Unrest over the sharp devaluation of the Iranian currency took place on October 3, 2012. President Ahmadinejad announced the previous day that an economic war by the West was responsible., a photo by Pan-African News Wire File Photos on Flickr.
Tensions over Iran’s currency spark clashes between protesters, security forces
By James Ball
Wednesday, October 3, 4:19 PM
Washington Post
Tensions over the plunging value of Iran’s currency sparked clashes between protesters and security forces in the capital Wednesday, the most significant unrest there in two years and a possible prelude to a more serious threat to political stability.
Increasingly stringent U.S. and European sanctions against Iran have driven the value of the rial down for years, but its fall has accelerated dramatically over the past week, forcing a run on hard currency and anxieties over the skyrocketing prices of food and other staples.
Protestors, apparently including many shop owners, clashed with riot police Wednesday in the area around Tehran’s foreign-exchange markets in what experts described as the most significant Iranian protests since the popular uprising in 2010. Police deployed tear gas to disperse crowds and closed off neighboring streets.
In an apparent bid to prevent any spread of unrest, the government deployed satellite jamming to block TV networks, including the BBC, from airing in the country.
The clashes came a day after Iranian President Mahmoud Ahmadinejad acknowledged that Western sanctions were exacerbating the country’s economic problems and urged Iranians not to exchange their rials for foreign currencies, saying that doing so would further the “hidden war” against the country.
The value of the rial has fallen roughly 60 percent over the past year but about 30 percent over the past week.
U.S. officials said the Iranian currency crisis reflected the combined consequences of fiscal mismanagement by its government and economic sanctions imposed to force the country to negotiate over its nuclear program.
Asked about the fall of the rial Wednesday, Secretary of State Hillary Rodham Clinton said sanctions could be reconsidered if Iran moves to cooperate with the West.
“They have made their own government decisions — having nothing to do with the sanctions — that have had an impact on the economic conditions inside of the country,” Clinton said.
“Of course, the sanctions have had an impact as well, but those could be remedied in short order if the Iranian government were willing to work with the . . . international community in a sincere manner,” she said.
Analysts said the currency weakness spells serious political problems for the Iranian government.
“These are the biggest demonstrations we have seen in Iran since 2010,” said Barbara Slavin, senior fellow at the Atlantic Council. “It’s a reflection of pent-up frustration and anger with the economic problems of the country, which have gotten worse, particularly since the European sanctions came into effect in the summer.”
While the Obama administration has steadily imposed more severe economic sanctions on Iran, the European Union did not agree to a total blockade against Iranian oil imports until January, amid concerns over the country’s nuclear program. The sanctions took effect in July, exacerbating Iran’s existing economic trouble.
The E.U. is meeting again later this month to debate further tightening and refining the sanctions. Banking sanctions, experts say, have had as severe an effect as those on oil imports and have caused substantial quantities of the Iranian regime’s overseas currency reserves to be frozen outside of the government’s reach.
Among ordinary Iranians, the currency crisis is being felt severely in shops and bazaars.
“This is really calamitous in terms of how it affects prices for ordinary people. Iran produces a lot of its own food, but not all. It imports wheat, inputs for its manufacturing, medicine and medical devices and more,” Slavin said.
Iran imports substantially more food than it exports. According to figures from the World Trade Organization, the country imported $9.4 billion of agricultural products and $8.2 billion of food in 2010. Iran also imports substantial quantities of materials for industry, as well as consumer electronics.
Anger over rising food prices have caused small-scale protests in Iran during the past year. In July, small-scale unrest broke out over the rising price of chicken, a staple food, in the northern city of Nishapur.
Such price hikes came despite Iranian efforts to stockpile foodstuffs ahead of tighter sanctions, including the purchasing of millions of tonnes of wheat early in the year through international markets.
Iran’s economy could be approaching a state of hyperinflation, where prices rise daily, said Karim Sadjadpour, an Iranian-born American and senior associate at the Carnegie Endowment for International Peace.
“When authorities concede an inflation rate of 29 percent, you can be confident that the unofficial rate is usually much higher,” Sadjadpour said. “People in Tehran frequently complain that their Iranian salaries cannot keep up with daily living costs that rival that of Western cities.
“So far, the slogans people are chanting are more economic than political, and they’re directed at the regime not Western sanctions,” he said. “The regime will try to nip these protests in the bud right immediately, before they start getting overtly political.”
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