As Iran faces economic unrest, discussion is intensifying over the impact sanctions are having on Iran’s economy.

But experts doubt that the current situation portends the end of the Iranian regime or Iranian capitulation to Israeli and Western-led demands that it change its nuclear stance.

“You have now a market [...]]]> via IPS News

As Iran faces economic unrest, discussion is intensifying over the impact sanctions are having on Iran’s economy.

But experts doubt that the current situation portends the end of the Iranian regime or Iranian capitulation to Israeli and Western-led demands that it change its nuclear stance.

“You have now a market that is under a lot of tension” which has “created a big economic crisis for the government”, said Djavad Salehi-Isfahani, a professor of economics at Virginia Tech, during a meeting here Wednesday at the Wilson Center.

But Salehi-Isfahani added that there is a “lot of misunderstanding about the currency system in Iran”, noting that people are confusing it with huge devaluations that occurred in East Asian countries and Zimbabwe.

“Iran is nothing like that,” he said.

While expressing varying views about the severity of Iran’s economic problems, the Wilson Center’s panelists agreed that it’s still able to manage its ailing economy and the resulting unrest.

“Iran has a lot of experience with sanctions. In fact, what they did immediately is open up the books from the 1980s about how to deal with a currency crisis,” he said.

Demonstrators clashed with police outside Tehran’s central bazaar on Wednesday during protests about the Iranian currency’s declining value. The rial has lost an estimated 80 percent of its value against the U.S. dollar in the last year.

Ali Vaez, a senior Iran analyst at the International Crisis Group, told IPS that “the regime is likely to nip it in the bud to prevent (the protests) from snowballing.”

“Although it’s not clear if there will be more protests, one thing is certain: Iran will experience a much more securitised environment in the run-up to the 2013 presidential elections,” he said.

Iranians are also struggling with rising inflation and unemployment amid escalating U.S.-led sanctions linked to the Islamic Republic’s controversial nuclear programme.

Iran maintains that its nuclear programme is entirely peaceful but Western countries led by the U.S. claim that Iran is working towards achieving nuclear weapon-making capability.

Israel has been pushing the Barack Obama administration to move its previously stated “red line” on Iran, a nuclear weapon, to preventing Iran from obtaining nuclear weapons capability, something which Israel claims would seriously endanger its existence and the stability of the surrounding region.

“I’ve been speaking about the need to prevent Iran from developing nuclear weapons for over 15 years…I speak about it now because the hour is getting late, very late,” said Israeli Prime Minister Benjamin Netanyahu during his speech at the 67th annual U.N. General Assembly meeting last week.

Already under six rounds of sanctions imposed by the United Nations Security Council, Iran saw Western sanctions tighten markedly this year with an EU ban on Iranian crude oil purchases going into effect in July.

U.S. sanctions are also increasingly targeting banks that deal with Iran’s central bank, thereby seriously impeding Iran’s ability to conduct international transactions and trade.

Sanctions have not yielded tangible progress toward a diplomatic solution over Iran’s alleged nuclear ambitions, but the protests Wednesday and protests in July in the northeastern city of Nishapur over the rising price of chicken – a main food staple for the Iranian working class – indicate that segments of Iranian society will express their dissatisfaction when faced with serious pressure.

“The chicken prices got the government’s attention,” said Salehi-Isfahani, adding that the “government made a wise move in trying to stabilise the chicken market and not worry about the dollar.”

“The aim of sanctions is to raise pressure against the regime in order to solve the nuclear crisis in a peaceful manner,” Alireza Nader, a senior international policy analyst at the RAND Corporation, told IPS.

“But as we’ve seen, sanctions are also leading to major unrest in Iran and weakening the regime at home and abroad,” he said.

Bijan Khajehpour, an Iranian businessman and specialist on the Iranian economy, explained during the Wilson Center event that a number of factors have been harming Iran’s economy.

“It’s not just the sanctions…Iran’s economic developments have been undermined by sanctions, subsidy reforms, mismanagement and corruption,” he said.

“The degree of instability has reminded many citizens of the days of the Iraq-Iran war” and “public anger is reflecting itself in sporadic unrest, strikes, blogosphere protests and critical comments by artists,” he said.

But Khajehpour disagrees with reports suggesting that the Iranian economy is collapsing. “The current deterioration of the Iranian economy is less a period of economic collapse and more a period of economics adjustment,” he said.

“The citizens are suffering, but the macro economy could potentially benefit,” said Khajehpour, noting that sanctions which have impeded Iran’s ability to purchase the equipment it needs to develop key industries have forced it to produce them itself.

Khajepour added that, “The future story of Iran is in (its gas industry),” which is projected to grow over the next five years despite sanctions.

“The additional gas capacity will generate the potential of investments in gas-based industries with export potential,” said Khajehpour.

Suzanne Maloney, another panelist and Iran analyst at the Brookings Institute, said it’s “incredible and tragic” that “Iran’s economic horizons are more limited today than the last 50 years.

“There are huge constraints on Iran’s growth and development and that presents tremendous political vulnerabilities,” she said.

“Sanctions are working, but we’re not getting anywhere on the nuclear programme and that cannot be lost on anyone,” she said.

