Business

Iran's economy takes a battering

Saeed Kamali Dehghan

Iran's president Mahmoud Ahmadinejad is shouldering the blame for the financial woes hitting the republic, writes Saeed Kamali Dehghan.

Iranians are having to limit their consumption of foodstuffs such as fruit, chicken and red meat. (Behrouz Mehri, AP)

Iran's president, Mahmoud Ahmadinejad, has survived many crises during his seven years in office. But fears over the country's crumbling economy, which have exposed the extent of internal divisions at the top of the Islamic republic, could signal the beginning of the end.

Ahmadinejad has been left increasingly marginalised as Iran's currency has plummeted and analysts speculate that he is being used by his former allies as a scapegoat for the regime's problems.

With the rial reaching an all-time low last week, Ahmadinejad has been roundly rebuffed by his opponents, who blame his government for mismanagement and economic incompetence. The currency has lost a third of its value in a week and the dollar is now three times stronger against the rial than early last year.

At a press conference in Tehran last week, Ahmadinejad made a speech that highlighted the power struggle between his supporters and his conservative rivals in Parliament and the judiciary.

The president defended his economic policies and blamed the plummeting value of the rial both on Western sanctions and a "propaganda campaign" perpetrated by his opponents at home.

Ahmadinejad's words widened the internal rift, prompting many of his parliamentary rivals – who form an overwhelming majority – to launch the strongest attack on him by regime insiders so far.

Lying vividly
Abbas Rajaie, an MP for the central city of Arak, accused the president of "lying vividly to the people" and Kamalodin Pirmoazen, another parliamentarian, said he was inciting discontent among Iranians towards their officials. The influential MP Ali Motahari, an outspoken critic of Ahmadinejad, has also recently said that the president should not remain in presidential office "even for another single day".

These remarks echoed what the Iranian opposition leaders Mir Hossein Mousavi and Mehdi Karroubi, who are under house arrest, said in 2009 when Ahmadinejad took office for a second term amid unrest and allegations of fraud.

They are the latest signs that Ahmadinejad, who has suffered a series of setbacks in his ongoing feud with the conservatives, has lost a great deal of his influence in Iran – although he is still able to grab headlines abroad.

Last week, while he was addressing the United Nations general assembly, his media adviser, Ali Akbar Javanfekr, was taken to Tehran's Evin prison. Ahmadinejad suggested last week that he wanted to inspect the prison, but authorities signalled that he would not be welcome.

It did not help that Tehran's Grand Bazaar, the heartbeat of the capital's economy, also went on strike and hundreds of protesters took to the streets chanting anti-government slogans that described the president as a "traitor". Iran's state TV, which rarely reflects public anger about the regime, reported the closure of the bazaar and the discontent about the devaluation of the currency. Analysts saw the coverage as a sign that pressure is mounting on the president.

Sadegh Zibakalam, a professor of political science at Tehran University, said Ahmadinejad was increasingly becoming a "lame duck". Zibakalam said Ahmadinejad was being used as a scapegoat by many of the same people who were his supporters in the past. "Mr Ahmadinejad's economic policies are not new. They have been in place from the beginning. If there's a failure, it's not limited to Mr Ahmadinejad. The leadership of fundamentalists should be held responsible too."

Controversial chief
Fundamentalists, who are believed to be close to Iran's supreme leader, Ayatollah Ali Khamenei, have accused Ahmadinejad and his allies, including his controversial chief of staff Esfandiar Rahim Mashaei, of attempting to undermine clerical power and advocating nationalism and greater cultural openness.

"Mr Ahmadinejad and Mr Rahim Mashaei don't think they need to obey clerical power. They both have not been loyal enough to the supreme leader," said Zibakalam.

He predicted that Ahmadinejad, who cannot run for a third time under Iranian law, would not be able to ensure the election of one of his allies in the 2013 vote.

Hamid Dabashi, a professor of Iranian studies at Columbia University in the United States, said that some slogans used by protesters last week showed that the crisis was "much more deep-rooted" and had wider political implications.

"Now the endemic factionalism [in Iran] will try to ride on this crisis as the Islamic Republic is gearing up for the next presidential election. The conservatives will happily blame Ahmadinejad for everything," he said. "And if [former president Muhammad] Khatami plays his historic role of warming up the otherwise depleted political energy of the Islamic Republic, they may actually manage to regenerate some political legitimacy for the ruling regime." – © Guardian News & Media 2012

 


 

 

Static incomes cannot counter inflation

 

Parvin*, a housewife in Tehran, explains how the currency crisis is affecting ordinary Iranians: "In Iran, it was always hoped that the man who asks for your daughter's hand would be an engineer or a doctor. But now, with the crisis over the national currency, one joke says: 'We had happily assumed that our daughter had married a foreign-exchange dealer, but to our dismay it turned out that he was faking and was merely an engineer.'

"The rial is losing its value rapidly and we feel its impact in the prices of staple goods, household products and almost everything else. Prices are going up every day but our income remains static. The money in our pocket comes from my husband who works in a public office. In comparison to last year, his salary has risen very little whereas our daily needs, such as milk, cheese and chicken, are going up disproportionately.

"The price of chicken has doubled since the beginning of the year. Our bills, too, have gone up. When our tenancy contract was due to expire a month ago, the landlord wanted to increase the rent significantly.

"The only way we can cope with the situation is to eliminate some items from our daily basket. I used to buy a variety of fruits and staples, but now I have to limit myself. I also have to cook food which is cheaper and use less meat.

"We used to be a busy family with lots of relatives visiting us every week. Now we rarely invite people for meals. In our culture, it's rude not to insist the guest stays for dinner, but these days people don't visit friends or relatives because they don't want to put a burden on their shoulders.

"Back in 2005 when [Mahmoud]Ahmadinejad was campaigning to become the president, we liked him; he was simple, easy to understand and promised economic justice for everyone. Now that the country is in a mess, no one can bear his face on national TV any more. Back then, almost 9000 rials was equal to one dollar. Now it is more than 30 000. – © Guardian News & Media 2012

* Parvin is a pseudonym

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