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The continuation of political crisis in the Islamic Republic takes its toll on the regime's already weak economy, blurring further more the prospect of getting out from the present stagnation.

Inheriting a paralysed economy that had run out of steam, President Mohammad Khatami failed to bring substantial changes and this despite growing hopes that his policy of overture and normalisation with other nations would help strengthening security and stability at home and stimulate the Iranian economy.

But the students protest movement that shook the regime in the one hand and internal feuding among the clerical rulers and leaders on the other not only stopped that process, but the impact these events had on the Iranian economy became a major subject of discussion in economic circles and among experts and observers both inside and outside Iran.

In an article published by the Paris-based "International Herald Tribune", the violent clashes in the Tehran streets had a devastating effect of the Iranian economy, already battered by a serious drought and the fall of the national currency. Such an upheaval can well discourage Iranian and foreign investors from the Iranian market, the paper adds, quoting international economists.

According to Iranian experts, as a result of this year's drought that has destroyed 30 to 40 per cent of the Iranian agriculture, Iran will have to import 7 million tons of wheat and 200.000 of rice to make for the losses caused to the productions, putting more pressure on the already strained public's reserves in foreign currency.

In an editorial published on 17^th July by the English-language "Iran News" surveyed the consequences of the last weeks political turbulence in Tehran on the Iranian economy and reached the conclusion that the events had negatively affected both the economy and the international image of the nation.Writing on the same subject, the pro-reform "Hamshahri" says after the recent troubles, investors are facing one important question that is to know if their investments in Iran are well secured or not?

Quoting Mr. Mehdi Sahra'ian, a university professor and member of the Iranian Economists Association (IEA), the paper says the students unrest will lead to higher inflation since the public's confidence in the future is shattered. The same goes for the investors who will follow a policy of wait and see, meaning waiting for political stability before starting to invest.

Mr. Sahr'ian believe that the university troubles will also affect the employment. "With investment reduced to the minimum and economic activities stopped, less jobs would be created and this at a time that the bewildered Government is putting all its efforts to sort out the political situation, leaving economic and production problems to another time", he points out.

However, and regardless of all the troubles ahead, Mr. Mohsen Nourbakhsh, the Governor of Iran's Central Bank do not seem to be much affected by the situation.

In a press conference, he assured journalists that the industrial world has responded positively to President Khatami's normalisation policy and would therefore provide financial resources one needs to implement Iran's economic and development plans.

His optimistic view goes as far as to forecast the appreciation of the local money against the US Dollar in the Tehran bazaar, stressing on the fact that as a result of the substantial increase in the oil prices, the volume of the green back reaching the free exchange markets will also increase.

But Mr. Nourbakhsh did not mentioned in his expose the factors that will call for more demand for the US Dollar, like the payment of almost USD 8 billions for the settlement of foreign debts, importing more basic foods, particularly wheat and rice, estimated at more than 3 billions and above all, the huge demand for foreign currencies, mostly dollar, resulting from the public's fear of an uncertain future.