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Iran: Waiting for the New Year under Sanctions

While President Obama and his advisors claim victory over the success of new sanctions against Iran and the sharp decline in the value of the Iranian currency, many Iranians are stockpiling food and other basic staples, anxiously awaiting their uncertain future. “Our money is becoming worthless. We cannot catch up with the rising prices,” an eighty-six year old relative told me. Is President Obama aware of the reality Iranians are subjected to as a result of the US sanctions?

A vendor in Tehran, Iran, February 2, 2012 (AP)

A vendor in Tehran, Iran, February 2, 2012 (AP)

The slide in the value of the Iranian rial began weeks ago. It happened with dizzying speed. In a short few weeks, the rial lost much of its value against the dollar and other major currencies. Sold at 11,000 rials in November, the dollar rose some 50% in value by the end of the year.  “The dollar will reach 20,000,” was the widespread rumor in the streets of the capital. On January 23rd, the dollar reached 20,000 rials. Food and other prices continued to increase. “Rice-sack currency,” wrote a blogger, referring to the need to carry a bag full of notes to go shopping.

For many Iranians, the current decline in the rial brought back memories of similarly anxious days in mid 1990s. I visited Iran during a turbulent time in July 1995 when the rial kept losing value against the dollar. The dollar increased from 1,500 to 3,600 rials in a short period. Panic prevailed everywhere. Discussing the exchange rate was a national pastime. Even children wondered about exchange rates.

It was during Moharram, the month of national mourning for the death of Imam Hussein, Shiite Islam’s third Imam some thirteen hundred years ago. The dollar reached 6,500 rials by the end of Moharram. “Did the price of the dollar go up because of the death of Imam Hussein?” my six-year old nephew asked.

By the end of the summer, the dollar had reached 7,000 rials. “I am telling you, it will be 10,000 soon. This is how the Americans will get rid of the mullahs,” a cab driver told me. President Clinton had shown a 10,000 rial bill in a press conference, a relative told me. Rumors spread around Tehran that Bill Clinton had announced his readiness to push the dollar up to 10,000 rials to bring down the Islamic Republic.

The dollar continued to climb, and four years later, in fall 1999, it exchanged for 10,000 rials. To the disappointment of those dreaming of a regime change, the government of Iran remained. Meanwhile, the rial enjoyed a long period of relative stability. The dollar exchanged for 10,000 rials. All that changed with the new rounds of sanctions.

President Clinton’s press conference proved to be the imagination of the Iranians who wished a regime change with the help of the Americans. Bill Clinton did not take credit for the 10,000 rial exchange rate. The turmoil in currency markets was not a part of the American policy. Now, many years later, while President Obama celebrates the success of economic sanctions, there are no enthusiastic rumors about him showing a 20,000 rial note to reporters.  Even the most vocal opponents of the government in Iran don’t wish for an intervention and regime change by the United States. Meanwhile, many suffer from President Obama’s sanctions. Trapped between a repressive government, and an outside world uninterested in their lives, ordinary Iranians carry the burden of the sanctions on their shoulders.

“I lost one-third of the value of my assets in a few weeks,” a resident of Tehran said about the dollar value of his home, his only asset. “Everything I buy is 50-100% more expensive now,” the owner of a medium-size toy factory said about the cost of his raw material. The real effect of the sanctions and currency depreciation will come later when more and more factories stop producing because of the shortages of imported parts, and the increasing uncertainty in the market, he said. “It is becoming very difficult to continue working. I may survive this, but many will be out of business by the New Year.”

Usually around this time, Iranians begin preparing for the New Year on the 21st of March. They buy sweets, nuts and dried fruits to treat their visitors, shop for new clothes for their children, do the most thorough spring cleaning.  These days, however, anxiety about prices increases and the precipitous decline in the value of the local currency has replaced the joy of the New Year.

Anxious about the future, middle class Iranians are filling up their freezers with meat, vegetables, and other food, and storing rice, laundry detergent, and all that they can store. Some thirty years ago during the war between Iran and Iraq many Iranians bought large freezers and stockpiled meat and other food stuff in fear of anticipated shortages. The war ended, and as time passed, some unplugged their valued freezers. Now, many years later, with the rising prices of food, and the fear of another war, the freezers are once again plugged in.

Others are emptying their bank accounts and buying dollars. There are no coping mechanisms however for workers and most other Iranians without savings or cash in the bank. Cash strapped, and already struggling to survive the odds of an ailing economy, waiting is all they have in their arsenal. Factory closures and the non-payment of wages will be their gift from the United States this coming New Year. I wonder if the President is hoping to appeal to these Iranians.


