And, he added: “If you have the upper middle class join the lower-income class … I think that’s very dangerous for the regime.”
The Iranian government’s steps foreshadow the impact of U.S. sanctions that will go into effect as a result of President Trump’s withdrawal last month from the nuclear deal with Iran. On Tuesday, the Trump administration said it expected all countries that buy oil from Iran, which has some of the world’s largest oil reserves, to wind down their purchases to zero by November 4 or face U.S. sanctions. If the Trump administrations follow through, it will further damage Iran’s economy, which is heavily reliant on the oil trade.
“As I have said before, it should surprise no one that protests continue in Iran,” Mike Pompeo, the U.S. secretary of state, said Wednesday in a statement. “The Iranian people are demanding their leaders share the country’s wealth and respond to their legitimate needs.”
Barbara Slavin, director of the Future of Iran Initiative at the Atlantic Council, told me the U.S. had declared “a completely unjustified economic war” on Iran. She said the U.S. wanted to “simply … weaken Iran, to destabilize Iran, to make it less of factor in the region, to collapse the economy.”
“If that leads to violence, and instability, and civil war, that’s an extra benefit as far as this administration is concerned,” she said.
But there are other reasons for the protests, as well. The promised economic benefits from the nuclear deal didn’t materialize at the pace at which Iranians had hoped. At the same time, the government moved to remove subsidies, pruned welfare rolls, and spent billions on the war in Syria. Rouhani’s attempts to address the structural problems with Iran’s economy ran into roadblocks—the most significant of which was the U.S. decision to withdraw from the JCPOA. The U.S. says it wants Iran to be a “normal” country, which, in the administration’s view, includes stopping Iran’s support for militant groups across the region, its activities in Syria and Yemen, and its continued opposition to Israel. Economic malaise and outside pressure from the U.S. are changing “the whole calculation of different classes in Iran,” Ghasseminejad said. “So a combination of people being deeply disappointed in what the regime can deliver and the pressure from outside—I think that’s what we’re seeing.”
Still, the overall Iranian economy will be able, at least for the short term, to protect itself against the worst consequences of U.S. sanctions. Its foreign-exchange reserves are robust and there are indications that some countries—especially its largest clients for energy supplies—will continue buying Iranian oil and paying for it with a currency other than the U.S. dollar. In the wake of the protests, the government will undoubtedly take steps intended to bolster the economy as it prepares for difficult times. It is another matter whether any of that will stop—or slow—the resentment being felt by Iranian citizens fed up with rising prices, mismanagement, and what now looks almost certainly to be another period of economic retrenchment.
Slavin said Iran’s economic imbalances will get worse, but the regime will be able to “feed their people and keep the lights on.” But, she added: “It’ll weaken Rouhani, obviously, [and] strengthen the hardline faction.”