How currency collapse compounds Iranian regime’s crisis of legitimacy

Special How currency collapse compounds Iranian regime’s crisis of legitimacy
Tehran’s growing international isolation has had grave consequences for the value of the Iranian rial. Analysts say that economic woes are inflaming anti-government protests across the country. (AFP)
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Updated 29 January 2023

How currency collapse compounds Iranian regime’s crisis of legitimacy

How currency collapse compounds Iranian regime’s crisis of legitimacy
  • Rial, the Iranian currency, has lost 29 percent of its value since protests and a harsh regime crackdown began
  • Double blow of a depreciating currency and high inflation has sparked a cost-of-living crisis and discontent

IRBIL, Iraqi Kurdistan: Iran’s currency has been hitting record lows against the US dollar, which observers say is a reflection of the regime’s increasing isolation on the international stage and the seriousness of the new EU sanctions against its paramilitary enforcer, the Islamic Revolutionary Guard Corps.

Coming as it does on top of ongoing mass protests sparked by the death of 22-year-old JIna Mahsa Amini in police custody last September, the currency crash has defied measures such as the replacement of the central bank chief last month and fueled speculation that it would destabilize, or even bring down, the regime in 2023.

The rial has lost 29 percent of its value since anti-government protests and a harsh regime crackdown commenced late last year. On January 22, it was trading at around IRR450,000 against the US dollar, representing a new all-time low.

Dr. James Devine, associate professor in the Department of Politics and International Relations at Mount Allison University, believes it is Iran’s growing political isolation — due to its brutal crackdown on protesters, its military support for Russia’s war with Ukraine, and doubts about a revival of the 2015 nuclear deal — that has dragged down the value of the rial.

“All of this is compounded by mismanagement and corruption, which have dogged Iranian economic planning since the regime took power,” Devine told Arab News.

Although Iran’s economic situation seems particularly bleak at present, Emily Hawthorne, a senior Middle East and North Africa analyst at the risk intelligence company RANE, describes the rial’s depreciation as serious, “but certainly not unprecedented.”

“High inflation, international isolation, low investor confidence, and low consumer confidence are all driving the decline,” she told Arab News.

The double blow of a depreciating rial and high inflation has triggered a cost-of-living crisis, which in turn has spread discontent and stoked anger at the regime.

More protests are expected due to rising prices and a scarcity of goods for Iranian consumers. (AFP)

Arash Azizi, author of “The Shadow Commander: Soleimani, the US, and Iran’s Global Ambitions” and a doctoral candidate in history at New York University, says the collapse of the currency “has long had an important psychological weight in Iran,” with potential political and economic consequences.

“Those who yearn for the pre-1979 Iran, for instance, usually like to talk about how a US dollar was worth IRR70 — as opposed to more than 450,000 today,” Azizi told Arab News.

“It also continues to have a real downward effect on wages, which have not nearly kept up with inflation and with the fall of the currency.

“Much in Iran is imported and paying for these imports has become increasingly difficult for individuals and companies. It has also made foreign travel very hard for most Iranians, even for nearby places such as Dubai and Turkiye, although the latter has also seen its own currency collapse.”

According to Hawthorne, the “poor and fragile” state of the global economic environment makes this period worse than previous ones and creates “additional external pressure on the Iranian economy.”

“Also, some Iranians feel growing anti-government anger, as reflected in the Mahsa Amini protests and some recent organized labor strikes and demonstrations, which contributes to the sense of economic insecurity,” she said.

However, Hawthorne is doubtful that new EU sanctions against the IRGC would “have a significant impact on the rial, beyond the downward pressure already created by increasing sanctions from Europe on other Iranian individuals and entities.”

For his part, Devine is convinced that with increasingly aggressive sanctions “there is a cumulative effect that is becoming serious for the regime.”

However, while the currency collapse has piled further pressure on Tehran, he is not sure it is the regime’s “most vulnerable spot.”

“I have not seen any clear sign that the currency collapse or the sanctions represent the final straw for the IRGC,” Devine said. “The IRGC controls between 25 percent and 40 percent of the Iranian economy, so they will still have access to goods and services within Iran.”


• At the end of December, the governor of Iran’s central bank resigned after the rial lost around 30% of its value in 2 months, falling from IRR330,000 to IRR430,000 per US dollar.

• On Jan. 22, the national currency traded at around IRR450,000 per dollar, a new all-time low, after inflation reached 45% at the end of December 2022.

