HomeIran News NowIran Opposition & ResistanceTo Make Sense of the Regime’s Economic Surgery, Look at Uprisings

To Make Sense of the Regime’s Economic Surgery, Look at Uprisings

Iranian man holding a board that reads: “If it wasn’t for the high prices, people wouldn’t be here.”

Recent nationwide protests over the rising prices of products such as bread, cooking oil, eggs and pasta first began in Khuzestan province (southwestern Iran) on May 6, where they were met with violence by state police and anti-riot forces.

As always, the Iranian regime restricted access to the Internet during the protests. According to the NetBlocks database, the Internet has been disrupted in some parts of Iran, especially in areas where protests are taking place.

Since May 10, when the government of Ebrahim Raisi increased the prices of four basic commodities – with cooking oil prices, in particular, jumping over 400 percent overnight, street protests have spread to at least 10 provinces. The regime tried to prevent the spread of the protests by resorting to violence, which in some places led to the killing of demonstrators. Despite the killings and widespread arrests, it failed to do so. Victims’ funerals became the scene of further clashes between the people and the regime’s suppressive forces.

The demonstrations immediately became politicized and targeted the entirety of the regime and its leaders with slogans like “Down with Khamenei, Down with the dictator” and “We don’t want mullahs ruling”.

Coming from all walks of life, protestors shout slogans that target the top officials of the clerical system, including the Supreme Leader, Ali Khamenei, and President Ebrahim Raisi. It is evident that protesting the ailing economy is complementary to another primary demand: overthrowing the regime. The protesters chanted: “Khamenei is a murderer, his rule is illegitimate”, “Guns Tanks Fireworks, mullahs must get lost,” and “Death to Raisi,” “Death to the dictator”, “Neither surrender nor humiliation, cry out your right,” “Liar Raisi, what happened to your empty promises,” “No to the rule of IRGC”, ” Neither Gaza nor Lebanon, I sacrifice my life for Iran”.

The internet in the cities with ongoing protests is either cut off or partially throttled by the government in an attempt to control the spread of news.

What prompted the protests

The new series of protests began in Iran following the rapid rise of consumer goods, particularly bread and pasta. While the prices have been experiencing a rising trend in recent years, they skyrocketed soon after Ebrahim Raisi’s government removed the preferential exchange rate in particular for flour and bread.

Previously, six basic commodities, including wheat, barley, corn, soybeans, crude oil, and oilseeds, were sold on the basis of a preferential currency exchange rate, along with some medicine and medical equipment. The regime’s decision to end this arrangement made flour, bread, and other basic necessities much more expensive in Iran.

The preferential rate was the country’s official exchange rate, kept at 42,000 rials to the dollar since 2018 and ostensibly used to import essential materials such as wheat and medicine. (The real exchange rate fluctuates between 280,000 to 300,0000 rials to the dollar). But the regime’s insiders who received imported goods at a lower price sold them at exorbitant profits in the market. The prices did not significantly decrease, and since the regime did not have enough currency, it began printing money.

The unsupported banknote printing created liquidity much higher than Iran’s low production rate of 3%. The regime removed the official exchange rate after a lot of fanfare about “combatting corruption.”

Because Iran’s liquidity rate was more than its production and employment rates, inflation has become rampant, causing prices to rise steadily.

Since regime officials knew removing the official exchange rate could certainly increase prices, they flip-flopped while implementing their so-called “economic operation.”

While many economists warned that removing the preferential rate would lead to a “currency shock” and cause prices to jump, Raisi claimed on April 8 that the regime “will not create a currency shock by removing the preferential rate.”

But the skyrocketing prices speak for themselves. Since removing the preferential rate, wheat increased by 100% compared to three years ago. The price of flour increased from 25,000 rials to nearly 170,000 rials per kilo, and the cost of medicine has increased tenfold.

 

So why did Raisi do this?

Unlike the Islamic Republic’s blame narrative, Western sanctions are not the reason for the situation. It is the result of years of misguided and devastating policies, rampant corruption, and embezzlement.

Now, the regime had to make a choice. Either subsidize the people’s most basic needs or continue to bankroll its suppression at home, its extensive meddling in the region, its missile program, and its drive to acquire nuclear weapons. The regime has chosen the latter. Rampant corruption and systematic embezzlement have aggravated the situation.

According to the state-run Eghtesad-e Ayandeh daily on May 12, the regime would earn roughly $8 billion by removing the preferential rate and setting a much higher currency rate. Iran’s ruling theocracy needs every penny to fuel its warmongering and terrorism machinery and use it as leverage in its nuclear talks with world powers.

