[size=39][size=48]Preparing for the Worst in Iran[/size][/size]
On Tuesday, the commander of the Islamic Revolutionary Guard Corps, Mohammad Ali Jafari, wrote a letter to Iranian President Hasan Rouhani that was subsequently published by Tasnim News Agency, a private company with strong ties to the IRGC. In the letter, Jafari criticized Rouhani for working harder on the campaign trail – and fighting his political enemies – than he was trying to solve the country’s economic problems, which are getting worse by the day. Inflation is spiraling out of control. Encouraging Rouhani to take undefined “revolutionary action” to rein in prices, Jafari also stressed that all of Iran must join in bringing relief to the most vulnerable segments of society.
The letter is the most ominous signal in what has been a difficult past few days for Iran. The black-market exchange rate for the Iranian rial to the dollar has fallen to 122,000, while the official rate has decreased to 44,000. The black-market rate is now more than double what it was in April,
when it first seemed that the rial’s depreciation – and the protests it introduced – might actually threaten the Rouhani government. On Monday, the new governor of the central bank released a statement saying the bank would enact extraordinary measures in the coming days. Yet the rial continues to plunge, and posts on social media show protests popping up around the country again.
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It’s no secret that the Rouhani administration and the IRGC are often at odds with each other. Rouhani himself had a plan to undermine the IRGC’s influence: He wanted to use the money recouped by the Iran nuclear deal to improve the economy and thus take some power back from the IRGC, which is believed to control as much as 60 percent of the Iranian economy. Indeed, Rouhani had already been trying to change the status quo, even going so far as to arrest certain IRGC members and forcing IRGC-held companies to transfer title back to the state, which will eventually privatize them. Rouhani had plenty of support in this regard – not just from the reformist faction he leads but from the supreme leader himself.
The problem for Rouhani is that the U.S. withdrawal from the Iran nuclear deal all but ruined his plan. With the Iranian economy already in shambles and with sanctions due to return in August, it’s unclear how the president can craft a new one. Iran has some $90 billion in foreign reserves, and though these reserves may buy the government some time, they won’t buy very much of it. The government already tried to benchmark the rial in April, but the policy failed quickly, forcing Tehran to discontinue it in June. The government has also tried the scapegoat approach, having recently arrested around 60 people and charged them with “economic disruption,” but these people’s incarcerations have convinced no one that the economy is now healthy.
As for the IRGC, it isn’t interested in removing Rouhani from power, at least not by a coup. The IRGC’s legitimacy is derived from its role as protector of the revolution, and a putsch would call that legitimacy into question. The IRGC is more interested in co-opting the system and harnessing power within it than it is in ousting the regime itself. It may not see eye to eye with Rouhani on all matters of state (and to be clear, the IRGC thought the nuclear deal was doomed to fail from the start), but revolution and the uncertainty that surrounds it are more detrimental to its bottom line than a president with whom it disagrees.
It’s therefore unclear what exactly Jafari meant in his letter when he called for revolutionary action. What is clear is that the IRGC is giving Rouhani just enough rope to hang himself while sending a message that it stands with the Iranian people, just in case. Doing so undercuts Rouhani’s power and deflects anger away from the IRGC, whose costly ambitions in Iraq, Syria and Lebanon have aroused the ire of protesters. Even if the Rouhani administration does stabilize the situation, there is still no clear path for economic success, increasing the likelihood that a pro-IRGC candidate could win the next elections.
Unlike in incidents past, these protesters are not just students. These are ordinary citizens who are quickly losing their life savings and are struggling to put food on their tables. So far, their numbers are small enough not to threaten the government, but if the value of the rial keeps falling and inflation keeps rising, that may not be the case for long. The IRGC letter seems to be preparing for an outcome in which Iran may have to call in the IRGC to clear the streets and restore order – which the IRGC will have to spin.
It’s unlikely that this will happen, but the situation is now such that it can’t be dismissed. The worse the situation gets for everyday Iranians and the harder it is for Iranian economic elites to make money, the more unpredictable conditions on the ground may become, and the higher the possibility for a single event to lead to a spontaneous protest movement large enough to force very difficult decisions on Iran’s leadership. That the IRGC is hedging its bets shows how seriously it takes the risk, however remote it may be.