructure.

“What has this accomplished for you?” he asked his largely American audiences.

But it is far from clear that Ayatollah Ali Khamenei, the supreme leader of Iran, shares that view. Traditionally, he has been less focused on Iran’s economic future than on its status as a regional and world player. If Mr. Zarif goes home with a deal, American officials say, there is no guarantee that Ayatollah Khamenei will make a cost-benefit analysis about whether to approve it.

“The decision is the supreme leader’s to make, and we still don’t understand much about his calculus,” one senior American official said, declining to speak on the record about the talks.

But the government has quietly begun to take measures to ease the losses in oil income, which are only now beginning to be felt since Iran typically sells its oil in three-month contracts.

To cover an expected shortfall of nearly $2.25 billion in the coming three months, Mr. Rouhani announced this week that his government would dip into strategic financial reserves — which he said last year that the country did not have — to pay for continuing civil engineering projects.

The hope all along for the West was that financial pressures would soften Tehran’s negotiating stance, and they still might, particularly if the drop in oil prices proves to be more than transitory. However, most analysts here remain adamant that any such hopes are misplaced.

“They will remain focused on getting a deal, but not any deal,” said Ali Khorram, a former Iranian ambassador to China who is close to the negotiating team.

He said that Iran had been taking lessons from Iraq and Libya: Iraq got stuck in the quagmire of sanctions by making halfhearted compromises; Libya, under Col. Muammar el-Qaddafi, ended its entire nuclear program in 2003, but the West’s role in overthrowing Colonel Qaddafi made a deep impression on Tehran about the risks of giving up a potential nuclear capability.

“It is clear for us, we either want a comprehensive deal or no deal at all,” Mr. Khorram said, referring to the Iranian demand to retain an enrichment program while forging a step-by-step plan to cancel all sanctions.

“I’m sure there is a Plan B if things go differently,” he added.

If there is such a plan, it is a well-kept secret.

In Plan A, Mr. Rouhani’s vision, a nuclear deal would lead to the lifting of all sanctions, and the Iranian economy would become a tempting prospect for foreign investors.

The pro-government news media churn out items about foreign companies’ showing interest in Iran, one of the last untouched markets in the world. This week, they reported that General Motors was interested in cooperating with Iran Khodro, Iran’s largest car manufacturer. Billboards advertise iPhones (sanctions on computers and cellphones were lifted in 2013). On Thursday, Boeing reported selling its first products to Iran in 35 years — $120,000 worth of maps and information.

“We are already victorious in the nuclear talks,” Mr. Rouhani said, smiling, on state television last week, “and will be triumphant with God’s grace tomorrow, too, not only in this arena, but in many others.”

Mr. Rouhani’s insistence that a deal is inevitable is contagious, many Iranians say. “Our leaders repeat this over and over again on television,” Mr. Heydarian said.

At Bahram’s Barber Shop, near Tehran’s busy Keshavarz Boulevard, all five seats were empty early Wednesday morning, so Isa, 35, had decided to polish a traditional teakettle. The television was switched to the news channel, but the barber was singing an Iranian song about hearts filled with love.

Isa, who was uncomfortable giving his family name for fear of reprisals, said he had voted for Mr. Rouhani because he was the only one who was not a hard-liner. “I believe in his promises,” Isa said, “mainly because the reality is something I prefer not to think about.”

The government misses no opportunity to point out its successes, like bringing inflation down to around 25 percent from more than 40 percent and halting the decline in the national currency, the rial.

The continuous injections of hope have led some Iranians to worry about a backlash of disappointment should the nuclear negotiations collapse.

“We could very well see some civil protests in some cities,” said Hamid Reza Jalaeipour, a sociologist and former reformist politician. “But Iranians are like sheets of copper: They can be folded and bended, but they never fall apart. We can adapt to bad times.”

In the state-dominated news media, it is the good news that gets most of the attention. A government spokesman recently announced that the economy had grown at a rate of 9.5 percent in the third quarter. But many Iranians dismiss such figures.

“I don’t know much about the economy,” said Mahin Ranjbaran, 37, who sometimes washes dishes in a restaurant. “But my husband and two children and I have to live in with my parents, and we still cannot afford to pay the bills. That is how I measure improvement or decline.”

David E. Sanger contributed reporting from Washington.

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