A Fistful of Rials Gets Old Fast

Al-Jazeera takes note of the events across the Gulf:

Iranian riot police have clashed with protesters in the capital Tehran over the collapse of the rial, the country’s currency, which has lost a third of its value against the dollar in a week.

Police on Wednesday reportedly fired tear gas to disperse demonstrators, including currency exchange dealers.

It was the first sign of public unrest over the plunging currency.

The fall of the rial, which has now lost more than 80 per cent of its value compared with a year ago, with 17 per cent of its value shed on Monday alone, has been largely blamed on Western sanctions imposed over the country’s nuclear programme.

The rial slipped another four per cent on Tuesday to close at 36,100 to the dollar, according to exchange tracking websites.

To say that Iranians are shamed over this is an understatement.  To say that the economic sanctions are having an effect is an understatement too.  Hyperinflation, where people’s savings evapourate, is destabilising.  Whether it’s enough to overcome the regime’s security apparatus is another story.  That was the dilemma about Saddam Hussein: his mismanagement of the economy, coupled with sanctions, produced hardships, but his internal security was so strong that the power challengers were stymied from taking action, until George W. Bush showed up with “democracy in the Middle East”.

Recent history re U.S. support of Iranian dissidents isn’t encouraging.

Speaking of power challengers, this is also interesting:

Mohammadi also said holding talks with the US was not an option.

“Past experience shows that speaking of negotiations in these conditions only sends a signal of weakness. The enemy only makes concessions and takes you seriously when you’re strong,” he wrote.

Maybe that’s an admission of weakness in and of itself…

But perhaps there’s something to be proud of here.  Twenty years ago, Russia experienced similar (if not quite this many zeroes) inflation, and I had this exchange with my Russian representative:

Socialist states love to trumpet their own successes, real or just propaganda. The collapse of the rouble left just about everyone in the Russian Federation with more than a million roubles (about US$770 in early 1994) of net worth. So I declared to my representative, “Seventy years of socialism, and everyone’s a millionaire!”

His response: “It was their greatest achievement!”

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