Given this privileged position, the IRGC is best placed to take advantage of black markets and smuggling, according to Devine. And while it is undoubtedly feeling the pressure, neither its leaders nor rank and file are likely to consider changing course or defecting from the regime.

Devine added: “If the regime goes, the IRGC goes with it. It has no raison d’etre without the Islamic Republic. Moreover, if there was a change in government, the IRGC leadership would likely face prosecution at home and/or abroad.

“At the lower levels of the rank and file, there may not be the same ideological commitment or privilege, but they are still better off than the average Iranian and the post-regime future is uncertain for them as well.

“In short, it will take a lot to decouple the IRGC and security services from the regime.”

While the growing global consensus against Iran does not include China and Russia, the ability of the two non-Western powers to help reverse the rial’s decline is open to question.

“China and Russia share with Iran a dislike for unilateral sanctions from any one country or institution and are likely to continue transacting with Iran, especially Russia, which is also isolated from the rest of the global community due to sanctions linked to its invasion of Ukraine,” Hawthorne told Arab News.

“However, this won’t provide enough of a lifeline for Iran to help the rial stay afloat. Rather, it could provide some trade and some exchange of goods and equipment but won’t save the economy.”

Devine also believes that although Iran is selling a “healthy” number of barrels per day of oil, mainly to China, this is unlikely to be enough to “reinvigorate the rial.”

Furthermore, Washington has begun clamping down on Iran’s smuggling of dollars from neighboring Iraq, which is also negatively affecting the rial’s value.

“While Russia and China may not be able to bail out the rial, they can make sure that going forward, Iran will not be as economically isolated as it was in the past,” Devine said.

Hawthorne predicts there will be more “economically motivated protests” in Iran throughout 2023, but doubts the Iranian government will collapse this year or in the near future, “even though economic strain will contribute to its unpopularity.”

Azizi also says “the regime has long survived harsh economic crises and this isn’t an exception either.” He added: “It adds to its problems, but it doesn’t seem to lead to state collapse just yet.”

Devine expects more protests due to rising prices and a scarcity of goods for Iranian consumers, which will further undermine the regime’s legitimacy and make it more reliant on coercive power to maintain its control.

But whether or not this is a tipping point for the regime is a much more complicated question.

“I think the regime has the institutional and coercive capacity to survive the current level of unrest and probably quite a bit more,” Devine said. “However, they could lose control if they make political mistakes.

The rial has lost 29 percent of its value. (AFP)

“For instance, if they overreact to the protests and begin killing large numbers of Iranians in the street, particularly young women. The execution of dissidents also has the potential to cause a backlash.”

Devine believes the “complicating factor” at play is the “coherence of the regime.”

“Reformists and moderates have criticized (President Ebrahim) Raisi for being too hard on the protesters and by the hardliners for being too soft,” he told Arab News. “This kind of environment could lead the regime to mis-calibrate its response.

“At a certain point, the more moderate members of the regime may go beyond criticism and disown the regime. If enough of them do that, it could snowball into a crisis, particularly if the regular military joins.”

In the meantime, Devine says, the protesters require better organization. While they can create “small disturbances,” he added, they do not seem to have the kind of organization that could really challenge the regime’s “control of the country and economy.

“Perhaps the currency crisis will provide the impetus for this to happen, but I have not seen it yet.”

Turkiye’s President Erdogan says Western missions will ‘pay’ for closures

A view of the German consulate in Istanbul, on June 2, 2016. (AP)
A view of the German consulate in Istanbul, on June 2, 2016. (AP)
Updated 10 sec ago

Turkiye’s President Erdogan says Western missions will ‘pay’ for closures

A view of the German consulate in Istanbul, on June 2, 2016. (AP)
  • Turkiye suspended negotiations for Sweden and Finland’s NATO accession last month following a protest in Stockholm during which a copy of the Qur'an was burned

