January 15, 2018

Iran: Some Causes and Possible Consequences of the Popular Riot

Vadym Volokhov

At the beginning of this January, it became clear that the December 2017 popular riot was very unexpected for all, including for the current regime of Iran, Iranian and foreign special services, and so on. It started spontaneously and was very unorganized, slowly reaching its end, when the energy of protest was exhausted. Apparently, the time has come to try to find out why this happened, and in general — why the streets of the cities were overwhelmed by thousands of Iranians, trying to attract the current authorities' attention.

The reasons are numerous, and they can be divided into economic and political, and into internal and external ones.

The Supreme Leader of IRI Ayatollah Ali Khamenei, President of the country Hassan Rouhani, members of the Iranian government in their statements have repeatedly mentioned the agents of special services and their role in the protests. Of course, all these statements could be considered political and propagandistic, aimed at the consolidation of internal forces. Indeed, Iran has enough enemies. However, in the context of the new US strategy towards Iran, promulgated in October 2017, and taking into consideration the agreements concluded between the United States and Israel and the active cooperation between the United States, Israel and the Kingdom of Saudi Arabia in confronting the growing Iranian influence in the Middle East and Gulf region, it would be an obvious mistake to ignore the version of external intervention in the above-mentioned protests in Iran.

Influence or attempted influence on the situation from the outside could take place, but they did not play a decisive role in the popular riot. Given the specifics of Iran, an external factor here can only play an auxiliary role. When the need for political or economic changes will be mentioned in mosques during prayers, and will be discussed in the bazaars of large cities and small villages, in political circles, then we will be able to talk about the revolutionary situation. Then the external factor will be of some significance. Right now we have seen only one episode of internal political struggle, the street element of which suddenly came out of control of the regime rather unexpectedly. The popular riot became a consequence of, so to speak, overstraining of the state.

 

In recent years, the Islamic Republic of Iran has been actively building the conditions for the establishment of the so-called “Shiite Belt/Crescent”, which should “guarantee security” for a number of countries. Tehran is making a land corridor to the Mediterranean Sea.

The Shia Belt/Crescent
The Shia Belt/Crescent

The three wars that Iran now is leading in the region are exhausting its economy and budget. Now it's even difficult to say which is worse: economic sanctions against Iran or the wars? The losses it has suffered are very noticeable. In Iraq alone between 2014 and 2017, at least 40 thousand soldiers, mercenaries and fighters from the Shiite formations “Badr” and “Al-Hashd al-Sha'bi” died. In Syria, the losses are even greater, but in that country the Iranian regime basically pays money to foreign mercenaries from Central Asia, the Middle East and North Africa.

Now Iran actually controls parts of the territory of Iraq, Syria, Lebanon. At the same time, it is forming parallel armed structure there: Shiite militia, which is also its instrument of control and influence. In Lebanon, there is “Hezbollah”, in Iraq there are Shiite militias “Al-Hashd al-Sha'bi” and “Badr” consisting of 100–150 thousand militants. In Syria, Iran sponsors from 80 to 100 thousand mercenaries who are fighting against the “Islamic State” (ISIS) and other opponents of B. Assad's regime.

In Yemen, the situation is a bit better than in Syria, there are actually no mercenaries there. But without external funding (mostly Iranian), the insurgent Shiite group of the Houthis “Ansar Allah”, which conflicts not only with Mansour Hadi and Saudi Arabia, but also with the Saleh clan, will very quickly lose everything to everyone.

In this regard, it should be mentioned that the IRGC, which in recent years has turned into a very wealthy organization and powerful force that shapes Iran's foreign policy, is the tip of the policy of “export of the Islamic Revolution”.

All these wars and financial assistance cost Iran tens of billions of dollars, undermine its economy and strengthen Iranians' protest moods. According to the UN Special Envoy on Syria, Staffan de Mistura, Tehran annually spends 6 to 35 billion US dollars to support B. Assad's regime.

 

Among the domestic political factors that affect the situation, one should mention the rather fierce struggle between the two political groups: liberal reformers who are after certain democratic reforms, and conservatives who pursue a tough policy to preserve the Islamic regime in the country. The leader of the first group is the current President, Hassan Rouhani. The second is led by a group of conservative clerics with the Supreme Leader of Iran Ayatollah Ali Khamenei at head. The educated part of the Iranian population is not satisfied with many religious restrictions imposed by the clergy.

Supreme Leader of Iran Ayatollah Ali Khamenei and President Hassan Rouhani
Supreme Leader of Iran Ayatollah Ali Khamenei and
President Hassan Rouhani

But the difficult economic situation in the country, of course, has played a prominent role. We remember that in the summer of 2015 Tehran celebrated a great victory in the international arena having made a “nuclear deal” with the United States, France, Britain, Germany, China and Russia. This has led to a reduction in economic sanctions imposed on Iran. Therefore, it began to actively attract foreign investments into its economy. At first glance, the population of the country should consider it a good sign for its future. But things did not come around as they were expected.

