A Rial-ity Check

The mantra isn’t, “it’s the repressive theocratic regime and impossible religious police” stupid. Bottom line, people vote with their stomachs and their standard of living… where their vote makes any difference… and rebel when they cannot effect change at the ballot box. The Arab Spring was about power elites keeping all the goodies for themselves. The return of the Institutional Revolutionary Party (P.R.I.) – the iron hand that guided Mexico for 70 years until Vicente Fox unseated that infamously corrupt party in 2000 – with an easy victory for Enrique Peña Nieto as President was simply a signal by the populace that the folks in power had delivered little more than a failed economy and murderous, cartel-driven instability. THE issue in the American presidential campaign is clearly the seeming lack of economic growth.

Iran is no different, although we see this apparent monolith of Shiite extremism, a government that is elected but in fact reports entirely to a “higher authority,” with strong rumors that the Ayatollahs are thinking about abolishing the elected presidency. In fact, the relatively minimal support from local extremists has Iran’s leadership casting a wary eye on the Arab Spring and has them voicing strong support for the Alawite (a Shiite faction) Assad regime in Syria.

As Iran’s economy tanks from a combination of crass mismanagement and the impact of various economic sanctions imposed by many of the larger global trading nations – Iran cannot even get insurance for ships carrying its oil to the few remaining buyers – the local currency (the rial) has dropped in half against most major currencies. Inflation has driven local food prices by at least an annualized 25% increases. And they’ve even taken to repainting their ships to hide their identity in an effort to stem the significant reduction in their oil exports: “[Iran even has] a fleet of about 65 Iranian tankers serving as floating storage facilities for Iranian oil, each one given a nautical makeover to conceal its origin and make a buyer easier to find… International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran’s sales should drop even more with the European embargo that went into effect on [July 1^st]. New York Times, July 4^th.

Like many in the region, those well-connected seem immune from the vagaries of economic pain. Ensconced in their expensive German cars, living in well-appointed mansions, there are cadres of businessmen who can make good use of economic pain to generate profits. “At first glance, Tehran, the political and economical engine of Iran, is the same thriving metropolis it has long been, the city where Porsche sold more cars in 2011 than anywhere else in the Middle East. City parks are immaculately maintained, and streetlights are rarely broken. Supermarkets and stores brim with imported products, and homeless people are a rare sight on its streets… But Iran’s diminishing ability to sell oil under sanctions, falling foreign currency reserves and President Mahmoud Ahmadinejad’s erratic economic policies have combined to create an atmosphere in which citizens, banks, businesses and state institutions have started fending for themselves.” New York Times, July 1^st. The country puts on a good show for the world, but the vast majority of Iranians are suffering.

The economic undercurrents reflect this reality instead: “Some … exchange their rials for dollars and other foreign currencies as fast as they can. More sophisticated investors invest their cash in land, apartments, art, cars and other assets that will rise in value as the rial plunges… For those on the losing end, however, every day brings more bad news. The steep price rises are turning visits by Tehran homemakers to their neighborhood supermarkets into nerve-racking experiences, with the price of bread, for example, increasing 16-fold since the withdrawal of state subsidies in 2010.” NY Times.

Ahmadinejad has tried to rally internal support by blaming the outside world for seeking to destroy Iran as a nation, or at least to control its policies and goals. He has all but begged for Israel (with the United States sure to be blamed as well) to attack his country by denying the Holocaust, threatening to push Israel into the sea and seemingly developing a nuclear program with the ability to do just that. Strangely, he seems to believe that such an attack would galvanize a skeptical Iranian body politic to circle the wagons against an outside military strike and provide support for the incumbent regime that is falling apart day by day. Iran would also rise in the eyes of majority of the Islamic world that feels the West is their biggest threat.

For years, the Iranian government attempted bribing the populace by subsidizing the basics, spending gobs of money importing foreign commodities under this scheme. But the money has run out, and shortages and expensive foodstuffs have sent a very different new message to the people these days. “For Iran’s army of employees, even state jobs no longer hold security. On [June 28^th], an official within Iran’s elite Islamic Revolutionary Guards Corps admitted in an interview with the corps’ own publication, Sobh-e Sadegh, that the government had been late in paying soldiers their wages.

“Government officials and lawmakers have been quick to blame the West for Iran’s troubles. Last week, the head of Parliament, Ali Larijani, accused the Ahmadinejad administration of failing to take measures to ‘counter the enemy’s hostile policies.’ ... Many economists, though, say that even without the sanctions, Iran would still have big problems: a legacy of inflationary oil spending and budget-busting state subsidies of food, gasoline and other basic items that encouraged over-consumption and the steady erosion of the country’s industrial base.” NY Times.

Public unrest is met instantly and viciously by local police and the Revolutionary Guards, but the tea kettle is whistling with boiling pain. The clock is ticking, and the sanctions have accelerated local discontent. Whether that brings Iran back into meaningful dialog to sacrifice her nuclear ambitions – a factor that could at least generate more oil revenues and drop the cost of Iranians’ shopping for needed international goods – or keeps this ragged nation on its self-destructive course remains to be seen. Perhaps Israel will cooperate and stage that much-needed, politically unifying attack.

I’m Peter Dekom, and it truly does seem as if “it’s the economy, stupid” is this planet’s supreme guiding force.