ON the face of it, it is hard to argue with the assessment by Iranian President Mahmoud Ahmadinejad that his country's currency, the rial, has gone into free fall because of the activities of “his enemies”. The US and EU-led economic sanctions that have been imposed progressively since 2006 were supposed to cause the Iranian government to think again about its refusal to come clean over its nuclear program. However, even if sanctions have been the trigger for the collapse in the value of his country's currency, down by more than 80 percent against the dollar in less than a year, there are deeper reasons for Iran's economic malaise, as Ahmadinejad well knows. Put bluntly, the country, particularly its oil and gas sector which still produces the largest part of its wealth, has been undermined by a lack of investment, compounded by poor management and rampant corruption. It has not helped that as, over the last six years, sanctions have begun to bite, the country was unable to afford to buy the latest technology and equipment to keep its hydrocarbon sector as productive as other major oil exporting countries. The mismanagement and venality of the regime and its armed supporters, not least the Revolutionary Guard and the Basij militias, began to send the economy into a slow spiral of decline from almost the moment Ayatollah Khomeini came to power in 1979. Ironically it was the support of the bazaaris, the merchants, which underpinned the success of the Iranian revolution. Yet these ardent adherents of the new order quickly came to understand that the regime intended to gather as much power and influence as possible into its own hands. This included the economy. One despotism had been overthrown to be replaced by another. The ayatollahs even took over and kept large parts of SAVAK, the Shah's feared secret police. Unfortunately, it is ordinary Iranians who are suffering from the economic collapse. Reports from Tehran suggest that the current rush to convert rials into a hard currency or gold or silver is being led by those close to the regime. The tragedy is that the greater the pressure to bail out of the Iranian currency, the steeper will be its collapse. Most ordinary Iranians do not have spare money to convert into dollars. Therefore, they will have to endure rising inflation and the continued collapse in their standard of living. Ahmadinejad knows that the resulting simmering public anger and despair could erupt and once more bring people out on the streets in their hundreds of thousands, again endangering the regime. Therefore besides blaming the currency dealers for driving up the exchange rate, he has rounded on the international community in an almost certainly unsuccessful attempt to shift the responsibility away from his own government. Yet he could end the misery of his people and his government's own weakness very simply. All he has to do is show the International Atomic Energy Agency that Iran's nuclear program is entirely peaceful, as he has protested again and again, that it is.
