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Iran demonstrations and possible consequences

People gather to protest over high cost of living in Tehran, Iran on December 30, 2017 [Stringer / Anadolu Agency]
People gather to protest over high cost of living in Tehran, Iran on 30 December 2017 [Stringer / Anadolu Agency]

Seven months after the largest protests in Iran’s history, Iranians have hit the streets once again.

They are fed up with the country’s poor financial performance and the recent devaluation of Iranian rial.

Having become one of the world’s most volatile currencies, the rial over the past few months has lost more than 50 percent of its value.

Iran’s central bank recently pegged the rial to the dollar, but the greenback – along with some other currencies – continues to be sold on a thriving black market, often fetching twice as much as its official price.

But while the current wave of protest may be seen as a manifestation of popular anger against perceived financial mismanagement, it also points to something else.

This time, the driving force behind the protests is the market, or the “Bazaar” as it is known in Iran, which has been a significant player in Iran’s modern political history.

The Bazaar – which played a crucial role in bringing the Pahlavi regime to its knees – has traditionally been used as a tool for the Iranian clergy to exert political influence.

Read: Is Iran serious about closing the Strait of Hormuz?

Contrary to Sunni-Muslim tradition, Iran’s Shia clergy has always enjoyed a strong bond with the nation’s upper class.

In line with the traditional system of Zakat (almsgiving), Muslims are generally expected to donate 1/40 of their annual income to help pay for community services.

In addition to Zakat, however, Shia Muslims are expected to donate 20 percent of their income to those they “most want to be like”.

Shia Muslims are expected to give this amount to the individual that he/she most admires; he/she is not permitted to donate this amount to the poor or allocate it for other purposes.

In Persian, this system is called “homs”, meaning “one in five”. This means that Iran’s Shia clergy generally ends up controlling some 20 percent of the Bazaar’s overall revenue.

In the past, the Bazaar has been controlled by a few wealthy families, which became deeply involved in Iranian politics following the country’s 1979 revolution.

Since then, they have grown even wealthier by developing deep ties with the ayatollahs through the homs system.

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In exchange for the homs they received, the ayatollahs have looked out for these families’ interests.

As the Iranian economy expanded, a new, liberal market power – composed largely of mid-sized enterprises and entrepreneurs – emerged.

For the sake of co-existence, this new market power – along with more traditional markets – has tended to work towards preserving the political status quo.

Meanwhile, another center of gravity emerged on Iran’s economic horizon: the Islamic Revolutionary Guard Corps (IRGC).

With the petro-dollar in one hand and a formidable arsenal on the other, the IRGC has become something akin to a Frankenstein monster. This transition occurred at a time when Iran faced a host of stringent international sanctions.

Under former President Mahmoud Ahmadinejad (2005-2013), Iran’s wealth began to diminish as a result of the sanctions. Meanwhile, expenses soared due to the country’s adventurous foreign policies.

Read: Israel security expert: We are not stronger than Iran

These conditions led to the IRGC’s increasing influence on the Bazaar. While the domestic market suffered at the hands of the IRGC, the economy was squeezed by the sanctions.

In 2013, Hassan Rouhani won the country’s presidential election. His economic plan rested on two major pillars: giving the market some breathing space by tempering the IRGC’s economic role and securing a deal with the international community regarding the country’s controversial nuclear program.

Despite some initial successes, however, both pillars of Rouhani’s economic policy ultimately collapsed. After his brother was arrested in July of last year, Rouhani was forced to come to terms with the IRGC.

With the US withdrawal from the nuclear deal in May of this year, financial sanctions on Iran were re-imposed, taking Rouhani by surprise and putting additional pressure on his administration.

With all these factors in mind, Rouhani appears to face four possible scenarios.

Iran protests in January 2018 - Cartoon [Sabaaneh/MiddleEastMonitor]

Iran protests in January 2018 – Cartoon [Sabaaneh/MiddleEastMonitor]

The first is resignation, although this appears to be somewhat unrealistic as resignations are not part of Iranian political culture.

After all, resignation is a means of indirectly accepting responsibility. And Iran has a history of assigning blame to a traditional coterie of villains, namely the US and Israel.

The second scenario would see Rouhani relieved of his duties by Ali Khamenei, the country’s supreme leader. Khamenei, however, is unlikely to take such a momentous step – even though it is legally possible.

In a third possible scenario, Rouhani could be removed from office in a coup carried out by the IRGC. This, however, would raise questions of legitimacy, and the international community is unlikely to countenance such a scenario.

Iran already faces questions regarding legitimacy, and if it sees a coup by a military force – which some even consider a “terrorist group” – its situation can only be expected to become more complicated.

In a fourth possible scenario, Rouhani could be relieved of his duties by parliament amid charges of “misconduct”. But this would require the approval of two-thirds of parliament – a tall order indeed.

And even if one of these scenarios comes to pass, this would not resolve Iran’s chronic financial woes, for which Rouhani is far from being solely responsible.

The most formidable obstacle facing the country is the ruling elite’s refusal to accept certain realities. And they are generally accustomed to accusing unidentified “agents” for any economic trouble they face.

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What’s worse, they don’t seem to want to accept that the economy cannot be repaired by force, preferring instead to threaten the market while ignoring its grievances.

For example, after the current round of protests erupted, Rouhani called on security forces to crush the demonstrators.

There only appears to be one solution to Iran’s economic crisis: re-entering direct talks with the US

Contrary to popular belief, US President Donald Trump is more open to negotiations than his predecessors. But his style is different; it’s more like that of celebrated US General Douglas MacArthur.

On Sept. 27, 1945, MacArthur invited Japanese Emperor Hirohito – who had been seen as a god by many Japanese – to the US embassy in Tokyo. Accompanied only by an interpreter, they reached an agreement after a single hour of talks.

As a businessman, Trump understands the value of time. He would negotiate with Ali Khamenei, the true holder of power in Iran, like he spoke with North Korea’s leader in Singapore.

Trump does not care about Khamenei’s religious status. For him, Khamenei is Iran’s real leader – and he would like to speak to him face to face.

But Khamenei seems unprepared for such a scenario.

A more likely outcome is that Iran becomes something akin to the Middle East’s Venezuela. So far, Tehran’s strategy has been to frighten Iranians by citing the Syria example.

But for most Iranians, the Venezuela model is no less frightening.

READ: Iranian oil minister calls Trump’s order to OPEC insulting 

Iran’s current situation should worry Ankara as well.

Serious instability in Iran would have knock-on effects in Turkey. For one, were Iranians to flee the country, they would not take refuge in Afghanistan or Pakistan.

And one must remember that Iran’s population is much, much greater than Syria’s. Already hosting more than three million Syrians, Turkey won’t be able to absorb a massive refugee influx from Iran.

In the Syrian case, the Turkish government and people responded positively to the newcomers, given both countries’ historical and religious ties.

But it isn’t the same for Turkey-Iran relations, which are marred by past conflict and sectarian differences.

From this perspective, any refugee influx from neighboring Iran would constitute a national security problem for Turkey.

Sooner or later, Turkey will have to choose between stability and its principles. The safest alternative for Turkey now is to act as mediator between the international community and Iran.

Trump’s withdrawal from the nuclear deal has coincided with watershed elections – presidential and parliamentary – in Turkey.

And in this regard, Turkey’s future still remains unclear. But now that the elections are over, Turkey should play the role that fits it best.

One of the most influential countries in the region and the Muslim world, and a member of the NATO alliance, Turkey could play a role in securing a kind of rapprochement between the US and Iran after decades of bitter animosity.

And direct talks between Trump and Khamenei should be at the core of these diplomatic efforts.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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