Iran’s currency virtually collapsed last week, and the public protests that followed in Tehran stirred memories of the massive anti-regime protests of 2009. This has caused excited speculation in the United States and its allies about the imminent fall of President Mahmoud Ahmadinejad, the abandonment of Iran’s uranium enrichment program, or even the end of the whole Islamic regime. Don’t hold your breath.
Ahmadinejad blamed the currency crisis on the foreign sanctions that are crippling Iran’s trade, of course. His critics at home just blamed him: “The smaller part of the problem relates to sanctions while 80 per cent of the problem is rooted in the government's mistaken policies,” said Ali Larijani, the speaker of the Iranian parliament. But he would say that, wouldn’t he?
It’s true that Ahmadinejad has used the country’s large oil revenues to paper over some serious mistakes in running Iran’s economy, but the current crisis was caused by a steep fall in those revenues, which is directly due to the sanctions.
Four rounds of United Nations-backed trade sanctions, ostensibly meant to stop Iran from developing nuclear weapons, had already cut the country’s oil exports from 2.5 million barrels a day to 1.5 million barrels by early this year.
Then came new American sanctions that blocked any international bank doing business in Iran from access to the immense U.S. market – so most of them ended their dealings with Iran.
In July came new European Union sanctions banning oil imports from Iran entirely. Since Europe was taking one-fifth of Iran’s remaining oil exports, that blow was enough to send the Iranian rial into free fall.
Source and full story: Cape Breton Post, 15 Oct 2012