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Iran Democracy Monitor - No. 188

Edited by Ilan Berman and Rachel Millsap
July 31, 2018


IRAN'S UNFOLDING CURRENCY CRISIS...
The looming prospect of renewed U.S. sanctions has sent Iran's national currency into a tailspin. On July 29th, the Iranian rial hit a record low, dropping some 12 percent to over 100,000 rials to one U.S. dollar. With the decline, the rial has lost roughly half of its value since April amid escalating jitters over the potential impact of impending U.S. sanctions, which are set to be reimposed on Iran in August and November, pursuant to the Trump administration's withdrawal from the 2015 Iran nuclear deal. The Central Bank of Iran has blamed foreign "enemies" for the currency plunge, remarking that "the recent developments in the foreign exchange and gold markets are largely due to a conspiracy by enemies with the aim of exacerbating economic problems and causing public anxiety." In an effort to control currency speculation amid the devaluation, Iranian authorities have launched a crackdown on currency traders, with nearly thirty people arrested to date and charged with economic disruption and "spreading corruption on earth." (
Reuters, July 29, 2018)

...LEAVES ROUHANI SCRAMBLING TO STABILIZE THE NATIONAL ECONOMY

As the value of the Iranian rial continues to plummet, President Hassan Rouhani's administration has found itself scrambling to keep the Islamic Republic's economic ship of state afloat. On July 25th, amid rumors that the country might soon reintroduce a food rationing system, Planning and Budget Organization (PBO) chief Mohammad Baqer Nobakht tendered his resignation. Iran's central bank governor, Valiollah Seif, was also swapped out in favor of Abdolnasser Hemmati, who was previously Iran's ambassador-designate to China. The apparent restructuring of Rouhani's economic team follows his most recent cabinet address, in which the Iranian president named "reforming the banking system and financial monetary policies, and the improvement of banking relationships with the world" as central priorities of his administration. (
Radio Farda, July 26, 2018)

CRISIS AND OPPORTUNITY FOR IRAN'S "REFORMIST" CAMP

In the aftermath of President Trump's May decision to withdraw the United States from the JCPOA, Iran's "reformist" political camp is showing signs of serious strain. In June, 100 Iranian activists penned an open letter to former president - and "reformist hero" - Mohammad Khatami, urging the two-time president to "salvage the political movement he pioneered." The letter was intended to persuade Khatami, long revered as a leader of the movement for social freedoms in Iran, to initiate "reforms within the Reform movement" as a way of maintaining its relevance in the face of growing hardliner power within the Iranian body politic.

The movement, meanwhile, may receive assistance in this rehabilitation from an unexpected quarter: the Iranian regime itself. Regime authorities appear to be seeking to position the movement as a counterweight to the ongoing political ferment now visible on the Iranian "street." On July 29, Iran’s top security body approved the release from house arrest of two controversial opposition figures, Mir Hossein Mousavi and Mehdi Karroubi. Both men had opposed incumbent Mahmoud Ahmadinejad in the country's 2009 presidential elections, and both cried foul following Ahmadinejad's controversial victory - stoking grassroots unrest that coalesced into the so-called "Green Movement" protests in Iran. The two men, as well as Mousavi's wife, Zahra Rahnavard, have languished under house arrest since. The decision to reverse the edict now was apparently approved by the country's powerful Supreme National Security Council, but still must be reviewed by Supreme Leader Ali Khamenei before it takes effect. (
Al-Monitor, June 13, 2018; Agency France Presse, July 29, 2018)

A MANDATE TO STAY IN SYRIA

Is Iran leaving Syria? In recent weeks, growing tensions between Iran and Israel have led many - including longtime Iranian strategic ally Russia - to urge Tehran to pull back its military capabilities from the Syrian theater. Syria's embattled dictator, however, isn't one of them. In a June interview with Iran's Al-Alam TV, Syrian President Bashar al-Assad emphasized that the assistance of the Iranian regime and its chief terrorist proxy, Hezbollah, was needed to stabilize his country, and that these elements could remain as long as they desired. According to Assad, Iran, like Russia, "is an allied country," while Hezbollah ranks as a "basic element" of the current conflict. "The battle is long, and the need for these military forces will continue for a long time," Assad made clear. (
Radio Free Europe/Radio Liberty, June 14, 2018)

TOWARD AN "ARAB NATO"

The Trump administration is ramping up its efforts to contain Iran militarily. The White House is reportedly working to create a new security and political alliance in the Middle East, encompassing six key Arab states, including Egypt and Jordan, in an effort to "counter Iran's expansion in the region." The alliance, tentatively dubbed the Middle East Strategic Alliance (MESA), will include cooperation between the countries involved on a range of issues, such as missile defense, counterterrorism and both economic and diplomatic matters. The effort, which has been dubbed an "Arab NATO," is seen first and foremost as a defense against Iranian aggression and expansion, including the Islamic Republic's ongoing support for proxy groups in the region and its continuing threat to the state of Israel. Joint alliance priorities would also include Yemen and Syria, as well as the defense of Gulf shipping lanes. Tensions in the bilateral relationship between two key partners, Saudi Arabia and the United Arab Emirates, have been cited as a potential flashpoint or stumbling block for the initiative, but U.S. officials remain optimistic that a durable partnership can be reached. (
Reuters
, July 27, 2018)