Probably one of the main reasons for the popular protests was that:

Firstly, the Iranians had great hopes for re-election to the second term of the country's President, H. Rouhani, and linked with this a complete improvement of their economic situation;

Secondly, the positive effect of a “nuclear deal” did not work in terms of rapid improvement of the daily life of the Iranians.

Note:

The “Joint Comprehensive Plan of Action” (JCPOA)The “Joint Comprehensive Plan of Action” (JCPOA) came into force in October 2015 and provides for some restrictions on Iran's nuclear program in exchange for the lifting of sanctions against the IRI.

January 12, 2018, US President D. Trump did sign extending the regime of lifting sanctions against Iran, although on the eve of the day he said he would not do so because it contradicted his election promises.

Now the US Congress has 60 days to decide on the introduction of new sanctions.

Since 2016, the country's economy has begun to slowly gain momentum, but not the ones that were hoped for. The Iranians have not noticed any real changes in their life.

According to the International Monetary Fund, GDP growth in Iran in 2016 and 2017 amounted to 4.5 % and 4.1 % respectively. At the same time, inflation has risen by 10 % over the past two years. According to the Persian BBC, over the past 10 years, the population of Iran has grown poorer by about 15 %.

Already at the end of last year it became clear that many of H. Rouhani's promises remained on paper. The composition of his office clearly showed that reforms should not be expected.

The USA's policy toward Iran also frustrates European banks and dramatically reduces investment flows to the Iranian economy. The White House unilaterally imposed new sanctions against several Iranian companies in February 2017, and in October of that year, sanctions were imposed against the IRGC. It is no secret that today the IRGC is one of the richest structures of the regime, very closely integrated into the Iranian economy. Besides, the IRGC has a great influence on Iran's foreign policy.

The analysis of the country's economic situation shows that the difficult situation due to low living standards, unemployment, corruption, constant growth of prices, and many months of wage arrears could push the people to protest against the regime.

 

Key socio-economic changes in Iran since the 2009 protests
Key socio-economic changes in Iran
since the 2009 protests

Let's consider in more detail some of the reasons of an economic nature.

December 10, 2017, Iranian President Hassan Rouhani submitted to the Majlis a draft budget for the new year, which begins March 21, 2018. Of course, to this draft there can be many questions not only from the opposition, but also from pro-government reformers and centrists. However, Rouhani's government was the most persistently criticized, of course, by conservatives, who are a minority in the Mejlis of the IRI. They stressed that the President and the government were not able to manage the country and intended to put an additional economic burden on the shoulders of the people. For example, it was pointed out that the government would be able to achieve not more than 70 % of planned revenues to the budget, and therefore, to cover the deficit, it would have to raise prices and taxes. Conservatives argued that such steps had already been planned in the draft budget.

Most loudly were discussed the plans to increase taxes on imports of foreign cars and travels abroad. For example, for Iranians for the first trip abroad for one year the tax used to be 75 thousand tomans (about 21 US dollars). Now it has increased to 155 thousand tomans (43.5 US dollars). The second trip abroad during the year will now cost 255 thousand tomans (almost 72 US dollars), and the third trip will cost 355 thousand tomans (99.5 US dollars).

Fuel prices have grown from 900 tomans (0.25 US dollar) to 1.5 thousand tomans (0.42 US dollar), which has led to an increase in transport costs and higher prices for all goods.

It is planned to retain the military service tax. That is, if you do not want to serve, you can get exemption from service by paying from 2.5 to 12 thousand US dollars (depending on your education), and live calmly. If you don’t have that money — go and defend the state.

There is another long-standing and no less sharp topic that concerns literally every Iranian. I mean state subsidies for basic goods. Since the Islamic Revolution of 1979, they have actually devastated the Iranian budget, but the corresponding reform was postponed all the time. The governments of Ali Akbar Hashemi Rafsanjani (1989–1997) and Mohammad Khatami (1997–2005) did not dare to make such radical changes. Conservative Mahmoud Ahmadinejad (2005–2013) used “shock therapy” and monetized some subsidies. Each Iranian began to receive compensation in the amount of 45–50 US dollars a month. In 2010, it was quite a lot of money. M. Ahmadinejad became almost a national hero to the poorest people and peasants. They received significant amounts of cash, but then happened what had to happen. Inflation began, prices increased times. After the collapse of the rial's rate of exchange, now the amount of compensation is about 12 US dollars.

Ali Akbar Hashemi Rafsanjani, Mohammad Khatami and Mahmoud Ahmadinejad
Ali Akbar Hashemi Rafsanjani, Mohammad Khatami and Mahmoud Ahmadinejad

Before the presidential election in 2017, H. Rouhani's government kept paying, but in the new fiscal year it plans to reduce the list of those who receive monetized subsidies by 20 million people. In the draft budget only 6.5 billion US dollars are allocated for this (in the previous year 12.7 billion US dollars were allocated). There is no clear plan for determining those who do not need a subsidy.

In 2017, prices for basic foodstuffs increased significantly. The government refused to raise the price of bread by 18 %, but it allowed the bakers to set their own price. As a result, it has risen by almost 30 %. For the next fiscal year, the government is proposing the government to stop regulating prices for goods and to allow the market itself to be guided by supply and demand. This means that prices for basic consumer goods will rise by 50–60 %.