ISTANBUL: Turkish President Tayyip Erdogan said Western missions would “pay” for issuing security warnings and temporarily closing consulates in Turkiye last week, while police said there was no serious threat to foreigners after detaining 15 Islamic State suspects on Sunday.
Ankara summoned the ambassadors of nine countries on Thursday to criticize their decisions to temporarily shut diplomatic missions and issue security alerts. Turkish officials said the following day that Western nations, including the United States and Germany, had not shared information to back up their claims of a security threat.
“The other day our foreign ministry summoned all of them and gave the necessary ultimatum, told them ‘You will pay for this heavily if you keep this up,’” Erdogan said during a meeting with youth that was pre-recorded and broadcast on Sunday.
Alongside the closures, several Western states warned citizens of a heightened risk of attacks to diplomatic missions and non-Muslim places of worship in Turkiye, following a series of far-right protests in Europe in recent weeks that included several incidents of burning copies of the Muslim holy book, the Qur'an.
Turkiye suspended negotiations for Sweden and Finland’s NATO accession last month following a protest in Stockholm during which a copy of the Qur'an was burned.
Erdogan said that the Western states were “playing for (more) time” and that the “necessary decisions” would be taken during Monday’s cabinet meeting, without elaborating.
Earlier on Sunday, police said they had not found evidence of any concrete threat to foreigners in the detentions of 15 Islamic State suspects accused of targeting consulates and non-Muslim houses of worship, state media reported.
Anadolu Agency cited an Istanbul police statement saying the suspects had “received instructions for acts targeting consulates of Sweden and the Netherlands, as well as Christian and Jewish places of worship.”
While the suspects’ ties to the jihadist group were confirmed, no concrete threats toward foreigners were found, the statement said.
Foreign Minister Mevlut Cavusoglu repeated on Saturday Turkiye’s frustration with what it says is Sweden’s inaction toward entities that Ankara accuses of terrorist activity. All 30 NATO members must ratify newcomers.
Turkiye, Sweden and Finland signed an agreement in June aimed at overcoming Ankara’s objections to their NATO bids, with the Nordic states pledging to take a harder line primarily against local members of the banned Kurdistan Workers Party (PKK), which took up arms against the Turkish state in 1984.


Yemen’s Taiz mourns 2 children who committed suicide

Yemen’s Taiz mourns 2 children who committed suicide
Updated 05 February 2023

Yemen’s Taiz mourns 2 children who committed suicide

Yemen’s Taiz mourns 2 children who committed suicide
  • Calls grow for deeper investigation into motivations and protection of youngsters amid shock and despair

AL-MUKALLA, Yemen: Security services of the southern Yemeni city of Taiz said that two children committed suicide in two separate events on Saturday, leaving the beleaguered population in shock and despair.

Police in Taiz said in a statement that they were notified of two suicide victims in the city on Saturday evening, citing the deaths as “dangerous precedents.”

Police named the first child as 12-year-old Kareem Abdul Kareem from the Al-Jamhuria neighborhood, who hanged himself inside his room on Saturday afternoon by tying a scarf around his neck.

Ammar Khaled, a 16-year-old who committed suicide on Saturday evening by wrapping a rope around his neck and tying it to a door outside his family’s home, is the second victim. 

After forensic investigators gathered photographs and evidence, his family requested his burial on the same day. 

Police in Taiz pledged to investigate the circumstances surrounding the deaths of the victims and have asked the community and professionals for assistance in determining the reasons behind the suicides.

In a statement, police urged both authorities and members of the public “to collaborate…in order to provide the appropriate answers.”

Mohammed Alawi, an investigator with police in Taiz, told Arab News that a team, including social and psychiatric professionals, was looking into the cases and would release their findings this week.

Initially, Alawi ruled out the possibility of cyberbullying or even sexual harassment and attributed the deaths of the two children to the mobile game PUBG. 

“These are risky games, and we advise parents to monitor their children’s mobile devices to see what they are seeing or playing,” Alawi said.

He also touched on other instances of suicide, which he blamed on psychological suffering caused by the war.

“Women and children in Yemen, particularly in besieged Taiz, have suffered emotionally because of the war. We had never seen such crimes before the war,” he said.  

On social media, the police statement and photographs of the two deceased children have elicited condolences for the families and calls for an investigation into the motivations behind the suicides and for the protection of children.

“You should investigate with the family about the electronic games they played, such as PUBG, and whether they have Facebook or WhatsApp accounts,” said Adnan Taha on Facebook.

“All communications should be reviewed, since (the children) may be vulnerable to harassment and extortion,” Taha said.

Another social media user, Muneir Al-Qaisi, urged local security agencies not to bury the victims before autopsies are conducted to determine whether they consumed anything poisonous.

“We hope you will not hurry to bury them and (will) examine their bodies,” Al-Qaisi said. 