About the Author

Behzad Yaghmaian

Behzad Yaghmaian is the author of "Social Change in Iran: An Eyewitness Account of Dissent, Defiance, and New Movements for Rights". He is a professor of political economy at Ramapo College of New Jersey. Yaghmaian can be reached at behzad.yaghmaian@gmail.com 
  • Zoe

    In the past sanctions have pushed Iran to be more self sufficient, and less reliant on imports. Hopefully this sanction will do the same. It will take a little while to adjust, but Iranian are industrious and ingenious. Remember an executive in Johnson & Johnson once told me, we don’t import into Iran, because within a month they will produce the same product sometime better than ours!
    Sanctions do manage regime change. Cuba, Iraq of Sadam, North Korea are all witness to that. Regime change can only come from within, not without. What sanction do is to wipe any good will left among people towards those who impose it. I think West neither realize it nor care!

  • Zoe

    meant to say “sanction do not manage regime change”

  • Edward

    “Others are emptying their bank accounts and buying dollars.” I find it mind-boggling that Iranians should trust the dollar above other currencies. Do they not get Max Keiser in Iran?.

    • Zoe

      Edward, it was a bit of exaggeration on part of Mr Yaghmanian!,

  • Vincent G Thomas

    Behzad, you are right on target with this. We recently returned from Cuba. Our60 year-old embargo has not worked there either. The US policy of thinking that making the local citizens miserable will arouse them into overthrowing regimes the US does not like, is a failed policy. The same thing happened in Iraq. So many children and women died before we began Desert Storm and then later the miserable war.
    Just who are these policy wonks who think defenseless people can overthrow their government? The US pumped up the military for about 50 years in Egypt; the generals are not about to let go. The same in Pakistan; the generals still have the upper hand.
    I hope President Obama will change out policy and try diplomacy. Out oil hungry corporations can only think one way–like a carpenter’s hammer and nails. The policy is to make oil deals; just like Shell in Iraq. The plight of the people and the suffering they must endure is overlooked and not discussed.Thank you for your insight. Peace

  • http://MiddleEastInterpreter.wordpress.com MiddleEastInterpreter

    in 1979 the Iranian overthrew the Shah, they sieged the American embassy and thought that this was their path to salvation.

    Decades on and it looks like they gambled on the wrong horse. Their oppressive regime has taken them down the wrong path. How much money has been spent on supplying, Syria, Gaza and Hezbollah with arms? How much money was spent on financing insurgents in Iraq and Afghanistan?

    The Iranian people should not look at Obama to remove the sanctions, they should at their own government that has failed them and has decided to sacrifice the people on the street, in order to progress their nuclear program.

    Maybe now, when the sanctions start biting, not just freedon loving youth would go and demonstrate, but regular people that want to live a decent life too.

    MiddleEastInterpreter
    MiddleEastInterpreter.wordpress.com

    • Zoe

      Depends what you call the wrong horse?, those regime who gambled on the right horse did not do any better, in fact their down fall started when they started to bet on the right horse and were brought to the fold so to speak.
      If there is only one point in favour of present regime in Iran , it is that they are not servile to the west and that is what irks the western government more than anything else.
      I can tell you something about the sanctions in Iran, it has made Iranian hate the western governments and blame them for their hardship.
      As Norman Lamont says “these sanctions will not work”
      http://www.bbc.co.uk/news/business-16954636

  • Zoe

    Depends what you call the wrong horse?, those regime who bet on the right horse did not do any better, in fact their down fall started when they started to bet on the right horse.
    If there is only one point in favour of present regime in Iran , it is that they are not servile to the west and that is what irks the western government more than anything else.
    I can tell you something about the sanctions in Iran, it has made Iranian hate the western governments. As Norman Lamont says “these sanctions will not work”
    http://www.bbc.co.uk/news/business-16954636

  • Zoe

    Depends what you call the wrong horse?, those regime who bet on the right horse did not do any better, in fact their down fall started when they started to bet on the right horse. and by the way which was the right horse? a western installed government?
    If there is only one point in favour of present regime in Iran , it is that they are not servile to the west and that is what irks the western government more than anything else.
    I can tell you something about the sanctions in Iran, it has made Iranian hate the western governments. As Norman Lamont says “these sanctions will not work”
    http://www.bbc.co.uk/news/business-16954636

  • Edward

    The debate on who backed the right horse or the wrong in refusing to come under the American sphere of influence is apt.
    Having considered the matter it seems that those countries with resources which the Americans wanted to exploit did badly – South America, Africa, the Middle East etc until they expelled the Americans. Ask any of these if they would go back to be under the American umbrella and I am sure you know the answer you would get.
    The number of countries which benefitted from American hegemony – like South Korea – are very few indeed. That most countries do all in their power to prevent the Americans occupying their countries should speak for itself.