Danger of economic woes shown

The protesters rallied for days in Iran, chanting against government corruption and demanding justice.

That was last year, when depositors who lost their savings in the collapse of major government-run credit union took to the streets, shouting “Death to (Valiullah) Seif,” Iran’s Central Bank governor.

In the past 10 days, there were new protests, the largest in Iran since its 2009 disputed presidential election, fueled by young people angry over their bleak prospects. This time, they shouted slogans against President Hassan Rouhani and Supreme Leader Ayatollah Ali Khamenei, a figure seen as subordinate only to God by hardliners.

The new unrest appears to be waning, but anger over the economy persists. The protests in dozens of towns and cities showed that a sector of the public was willing to openly call for the removal of Iran’s system of rule by clerics — frustrated not just by the economy but also by concern over Iran’s foreign wars and general direction.

Economic woes

The collapse last year of the Caspian Credit Institute, which promised depositors returns often seen in Ponzi schemes, showed the economic desperation faced by many in Iran. Retirees unable to make ends meet on their pensions can be found driving many of the taxis crowding Tehran’s roads. Universities turn out students with no hope of employment in their fields, while those lucky enough to have work often have a second or even a third job.

Banks remain saddled with bad loans, a warning repeatedly sounded by the International Monetary Fund. Some of this stretches back to the days of nuclear sanctions, while others find themselves mired in the murky finances of the paramilitary Revolutionary Guard, which is estimated to control a third of the total economy.

Inflation, initially brought under control by Rouhani, has slipped back into double digits, according to recent figures. He cut some subsidies offered by his hard-line predecessor, the Holocaust-questioning populist Mahmoud Ahmadinejad. Those subsidies benefited rural and poor voters in the provinces, the same people who appear to have taken to the streets in the recent protests, initially sparked by food prices.

The government likely will offer either subsidized food prices or cash handouts to soothe anger in the provinces, although how that comes about remains to be seen. But the unrest has had one benefit: It has helped boost global oil prices to over $60 a barrel, providing desperately needed currency to the OPEC-member nation.

Battlefield success

The recent protests saw some marchers chant against Iran’s foreign wars, demanding the government focus first on those at home.

Since the U.S.-led invasion of Iraq in 2003, Iran has expanded its presence across the Middle East as a counter to the American bases that dot the Arab Gulf countries surrounding it. The U.S. military accused Iran of training insurgents in Iraq who targeted its troops with roadside bombs, and Tehran has powerful influence over Iraq’s Shiite-led government.

The rise of the Islamic State group, as well as the Syrian civil war, threatened Iran’s allies, and it responded by sending the Revolutionary Guard’s elite Quds expeditionary force into both Iraq and Syria.

In Iraq, Iranian advisers turned Shiite militias into a powerful ground force against IS extremists.

In Syria, President Bashar Assad appeared to be on the ropes until Iran fully entered the conflict. He held onto his presidency with Quds force generals leading foreign fighters from Afghanistan and Pakistan, as well Iranian-supported Hezbollah guerrillas from Lebanon.

In Yemen, the U.S. and Western powers accused Tehran of supplying Shiite rebels with ballistic missile technology.

Protesters denounced the money going to support these groups rather than helping people in Iran.

New era looms

Approaching the 40th anniversary of the revolution, Iran increasingly will consider who follows the 78-year-old Khamenei, who underwent prostate surgery in 2014. Among those under consideration is Rouhani, himself a cleric. Both the U.S. and analysts studying Iran say hard-liners initially fomented the economic protests to put pressure on Rouhani but quickly lost control of them.

Iranian law bars Rouhani from seeking a third term, so Iran’s 2021 presidential election will see a wide-open field.

The economic resentment seen in recent days could prompt the rise of another Ahmadinejad-style hard-line populist — if Iran’s clerical leadership allows such a candidacy.

It’s hard to tell right now who emerged stronger after the protests — Rouhani or his hardline opponents. Each tried to wield anger over the economy against the other.

Protests wane

Authorities managed to stifle the protests in part by blocking access to the messaging app Telegram, through which demonstrators organized the rallies and shared images from the streets. The Revolutionary Guard’s volunteer Basiji force also was deployed and police have arrested hundreds; more than 20 protesters were killed, although security forces did not engage in the level of bloodshed that followed the 2009 protests.

Both U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu said they supported the protesters, without apparently providing any aid. The protests quickly raised the hopes of those abroad who want to see an end to the Islamic Republic.

But for now, that won’t be happening. Instead, Iran’s ruling system faces a future of grappling with the effects of economic woes that have proven to be unpredictable and potentially volatile.