Hyperinflation stalks Iran while
Israel wavers By Victor Kotsev
The freefall of Iran's currency, the rial,
has triggered fears of hyperinflation in the
Islamic Republic. It offers context to the
comments of Israeli officials, especially Israeli
Prime Minister Benjamin Netanyahu's speech at the
United Nations last week, who have hinted that the
international sanctions are producing an effect
and they would be willing to postpone a military
strike on Iran's nuclear program until next year.
Meanwhile, speculation
about two alternative options
- a surprise attack or early elections in Israel,
which would give Netanyahu an opportunity to
compromise further with his militant rhetoric -
has increased.
The collapse of Iran's
currency, coupled with rising discontent of
workers inside the country, is by far the biggest
recent news in that respect. In the last few days,
the rial lost 30% to 50% of its street value - 15%
on Monday alone - sparking riots and clashes
between police and protestors in Tehran Wednesday.
Over the past year, the Iranian currency has
depreciated by about two-thirds, severely
affecting imports and financial stability in the
country. American officials were quick to
capitalize on the debacle, pointing to it as proof
that the sanctions designed to curb the Iranian
nuclear program were producing an effect.
Amid soaring food and other prices - even
before these latest developments, the annual
inflation rate in the country was close to 30% -
the threat of hyperinflation and the effective
destruction of the Iranian economy looms. In
another sign of protest, a petition reportedly
signed by over 10,000 Iranian workers adds
pressure on the Tehran leadership.
As the
Associated Press put it, "Iran's factory workers
and laborers have provided the tipping points at
pivotal moments. They gave vital populist backing
to the 1979 Islamic Revolution and generally sided
with the ruling clerics when they were under
threat by riots after [current Iranian President]
Mr Ahmadinejad's disputed re-election in 2009."
[1]
The Iranian elite, meanwhile, is
engaged in an intense power struggle between
several different factions. Iran's president,
Mahmud Ahmadinejad, who has another eight months
to go before his second term expires and cannot
run for re-election, blamed the crisis on the
sanctions and on "psychological warfare" by
Western powers and domestic "speculators." His
opponents, on the other hand, pointed to problems
with his own financial policies, including
mismanagement of the economy over the last years
and a failed recent attempt to stabilize the
exchange rate by opening a government-regulated
currency exchange center.
In a sign of
just how far the internal political intrigue in
the country has gone, rumors circulate that the
Iranian Supreme Leader, Ayatollah Ali Khamenei, is
considering abolishing the office of the president
altogether.
These developments help
explain also the recent shift of rhetoric on the
part of Israeli leaders. Several days ago, for
example, the controversial foreign minister
Avigdor Lieberman predicted "an Iranian-style
Tahrir revolution" in the coming months, which
would presumably halt Tehran's nuclear program.
"[The Iranian economy] is not collapsing,
but it is on the verge of collapse," Israeli
Finance Minister Yuval Steinitz chimed in. "The
loss of income from oil there is approaching
$45-50 billion by the year's end."
Netanyahu's own speech at the UN General
Assembly last week, featuring the now-famous
cartoon bomb drawing, was widely interpreted as a
softening of his stance. The Israeli prime
minister proclaimed his determination to stop Iran
from acquiring a nuclear weapon but told the
Assembly that Tehran would likely not cross his
red line before the next spring or summer.
While the simplistic drawing attracted
considerable criticism from pundits, it arguably
accomplished its main objectives - to draw
attention, to convey a clear ultimatum to both
Iran and US President Barack Obama, and to prepare
global public opinion for a possible military
campaign in the future. Domestic Israeli
commentators, moreover, have picked up on another
possible goal of Netanyahu's speech: to set the
tone for an early elections campaign in Israel.
As the veteran political analyst Yossi
Verter wrote in an article in the Israeli daily
Ha'aretz,
Thursday's speech also had political
ramifications that presumably were not lost on
the speaker: If, at the start of the Knesset's
[parliament's] winter session in around two
weeks, Netanyahu calls for early elections
(probably in February) it's clear that the
election campaign will be centered on the
Iranian threat. In an election campaign that has
a security-diplomatic, even existential
character, less experienced politicians or
political wannabes like Labor's Shelly
Yacimovich and Yesh Atid's Yair Lapid, who are
pushing a socio-economic agenda, will find
themselves in terra incognita, with little to
sell the public. [2]
Netanyahu is having trouble
getting the 2013 budget approved, which could
serve as a trigger for early elections.
Incidentally, such a vote would likely happen
before his nuclear deadline expires, which could
save the Israeli prime minister's political
fortunes should he back down from his aggressive
rhetoric.
For his part, the Iranian
president hinted in recent interviews that a
breakthrough in the nuclear negotiations could
happen after the US presidential election next
month.
Still, the war chatter has not
subsided. On Tuesday, a senior Iranian lawmaker
threatened in an interview with the Iranian
English-language channel Press TV that if the
talks with world powers failed, Tehran would
increase uranium enrichment to 60% purity of the
fissile material uranium-235, up from the current
20% enrichment and only a short technological leap
away from the 90% level required for a bomb.
In comments published by the Times of
Israel, an anonymous Iranian nuclear technician
said that 30% purity had already been achieved,
and "by next year, we hope to reach up to 50 or
even 60%". He also shared that "More and more
young graduates and people are brought in [the
nuclear program] every day. ... We have been
working non-stop." [3]
Meanwhile, a
comprehensive recent report in Foreign Policy
Magazine offers new perspectives on the Israeli
military option against Iran and the US-Israeli
relationship. Besides straight-forward air
strikes, US planners have been concerned about two
possibilities that have not received much
attention so far, journalist Mark Perry reveals.
One is regime decapitation, which "would almost
certainly trigger an Iranian response targeting US
military assets in the region, as it would leave
the Iranian Revolutionary Guard forces in charge
of the country".
The other one is an
"extremely dangerous" commando raid against the
nuclear facilities, broadly similar to the one in
Entebbe, Uganda, in 1976, where Netanyahu's
brother died in the operation to free Israeli
hostages. An estimated 400 commandos would storm
the main Iranian facilities, take the enriched
uranium with them, and blow them up.
"There aren't three divisions near [the
underground enrichment facility at] Fordow,
there's one, and it's dug in," an American
military source told Perry. "It wouldn't take the
Iranians three hours to respond, it would take
them three days." [4]
Since, as the
Israeli experts and leaders have acknowledged,
Israel can only delay Iran's nuclear program by a
few years, for now it has an interest to wait.
While Iranian currency reserves are getting
depleted and unrest is on the rise, every week
brings a palpable decrease in Iran's ability to
rebuild its facilities. On the other hand, a
strike now could spell the end of the sanctions
regime.
There may be, therefore, a sliver
of hope for the nuclear talks, as well as a few
extra months on the Israeli military clock.
Unfortunately, recent developments such as the
Iranian threats to up enrichment and the US
removing the Mujahadin-e-Khalq, a militant Iranian
anti-government organization, from its terror
list, do not point in a very conciliatory
direction. The hope may well be short-lived.
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