Iran’s foundering economy may incite more popular revolts
Iranians have taken to the streets for the second time in less than a year expressing outrage at the regime’s inability to prioritise its own people over the mullahs’ desires for imperialist expansion across the Middle East.
The Iranian economy is in a downward spiral, particularly after US President Donald Trump declared that the United States would be withdrawing from the ill-fated and poorly negotiated nuclear deal and said America would be reimposing sanctions against an Iranian regime that has wreaked so much havoc in the region and around the world.
US sanctions have not even hit Tehran yet but already the Iranian currency, the rial, is in freefall. The rial rapidly depreciated to 42,000 rials to the dollar after authorities attempted to protect the currency by applying a fixed exchange rate in April in anticipation of the US withdrawal from the nuclear deal.
Iranian President Hassan Rohani had hoped that a fixed exchange rate would prevent a mass sell-off but black-market traders have reaped a windfall in illicit exchanges, with some prices noted as being 75,000 rials to the dollar. This has caused massive inflation, with prices of staple goods skyrocketing and rents extortionate to the point that small businesses are being forced to close and people struggle to find a place to live.
The Trump administration is also applying heavy pressure on its European allies to also renew sanctions against Tehran. While politicians from Germany, the United Kingdom and France have pledged to remain committed to the nuclear deal, European companies are pulling out of investments and agreements with the Iranians, fearing punitive action taken by the US Treasury should they attempt to flout Washington’s sanctions despite EU assurances.
For instance, the French energy giant Total has announced it would halt its business in Iran and withdraw from the country unless granted a sanctions waiver, which is unlikely to be forthcoming from the Trump administration.
Rohani was in Europe meeting with Austrian and Swiss leaders to salvage what he can of the sinking ship that is the nuclear deal. Tehran has threatened Western powers that, unless Iran is appeased with greater economic cooperation at the expense of the United States, it will turn eastward towards oil-thirsty China.
However, that is simply bluster because the Chinese are not going to bankroll Iran just for the sake of expanding their influence. Beijing will smell blood in the water and move in for the kill, realising that Tehran is in no position to be bargaining for a good deal. China will demand heavy concessions from Iran, which will have to kowtow to one of its only customers, and ultimately it will not save its economy.
With intensifying protests and violent clashes between Iranian police and the populace, it is likely that Rohani’s career is in great jeopardy. Supreme Leader Ali Khamenei will seek to distance himself from the grievances of protesters by blaming Rohani for his failed economic policies and will scapegoat the president.
Iranians are unlikely to fall for the ruse for long, though, because they are fully aware who ultimately holds all the power in their country. Khamenei has controlled almost every aspect of Iranians’ lives for decades and such totalitarianism and failure to provide for the people may give the mullahs deja vu of the revolution they launched against the shah in 1979, except this time it could be their necks on the chopping block.