Iran protests show danger of economic woes

Demonstrators attend a protest over Iran's weak economy in Tehran, Iran. (AP)

DUBAI: The protesters rallied for days in Iran, chanting against government corruption and demanding justice.
That was last year, when depositors who lost their savings in the collapse of a major government-run credit union took to the streets, shouting “Death to (Valiullah) Seif,” Iran’s Central Bank governor.
In the past 10 days, there were new protests, the largest in Iran since its 2009 disputed presidential election, fueled by young people angry over their bleak prospects. This time, they shouted slogans against President Hassan Rouhani and Supreme Leader Ayatollah Ali Khamenei.
The protests in dozens of towns and cities also showed that a sector of the public was willing to openly call for the removal of Iran’s system of rule by clerics — frustrated not just by the economy but also by concern over Iran’s foreign wars and general direction.
That sentiment likely extends beyond those who took to the streets. But the protests also showed the constraints on discontent. Fear of reprisals probably kept some people away from the protests.
Without drastic change in people’s livelihoods, unrest over the economy will only intensify, becoming perhaps the greatest challenge for Iran as it nears its fourth decade of existence and a new era of leadership looms.
The collapse last year of the Caspian Credit Institute, which promised depositors returns often seen in Ponzi schemes, showed the economic desperation faced by many in Iran. Retirees unable to make ends meet on their pensions can be found driving many of the taxis crowding Tehran’s roads. Universities turn out students with no hope of employment in their fields, while those lucky enough to have work often have a second or even a third job.
Banks remain saddled with bad loans, a warning repeatedly sounded by the International Monetary Fund (IMF). Some of this stretches back to the days of nuclear sanctions, while others find themselves mired in the murky finances of the paramilitary Revolutionary Guard, which is estimated to control a third of the total economy.
Inflation, initially brought under control by Rouhani, has slipped back into double digits, according to recent figures. He cut some subsidies offered by his hard-line predecessor, Mahmoud Ahmadinejad. Those subsidies benefited rural and poor voters in the provinces, the same people who appear to have taken to the streets in the recent protests, initially sparked by food prices.
The recent protests saw some marchers chant against Iran’s foreign wars, demanding the government focus first on those at home.
Protesters denounced the money going to support Iranian proxies fighting in the region rather than helping people in Iran.
Approaching the 40th anniversary of the revolution, Iran will increasingly consider who will follow the 78-year-old Khamenei, who underwent prostate surgery in 2014. Among those under consideration is Rouhani, himself a cleric. Both the US and analysts studying Iran say hard-liners initially fomented the economic protests to put pressure on Rouhani but quickly lost control of them.
The economic resentment seen in recent days could prompt the rise of another Ahmadinejad-style hard-line populist.
It is hard to tell right now who emerged stronger after the protests — Rouhani or his hard-line opponents. Each tried to wield anger over the economy against the other. Weeks before the protests, Rouhani publicly complained that large parts of the government budget went to religious institutions, largely seen as power bases of the hard-liners, seeking to deflect blame over the economy.