“It is conceivable that the parents are unaware of beverages or meals being shared among the children,” said Al-Qaisi.

Investigator Alawi responded to accusations of a hasty burial by stating that one of the boys was buried at the request of his family and only after investigators examined both the corpse and the scene.

“He was buried after forensic teams examined the scene, photographed it, and performed investigations. Additionally, his relatives requested burial from the prosecution,” Alawi said.

Lebanon hopes UNESCO danger listing could save crumbling modernist fairground

Lebanon hopes UNESCO danger listing could save crumbling modernist fairground
Updated 05 February 2023

Lebanon hopes UNESCO danger listing could save crumbling modernist fairground

Lebanon hopes UNESCO danger listing could save crumbling modernist fairground
  • Rachid Karami International Fair has decayed due to conflict, poor maintenance and country’s financial crisis

TRIPOLI: Its arch is cracking and its vast pavilions lie empty, but the crumbling Rachid Karami International Fair in Lebanon’s port city Tripoli now has hope of revival, having been added to the United Nations’ list of world heritage sites in danger.
Designed by Brazilian architect Oscar Niemeyer in 1962, the collection of structures on the 70-hectare plot is considered one of the key works of 20th century modernism in the Middle East.
But the fair park has slowly decayed due to repeated rounds of fighting over the last 60 years, poor maintenance and most recently Lebanon’s crippling, three-year-old financial crisis.
“It was placed on the World Heritage List exceptionally, quickly and urgently – and on the list of heritage in danger because it’s in a critical situation,” said Joseph Kreidi, UNESCO’s national program officer for culture in Beirut.
Its elegant arch is missing concrete in some parts, exposing the rebar underneath. Rainwater has pooled at the locked entrances. One section is sealed off by a sign that reads, “Unsafe building entry.”
“Placing it on the World Heritage Danger List is an appeal to all countries of the world, as if to say: this site needs some care,” said Kreidi.
He said it was up to the Lebanese authorities to draw together a plan for the site’s protection and rehabilitation but that UNESCO, the United Nations’ cultural agency, could help search for funding and provide technical expertise.
Lebanon has five other sites on UNESCO’s World Heritage list, most of them citadels and ancient temples.
Niemeyer is recognized as one of the fathers of modern architecture and the site in Tripoli was an early foray into the Middle East.
Construction of the fairground began in the 1960s but was delayed when civil war erupted in Lebanon in 1975. Fighters used the site to stage operations and stored weapons underneath its concrete dome.
Mira Minkara, a freelance tour guide from Tripoli and a member of the Oscar Niemeyer Foundation’s Tripoli chapter, has fond – but rare – memories of the fairground as a child.
For the most part, it was off-limits to Tripoli’s residents given safety concerns. But Minkara remembered her first visit during a festival of pan-African culture and crafts.
She hopes that UNESCO’s recognition could bring new festivals, exhibitions and economic benefits to Tripoli – already one of the poorest cities on the Mediterranean before Lebanon’s financial meltdown began.
Lebanon’s cultural heritage has been hit hard in recent years. The 2020 Beirut port blast tore through 19th-century homes in historic neighborhoods and power outages caused by the financial crisis have cut supplies to the national museum.
“We hope things change a little,” Minkara said. “It’s high time for this fairground to emerge from this long sleep, this almost-death.”

Egypt cancels World Youth Forum in light of global challenges

Egypt cancels World Youth Forum in light of global challenges
Updated 05 February 2023

Egypt cancels World Youth Forum in light of global challenges

Egypt cancels World Youth Forum in light of global challenges
  • Budget for event will instead be used to fund development initiatives
  • Event was set to start later this month

CAIRO: In response to a host of global economic challenges, this year’s World Youth Forum, which was set to start later this month, has been canceled, its organizers said on Saturday.

Instead, the budget for the event, which was to be held in the Egyptian town of Sharm El-Sheikh, will be used to fund the implementation of five development initiatives aimed at young people in Egypt and beyond.

This year would have marked the fifth edition of the forum, with the fourth being held in January last year. The event is organized by the Presidential Program for Qualifying Youth for Leadership.

It said the decision to cancel this year's conference was an acknowledgment of the multiple crises facing the world that have put huge humanitarian and economic pressures on nations and governments.

