Violence and Protest in Iran as Currency Drops in Value
European Pressphoto Agency
Riot police officers clashed with money changers in Tehran on Wednesday.
By THOMAS ERDBRINK and RICK GLADSTONE
Published: October 3, 2012
TEHRAN — The first outbreak of public anger over Iran’s collapsing currency and other economic maladies jolted the heart of the capital on Wednesday, with riot police violently clamping down on black-market money changers, hundreds of citizens marching to demand relief and merchants in the sprawling bazaar closing their shops in protest.
The official news media in Iran said an unspecified number of people had been arrested, including two Europeans, in the unrest, which was documented in news photographs, at least two verifiable videos uploaded on YouTube and witness accounts. Economists and political analysts in Iran and abroad said the anger reflected both the accumulated impact of harsh Western economic sanctions over Iran’s disputed nuclear program as well as the government’s inability to manage an economic crisis that has become increasingly acute.
It came a day after Iran’s president, Mahmoud Ahmadinejad, told a televised news conference that the plunge in the value of the currency, the rial — it has fallen by 40 percent against the dollar this past week —
was orchestrated by ruthless currency speculators, the United States and other unspecified internal enemies of Iran. He pleaded with fellow citizens to stop selling their rials for dollars, a currency he once characterized as “a worthless piece of paper,” and warned that speculators face arrest and punishment.
But Mr. Ahmadinejad, whose stewardship of the economy has been increasingly challenged by other Iranian politicians in the last year of his term, offered no new solutions to arrest the slide in the rial, which is a major inflationary threat and has become the most visible barometer of Iran’s economic travails. Because of the sanctions, Iran is facing extreme difficulties in selling oil, its main export, and in repatriating dollars and other foreign currencies, because Iran has been largely cut off from the global banking system.
Unscripted protests in Iran are highly unusual, particularly since the political opposition in the country was crushed after Mr. Ahmadinejad’s disputed re-election in 2009. Iran experts said the outbreak on Wednesday was significant because it appeared to offer an insight into the degree of public weariness.
“It may not be widespread yet, but it demonstrates not just unhappiness with the Ahmadinejad government, but also dissatisfaction with the Islamic Republic’s failure to stem the economic crisis brought about by incompetence, mismanagement and sanctions,” said Alireza Nader, a Washington-based political analyst at the RAND Corporation, a research and consulting firm. He said “the regime is going to face much greater instability in the future, especially if it loses the support of Iran’s business and merchant class.”
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, said in an audio commentary on the group’s Web site that the sanctions had effectively halved Iran’s oil exports, choked its ability to import essential goods and left its currency worth a fraction of its value early this year. “These are hard times for ordinary and upper class Iranian people,” he said.
The unrest also caught the attention of Secretary of State Hillary Rodham Clinton, who speaking from Washington rejected Mr. Ahmadinejad’s explanation for the rial’s plunge. She suggested that conditions would improve if Iran engaged in meaningful negotiations over its nuclear program, which Western powers and Israel suspect is meant to develop nuclear weapons but Iran says is for peaceful purposes.
“I think the Iranian government deserves responsibility for what is going on inside Iran,” Mrs. Clinton told reporters. “And that is who should be held accountable. And I think they have made their own government decisions, having nothing to do with the sanctions, that have had an impact on the economic conditions inside the country.”
Mr. Ahmadinejad’s warning to currency manipulators appeared to be the reason for the riot police deployment in and around Manoucheri Street in central Tehran, where the black-market money changes had been doing a thriving business, particularly in recent days as hundreds of Iranians sought to trade their rials for other currencies, fearing even worse times ahead.
Witnesses described cat-and-mouse chases between motorized riot police officers armed with tear gas and batons, and money changers and their customers, who were forced to scatter.
Anger also spread to Tehran’s grand bazaar, where many merchants closed their stores. Some were cheered by sympathetic shoppers in denouncing the government for its financial support of Syria’s embattled government instead of investing that money at home.
“They spend billions of dollars to keep Syrian President Bashar al-Assad in power, but now they say they have no money!” one garment seller screamed, according to witnesses. A team from Iran’s state television was nearly attacked when its reporter turned to the camera saying that the people behind him had been upset over a robbery.
Abdullah, a young man selling textiles, loudly complained that it has become extremely difficult to do business when the value of the rial is so unpredictable. “The checks our customers give us bounce, we don’t know what prices will be tomorrow, how can we earn a living?,” he said.
One of the videos uploaded on YouTube that witnesses verified as genuine showed hundreds of demonstrators marching peacefully and chanting “Leave Syria alone, think of us!”
But other videos, apparently uploaded by Iran’s underground and exiled opposition movement to exploit the moment for political advantage, appeared to be fake, blending clips from Wednesday with old footage from the antigovernment protests following the disputed election more than three years ago.
The secretary general of the Tehran Bazaar and Trade Union, a powerful official close to the government, accused unspecified outside instigators of pressuring bazaar merchants to close their shops. The official, Ahmad Karimi Esfahani, was quoted by the Iranian Labor News Agency as saying that most merchants had wanted to remain open for business. “Those now present are trying to show the bazaar as closed,” he was quoted as saying. “They are guided by foreigners.”
Other bazaar traders hinted that the closure of the bazaar was organized by powerful opponents of Mr. Ahmadinejad, who were trying to make him look weak by closing down Tehran’s most popular shopping center.
Members of Parliament and Shiite Muslim clerics have been calling for an end to the black-market currency trade, accusing the money changers of driving down the rial’s value. Others have called upon the government to buy rials and sell dollars and other foreign currencies, presumably from the central bank’s reserves, in order to stabilize the rial. But it is unclear exactly how large a cash reserve the Central Bank has at its disposal.
The head of Iran’s Central Bank and Mr. Ahmadinejad regularly say that Iran has more than $100 billion in cash, but government contractors, state employees and even members of the Revolutionary Guards have complained of late payments in recent months — and sometimes of none at all.
The bazaar is firmly in the hands of conservative businessmen who once supported Mr. Ahmadinejad’s rise to power but now strongly oppose him. Some analysts argued that Wednesday’s protest there may have been staged in order to embarrass the president.
With many trying to blame him for the wide range of problems plaguing Iran, Mr. Ahmadinejad seems to be gearing up for a political fight. On Tuesday he attacked the head of Iran’s parliament, Ali Larijani, accusing him and other politicians of trying to bring him down, after Mr. Larijani told the Revolutionary Guards-affiliated Fars news agency that the government practiced “Robin Hood economics.”