Abstract
In this paper, we argue that without fundamental economic and political reform the long term prospects of the Iranian economy will not be bright. First, we offer a broad overview of Iran’s economic performance over the last two decades and characterise its structural features and continued weaknesses. Next, we turn to a discussion of possible models of oil revenue utilization and their economic and political implications. The aim is to highlight ways in which structural reforms can lead to diversification of the economic structure away from dependency on the oil sector in the long term. We argue that the way to do so is to restructure the utilization of the oil industry to achieve true decentralization of economic decision making and pave the way for political reform.