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May 2024 update
May 24, 2024: In May Iran held national elections and hardline pro-Islam candidates obtained 233 of the 290 parliament seats. The candidates for election must be approved by the government, which is dominated by conservative religious leaders. The result was that no candidates backing economic or government reform were allowed to run for office. Those calling for the elimination of the influence of religious leaders in government were also banned from running for election. This means that needed economic and political reforms won’t be made. For example, the government simply prints more money for internal needs and that creates more inflation and the currency declines in actual value.
This may change because of a May 19th helicopter crash that killed the Iranian president Raisi as well as the foreign minister. This appears to be an accident but the political situation in Iran could easily turn this into an opportunity to blame Israel or the United States for the deaths of two senior Iranian officials.
Inside Iran there were public demonstrations of joy because Raisi was dead. Raisi is nicknamed the butcher by Iranians because he has been responsible for executing or murdering thousands of innocent Iranian civilians. The Iranian government ordered police to break up demonstrations celebrating the death of Raisi while the government department in charge of monitoring Iranian internet traffic was ordered to suppress emails and chat activity praising the death of Raisi.
Raisi was also a supporter of spending a lot of money and effort on supporting pro-Iran groups in other countries. The Iranian IRGC (Islamic Revolutionary Guard Corps) and Quds Force manage the overseas mischief. This was obvious when leaders of these groups traveled to Iran for the Irasi funeral. These foreign groups included Hamas, Hezbollah, Palestinian Islamic Jihad, PFLP, the Yemen Houthis, and various Iraqi Iran-backed groups.
Raisi didn’t only kill Iranians, he also played a role in impoverishing them. Iranian economists report that nearly half of Iranians are living in absolute poverty. The government will not admit it is that bad, even though the economic situation keeps getting worse. The government points out that the inflation rate has been reduced from 45 percent to 37 percent in the last two years. Most Iranians are not impressed because they keep track of prices and know that many food items have doubled in price over the last year and imported items, that must be paid for in dollars, are too expensive for anyone except the wealthy families. These include the religious leaders who run the country and their families. They eat well. Most Iranians have a hard time buying enough food to keep their families from going hungry. Part of the problem is that about a quarter of the needed food must be imported. Iran cannot produce enough food to be self-sufficient, despite generous financial subsidies for farmers. Years of drought have not helped local farmers either.
Most Iranians no longer trust the government when it comes to improving the economy. That means many Iranians, especially businessmen, seek to obtain dollars for their savings and investing in their businesses because the dollar is far more stable in value than the Iranian rial. Currently it requires 42,000 Iranian rials to buy one dollar. The declining value of the rial and increase in prices is a major factor in the growing poverty rate. At the start of 2024 more than half the population was visibly living below the poverty line, even though the official poverty rate was about 40 percent.
Iranians can see that their religious leaders and their families are living well, as are government and military officials who support the government. The military and police are well paid and have enough food. The quarter million members of IRGC make sure the army and police remain loyal. The IRGC has a component, the Quds Force, which supports foreign militias that support Iranian goals. The most prominent of these militias is Hezbollah in southern Lebanon. There are several smaller pro-Iran groups throughout the region.
Despite poverty, a poor economy and unrest at home, Iran has been more active militarily in the last few years because the United States eased up on enforcing economic sanctions Iran has been subject to since 1979. That was when Iranian radicals entered the US embassy in Iran and took American diplomats prisoner. After that Iran was subject to a growing number of economic sanctions that prevented Iran from receiving over a hundred billion dollars in oil revenues. That changed in 2023-2024 when the Biden administration gave Iran over $40 billion previously blocked by those sanctions. Many financial and political analysts correctly predicted that Iran would use a lot of those billions to attack its enemies, mostly through proxies such as the Houthi rebels in Yemen and pro-Iran militias in Iraq, but also a massive 2024 direct Iranian attack on Israel in April. That attack was a colossal failure, doing little damage to Israel and wounding only a few civilians. Iran was humiliated by this failure and vowed to try again in the near future, as soon as they figured out how to carry out an effective attack against the impressive Israeli defenses that blocked the first attack. Iran still has most of the $40 billion, although they may be forced by the Iranian people to spend some on reviving the Iranian economy and restoring the prosperity so many Iranians have lost over the last decade as they slid into poverty.