Besides, the regime earns billions of dollars as the prices of consumer goods continue to increase. The regime has “removed the preferential rate simply because the government wants to benefit from five quadrillion rials [nearly $17 billion] price difference in consumer goods. The claim of spending money for people is a bitter joke,” state-run Mostaghel daily acknowledged on May 10.

Raisi’s government promised to give four million rials worth of subsidies to Iranians for two months to calm tensions. But as the prices of consumer goods continue to rise, this amount of money would in no way help Iranians make ends meet.

Besides, even if the regime gave four million rials to Iranians in terms of subsidies, inflation would increase, even more, leaving Iranians with nothing for acquiring their basic needs.

Reactions

Reactions have been so grave that the tightly controlled state media have started to warn the regime about another nationwide uprising. They also admit how the regime’s disastrous economic policies and its corruption have worsened Iran’s economic crunch.

The regime’s “economic surgery” would “kill Iran’s sick economy,” according to parliamentary deputy Moinoldin Saadi, as quoted by state-run ILNA on May 14.

Hossain Raghfar, one of the regime’s economists, called this plan “a new episode in the plundering of the Iranian economy that the government conducts to compensate for the budget deficit.”

“Only people will suffer from this decision. They cannot tolerate this much financial pressure and the skyrocketing prices. We should mind our security too. The economic pressure on people certainly increases social protests and [uprisings]. The recent protests in southwest Iran are testaments to this fact, and we cannot ignore them,” the state-run Mostaghel daily warned.

“The government should not test people’s tolerance. People’s patience has a limit. These measures could cause incidents [uprisings] like those in 2018 and 2019, or even worse because people see their lives endangered,” the state-run Bahar daily quoted MP Ghasem Saedi on May 12.

The regime has so far failed to deceive the public. On May 15, the state-run Etemand Online quoted Hojjat Abdolmaleki, Raisi’s Minister of Labor, as saying, there have been “more than one million cases of protests” in just four days since the so-called “subsidies modification plan was implemented.”

The bigger picture

Iran has been experiencing various protests and at least eight large-scale uprisings since December 2017. When the November 2019 uprising erupted and the regime killed 1,500 peaceful protesters, both the regime and the people knew the situation would never be the same.

While viewing the current protests as the result of an economic crunch alone would not represent the entire reality of today’s Iran, it is fair to say that the country is going through a critical socio-economic transition. In the end, the real battle on Iranian streets is over two complete versions of Iran. The ruling mullahs want to impose a theocracy rejected by the overwhelming majority of the population. And the people seek a democratic, non-nuclear secular republic that respects human rights, is at peace with its neighbors and the international community and promotes gender equality. The regime wants to stay in power at all costs while the people seek its complete overthrow.

Role of the organized resistance

Resistance Units, affiliated with the main opposition Mujahedin-e Khalq (MEK), have expanded across the country. During the last Persian calendar year (March 2021 to March 2022), they carried out more than 2,230 anti-repression campaigns to pave the way for uprisings. The Iranian regime has seen a new upsurge in popular unrest in recent months.

Since January, the Resistance Units have carried out several major campaigns disrupting the operations of the state-run radio and television networks, its ministry of propaganda, and the ministry that plunders Iranian farmers.

The MEK-affiliated Resistance Units have been broadcasting slogans and excerpts from speeches of MEK leaders in thoroughfares and iconic public locations in major cities, encouraging popular revolt with the explicit aim of democratic regime change.

The quantity and quality of these activities have not gone unnoticed in ruling circles in Tehran. They have also led to the display of more acts of bravery on the streets of Iranian by average citizens. The regime is at a dead end. The more it plunders people to fund its terrorist and nuclear priorities, the more anger it invites among the people, and the more likely will be the prospect of its overthrow.

Every single account of protest, whether teachers demanding their salaries, pensioners crying for fair pay, or families mourning the victims of a collapsed building in Abadan, Iranians call “death to the dictator” whenever and wherever they can gather and march. They are aware that there is no economic initiative or environmental solution to their misery as a decades-long resistance across the country and around the globe has continued to point fingers at the root of the problem.

Absent the regime’s Supreme Leader’s intention to bow to the people’s demands or offer any solutions to the multitudes of crises plaguing Iran, there is no end to the waves of uprisings anymore. As the protests increase, the number of Khamenei’s followers shrink, many fearing for the future or sense that change is coming. It’s only a matter of when, not if, when real change is deemed inevitable.