Economic Sanctions causes Collapse in Iranian Rial and Protests against Iranian Regime

Posted by PITHOCRATES - October 7th, 2012

Week in Review

The economic sanctions are making their mark in Iran.  The people are suffering the economic consequences.  But so far it doesn’t look like it’s encouraging any change in official Iranian position on their nuclear program.  At least, not yet.  For the Iranian regime is beating back the protestors (see Iranian discontent rises as riot police fight protesters by Robert Tait, David Blair posted 10/3/2012 on The Telegraph).

Security forces used tear gas and batons against demonstrators angered by a dramatic collapse in the national currency, the rial, which has lost about a third of its value against the US dollar since Sunday. The hour by hour decline of the currency provides vivid evidence of the damage wrought by international sanctions, which were imposed because of Iran’s nuclear ambitions.

There were voting irregularities in the 2009 Iranian elections.  Protests erupted throughout Iran.  And the Iranian regime suppressed them.  President Obama did not support the protesters.  Nor demand that President Mahmoud Ahmadinejad step down.  Even though the Iranian regime is an enemy of the United States.  They are an active sponsor of terrorism.  And a threat to regional peace.  But when the Arab Spring reached our ally, Hosni Mubarak in Egypt, President Obama demanded that he stepped down.  Even though he didn’t use his army to suppress his people.  Now the country is run by the Muslim Brotherhood.  And is moving closer to Iran.

With the invasion of Iraq Libya made peace with the United States.  They were no longer a threat to the United States.  Or regional peace.  Yet President Obama committed military force to support the opposition in their civil war.    When the Arab Spring moved on to Syria, an Iranian ally, supporter of terrorism, home of Hezbollah, President Obama made no move to support the opposition.  And Syria has degenerated into a bloody civil war.  Sending refugees across borders.  And causing cross-border incidents.  The very thing the Obama administration warned of in Libya.  And used to justify their support in that conflict.

American foreign policy these days may appear a bit confusing to our friends and allies.  The U.S. is supporting sanctions against Iran to get them to abandon their nuclear programs.  Which probably would not have advanced as far had the Iranian protests in 2009 led to a regime change.  But the U.S. did not support the protestors.  Unlike in Egypt and Libya.  Nations that weren’t enemies of the United States.  Like Iran is.  So it will be interesting to see where these new protests may lead to.  Hopefully they will end well for the Iranian people.

Behind the rial’s decline lies a precipitous fall in Iranian oil exports, which have dropped from about 2.5 million barrels per day last year to 1.1 million barrels in August, according to the International Energy Agency. This has deprived Iran of billions of dollars of revenues and exposed the regime’s failure to avoid the damage caused by sanctions.

The collapse of the currency reflects a general loss of public confidence. The anti-government website, Kalemeh, cited eyewitnesses accounts that demonstrators demanded the overthrow of President Mahmoud Ahmadinejad.

The collapse of the rial makes it far more expensive for Iranian companies to buy imported goods. Mr Kushner said the latest decline “means that most Iranian importers simply cannot afford to pay for goods if they must use the free market rate.”

Instead of trading with the West, Iran has tried to buy more goods from countries likes China, India and particularly Turkey. However, the fall in the currency raises the price of imports across the board, meaning that they could become unaffordable. “We will see a real financial crisis in the coming months because the economy cannot sustain this,” said Mr Kushner. “It is bad, but will become a lot worse.”

With the fall in oil revenues the state has to make up for that revenue by other means.  And it looks like they’ve depreciated their currency.  That is, they’ve printed rials.  Making them worth less.  Which can be hidden somewhat in a closed economy.  But not with international trade.  Because to buy foreign goods you first have to exchange your money for the foreign currency of your trading partner first.  And when your currency is greatly depreciated it doesn’t trade for much foreign currency.  Making those imports very, very expensive.  Taking more and more rials to buy them.  Putting them out of the reach of ordinary Iranians.  Hence the protests.  And the lack of public confidence.

The Iranian people are ready for change.  Will they get it?  Time will tell.  Unfortunately for the Iranians, time didn’t treat them well in 2009.

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The Iranian Regime is bad for World Peace. An Iranian controlled Egypt is even Worse.

