It’s not a revolution yet, but what’s happening in Iran signals that the long-running crisis in relations between Iran and the United States may be nearing a turning point. Iran’s currency, the rial, has collapsed, and it’s plunging further each day, as prices skyrocket and Iranians scramble to find hard currency. Having already lost half of its value since 2011, it fell another 40 percent this week. A big reason: Iran’s oil exports—which once topped 4 million barrels per day—fell from just over 2 million barrels per day in 2011 to about 1 million barrels per day today, leaving a gaping hole in Iran’s foreign exchange earnings.
The collapse of the rial poses a fundamental challenge to Ayatollah Khamenei. When I last visited Iran, in 2009, a nearly universal refrain—among ordinary Iranians, business people, and especially among the circle of big-business types associated with Ayatollah Ali Akbar Hashemi Rafsanjani—a former president who backed the Green Movement—was that the pain of economic sanctions was biting harshly. Many asked, “Why endure this hardship and international isolation simply in order to protect a nuclear program that isn’t necessary for Iran’s future?”
Iran is still talking tough, pledging never to halt its nuclear program and blaming a “conspiracy” for the economic crisis.
However, things are unraveling. There have been street protests and strikes by bazaar shop owners in Tehran and Isfahan, and at least some protesters are chanting slogans critical of Iran’s support for Syria’s President Assad. “Leave Syria alone, think about us,” they chant.
That doesn’t mean that sanctions are working as intended. From the beginning, US-led economic sanctions against Iran have had twin purposes. First, in political terms, the sanctions were useful for President Obama to allay right-wing and Israeli criticism that he wasn’t doing anything about Iran, and he could say that hawks needed to give the sanctions time to work. And second, though few advocates for sanctions really believed this, it was hoped that sanctions would compel or persuade Khamenei to end the nuclear enrichment program. The first purpose has been accomplished, mostly. The second, not so much.
Problem is, Iran is not a democracy. Despite the fact that Rafsanjani, the Green Movement and others—especially in the powerful, bazaar-based business class—might be willing to shut down or limit the nuclear program in order to rebuild ties with the United States, these forces, you’ll recall, were mightily suppressed in 2009. In 2012, they may be agitated over economic collapse and mismanagement by President Ahmadinejad’s feckless government, but their power to force a shift in policy is very limited. And it’s way too early in the current crisis to say that the fall of the rial will provoke massive political unrest across Iran.