Michael Singh, the managing director of the Washington Institute, echoed the consensus among a number of well-known neoconservative analysts Wednesday by writing that more aggressive pressure and punitive measures are needed to change Iran’s nuclear calculus.

“Rather than hoping that giving current sanctions “time to work” will force Iran back to the negotiating table, the United States and our allies should add further pressure to the regime and the elites who comprise it, including through additional targeted economic sanctions, diplomatic isolation, bolstering the credibility of our military threat to the regime, and support for the Iranian opposition,” he wrote in an op-ed for Foreign Policy.

According to Trita Parsi, the president of the National Iranian American Council, more pressure alone will not bring about favourable results. “I don’t find it likely that the regime will capitulate due to the sanctions as long as sanctions relief is not part of the mix,” he said.

“The possibility that sanctions will lead to general regime change exists, but the question is what type of regime change would the devastation of the Iranian economy generate?” Parsi asked.

Slow-building [...]]]> The following is a set of edited notes from a conversation between myself and IPS’s correspondent in Egypt, Emad Mekay, who was filing dispatches for LobeLog until the Internet went down. He was on the streets of downtown Cairo today until just after the curfew, when he returned home and we chatted by phone.

Slow-building protests started out with diverse crowds, including children

From the morning on, the number of protesters was increasing by the hour. Immediately after Friday morning Prayers at Sixth of October City, a suburb of Cairo, 3,000 people were out in the streets. By afternoon prayers, the number doubled. In the crowd there were many women, some with kids in tow.

The crowd appeared to traverse social lines, from people wearing the garb of door-guards to middle-class and affluent people. Even school girls were out.

I took it as a sign that people really want change when they risk taking their children out. But when things got out of hand, a lot of people pulled their kids out of protests.

Also soon after clashes started, residents began stocking up on food, and in the main area of Cairo, shops were closing their doors. People were unable to get around in cars.

Only the protesters, the police, and the army were left on the streets.

Of course, I got hungry. I stopped at a state-run bread distribution center and I jokingly asked the woman selling bread why she wasn’t protesting. She asked how many people were out, and I said about 4,000 so far. She said she’s waiting for more people. She’s technically a government employee.

In downtown Cairo, people in their homes and apartments looking out from their balconies and windows were throwing food and water to the protesters. Protesters were even allowed to go and make landline calls and go back down to the streets (mobile service is down in many areas and for many different services). This is in downtown Cairo, some of it in affluent areas. People would just open their doors to let people in.

Protesters going after symbols of the government

Before I went to Cairo, I was near the protest from a nearby main mosque. They were marching down and singing songs like ‘down with Mubarak.’ On the way, there was a police station. Some protesters tried to get in, but didn’t initially throw stones.

These are the symbols people are focusing on now: pictures of Mubarak, police stations, and NDP offices.

I don’t think there’s sympathy for the government — though people are worried about what’s next and whether things will get out of control.

The protesters are not looking outward at all and not mentioning Israel or the U.S.

They are concerned about better lives in Egypt. There were no religious slogans except for “alluhah akbar,” which is also a general expression of celebration.

Army presence in streets, perhaps military intelligence

The branch of the Army that came to downtown Cario to protect the (state-run) TV and Radio building were from the Republican guard, which is the presidential guard.

There were reports of tanks around the U.S. and other embassies, protecting those diplomatic installations.

There were cars around the city in strategic areas with tinted windows. It’s illegal for civilians in Egypt to have tinted windows. Usually, these cars are some kind of military intelligence.

There also appeared to be a communications tower being set up downtown (for police to communicate). But this sort of activity is usually conducted by the military.

Government blames the Muslim Brotherhood

Basically, what the government was trying to do was say that it was the Muslim Brotherhood (MB) behind the unrest, but most of the leadership of the MB was arrested ahead of the protest.

Instead of having senior officials from Mubarak’s party come out and say its the Muslim Brotherhood, a parade of low-ranking governemnt officials came out and said the MB did this. They were blaming the Brotherhood for the “riots,” and for fires.

Unsubstantiated rumors flew that the government itself had set fires in order to blame the MB. People noted that it took nearly four hours for firetrucks to come and fight the fires; they guessed that the authorities could have easily called in services.

Communication breakdown

At home, people were watching satellite broadcasts like Al Jazeera, Al Arabiya, and even Al Hurra, the U.S. government-funded station, which all had good coverage.

Most forms of communicating out are down or suppressed. There is still no Internet service, and mobile phone services are still down. [Mekay was unable to dial the U.S. from his landline.]

People are complaining that landlines are often busy, too. People are phoning into Egypt in terror, trying to call their families.

The authorities cracking down and cutting all communications really infuriated everyone. It was a sign that they might be losing control.

Nervous excitement

When I came back here, there were some intellectuals who were blaming Mubarak for what’s happening.

Everybody’s nervous; you might hear it in my voice. I don’t know if it’s just excitement, but things are boiling. It’s scary in a way, too, because I personally don’t know what’s going to happen next.

There are reports on satellite television of two more protesters dead in Mansour, a city in the northeast Nile River Delta. Al Jazeera just reported that in the main city on the Suez, 11 people died today, on top of the three others that have died in recent days.

The government may react more violently.