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Economic Problems Prompt Iran to Cautiously Consider Change

Labor strikes. Nationwide protests. Bank failures.

In recent months, Iran has been beset by economic problems despite the promises surrounding the 2015 nuclear deal it struck with world powers.

Its clerically overseen government is starting to take notice. Politicians now offer the idea of possible government referendums or early elections. Even Supreme Leader Ayatollah Ali Khamenei acknowledged the depths of the problems ahead of the 40th anniversary of Iran’s Islamic Revolution.

“Progress has been made in various sectors in the real sense of the word; however, we admit that in the area of ‘justice’ we are lagging behind,” Khamenei said in February, according to an official transcript. “We should apologize to Allah the Exalted and to our dear people.”

Whether change can come, however, is in question.

​An economy run by the state

Iran today largely remains a state-run economy. It has tried to privatize some of its industries, but critics say they have been handed over to a wealthy elite that looted them and ran them into the ground.

One major strike now grips the Iran National Steel Industrial Group in Ahvaz, in the country’s southwest, where hundreds of workers say they haven’t been paid in three months. Authorities say some demonstrators have been arrested during the strike.

More than 3.2 million Iranians are jobless, government spokesman Mohammad-Bagher Nobakht has said. The unemployment rate is more than 11 percent.

Banks remain hobbled by billions of dollars in bad loans, some from the era of nuclear sanctions and others tainted with fraud. The collapse last year of the Caspian Credit Institute, which promised depositors the kinds of returns rarely seen outside of Ponzi schemes, showed the economic desperation faced by many in Iran.

​Or in security services’​ grip

Meanwhile, much of the economy is in the grip of Iran’s security services.

The country’s powerful Revolutionary Guard paramilitary force, which answers only Khamenei and runs Iran’s ballistic missile program, controls 15 to 30 percent of the economy, analysts say.

Under President Hassan Rouhani, a relatively moderate cleric whose government reached the nuclear accord, there has been a push toward ending military control of some businesses. However, the Guard is unlikely to give up its power easily.

Some suggest hard-liners and the Guard may welcome the economic turmoil in Iran as it weakens Rouhani’s position. His popularity has slipped since winning a landslide re-election in May 2017, in part over the country’s economic woes.

Analysts believe a hard-line protest in late December likely lit the fuse for the nationwide demonstrations that swept across about 75 cities. While initially focused on the economy, they quickly turned anti-government. At least 25 people were killed in clashes surrounding the demonstrations, while nearly 5,000 reportedly were arrested.

​A rare referendum?

In the time since, Rouhani has suggested holding a referendum, without specifying what exactly would be voted on.

“If factions have differences, there is no need to fight, bring it to the ballot,” Rouhani said in a speech Feb. 11. “Do whatever the people say.”

Such words don’t come lightly. There have been only two referendums since the Islamic Revolution. A 1979 referendum installed Iran’s Islamic republic. A 1989 constitutional referendum eliminated the post of prime minister, created Iran’s Supreme National Security Council and made other changes.

A letter signed by 15 prominent Iranians published a day after Rouhani’s speech called for a referendum on whether Iran should become a secular parliamentary democracy. The letter was signed by Iranians living inside the country and abroad, including Nobel Prize laureate Shirin Ebadi.

“The sum of the experiences of the last 40 years show the impossibility of reforming the Islamic Republic, since by hiding behind divine concepts … the regime has become the principal obstacle to progress and salvation of the Iranian nation,” read the letter, which was posted online.

But even among moderates in Iran’s clerical establishment, there seems to be little interest in such far-reaching changes, which would spell the end of the Islamic Republic. Hard-liners, who dominate the country’s security services, are adamantly opposed.

“I am telling the anti-Islamic government network, the anti-Iranians and those runaway counterrevolutionaries … their wish for a public referendum will never come true,” Tehran Friday prayer leader Ayatollah Ahmad Khatami said Feb. 15, according to the state-run IRNA news agency.

​Take responsibility

Yet there are signs that authorities realize that something will have to give. Khamenei’s apology in February took many by surprise, especially as the country’s true hard-liners believe he is the representative of God on earth.

Khamenei’s apology came after a letter from Mehdi Karroubi, an opposition activist who remains under house arrest, demanding that the supreme leader take responsibility for failures.

“You were president for eight years and you have been the absolute ruler for almost 29 years,” Karroubi wrote in the letter, which was not reported on by state media. “Therefore, considering your power and influence over the highest levels of state, you must accept that today’s political, economic, cultural and social situation in the country is a direct result of your guidance and administration.”

Iran’s former hard-line President Mahmoud Ahmadinejad, blamed by many for the country’s economic woes, has come out for early elections. He also demanded they be “free and fair,” while continuing his own campaign against Khamenei, whom he ignored in his attempt to run in the 2017 presidential election.

However, Ahmadinejad’s action drew immediate criticism, as his own widely disputed 2009 re-election sparked unrest and violence that killed dozens.

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