Economic crisis and sanctions; is this the countdown for Ahmadinejad?
Antonella Vicini 16 November 2012

The protests were not caused just by the devaluation of the riyal and a fast moving economic crisis that in October alone saw inflation rise by 0.9%, but also by a series of internal events expected to take the Islamic Republic to a changing of the guard at the presidential level and that in the meantime are providing an image of a country that is also politically less united. It is perhaps no coincidence that the Supreme Guide, the Ayatollah Ali Khamenei, has already clearly asked Iranian officials and politicians to wash their dirty laundry in private in view of the next elections, unless they wish to be branded as “traitors”.

Two factors have caused the fall in value of the Iranian currency; the intensification of sanctions imposed by the West and the Iranian president’s economic policy. The first is a situation that would be hard to address from within over the short term, unless there is a sudden change of direction in Tehran, while the second is instead the consequence of bad choices that do not answer the needs of this country.

These at least were the beliefs of protesters who left the Bozorg Bazaar to march towards the Majles, the Iranian parliament, chanting slogans against Ahmadinejad’s economic policies and against the government’s support for the Syrian regime, asking it to concentrate instead on internal affairs. “Leave Syria alone and worry about the situation here,” they chanted in messages addressed at the president, omitting the name of Grand Ayatollah, although it is hard to envisage support for Syria without the approval of Ali Khamenei.

The people in the bazaar

It is no coincidence that this protest had been organised by the so-called ‘bazarì’, literally merchants, but more in general by the fundamental base of Iranian society, traditionally close to the clergy and acknowledged for the active role played since the “white revolution” of the Sixties and in the Islamic revolution.

The ‘bazarì’ are quite a powerful pressure group in the Islamic Republic, controlling tens of thousands of votes, subsidising election campaigns and therefore also conditioning economic choices made in Iran. While it is true that the ‘bazari’ need power, it is equally true that power seriously needs the ‘bazarì’.  This strong bond had been made official by Khomeini before the revolution. It was no coincidence that in 1976, the shah had planned to have the Grand Bazaar destroyed and replaced with a modern European style market.

The fact the protests started with them has an obvious political meaning. Statements made the day after the protests by Asgar-Oladi were equally important, and when a member of the Islamic Alliance Party (Hezb-e Motalefeh-ye Eslami), Motafeh, speaks, he speaks as the symbol of the bond between the world of the bazaar and the clergy. Therefore in Iran it is best to pay attention to him.  Asgar-Oladi clearly spoke of the need to “consider protesting” against anyone using non-credible excuses for having destroyed the country’s economy.

Is this all Ahmadinejad’s fault?

Recent protests were certainly an attack on the outgoing president, but perhaps they also sent a broader message to those listening and understanding that something must change. The next opportunity will be on June 14 next year when Iranians will be called upon to elect the Islamic Republic’s new president.

Ahmadinejad, formerly under the protection of Ayatollah Ali Khamenei, was recently defeated in the  Majles, which with 179  votes out of  240 blocked his plans to provide financial aid to poorer citizens affected by the current crisis, as reported by the ILNA news agency. It was not only the provision that was rejected, but also a symbol, an element of the economic plan that following his election in 2009, Ahmadinejad had described as “the best in the past fifty years.” At a practical level this became possible following the general elections in March in which the president and former mayor of Tehran lost his majority in the parliamentary assembly.

Life in Iran today

The recent round of sanctions imposed by the United States and the European Union has significantly affected a situation that has been visibly deteriorating every year. In 2010 a dollar was worth 10,000 riyal, while it is now worth 37,500, although banks try and keep the official exchange rate lower. Since the beginning of the year the currency has lost 75% of its value. In a country with an economy based on oil exports, the last round of sanctions may cost $48 billion in lost revenue, although there is no official data on this subject. According to some analysts, however, in spite of sanctions, the Iranian government still owns enough foreign currency to place on markets and at the end of 2011 the International Monetary Fund calculated that Iran had currency reserves amounting to $106 billion.

Adding up a few numbers one discovers that the cost of a one-bedroom apartment in cities is $560 a month while a three-bedroom apartment costs $1,200. The cost of buying property is $2,500 a square metre in the city centre and $1,200 a square metre in the suburbs, while average wages are about $600 a month. The cost of a kilo of rice is $3, apples and oranges are $1.50 and a kilo of bread is $1. These prices are not that different to European ones, but salaries are about half.

One must then add the indirect effect of sanctions on other essential goods such as medical and hospital equipment, as Iranian banks are cut off from international circuits. The Washington Post recently reported that those mainly affected are “cancer patients and haemophiliacs, those suffering from multiple sclerosis, thalassemia, as well as transplant patients and those undergoing dialysis” who cannot stop treatment.

To all this one must add the black market, the business done by the Guardians of the Revolution in spite of sanctions – on the contrary precisely thanks to sanctions – and a political leader who appears to have lost most consensus not only abroad but also in the country.

From the opposition to the Speaker of the Majles, presided over by Ali Larijani who has accused the president of being the cause of eighty percent of the country’s problems, to the reformist press such as the daily newspaper Etemaad as well as the conservative Khorasan, and a number of news agencies such as Fars, to also even include sermons during Friday prayers in Teheran, Isfahan and Mashhad, Ahmadinejad is considered responsible for the current situation, regardless of pressure from the West, to the extent that there are some who believe he will exit the stage well before June 2013.

Translated by Francesca Simmons

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