The Landscape After the Protests

Katarzyna Sidło, CASE Economist and Radosław Sterna, University of Warsaw

As President Donald Trump was deciding whether or not to continue the suspension of key sanctions on Iran — which he eventually decided to uphold despite his harsh criticism of the 2015 nuclear deal — the country saw the mass demonstrations that swept through its many bigger and smaller cities slowly dying out.

The protests, which began in the city of Mashhad on December 28, 2017, erupted ostensibly over a sharp increase in the price of eggs. In a statement similar to many others issued by governments all over the world, the authorities did, however, blame “the other” ­– in this particular case “counter-revolutionaries” and “foreign powers” (including the United States of America) — for inducing demonstrations. At the same time, though, President Rouhani and his aides believed that it was his conservative opponents who were behind the outbreak of the protests.

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Photo: Reuters

The truth, as in most instances, lies probably somewhere in the middle. Having lost the presidential elections of 2017, the conservative wing connected to the Islamic Revolutionary Guard Corps (IRGC) is currently in disarray. However, the conflict between the IRGC and Mr. Rouhani and his fraction has only intensified: in July the National Iranian Oil Company (NIOC) signed a huge contact with TOTAL for the development of the South Pars gas field, and no companies connected to the IRGC were included in the highly lucrative deal. Later that month, Mr. Rouhani’s brother, Hossein Fereidun, was arrested by the country’s hardline judiciary “on charges connected to financial crimes.” Perhaps in retaliation, the IRGC was the subject of a crackdown by Mr. Rouhani on its business network, with a number of former IRCG officials arrested on suspicions of corruption. To say that the country’s hardliners would happily use any occasion to get back at the President is therefore not an exaggeration.

And occasions for vengeance have been plentiful. Despite a number of sanctions being lifted as part of the nuclear deal, Iran’s quasi-socialist economy continues to falter. With inflation at nearly 10% and unemployment at 12.7%, discontent among people is rising, especially as social assistance has been declining in real terms since 2014. Especially frustrated is the youth population, among whom unemployment rates are over twice as high as the general population. Better educated than their parents and older siblings (almost three quarters of those aged 18–24 are enrolled in some form of higher education), Iranian youths are increasingly hopeless and without prospects for a better future.

In our opinion it is most likely that the protests were indeed initially if not orchestrated than strongly backed by the Islamic Revolutionary Guard Corps, but simply spiraled out of their control. Tellingly, it was not the same people that protested during the Green Revolution of 2009 that took to the streets this time. A decade younger (an average age of those arrested is believed to be 25), they come predominantly from smaller cities in more conservative part of the country.

The way that Mr. Rouhani responded to the demonstrations will definitely not make him more popular amongst those who were marching against him the past two weeks. While he did, to some extent, acknowledge their grievances over the economic situation in the country and said that they are “absolutely free to criticize the government,” thousands of people have still been arrested and a growing number died (at least three reportedly while in the police custody, although admittedly the arrests were made not only on Mr. Rouhani’s orders but also Basij forces controlled by the IRGC).

The protests, albeit presently waning down, will likely happen again in the future and the state of the economy and the strength of the conflict between Mr. Rouhani and IRGC (as well as the strength of the Guards’ fraction itself) will determine their timing. If they continue to occur, they may have an impact over not only Iran’s internal relations, but international ones as well. While the European Union remained conspicuously silent and refrained from commenting on the situation in the country, for Mr. Trump the demonstrations were a way to call attention to Iran’s human rights abuses. Although this time restoring sanctions was taken off the table, the President is believed to be preparing new ones, “not technically related to the nuclear agreement.”

If Mr. Rouhani wants to save his country’s economy — and indeed his job — he needs to speed up economic reforms, fight the country’s rampant corruption, and curb the influence of the Islamic Revolutionary Guard Corps. Perhaps the most challenging task will, however, be convincing those Iranians who marched against him that he is fit for the job.

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