by Eli Leon, Ilan Gettegno, News Agencies and Israel Hayom Staff
This photo, taken by an
individual not employed by the Associated Press and obtained by the AP
outside Iran shows protesters near a garbage can that was set on fire in
Tehran on Wednesday.
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Photo credit: AP  |
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Iranian authorities took aggressive measures
on Wednesday in an attempt to stabilize the country's plummeting
currency, making arrests, vowing to stamp out sidewalk money changers
and warning merchants against fueling the mounting public anger over the
economy.
There were unconfirmed reports of sporadic
violence. Associated Press photos showed riot police blocking a street
with the charred hulks of a garbage can and a motorcycle that had been
set on fire. Smoke was rising from the area in central Tehran near the
main bazaar.
The sweeping responses to the freefall of
Iran's rial – which has lost more than a third of its value in a week –
underscored the worries for Iranian leaders after months of dismissing
the West's economic squeeze seeking to rein in Tehran's nuclear program.
A declining currency causes shifts in an economy such as making
imported goods more expensive.
Although the currency crisis is blamed on a
combination of factors – including internal government policies – the
rush to dump rials appears to reflect an underlying perception that
international sanctions have deepened problems such as runaway inflation
and soaring prices for imports and that the only safe hedge is to grab
dollars or euros.
If the economic turmoil intensifies, it could
boost pressure on the ruling system before elections next June to pick
President Mahmoud Ahmadinejad's successor. That has the potential to
hinder nuclear talks with the West until after the elections.
Protesters aimed much of their anger at
Ahmadinjad, chanting slogans such as "Mahmoud the traitor," while
voicing their discontent at their government's support of the Syrian
regime, yelling "Forget Syria, help us."
One of Ahmadinejad's main critics, parliament
speaker Ali Larijani, has led the calls to blame the currency crisis
mostly on allegedly misguided government monetary policies.
In reply, Ahmadinejad warned that he could consider resigning if his government is put under too much pressure.
"Now is not the time for anybody to settle
accounts," Ahmadinejad said Tuesday as the rial hit a record low. "If my
presence is a burden on you, (the solution is for me to) write one line
to say goodbye."
Tuesday's rate of 35,500 rials against the
U.S. dollar compared with 24,000 a week ago on the unofficial street
trading rate, which is widely followed in Iran. It was close to 10,000
rials for $1 as recently as early 2011.
Exchange houses were closed Wednesday, and currency websites were blocked from providing updates on the latest rates.
Public grumbling has grown steadily louder
over the punishing combination of a falling currency and rising prices,
which have put some staples such as chicken and lamb out of reach of
many low-income Iranians. Earlier this week, a petition signed by about
10,000 workers was sent to the labor minister to complain that even
paying rents has become a struggle.
The owner of a furniture showroom said he
hasn't made a sale in 10 days while his workshop rent has been increased
by 30 percent. He said one of his workers bought a can of tuna for
lunch Saturday for 35,000 rials, or about 98 cents at the current
exchange rate. The next day it was 45,000 rials, or $1.26, said Hamid,
who gave only his first name because of warnings by Iranian officials
not to discuss the economic situation with the media.
"Even Afghan workers are going home since it
doesn't make sense to work in Iran with a currency that's worth less and
less," he said.
At Tehran's bazaar – the traditional business
hub in Iran's capital – merchants appeared to stage widespread closures
to protest the stumbling economy. The sprawling bazaar has played a
critical role in charting Iran's political course – leading a revolt
that wrung pro-democratic concession from the ruling monarchy more than a
century ago and siding with the 1979 Islamic Revolution.
The semiofficial Mehr news agency quoted
police Col. Khalili Helali as saying the bazaar was not officially
closed and that authorities will take action against many merchants who
have shuttered their shops.
"Police will deal with the guilds that have closed their shops to cause (economic) disruption," Mehr quoted Helali as saying.
Meanwhile, anti-riot police patrolled streets
in central Tehran where freelance money dealers work. Police units also
were deployed in key shopping areas.
Iran's economy minister vowed to break the
black market, which effectively sets the exchange rates. The unofficial
market will be "rounded up," Shamseddin Hosseini was quoted as saying by
Mehr.
