The Economic Woes Behind Iranian Unrest

Iran’s Supreme Ruler, Ayatollah Ali Khamenei, has accused foreign powers of instigating the unrest that rocked the country for days earlier this month, claiming at least 22 lives.

The protests—the largest since the disputed 2009 presidential election—began December 28 in the eastern city of Mashhad. They then spread nationwide, with tens of thousands calling for the end of clerical rule, BBC News reported.

So what sparked the recent unrest, and why did it become so widespread?

Anger over economic conditions in the country appears to have boiled over. While growth has returned since President Hassan Rouhani took office in 2013 (the IMF is predicting 4.2% growth in the first quarter of 2018), and annual inflation has dropped from 34% to 10%, many ordinary Iranians are still not feeling the benefits. The country is young and highly educated, yet youth unemployment remains high. Over 24% of people between the ages of 15 and 29 are unemployed. 

Rouhani’s budget proposal, unveiled last month, has also been a source of anger. The government proposed slashing subsidies for basic goods such as food and even increasing fuel prices by 50%.

Tamer Badawi, a research fellow at the Istanbul-based Al-Sharq Forum, calls it “a crisis of expectations.” “It is a deep sense of economic frustration,” he says. Indeed, there is a theory of revolution that states that unrest takes place when expectations are raised, and not met. 

Rouhani worked hard to sell the 2015 Iran Nuclear Deal to the Iranian people, giving them hope for a more prosperous future. While the end of international sanctions against Iran has translated into economic growth, it has not resulted in a better quality of life for Iranians. Many foreign banks and corporations remain reluctant to do business in Iran, in part due to the Trump Administration’s hard line on Tehran.

Furthermore, as much as 60% of Iran’s assets are controlled by the Islamic Revolutionary Guard Corps as well as religious institutions. These are controlled by the Supreme Leader and the clerical leaders of the country, who are shielded from taxes and stifle competition from private companies.

This sense that the system of the Islamic Republic has failed them seems to have driven the major escalation of the protests. The desperation of the protesters has led them to seek the overthrow the Supreme Ruler and the entire clerical system, a major distinction from the 2009 wave of protests.

Iranian economist Mehrdad Emadi believes these economic issues will be very difficult for Mr. Rouhani’s government to solve. “People are more and more desperate,” he told Reuters. “In this situation, there will be periodic outbreaks of dissent.”

The protests, though widespread, have been relatively small in scale and appear to be leaderless—organized over social media. Iranian authorities have cracked down hard, using live ammunition against protesters, making preemptive arrests of Tehran University students, and mobilizing tens of thousands in pro-government rallies. Iran’s clerical regime seems unlikely to fall, or even truly falter, anytime soon. Yet, the recent unrest is a reminder that even authoritarian governments can be vulnerable to their people’s economic frustration, especially in the digital age.