How Troubled Is the Iranian Economy? |
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The uprising in Iran that resulted in a deadly crackdown last week was fueled at its root by economic grievances. Iran’s currency has fallen precipitously in value after years of sanctions and economic mismanagement, with one U.S. dollar now worth some 1.4 million Iranian rials. The protest movement seems quelled for now. But the public’s economic demands have not been addressed.
How financially unstable has Iran become? What circumstances led to the emergence of the Pahlavi crown prince as a leading opposition figure? What’s at stake in a potential Iranian regime change?
The uprising in Iran that resulted in a deadly crackdown last week was fueled at its root by economic grievances. Iran’s currency has fallen precipitously in value after years of sanctions and economic mismanagement, with one U.S. dollar now worth some 1.4 million Iranian rials. The protest movement seems quelled for now. But the public’s economic demands have not been addressed.
How financially unstable has Iran become? What circumstances led to the emergence of the Pahlavi crown prince as a leading opposition figure? What’s at stake in a potential Iranian regime change?
Those are just a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.
Cameron Abadi: How weak exactly has the Iranian currency become? And more generally, how economically unstable had the country become on the precipice of these demonstrations?
Adam Tooze: What a lot of people are saying is very significant about these protests, which began in Tehran’s Grand Bazaar on Dec. 28, is that they are not about specific issues or politics but a general sense of economic malfunction. And the fact that they started in the bazaar is itself significant, because the bazaar is not just a bazaar in the sense you might understand it as a tourist but it is actually a major hub of Tehran’s economy. And politically and historically, it’s played a key role, going back over 100 years—all the way back to the constitutional revolution in Persia, what became modern Iran, in the beginning of the 20th century. So it’s that kind of an upheaval, the sense that the ground is shifting.
The trigger here is the exchange rate, which has........