The Iranian Rial continued to plummet last week, reaching new lows of 80% of its value one year ago and dropping an incredible 40% in only seven days. This new value directly and deeply affects the lives of Iranian citizens, many of whom have found daily staples such as bread unaffordable. The economic deterioration is a result of increasingly harsh economic sanctions levied by the EU, UN, and US both through collective and bilateral action, as a political strategy geared towards forcing the abandonment of the Iranian uranium enrichment program. The placement of the sanctions, the political ends being pursued, and economic results in Iran have created a strict dichotomy between the Iranian President Mahmoud Ahmadinejad and the Iranian people themselves.
Ahmadinejad remains firm in his stance that Iran has a right to enrich uranium, and that the process is for civilian purposes. The concealment of important information regarding its nuclear program from UN inspectors is seen as grounds for barring Iran from such research by the EU, UN, and US. There is a looming military threat from both the US and Israel, who recently drew two “red lines” representing the point at which Iran would be capable of building a weapon and the point at which military intervention would be necessary. Despite this threat, much of the western world remains confident in a non-militant solution, through economic measures. Sanctions have existed since 1979, when the United States froze $12 Billion in assets in response to a hostage seizure in Tehran. The current set of sanctions are much more comprehensive, with Iranian oil exports being virtually shut down globally through joint EU and US action one year ago. Since then, the expected economic decline has occurred, however, Ahmadinejad has not budged in his insistence that the Iranian uranium enrichment program is justified.
Last week, as the Rial depreciated by a massive 40% against the US dollar, protests and riots erupted throughout the country. These public demonstrations show that the public cannot continue to live in such economic conditions, as staples such as bread and milk have more than doubled in price this week. The Iranian parliament, dominated by the Principlist party, is quick to criticize Ahmadinejad for his stubbornness and economic mismanagement. Some suggest forcing him to resign, although most agree this would prove too difficult and could result in further political and economic distress. With his second term ending in June 2013, Ahmadinejad doesn’t have much remaining time as President. Rumors of a comeback by Akbar Hashemi Rafsanjani, the Iranian president after the Iran-Iraq war and one of the founders of the Islamic regime, are widespread, although he would have to compete with the elderly supreme leader, Seyyed Ali Khamenei. To many, Rafsanjani represents an optimistic future, with his platform pledging better relations with the west.
On October 15, the EU imposed additional sanctions, emphasizing the economic degradation in Iran. Tighter EU sanctions, which complement US restrictions, curbed trade with Iran in the finance, energy, and transport industries and froze the assets of many significant Iranian figures to cut the funding for the Iranian atomic program.
In the absence of Iranian action to shut down uranium enrichment the EU, UN, and US triad have continued a policy of increasingly shutting out Iranian business. With an economy heavily reliant on the export of oil, such economic sanctions translate directly into economic damage, which is mostly felt by the lower social classes. However, they do hurt Ahmadinejad by cutting political contributions, much of which is funded through oil revenues.
While the western strategy does postpone military action, Iranian citizens increasingly suffer. The goal of causing economic and social distress throughout Iran has been achieved, but the nuclear program continues to develop, due to Ahmadinejad’s devotion to its completion and his apparent indifference to the struggles of the Iranian people. The question of the purpose of uranium enrichment is no longer important. At this point Ahmadinejad, as President, must alleviate the economic situation and reverse western sanctions. His record, however, suggests that he will continue with his nuclear program until he no longer has the power to do so. With parliament and popular support clearly aimed at solving the economic crisis, an Iranian President and government more compatible with western powers could likely be elected come June. However, this is not soon enough for the struggling Iranian people, and may not be soon enough to avoid military intervention, as Israeli Prime Minister Netanyahu’s red lines for both Iranian nuclear capability and necessary military action in Iran are drawn at “spring or early summer of next year.” If Ahmadinejad cannot be deterred with economic sanctions, humanitarian distress may render further action unavoidable.
– Ari Salas