Iran Feature: The Top 10 Stories of 2012 --- A Currency Falls, Sanctions Expand, and Political Prisoners Continue to Resist (Farhi)

Closed Cirrency Exchange, Summer 2012This year forcefully disproved the assumption that imprisoning political and civil society activists and critics silences them and fixes the Islamic Republic’s dissident problem.

Former presidential candidates Mir Hossein Mousavi and Mehdi Karroubi remained incarcerated in their homes (the former along with spouse Zahra Rahnavard) without being charged and remained mostly without any kind of access to the outside world. But letters written by political prisoners about prison conditions and solidarity among prisoners — as well as the woeful state of the country’s politics — made it out of the prisons and were sufficiently covered by external news and activist outlets for many inside Iran to become aware of them.

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The Latest from Iran (3 October): Blaming the "Enemy" for the Economy

The Tehran Bazaar today, with most shops closed and shuttered

See also Iran Feature: A Beginner's Guide to the Currency Crisis
Iran Snap Analysis: Ahmadinejad and The Economy's "Worthless Pieces of Paper"
The Latest from Iran (2 October): A Currency in Free Fall?

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1902 GMT: More photos show that some of the crowds clearly turned to riots:

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Iran Featured Question: Is the Currency in Free Fall?

Claimed footage of Iranians seeking foreign currency in front of Bank Melli in Tehran on Monday

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Some may cling, in theory, to a horizon of a Tehran going from strength-to-strength with a devalued Rial and exports --- traded for rupees and rubles, rather than dollars --- taking over the world. I think, however, that reality is leaving theory behind --- and it is doing so on a daily, rather than a long-term, basis.

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Iran Analysis: Why the Currency Fell....And What That Means for Iranians (Namazi)

Two opening arguments: (a) government mismanagement has had a much bigger role to play than sanctions in this crisis; and (b) that irrespective of the culprit, the current situation is to the detriment of the Iranian private sector and in favour of governmental and quasi-governmental businesses.

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Iran Feature: Is Ahmadinejad's Government Fuelling the Currency Crisis?

Our analysis at EA is that the currency crisis in Iran is driven by structural problems, mismanagement, mis-timed subsidy cuts and interest rate policies, and inflationary pressures. We do not see a plan by the Ahmadinejad Government, let alone a conspiracy, for the sudden fall of the Iranian rial.

That is not to say, however, that elements within the regime will give up a profit from the events. Those speculating against the rial --- has allegedly included officials in the Revolutionary Guards, in the Ahmadinejad camp, and in other areas of the Government --- have made a handsome sum by exploiting the gap between the "official" and "open-market" rates. And if economic crisis offers political advantage, should that be passed up?

"A Correspondent" for Tehran Bureau, while paying lip service to "fundamental structural problems" such as an excess of cash in the Iranian system, goes much farther. He/she sees a plot by the President and his inner circle to solve an immediate budgetary issue --- even if there are higher costs down the road --- while seeking a winning position in March's Parliamentary elections.

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The Latest from Iran (4 January): If You Yell Victory, Does It Count?

See also Iran Feature: Explaining the Currency Crisis
Iran Snap Analysis: After the Show of Ships and Missiles, Regime Declares, "We've Won!"
The Latest from Iran (3 January): Desperately Seeking Reformists

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2145 GMT: Foreign Affairs (Turkish Front). Turkish Foreign Minister Ahmet Davutoğlu has made an unexpected trip to Tehran today, briefly meeting his Iranian counterpart Ali Akbar Salehi.

No details of the discussion or of the agenda were given in Mehr, which said only that Davutoğlu would be meeting Iranian officials tomorrow.

2045 GMT: Currency Watch. Amidst the currency crisis, the Central Bank has ordered a decrease in the amount that can be exchanged under a preferential "traveller's rate" from $2000 to $1000.

Under the "traveller's rate" of about 13000:1, the Iranian rial is weaker than the official rate of 11800:1 but still stronger than the open market rate of 15700:1, thus enabling Iranians going abroad to get more US dollars or foreign equivalents for their Iranian currency. Iranians can carry out the transaction once a year.

(Hat tip to Moandor, who provided information earlier today and predicted the Central Bank would soon take a step over the traveller's rate in .)

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The Latest from Iran (6 October): Through the Looking Glass of "Justice"

1820 GMT: Gasoline Squeeze. Azerbaijani site Trend looks at Iran's energy situation, with experts sceptical that Tehran can achieve its declared goal of self-sufficiency.

1800 GMT: Extra, Extra, Read All About It. The leading reformist newspaper Shargh has resumed on-line publication.

Shargh has suffered a lengthy ban by the Iranian authorities until the print edition reappeared this summer.

The website features a series of articles on sanctions against Iran, including a feature on   Stuart Levey, the Undersecretary for Financial Intelligence in the US Treasury. He is recognised as the official who has been successful in swaying private banks and companies around the globe to support sanctions against Iran. The newspaper claims he has made 80 foreign trips, 8 to Dubai --- a key point for Iran trade and finance --- alone. 

1735 GMT: Political Prisoner Watch. Hashem Sabaghian, a leading member of the Freedom Movement of Iran, has been released from detention.

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The Latest from Iran (5 October): The Economy, Arrests, and Ahmadinejad v. Parliament

1729 GMT: Nuclear Watch (Better Late than Never). The head of Iran's atomic energy organisation, Ali Akbar Salehi, said today, "The start-up process of the Bushehr power plant is progressing well and we hope to see it connected to the national electricity grid by late December, or a few weeks earlier." 

The Bushehr plant was supposed to be operational this month but Iranian official said last week that the launch would be delayed. Salehi said this was because of a "small leak" in a pool near the plant after stories circulated that Bushehr might have been hindered by the Stuxnet computer worm.

1725 GMT: Mousavi Watch. In his latest interview on Kalemeh, Mir Hossein Mousavi has declared that President Ahmadinejad's foreign policies are destructive and his performance should be judged in a referendum.

1720 GMT: Currency Watch. Iranian Labor News Agency reports that lines in front of governmental currency exchange shops are 10 meters long. Dollars are being traded at open rates, as opposed to the government's official rates, elsewhere.

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Iran Special: A Beginner's Guide to the "Currency Crisis"

The best way to understand the current foreign exchange crisis is by imagining that you are commuting back home from your job, driving on the same route you have been taking for the past decade. All the sudden, you see that the highway you take has been closed off. You immediately try the main road you know, but that is closed too. You go to the train station, only to learn that it not running.  You will feel very disoriented and may not know how to get to your destination.

That's where we are now with the Iranian banking system. Businesses and individuals are feeling disoriented because the banks and forex traders they have relied on for decades are suddenly unable to service them.

Over the next few weeks and months, they will start finding the side streets and figuring out how to move money again. It's unlikely that such a high spread will remain in place between the official and black market rate of the rial. I expect the spread to narrow, but it will persist at much higher levels than in the past. The traders will want to be compensated for the trouble of finding new routes and the few banks that do not worry about US pressure or their own government's cracking down will want a premium for their services.

My best assessment is that we can say with certainty that the sanctions are indeed "biting" and "painful", especially for ordinary Iranians and the private sector. But to say that sanctions are "working", we need evidence that they are contributing to their core purpose, which is supposedly to change Iranian behaviour on certain issues.

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