The first month of the new year was one of protests and mass demonstrations for Iran, with oppressed Iranians making economic and political demands concerning their lack of personal freedom, as their country’s economic crisis has reached a breaking point. The crisis is ultimately due to the fact that the Supreme Leader of Iran, Ali Khamenei’s hardline economic regime continues to favour national interest, investing the vast majority of the country’s wealth on foreign policy in the Middle East, leaving the majority of his people to survive in squalid conditions. The primary motive of Khamenei’s economic regime is to spread his sphere of influence within the Middle Eastern region, to ensure that his status as a powerful Arab leader is secured. In prioritizing self- interest, Khamenei’s regime has ultimately sacrificed the well-being of his people, with basic necessities inflating to unaffordable prices for Iranians as a result.
Last year President Rouhani was re-elected by the Iranians to moderate Khamenei’s self-serving administration. Rouhani promised his people to lower inflation, raise growth rates and lead Iran to economic prosperity. His failure to deliver these promises has further infuriated Iranians, as instead, Rouhani has implemented a conservative economic policy which cuts government cash handouts to lower and middle-class Iranians, to lower the burden on the economy he promised to improve. This conservative economic policy was deemed necessary by Rouhani due to U.S. sanctions imposed on Iran, primarily due to Khamenei’s governmental mismanagement. While Rouhani and Khamenei promote vastly different ideologies, due to the fragility of the Iranian economy, the two governments have been forced to align more closely than they appear, much to the disappointment of the Iranian people.
The Iranian people have received a large amount of worldwide support for their demonstrations, as protests have taken part in the U.S., U.K., Italy and Germany with demonstrators standing in solidarity with the Iranians. Worldwide, demonstrators are attempting to put pressure on the Khamenei regime and the Rouhani government, to focus on investing where the livelihoods of the Iranian people will benefit. Donald Trump, is widely known to oppose the Khamenei regime, pledging that the U.S. will show great support for the people of Iran.
Iran’s economic problems have persisted due to the corrupt interests of Iran’s ruling elite and the economic mismanagement that occurs as a result. Self-interest remains the ruling elite’s top priority, overriding the basic necessities of the Iranian people. When Rouhani was first elected in 2013 and then re-elected in 2017, he promised to focus on the needs of the people that Khamenei neglected, asserting that he would revive Iran’s economy by attempting to attract foreign investors. Unfortunately, his efforts have shown very limited success, as employment opportunities in Iran remain low and inflation persists.
While it is undeniably necessary to attract foreign investors in order to improve Iran’s economy, these efforts ignore the inherent corruption that exists within Iran’s political structure, that must be addressed in order to revive Iran’s economy in the long-term. Foreign investors will fail to see Iran as an attractive business location if the government remains untamed, and the economy mismanaged. Furthermore, Iran will remain subjected to crippling U.S. imposed sanctions due to the vested, private interests of the religious and military institutions that strongly influence business in Iran.
Though Rouhani was elected as a means to improve the Iranian economy, his ability to introduce lasting change is limited. This is due to the deep-rooted structural issues inherent in Iran’s ruling elite, that encompasses bodies including the Islamic Revolutionary Guard, who stand strongly against democracy and U.S. regimes and hold more power than the Rouhani government. These religious and military institutions control over 60% of economic assets and avoid taxes, which halts competition from small private companies to ensure they remain economically most powerful. As a result, job creation is very limited as long as these institutions remain in power, so the possibility for Iranian’s to improve their livelihoods is bleak. While U.S. sanctions have been imposed as a means to halt the spiralling corruption of these Islamic militaries and religious institutions, unintentionally, these sanctions have bolstered the dictators amongst Iran’s ruling elite. A black market economy has been built across Iran by these dictators that ensure working Iranians remain impoverished.
The protests that have occurred across Iran this month have been fuelled by deep economic frustrations of the people due to the lack of economic development that has been promised to them. It is undeniable that while the Rouhani government could alter his policies to ally with his people more closely, economic revival will not occur unless the deep-rooted structural issues inherent in the structural makeup of Iran’s ruling elite and economy are addressed.
For Iran to see lasting change, both economic and political change is necessary. The Supreme Leader Khamenei currently owns the equivalent of a USD $95 billion financial empire, holding assets in every sector of the Iranian economy. He is currently one of the most powerful rulers in the Islamic republic, a monopoly of power which has been used to maintain his grip on Iranian politics and the military, rather than to improve the livelihoods of his people. Khamenei, as well as Iran’s ruling elite, seek to ensure the survival of the Islamic theocracy at any cost, and Rouhani’s government due to the immense power of Khamenei’s regime, has inevitably been used as a pawn for Khamenei to maintain his rule. The consequences of these political issues are dangerous as there is a severe disconnect between ordinary Iranians who have been neglected by the elite, resulting in the recent protests.
Unfortunately, the recent protests did not successfully instil any lasting change. The protests were mainly staged by Iranians of lower-class backgrounds, sweeping through small towns more aggressively than large city centres. In order to seriously threaten the Islamic republic, it is necessary that urban middle classes and the lower rungs of society join more closely for there to be a chance of revolution. While the recent protests have undeniably shaken the current Rouhani government, it also is necessary that Rouhani rethink his austere measures and alter his economic policies to the benefit of both the middle and lower classes. Rather than using the country’s wealth to fund foreign policy in the Middle East, including terrorist organizations, it is essential that the Rouhani government focus on improving the livelihoods of his people, which could firstly be done through increasing cash handouts. Furthermore, if Iran was to forgo its funding to terrorist organizations in its foreign policy, it is likely that the U.S. will lift its remaining sanctions. As a result, Rouhani would be under significantly less pressure to maintain his austere economic policy, with more financial means to improve the livelihoods of his people, narrowing the dangerous disconnect between ordinary Iranians and the elite.
For the Iranian economy to grow, it is critical that Iran is re-integrated into the world economy. This could only take place if the U.S. lifts its remaining sanctions on Iran, ensuring that it becomes a more attractive location for foreign direct investment. However, private companies will still face opposition from religious and military institutions including the Iranian Revolutionary Guards, who are strongly opposed to the presence of private companies in the Iranian economy. The recent support from outside actors of the Iranian demonstrators has undeniably put pressure on the Iranian government and the ruling elites to rethink its current economic regimes. Foreign support is a critical factor necessary to induce a political and economic change in Iran.
These measures will be steps necessary to induce a revolution, the most effective way to introduce lasting change in Iran. Overthrowing the current regime in which corruption pervades Iran’s political and economic systems and replacing it with a new system that favours the people could only be achieved through revolution. The loyalty of the military services to the people will be a critical factor in determining the success or failure of this task. The military services who serve the provinces outside the capital are more loyal to the people than the military services who serve the big city centres such as Tehran. The outskirts will have to play a critical role in mobilizing the masses to ensure that the military services that serve the big city centres, as well as the current government, becomes fearful, with no other option than to step down and relinquish their position as members of Iran’s ruling elite.
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