President Rouhani blames a conspiracy by “Iran’s enemies”, but perhaps the Iranian leaders have been their own worst enemy considering the continued economic failures in spite of the lifting of sanctions?
By Reuters 8:47 PM EST
Iran’s President Hassan Rouhani may have to step back from some of his core economic policies in the face of nationwide protests by tens of thousands of people frustrated by high unemployment and stagnant living standards.
The protests, during which at least 10 people have been killed, are fuelled by disappointment that the lifting of sanctions on Iran in January 2016 has failed to deliver an economic boom.
Instead, the non-oil part of the economy has continued to struggle, with unemployment officially put at around 12.5 percent – in reality, much higher for Iran’s millions of young people – and inflation running at nearly 10 percent.
“There is a crisis of expectations in Iran,” said Tamer Badawi, a research fellow at the Istanbul-based Al-Sharq Forum. “It is a deep sense of economic frustration.”
To ease that discontent, Rouhani may need to spend more government money on creating jobs, restrain inflation by supporting the rial exchange rate and do more to eradicate the widespread corruption which angers the protesters.
But all of those actions would involve policy change. Rouhani has been pursuing a conservative budget policy to bring Iran’s volatile state finances under control, part of his effort to create an attractive environment for foreign investors. Meanwhile, fighting corruption would risk a backlash from powerful interests hurt by a crackdown.
Mehrdad Emadi, an Iranian economist who is head of energy risk analysis at the Betamatrix consultancy in London, said Rouhani faced a “Herculean challenge” fighting corruption in particular. But he suggested Rouhani might have no choice.
“People are more and more desperate,” he said. “In this situation, there will be periodic outbreaks of dissent.”