The news agency also reported that some
arrests were made for attempts to "disrupt the economy" and that at
least two "foreigners" were detained for trying to "gather information"
about the police action.
There were no further details. Iran has placed
broad restrictions on foreign media that severely limit the ability for
firsthand reporting on the streets.
In Washington, Secretary of State Hillary Clinton said Iran's leaders deserve responsibility for what is going on.
"They have made their own government
decisions, having nothing to do with the sanctions, that have had an
impact on the economic conditions inside the country," Clinton told
reporters. She said the sanctions have had an impact as well, but that
they could be quickly remedied if the Iranian government was willing to
work with the international community "in a sincere manner."
The causes for the rial's fall draw from many roots.
The Western sanctions include blocking Iran
from the main international banking networks, which made it difficult
for Iranian businesses to borrow money and forced many firms to pay with
cash for imports.
At the same time, Iran's Central Bank began
facing increasing troubles meeting demands for dollars. Sanctions on
Iran's oil exports have cut into its foreign currency revenue, and banks
in Dubai and elsewhere closed off transactions with Iran.
Critics of Ahmadinejad also say his government
added to the frenzy to dump rials with policies such as limiting bank
interest rates, which led depositors to pull their cash in fear it
wouldn't keep pace with inflation.
But the intangible elements – the idea that
even leaner days are ahead – appeared to kick in this week with consumer
prices continuing to rise and rumors abounding that banks would limit
withdrawals from dollar accounts.
In a sign of the multi-layered theories
swirling in Iran, some economists and experts have accused the
government of trying to devalue its currency in order to meet its own
budget deficit.
The government earns more than 90 percent of
Iran's overall foreign exchange revenues as a result of oil sales.
Higher dollar rates bring more rials into the treasury to pay salaries
and fund state programs, such as guarantee stipends to compensate for
the withdrawal of fuel and food subsidies last year.
Hosseini, the economy minister, challenged the government's critics to provide more than just claims.
"We are not for devaluating the rial," the
semi-official Fars news agency quoted Hosseini as saying. "Those who
make such claims better offer evidence."
Ayatollah Khamenei said Wednesday that the
“The Iranian nation has never bowed to pressure and never will, and this
is the cause of enemy’s fury,” state-owned Press TV reported.
“The thought that the cause of the arrogant
front’s enmity towards Iran is adopting certain stances or making
certain decisions is wrong. The cause of all these pressures is the
Iranian nation’s independent position and not bowing to the hegemonic
system,” he added.
“The Islamic Republic of Iran has faced a
range of pressures including political, security, military, economic as
well as sanctions, though the Iranian nation has not only neutralized
these pressures through resistance, but has become stronger,” Khamenei
said.
Meanwhile, cyber attackers have apparently
targeted Iranian infrastructure and communications companies, disrupting
the Internet across the country a state official was quoted as saying
on Wednesday.
"Yesterday we had a heavy attack against the
country's infrastructure and communications companies which has forced
us to limit the Internet," Mehdi Akhavan Behabadi, secretary of the High
Council of Cyberspace, told the Iranian Labor News Agency.
"Presently we have constant cyber attacks in
the country. Yesterday an attack with traffic of several gigabytes hit
the Internet infrastructure, which caused an unwanted slowness in the
country's Internet," he said.
"All of these attacks have been organized. And they have in mind the country's nuclear, oil, and information networks."
Roni Bahar, a cyber attack expert for Avnet Information
Security Consulting, said that based on reports out of Iran the cyber
attack was especially massive and was meant to damage the country's
Internet infrastructure by directly infiltrating Internet providers and
other critical systems. The purpose of the attack, apparently, was to
create a diversion for an attack on the internal computer networks used
to serve the country's critical infrastructure. Bahar went on to explain
that while there was normally no connection between external and
internal networks, various computer worms and viruses, such as Stuxnet,
have succeeded in the past to bypass obstacles and reach their target.
Eli Leon, Ilan Gettegno, News Agencies and Israel Hayom Staff
Source: http://www.israelhayom.com/site/newsletter_article.php?id=5975
Copyright - Original materials copyright (c) by the authors.
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