New Delhi, Jan. 12 -- As urban spaces rage with protests, Iran seems in turmoil again. Is America's long squeeze of Iran's economy at work? Or a classic "oil curse"? The stir was set off by an inflation flare-up caused by a crash in the Iranian rial. It slid by more than 40% last year, sending retail prices skyward.

Given its informal hydrocarbon exports, its actual trade balance is as hazy as a dust-storm. But structurally, as with any other oil economy, hydrocarbon exports had long given its currency such strength that it "cursed" all other industries, which were rendered unable to compete abroad. This nixed efforts to diversify away from oil and spelt high import dependence for household needs.

For stability, US-aligned Gulf states a...