Among the beneficiaries of the redirected funding is a series of international exchange programs for young people. These will be arranged in cooperation with the Decent Life Foundation, National Alliance for Civil Development Action, Arab Union for Volunteering and UN Volunteers Program.

Parliamentary Counselor Issam Hilal Afifi told Arab News that the proceeds from the sponsorship rights to this year’s forum would be redirected toward a large package of initiatives.

Dr. Muhammad Mahmoud Mahran, secretary-general of the International Committee for the Defense of Water Resources, said the move would also enable recommendations made at the previous forum to be implemented.

The planned initiatives would have a positive impact at the local, African and global level, he said.

Teachers, lawyers protest against Palestinian Authority 

Teachers, lawyers protest against Palestinian Authority 
Updated 05 February 2023

Teachers, lawyers protest against Palestinian Authority 

Teachers, lawyers protest against Palestinian Authority 
  • Palestinian sources told Arab News that a strike by doctors might follow, which will destabilize the status of the PA

RAMALLAH: The Palestinian Authority is facing protests from school teachers and lawyers over a number of grievances.

Palestinian sources told Arab News that a strike by doctors might follow, which will destabilize the status of the PA.

The teachers’ movement called on parents not to send their children to schools, and on students to only attend when their demands were met.

On Sunday morning, thousands of students returned to their homes because of the strike.

Omar Muheisen, a science teacher from Al-Shafei School in Hebron, told Arab News that the rate of commitment to the strike on Sunday in the city had reached 90 percent.

“We, as teachers, are living in a difficult predicament,” he told Arab News.

“It is not our problem if the prime minister, over the course of a whole year, did not succeed in solving the problem of teachers’ salaries,” he added.

Muheisen said the salary was not enough even to meet expenses until the middle of the month with outrageous rises in prices.

He said that the strike came after authorities failed to implement any previously agreed terms, including a 15 percent bonus starting from the first month of this year, and that the strike would continue until all their demands were met.

Teacher Jamal Al-Qaddoumi said that the agreement that was reached stipulated that the salary be regularized and a teachers’ union should be set up, but neither happened.

Al-Qaddoumi added the current salary was not sufficient to meet the needs of teachers, and it was not reasonable for teachers to work throughout the month on 85 percent of their salary. Half of Al-Qaddoumi’s income goes on bank loans, and the other half on bills and obligations, he said.

The Palestinian National Initiative Movement, headed by politician Mustafa Barghouthi, demanded fairness for teachers in a statement on Sunday, calling for their demands to be met and the education system to be saved in the interests of students.

It pointed out that the education and health sectors are among the most vital sectors, adding that male and female teachers had always performed their national and professional duties, and that their role was vital for building future Palestinian generations.

It stressed the importance of reviewing the public budget and allocating larger budgets for the education, health, and social welfare sectors, as they serve the broadest groups suffering most from poverty and marginalization.

Shaker Khalil, advisor to the prime minister on economic affairs, told Arab News that the financial crisis engulfing the PA is complex, due to the decline in external support and the high percentage of Israeli occupation deductions from Palestinian funds.

Khalil indicated that foreign aid for the past year was less than $200 million, and the total deductions of the Israeli occupation from the allocations of martyrs and prisoners amounted to $584 million since 2019.

This exacerbates the government’s financial crisis and is reflected in the general budget, he added.

In a parallel development, the Palestinian Bar Association suspended work on Sunday for four days, affecting all branches of the judiciary, in opposition to the amendment of the regular courts’ fees schedule.

Lawyer Alaa Khaseeb from Ramallah told Arab News that the PA’s doubling of court fees five times will make it difficult for citizens, considering the financial crisis they are living through, to go to court to sue, instead preferring to pursue matters themselves, which will negatively affect the work of lawyers, of whom there are nearly 12,000 in the West Bank.

Khaseeb indicated that the standard case fee, which was $700, is to become $3,500, making it impossible for many citizens to pay.

Lawyer and human rights activist Amer Hamdan from Nablus told Arab News that the basis of the PA’s problem with teachers and lawyers is poor political decision making.

He alleged that the PA had raised court fees to obtain money from citizens directly, a step that will force people to tribal courts or to seek fulfilment of their rights by force.

“The PA decided to go into the pockets of citizens to solve its financial problem,” Hamdan told Arab News.

The Bar Council also pointed out that the judiciary was in crisis as a result of the policies of the executive authority and its disavowal of the requirements for judicial reforms.