Listening to the streets of Tehran: Sanctions are hurting

Iran's current economic situation is untenable. If the leadership is concerned with the well-being of the Iranian people, it must strike a deal with the international community

Don't be fooled - times are hard in Iran
Brendan Daly
On 21 January 2013 16:39

A common phrase Iranians use when discussing their country is “before the Revolution,” followed by some comparison, depending on their political bent, on conditions in the country before and after 1979. Iranians are a varied people. Ask an Iranian their opinion of the former Shah, and the response you get will range from holy condemnation to virtual deification – and everywhere in-between.  But one thing all Tehranis currently agree on is this: everything is awful.

Indeed, a phrase that is becoming equally common is “before Ahmadinejad.” And unfortunately for the beleaguered president – who came to office in a surprise election victory in 2005 – in this case, the comparison between past and present is never positive.

“People used to complain when [former President] Khatami was in charge. About how expensive everything was, about how little freedom we had as young people. We had no idea how lucky we were,” says Reza, 29.

Iranians themselves are the first to admit their penchant for complaining. But today, their complaints are more than justified.  The recent currency crisis, brought about by the tightening of the US and EU-led sanctions programme, has meant that people’s savings are now worth less than half of what they were this time last year.

In October, oil exports fell to their lowest level since 1988. Consequently, the government’s Budget Commission announced that the Government received only half of its projected revenue in the first six months of the Iranian calendar (March to September, 2012).

According to official government statistics, inflation is currently running at 27 percent. But nobody takes this number seriously – the real rate is much higher. Even governmental and clerical figures have referred to a rate of 40 percent. Economist and former advisor to President Ahmadinejad, Hossein Raghfar said on October 10th that the real rate is over 100 percent. Certainly the cost of many imported products, such as coffee, has doubled over the past few months. As has the prices of beef and chicken, since before the latest round of stringent sanctions started to take effect.

This time last year, it was still very rare to hear the word “tahrim” (sanctions) on the streets of Iranian cities. Now you hear it every day. Not to mention the latest anecdotes of the dollar-rial exchange rates.

At the height of the currency crisis in October, when the rial had dropped to 20 percent of its value compared to last year, a convenience store in downtown Tehran rather humorously put up a sign saying “No discussion of the dollar rate!” As I presented my wares and the shopkeeper saw my Western face, he asked me if I could pay in dollars.

Street crime in Tehran has, by all accounts, risen exponentially over the past few years. I am told that ten years ago such occurrences as this brutal mugging – as well as the increasingly popular act of pretending to be a taxi driver in order to rob passengers at knife-point – were very rare.

More surprisngly perhaps, from around 10:30pm on most nights, on the major boulevard nearest to my apartment, young girls can be seen openly soliciting. To the uninitiated, they are simply well-dressed girls waiting to be picked up by friends. But there is a very specific, very subtle dress code – and if you stay around to observe, you will see them negotiating with men through their car windows. Again, I am told that this was unheard of only five or six years ago.

But even before the economy started to flounder, Tehran was on a downward spiral. A cartoon published on the internet in 2007, and still being passed around by Iranians on social networking websites, is indicative. It shows three schoolgirls in their blue uniforms standing on a bus, laughing and smiling. The adult men and women, segregated of course and drawn in black and grey, are glaring at the girls menacingly.

Manochehr, a 31-year-old from the wealthy suburbs of north Tehran, describes to me why he doesn’t like walking the streets of the downtown area of his own city: “I don’t like the way people look at me. If I am laughing with a friend, men look at me like I am some kind of alien.”

It is extremely difficult to find anyone in this city who will speak positively about their government, or even their society at large. Almost every single person I’ve met under the age of 35 has plans to move abroad. Some plans are more concrete than others – this year I’ve known several people who’ve already left – while some are more pipe-dreams than legitimate goals. Nonetheless this desire to leave their country of birth, speaks to the feeling of despair.

Situated right next to this feeling of despair, is a sense of powerlessness to effect any change, as the turn-out for March’s parliamentary elections indicates. The government announced a 64.5 percent turnout nationwide, remarkably close to the Supreme Leader’s “enemy-busting” 65 percent prediction in January. Indeed, election officials announced at 21:00 local time “an overall voter turnout of 64.6 percent” – which would of course mean that somehow -0.1 percent of people voted before the polls closed an hour later.

Officials also claimed a figure of 48 percent of registered voters for Tehran  – although anyone on the streets that day, myself included, would find it impossible to believe that there was anything close to the several millions needed to be lining up at the polling stations, to make such a figure credible.

The first post-Revolution chancellor of Iran’s oldest and most venerable academic institution, the University of Tehran, recently wrote an open letter to the Supreme Leader, Ayatollah Khamenei. On May 22nd, Dr Mohammed Maleki wrote his letter directly to Khamenei, an old acquaintance since before the 1979 Revolution.

After receiving no response, he took the step of publishing the letter in early December. In it, he urged the clerical leader to “to accept that Iran is at the verge of collapse” and recognize among other things, the catastrophic effects of the sanctions, and the dissatisfaction of the population. Within a matter of days the 78-year-old Maleki was summoned to Evin Prison to serve six years in prison, for sentences that had previously been suspended, for similar acts of defiance throughout his long career.

But he was of course right. In recent weeks, the rial has dropped back to around 33,000 per US dollar, close to the all-time low of 40,000 it reached in October. At the end of 2011, it was estimated that the Iranian government had about $80 billion in foreign currency reserves.

On December 7th, Deputy Speaker of Parliament Ali Larijani, thought to be one of the most influential figures in the regime, revealed that this figure had dropped to $40 billion – presumably due to the loss of oil revenue and the injection of said reserves into the market to save the rial from falling any further. This figure was more or less corroborated by sources who spoke with the London Times.

If the government can lose half of its reserves in a matter of months, it’s pretty clear that the current situation is economically untenable. Therefore, if the leadership is concerned at all with the well-being of the Iranian people, a meaningful deal with the IAEA and the UN Security Council P5+1 on the nuclear issue with the aim of lifting at least some of the sanctions, is an absolute necessity.

The chairman of parliament's National Security and Foreign Policy Commission recently said as much, but other indications have not been as promising.

Brendan Daly has spent the past year in Iran and has previously written for Middle East Quarterly

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