Iran: causes and consequences of the recent unres

Over the past few weeks, Iran has been shaken by what has been often described as the most widespread series of demonstrations in the country since 2009, which resulted in at least 22 casualties and thousands of arrests in a matter of days. The deployment of security forces has significantly weakened the unrest, however, their long-term ramifications, especially for the current government, might be significant, posing yet another challenge for President Hassan Rouhani and his ability to deliver in his second mandate.

The demonstrations started on December 28th 2017, mainly in Mashhad, the second largest city in Iran and a stronghold for the country's religious hardliners, which, according to most reports, have been the organizers of the protests aimed at undermining Rouhani’s government and his economic policies. However, things quickly got out of hand and demonstrations started to spread across the country.

The main trigger and leitmotiv have thus been the overall state of the economy, which, despite the heightened expectations and the liberalizing economic reforms introduced by the government, has not performed to expectations. Unemployment is currently estimated to be around 12.5% at the national level (though the unofficial rate is estimated to be almost double that figure) and the prices of basic goods are skyrocketing. This is in contrast to the economic boom promised by Rouhani in light of the nuclear deal reached with the permanent five members of the UN Security Council plus Germany and in force since January 2016. The agreement, which led to the lifting of nuclear-related sanctions against Iran, was portrayed by the administration as the key to fix the Iranian economy, mainly through the reprisal of exports at pre-sanctions levels, but also through the attraction of foreign direct investments to the country. While some of the economic figures (such as inflation and oil exports) improved significantly, overall the economic benefits of the nuclear deal have not been felt by the population.

The presentation of the budget for 2018 (starting in March) by Rouhani on December 10th, therefore, only raised additional concerns about the prospects for the improvement of the living standards in the short to medium run. Despite the President’s description of the budget as one aimed at working toward full employment, eliminating poverty and creating social justice, its focus on cutting fuel subsidies and cash handouts to the poor, as well as the allocation of state funds to religious and military entities contributed to enraging most of those who decided to join the protests.

This explains why most of the unrest took place in small towns and villages in which unemployment is higher than the national level (such as Kermanshah, where youth unemployment is around 38%), only marginally touching urban areas, such as Tehran, which have been the main beneficiaries of Rouhani’s economic policies.

At the same time, while the focus has been on the state of the economy, criticism was also aimed towards the endemic corruption, the restriction of civil liberties, and environmental issues such as air pollution and water scarcity.

Rouhani soon responded to the protesters by defending their right to criticize the government and even to protest. He acknowledged their economic grievances, while also adding that people do not want to be dictated to about how to live. Rouhani argued, “The problem we are facing today is the gap between we, the authorities, and the younger generation” and “one cannot force one’s lifestyle on the future generations.” This might have been a way to demonstrate that the target of the unrest was not only his government and his policies but also the broader leadership and Islamic Republic’s institutions.

The Supreme Leader echoed the statements made by Rouhani, recognizing that, despite the fact that demonstrators were “playing with fireworks”, their “appeals must be dealt with and heard out. They must be answered as much as possible,” a rare concession by a figure usually voicing support for security crackdowns. While he called upon the government to address these concerns, he also claimed “I myself am responsible” for following up on the demands.

What this will mean in practice for Rouhani and his room for maneuver remains to be seen. The fact that the state of the economy was going to be the main issue on which his success would be measured is no surprise. In May 2017, he won his re-election in a landslide victory largely because he convinced the electorate that the nuclear deal would trickle down its economic benefits to the population. More than seven months into the mandate, this is far from happening. The International Monetary Fund projected Iran’s economic growth in 2018 to be just 3.5%, much below the aspired 8% goal.

The decertification of the nuclear deal announced by US President Donald Trump back in October, together with his recent decision to allow waivers to sanctions one last time, unless more constraints to Iran’s nuclear and ballistic missile programs are agreed upon, only increase the economic uncertainty faced by Iran, given that foreign banks and companies will most likely continue to be deterred from engaging with the country.

In light of the recent demonstrations and the risk they pose for the stability of the Islamic Republic, the leadership might facilitate some of the restructuring advocated by Rouhani (and strongly opposed during the first mandate), aimed at curtailing the economic influence of foundations, state institutions, and actors such as the Islamic Revolutionary Guard Corps. Similarly, the administration might now be in a position to better promote civil liberties, such as the licensed right to peaceful protest and free access to social media. While the leadership might see the benefits of losing grip on some of these matters in the interest of security and stability, it is no doubt that such issues will be the subject of a hard-fought battle between different political factions in Iran for the coming months.




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