Posted by PITHOCRATES - January 29th, 2011

They Smile in your Face and then Sneak across the Border to Wreak Havoc

President Obama was a young senator with no executive experience.  And he had no foreign policy experience.  But he could talk to our enemies.  And make them like us.  Those same people who hate us with the fury of a white-hot blast oven.  Throw a couple of kind words in and an apology or two and, voilà, or our past bad blood is gone.  It was that simple.  Why any of the dunderheads who came before him couldn’t understand this was beyond him.  Then again, he is a super genius.  They weren’t.   So he would come in and save the day.  By saving the world (see Obama Doctrine is Failing in the Middle East by James Carafano posted 1/29/2011 on Heritage’s The Foundry).

Obama also bought into the false belief that improving relations between Palestine and Israel was the solution to “all problems” in the Middle East. That simplistic notion masks the serious challenges in the region—lack of healthy civil societies, a paucity of economic freedom, exploding demographic growth, endemic unemployment, environmental troubles, lurking Islamism, terrorism, and troublemaking from Iran. Much the enmity expressed against the West is more properly the product of homegrown problems. Yet, Obama has done little to address these issues other than try to solve them all with a single speech in Cairo.

So how has making nice to the Muslim world worked?  Has Palestine warmed up to Israel?  Have they warmed up to the Arab nations that have recognized Israel?  No.  Nothing has changed.  Apology Tour notwithstanding.  In fact, it looks like they have intensified their efforts (see Red Alert: Hamas and the Muslim Brotherhood posted 1/29/2011 on STRATFOR).

The Egyptian police are no longer patrolling the Rafah border crossing into Gaza.  Hamas [which formed in Gaza as an outgrowth of the Egyptian Muslim Brotherhood (MB)] armed men are entering into Egypt and are closely collaborating with the MB. The MB has fully engaged itself in the demonstrations, and they are unsatisfied with the dismissal of the Cabinet. They are insisting on a new Cabinet that does not include members of the ruling National Democratic Party.

By trying to make nice appears to have emboldened our enemies.  Imagine that. 

Iran supports Hamas.  And both call for the destruction of Israel.  Now there’s unrest in Egypt.  And Israel’s enemy in the Gaza Strip (located between Israel and Egypt) may be moving unopposed across the border into Egypt.  And you can probably guess why they’re going there.  You want a hint?  They’re not going there to be nice.

Damn College Students, always Rioting without Thinking about Tomorrow

President Obama is asking President Mubarak to exercise restraint in dealing with the protesters.  To let democracy work.  The problem is it’s not really democracy at work.  What’s happening in Egypt is kind of like what happened in Iran.  Without the American hostages

There are forces at work to replace the ‘conservative’ Mubarak (he was clamping down on Islamic extremism as well as human rights) with Shari ‘a Law.  Like in Iran.  And like it was in Afghanistan.  And those protesting should be careful of what they ask for.  Because they may just get it.  If they think Mubarak’s regime was difficult to live under, they need to talk to those who have lived under the Taliban in Afghanistan.  Or those currently living in Iran.

And speaking of Iran (see Dutch ends Iran ties over hanging posted 1/30/2011 on Al Jazeera).

The Dutch government has frozen official contacts with Iran to protest the hanging of a Dutch-Iranian woman, the foreign ministry said… Bahrami had been jailed in Iran since December 2009 after protests against Iranian President Mahmoud Ahmadinejad’s re-election. Protesters took to the streets, saying the vote was marred by fraud and that opposition leader Mir Hossein Mousavi was the rightful winner.

Rioting college students should pay attention to this.  Some of those students who overthrew the Shah of Iran were women.  Hoping for a better life with their college education.  Of course, after the Revolution, that’s about all they got from their college education.  Hope.  Because opportunities were now limited for second-class citizens.

Where have all the Cowboys Gone?

Things are not good in Egypt.  Or the greater Middle East region.  This could mark a watershed moment in history.  With Iranian influence in Egypt and Iranian control of the Suez Canal, life will change in most of the world.  Probably not for the good.  The shift in the balance of power could be so devastating that it could result in world war.  These are “the times that try men’s souls.”  And we look for a leader to get us through these perilous times. 

A George Washington.  An Abraham Lincoln.  A Franklin Delano Roosevelt.  A Harry S. Truman.  A Dwight D. Eisenhower.  A John F. Kennedy.  A Ronald Reagan.  A George H.W. Bush.  A George W. Bush.  Men hated by their enemies.  Men who pursued foreign policy with confidence.  Guts.   And without losing sight of the big picture.  The kind of leader that our enemies took seriously.  And the kind they respected.  Despite hating them.

That’s the kind of leader we need now.  Instead, we have an apologist.

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