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Mismanagement and Iran’s economic melt-down

Jan 18,2023 - Last updated at Jan 18,2023

The execution as a spy of former Iranian deputy defence minister Alireza Akbari who had British as well as Iranian citizenship has been condemned by Britain and France and international human rights organisations. His hanging has sent a message of defiance to Western capitals from Iran's ruling hard-line clerics who have courted condemnation for cracking down on popular protests and providing Russia with drones in its war against Ukraine.

Hard-liners aligned with supreme leader Ali Khamenei and President Ebrahim Raisi have also sent a message to youngsters who began protesting in mid-September after the death in morality police custody of Mahsa Amini, a 22-year-old Iranian Kurdish woman who was arrested for "poor hijab", failing to wear her headscarf properly. The anti-hijab protests, initially led by women and girls, have been joined by a wide range of dissidents and striking workers and morphed into nationwide demonstrations against the clerical government. Four protesters have been executed, at least 520 have been killed by security forces and 18,500 arrested.

Akbari, who served as deputy defence minister under Admiral Ali Shamkhani, was invited to return to Tehran from exile in 2019 to advise the government after Donald Trump pulled out of the 2015 agreement for lifting sanctions on Iran in exchange for limiting its nuclear programme. Instead of providing input, Akbari was detained, interrogated and, eventually, charged with espionage and being an enemy of God, a capital offense.

His family has suggested his ordeal and execution were intended to undermine Ali Shamkhani, secretary of the Supreme National Security Council since 2013 and former defence minister. He has, so far, not ordered the Iranian Revolutionary Guard (IRG) to mount a full-scale crack down on the protests. Consequently, he has been heavily criticised by hard-liners for failing to end the unrest as he did during demonstrations against huge fuel price rises. The protests began began on November 15; the IRG killed at least 1,300 and arrested thousands.

This period was regarded by then reformist President Hassan Rouhani as "one of its hardest years since the 1979 Islamic revolution". During 2018, 1.6 million Iranians had slipped into poverty while the members of the elite enjoyed wealth and rich firms, associations and individuals did not pay taxes.

This time, so far, the Basij militia and police rather than the IRG have been deployed in the effort to halt the protests which have waxed and waned during recent weeks. Shamkhani may believe that the latest protests will fade and end of their own accord if not hammered by the IRG.

However, the economic situation is far worse than in 2019. Sixty per cent of Iranians are officially reported to live in relative poverty while 20-30 of the 80 million dwells in extreme poverty. According to the welfare ministry, the figure doubled in one year from 2020-2021. Inflation has risen to 50 per cent while the value of the currency has fallen about 50 per cent. Food inflation is said to be 70 per cent in a dozen of the 31 provinces. One million jobs were lost during COVID and the average consumption in calories has fallen from 2,700 to below 2,200. Iran's growth rate has fallen to zero.

Mismanagement is a major factor in the country's economic melt-down, supreme leader Ayatollah Ali Khamenei admitted last year. "The main reason for the [economic] problems [in the past ten years] is not just the sanctions. A major part of these were caused by wrong decisions and inefficiency." He did not, however, mention that a large proportion of the economy is controlled by IRG-run firms and official charitable bodies or that corruption is also a key factor. 

So far, the clerics have done nothing to remedy the situation. Consequently, Khamenei has been personally blamed by protesters for the economic crisis and repression and they have called for his overthrow.

He and the hard-line conservatives are, indeed, responsible. They have systematically taken control of all the levers of power in Iran. Since 1989, Khamenei has been the supreme leader and has promoted the policies of the conservatives in the clerical institutions which dominate the state. The conservatives have 227 seats in the 290-seat parliament and President Ebrahim Raisi, elected in 2021, is from their ranks. His election was preordained as all potential challengers were disqualified by the Guardian Council which vets candidates for election and high office. Turnout fell to 48 per cent, a drop of 25 per cent from turn out in the 2013 election which reelected reformist Hassan Rouhani, maintaining the previous practice of rotating between reformists and conservatives favoured by Ayatollah Ruhollah Khomeini, founder of the Islamic Republic. This provided some checks and balances.

While there were economy, driven protests during his two terms in office, Rouhani led to eased social restrictions which have alienated Iran's youth. Raisi reverted to strict measures, notably on mandatory hijab, which led to the current round of unrest where Iranians chant, "Woman, life, and freedom," to protest the hijab death of Mahsa Amini and the lack of freedom.

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