Besides, by increasing taxes and reducing subsidy payments in the budget, expenditures on public authorities increase. Especially large will be an increase in the funding of the law enforcement bloc (by 25 %, despite an increase by 86 % last year). The largest amount of expenditures is planned for the IRGC (by 62 %, as compared with last year).

Another concern of the Iranians is unemployment, which is also very painful, especially for young people. In 2017, youth unemployment reached 40 %. Some analysts and political scientists consider young people in general and students, in particular, the driving force behind the popular riot. But this is not the case. At the end of January – in February 2018, the students begin the session and the second semester of study. For a student to be expelled from university means the collapse of his education, and hence the collapse of the whole future. Both foreign and Iranian journalists asked young people and students if they supported the protests. “We are tired of revolutions, quick decisions and we see that they do not lead to anything good. We are against another revolution”, — was often heard in response. So the youth factor is very uncertain.

By the way, of more than 1,000 people arrested during popular protests only 90 were students, 58 of whom study at Tehran's universities, and the rest — from other cities.

Unemployment rate in Iran
Unemployment rate in Iran

It is impossible to ignore the “factor of Western influence”. The matter is that many Iranians have relatives in the United States and Western Europe. Many of the Iranians studied at universities of the United States and Europe, and saw with their own eyes how young people live there.

Attention is drawn to the fact that the first mass demonstrations took place in Mashhad. It is known that the conservative candidate Ebrahim Raisi, who lost in the presidential election in 2017 (12th presidential elections took place on May 19, 2017), lives there.

Note:

Ebrahim RaisiEbrahim Raisi is a political and state figure.

Born December 14, 1960 in Mashhad. Got religious education. In 1989–1994 — Tehran's Prosecutor, since 1994 — Head of the General Inspection Office of the IRI. Since August 2014 — Prosecutor General of Iran.

In March 2016, retired and headed one of the richest funds of the Islamic world, “Astan Quds Razavi”.

He is also considered the main contender for the post of Supreme Leader of Iran after Ali Khamenei's death The Friday Imam of Mashhad is E. Raisi's close relative.

According to the Turkish Anadolu Agency, one of the reasons for mass demonstrations by Mashhad's population was the bankruptcy of at least 6,000 local companies and the loss by millions of Iranians of their money invested in those companies. Most of the bankrupt companies belonged to conservatives.

D. Trump's victory in the presidential race in the United States has objectively strengthened the position of conservatives and the IRGC in Iran. Thus, when the US President said he would not sign a “nuclear deal” with Iran, conservatives in Mashhad also began demanding to abandon this plan. The reformers led by the current President H. Rouhani consider the JCPOA a key victory of their foreign policy.

Iranian sources say that when people took to the streets of Mashhad, protesting against rising prices, they were joined by conservatives with political slogans against H. Rouhani's government, while the protesters expressed support for E. Raisi. So, for some reason, it seems that the government’s opposition conservatives and the IRGC that have strong positions in the city are behind the organization of this protest. It was here that, on the eve of the presidential election, they had already arranged provocations against political opponents, cancelling their speeches and dispersing the participants.

Iranians protest in Mashhad, Khorasan Razavi Province
Iranians protest in Mashhad, Khorasan Razavi Province

Note:

The Iranian Revolutionary Guard Corps (IRGC)The Iranian Revolutionary Guard Corps (IRGC), which, in the times of President M. Ahmadinejad had very broad powers and opportunities to influence political appointments, controlled important sectors of the economy, is also interested in returning all that. Of course, the leadership of the IRGC does not agree to the military restrictions within the framework of the “nuclear deal” signed with the West. H. Rouhani is aware of this and already in the second budget in a row he gives the IRGC the largest share at the expense of other law enforcement agencies. However, the IRGC seeks to fully restore its privileges. A controlled mass protest, for which you can always blame external and internal enemies of the regime, is a good tool for this.

On the eve of budget discussions, conservatives also chose an escalation course in order to increase their political weight. The results of the presidential/parliamentary elections and election to the Assembly of Experts have shown that Iranians are supporting reformers and a moderately conservative camp, so conservatives probably have not found other options for themselves than to address the streets to demonstrate that people are with them.

Therefore, we are not talking about the traditional struggle between reformers and conservatives inside the system that is the Islamic Republic of Iran, but about the birth of an “non-systemic movement” against the background of a difficult socio-economic situation.

Thus, two weeks of popular riot will seriously affect the domestic political balance of power in the country. It is important for Iran's leadership to quickly, efficiently and without the use of excessive force, disperse the unorganized protest movement, reduce the level of the population's dissatisfaction with foreign and economic policies led by Iran's leadership.

Iranians do not want to spend lots of money on the wars in Lebanon, Syria, Iraq and Yemen. There is no doubt, that without these Iranian funds, there will be changes in the mentioned countries, and as a consequence, there will be changes in the whole region of the Middle East and the Gulf.

 

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