Iran Democracy Monitor: No. 125

Related Categories: Iran

AHMADINEJAD IN THE CROSSHAIRS...
The sudden, steep devaluation of the Iranian rial earlier this month has created a major domestic crisis inside the Islamic Republic – and sent regime authorities scrambling to find scapegoats. In particular, Iranian president Mahmoud Ahmadinejad has emerged as a likely patsy for the country’s current economic problems. Iran’s parliament, or majles, has issued a petition summoning the president for a public questioning over his government’s economic policies, which are suspected of having contributed significantly to the present turmoil. Iran’s Supreme Leader, Ali Khamenei, has leveled a similar accusation at Ahmadinejad, declaring publicly on October 10th that the current domestic situation may well have been exacerbated by “mismanagement” – a thinly-veiled reference to Ahmadinejad’s controversial economic stewardship in recent years. (Tehran MEHR, October 7, 2012; Christian Science Monitor, October 16, 2012)

...AS PROTESTS WIDEN

Iran’s current bout of domestic unrest may have begun in the Tehran bazaar, but it increasingly has begun to involve other elements of Iranian society as well. On October 10th, some two hundred people gathered in Tehran to protest on behalf of over ten thousand drivers of Vahed, Iran’s largest bus company. The grievances included discrimination in benefits, wage discrimination, and unpaid salaries. The protesters also called for the dismissal of the company’s managing director. Participants also reportedly complained about insufficient food and housing benefits. According to Etehad, the official independent organization of Iranian workers, the protest is also partly due to a ten percent salary increase for all municipality workers – a benefit that was not extended to Vahed. (Tehran Rooz, October 11, 2012)

SUBSIDY REFORM ON HOLD

Iran’s deepening economic dire straits have claimed an unexpected casualty: the Iranian government’s own effort to reform the country’s extensive – and costly – subsidies. Food and fuel subsidy reforms, until recently being pushed by President Ahmadinejad’s government, have come under fresh parliamentary scrutiny, with the majles voting to consider a halt to the second phase of subsidy reforms now underway because of the hardships caused by the currency crisis. Until now, the government has pursued subsidy reform as a means to ease the financial burden on the state, but regime worries over their potential to exacerbate the current level of privation – and unrest – on the Iranian “street” apparently has served to chill official enthusiasm for the reform effort. (Radio Free Europe, October 9, 2012)

AS SANCTIONS BITE, IRAN REFOCUSES ON ASIAN ENERGY

Amid mounting international pressure from Europe and the United States, and a simmering fiscal crisis at home, Iran’s ayatollahs are increasingly setting their sights on Asia as a potential source of economic salvation. The Iranian regime has long expressed its interest in the Iran-Pakistan-India (IPI) pipeline—an energy scheme that would link the Islamic Republic with South Asia’s vast energy market, and in the process provide new customers for Iran’s extensive natural gas reserves. But political tensions between regional rivals India and Pakistan, as well as Iran’s increasingly precarious international position, have conspired to keep the project moribund. Now, however, Iranian officials have resumed their lobbying for the route. While in New Delhi recently on an official visit, Iranian Deputy Foreign Minister Seyed Abbas Araqchi reportedly pressed Indian policymakers to make a final decision regarding participation in the multi-billion dollar project. (Tehran FARS, October 16, 2012)

[Editors’ Note: Despite Iran’s enthusiasm, practical obstacles to the project abound. Among them is the fact that foreign financial institutions are now largely proscribed from doing business with Iran as a result of U.S. and European sanctions, and Indian banks have increasingly disengaged from Iran over the past year as a result. Still, Iranian officials are aware of the situation, and are “working on a mechanism” to make India’s financial participation in the project possible, Araqchi has said.]