Iran has other domestic problems that might benefit from an infusion of cash. For example, since late 2017 there have been continuing nationwide outbursts against the religious dictatorship running the country. There was similar activity in 2009 to protest the lack of fair elections. The 2009 protests were put down with force as were the recent ones, with over a thousand dead in 2019 and several hundred since then.
What started in late 2017 was different, with the protestors calling for the corrupt religious rulers to be removed. Some called for a return of the constitutional monarchy the religious leaders replaced in the 1980s after first promising true democracy. Even more disturbing was protests calling for Islam to be banned and replaced with something else, like Zoroastrianism, the ancient Persian religion that Islam replaced, violently and sometimes incompletely in the 7th and 8th centuries. Right before the 2017 unrest the religious rulers saw Iran on the way to some major victories in Syria, Iraq, Lebanon, and Yemen. The optimism turned out to be premature. The good times were supposed to begin in the wake of a July 2015 treaty that lifted the many sanctions Iran had collected for bad behavior since the 1990s. That did not, as many financial experts pointed out, solve the immediate cash crises because oil prices were still low. This was because of continued use of fracking in North America which triggered a massive more than 70 percent drop in the price of oil in 2013.
Iran’ mullah regime made their situation worse by not complying with the 2015 treaty while still getting most of the sanctions lifted, and for a while that seemed to be working. That strategy backfired when the U.S. accused Iran of violating the 2015 deal and by the terms of that agreement the American could and did withdraw. That meant many of the sanctions returned in 2018. Even before the American action foreign economists believed the Iranian economy wouldn’t get moving again until the 2020s. Now it is going to take even longer, and most Iranians are very angry about that. The 2017 protests continue, but more discreetly because of the threat of lethal retaliation. The senior clerics are worried and openly seeking a solution that does not include them losing power. Few Iranians are willing to accept that kind of compromise. The religious dictatorship is not only hated, but also seen as corrupt, incompetent, and untrustworthy. Iran proved that once more when they recently received $40 billion in sanctioned funds and spent it on the wrong things.
This upset many Iranians who were already angry at their government over several issues. This led to some odd acts of resistance. For example, in late 2022 a young Kurdish woman was arrested by the lifestyle police and accused of not covering her hair properly with her hijab. While in custody the girl died, apparently from beatings. This led to months of protests. The government refused to change its hijab policy and the protests faded away in early 2023. In 2024 the government imposed more dress restrictions for women and enacted laws that punished women who defied the dress laws more severely.
There are some more complications. Half the population consists of ethnic minorities, mainly Turks, Kurds, and Arabs, and some of these groups, including Arabs, Kurds and Baluchis are getting more restive and violent, for different reasons. Yet the Islamic conservatives are determined to support terrorism overseas and build nuclear weapons at home, rather than concentrating on improving the economy and living standards and addressing the corruption within their ranks.
Expensive efforts to aid pro-Iran groups in Syria, Yemen, Iraq, and Lebanon made some progress and are presented as examples of the ancient Iranian empire being reborn. The government sees these foreign adventures as a way to distract an unhappy population. This ultimately had the opposite effect as Iranians did the math and realized their poverty was the result of all the billions spent on these overseas adventures. At home the nuclear weapons program is still important because Iranian religious leaders have been increasingly vocal about how Iran should be the leader of the Islamic world and the guardian of the major Islamic shrines of Mecca and Medina in Saudi Arabia. Iranians believe having nuclear weapons would motivate the Arabs, and many others, to comply with Iranian demands.
The potential victims are not cooperating and can retaliate. The Arabs have been kicked around by the Iranians for thousands of years and take this latest threat very seriously. That has led to a major reform effort in Saudi Arabia with a new generation of leaders willing to take on corruption and go with alliances that benefit the Saudis. This includes openly working with Israel to deal with the Iranian threat. When Iran launched a massive UAV and missile attack on Israel in April, it failed to do any meaningful damage and now Iran wants to waste more money on another attack. That will be difficult because, since the failed Israeli attack, there have been numerous effective Israeli attacks on Iranian military facilities. Before that Israel attacked many Iran-backed groups in Lebanon, Iraq, and Syria. Iran insists it will strike back to avenge all the damage Israel has done to Iran, or at least to the reputations of Iranian leaders.
