The 2015 nuclear agreement signed by Iran and several world powers, including the U.S., was heralded internationally not only as a way to freeze the Islamic Republic’s nuclear program, but also domestically as a way to open up Iran’s moribund economy. At first, there were signs this was precisely what would happen: U.S., European, Russian, and Chinese companies all signed agreements with Iran. The World Bank estimated Iran’s economy grew 6.4 percent in 2016, on the back of 9.2 percent growth in the second quarter of the year. And there was hope the new openness would mark a new era of entrepreneurship.
Except none of this was quite enough to stop the nationwide protests that began December 28 over jobs and the cost of living.
The first sign something could be wrong came in the May 2017 presidential election. Hassan Rouhani, the reformist president who had championed the nuclear agreement, was re-elected by wide margin—56 percent of the vote over the 50.7 percent he got in 2013. But two weeks before the election, polls showed him in trouble against his more conservative challengers. His rivals asked why Rouhani hadn’t been able to deliver the kind of economic benefits the nuclear agreement was supposed to bring. That message resonated with many poorer Iranians whose lives hadn’t meaningfully changed since the lifting of some international sanctions. There were still not enough jobs and the price of essential goods were high. (Vali Nasr, a professor of international affairs at Johns Hopkins University, wrote at the time that Rouhani ultimately won by attracting the voters of Iran’s reformist movement who might otherwise have stayed home on election day.)
There are several reasons Iran’s economy hasn’t taken off in the way Rouhani had promised. For one, uncertainty over the fate of the nuclear agreement in the United States has given pause to U.S. companies that might otherwise want to invest in Iran; European companies are nervous that if the U.S. withdraws from the agreement, U.S. law will then target international companies that invest in Iran. The Trump administration maintains the agreement is deeply flawed, and that it does not address many concerns about Iran’s missile program, its support for militant groups, its human-rights record, and its military adventurism in Yemen, Syria, and other places—actions the U.S. says diverts money away from the Iranian public. Supporters of the nuclear agreement say the accord was not meant to address those issues. They say sanctions against Iran for those activities remain in place.
But perhaps more important than the uncertainty over the agreement are Iran’s own demographics. Half of all Iranians are under the age of 30. More people are entering the workforce each year than jobs exist or are being created. This all but ensures that a country with near universal literacy—with no gender disparity—will continue to have double-digit unemployment for the foreseeable future.
The protests began December 28 in Mashhad, a center of Shia pilgrimage. From there they spread to Qom, Najafabad, Rasht, and Khoramabad. In all, protests took place in 80 cities and towns. Demonstrators chanted slogans against the government, against Supreme Leader Ayatollah Ali Khamenei, and against Iran’s involvement in foreign conflicts. It’s unclear what prompted the protests, though some reports suggest they were encouraged by hard-line opponents of Rouhani as retaliation for a speech he made in December in which he complained about opaque budget allocations. But the new budget proposal also reduced subsidies to the poor (that decision has since been suspended) and increased the cost of basic goods such as fuel and eggs. What fueled the protests, Karim Sajadpour wrote, “have been the same grievances that power anti-government protests everywhere: rising living costs, endemic corruption, fraud, mismanagement. In Iran, add to that bitter cocktail both political and social repression, all conducted from the moral pedestal of Islamist theocracy.”
The protests were able to spread because of, among other things, the penetration of the smartphone—more than 40 percent of Iranian households have access to at least one—which enabled Iranians to use messaging apps to spread the word about the demonstrations. Although the protests spread to Tehran, the capital, they never really took root there. They have also mostly fizzled out elsewhere largely because of the government crackdown. These demonstrations did not come close to the scale of the pro-democracy protests of 2009 that were crushed by the regime. They had no obvious leaders and no clear demands and, as Barbara Slavin, director of the Future of Iran Initiative at the Atlantic Council, wrote, they came “largely from the regime’s working-class base, not the effete wealthy of north Tehran. They are demanding cheaper food, more jobs and less government corruption.”
Ultimately this might have been what prevented them from getting bigger. Writing in Politico, Gissou Nia, a human-rights lawyer, pointed out that those in the West who watch Iran closely “deal mainly with upper-middle-class Iranian professionals and intellectuals. They just don’t have access to who’s protesting … the kinds of people who don’t tweet about their suffering in English or call up foreign journalists to share their experiences.”
In all 22 people were killed in the protests and more than 1,000 arrested. And they appear to be over—or close to over. The Iranian regime organized Friday pro-government demonstrations across the country in which crowds accused the United States of instigating the unrest. Reuters quoted one Tehran cleric as saying “ordinary Iranians who were deceived by these American-backed rioters” should receive clemency, but he also called on the government to “pay more attention to people’s economic problems.”
This is ultimately what could imperil the Iranian regime. Rouhani’s economic promises have yet to materialize. This gives his government hard-line critics ammunition. The protests, as Ray Takeyh, a senior fellow at the Council on Foreign Relations, noted in Politico, have weakened the president. Khamenei and the hardliners view Rouhani and his supporters, he wrote, as harbingers of popular insurrection. Come the next election, in 2021, Khamenei, who has ultimate say over who can run for office, might grant his imprimatur only to hard-line candidates, leading to another period of political repression and economic hardship. All this as Iran’s population continues to grow, with few new jobs, and more international isolation.
“The Islamic Republic,” Takeyh warned, “is entering a period of prolonged transition where it will no longer be able to proffer a theocracy with a human face.”