Turmoil puts Iran at a crossroads
Calls for regime change may be premature, but change within the regime is on the cards
UNPRECEDENTED nationwide protests have shaken the Islamic Republic of Iran during the past fortnight. There seems to be no sign that they will abate anytime soon. Iran is no stranger to social unrest, but the intensity of the latest round of public demonstrations appears to represent an existential crisis for the republic.
It is widely being seen as posing the gravest threat the regime has faced in 47 years since the February 1979 Islamic revolution. The country is under a lockdown with the suspension of Internet connectivity and international telephony. The regime is also said to have deployed military-grade technology of Russian or Chinese origin to block Starlink, the global satellite communications network.
In an atmosphere of rumours and social media disinformation, an accurate assessment of the prevailing situation in Iran has been hard to come by. However, a range of sources report that recent days have seen a brutal crackdown by security forces; this has so far resulted in the death of several hundred demonstrators — the figures vary between 500 and 2,000 — and several thousands being detained. The coming days, perhaps even weeks, could therefore determine what the future holds for a widely unpopular regime but one which has long endured and is set to enter its 48th year next month.
Beginning December 28, widespread demonstrations and rioting have taken place across Iran. These organic protests started in Tehran’s Grand Bazaar. Traders shut shops and staged a sit-in, protesting the collapse of the Iranian currency, the Rial, against its principle benchmark, the US dollar. The trigger was a decision by the government of President Masoud Pezeshkian to undertake financial and economic reforms, compelled by the all-pervasive US sanctions.
One proposal was to withdraw a preferential exchange rate mechanism whereby trading guilds, the bazaaris, receive scarce forex at highly subsidised rates, disproportionately below the market rate. The bazaaris are fiercely protective of this access to preferential state funds via a controlled forex system. Pezeshkian’s decision has divided the ruling clerical regime which is keenly mindful of the economic influence of the bazaaris.
What started as a pressure tactic by the bazaaris spread like wildfire, drawing in students and a cross-section of society, where frustration and despair are ever present, particularly among the youth. Contributory factors are the severely depressed economic and employment conditions, an inflation rate estimated to be over 45 per cent and popular frustration with the regime’s economic mismanagement, widespread corruption and rent-seeking.
The pattern of past protests in Iran, most recently the 2022 anti-hijab demonstrations, is that popular discontent is initially fuelled by either a social (anti-hijab) or economic grievance and thereafter it rapidly transforms into a political uprising. The current demonstrations are following a similar pattern. However, this time around, the protests, as also the diversity of protesters — drawn from all segments of society — have shifted into a higher gear with an intensity never seen before. An additional element has been the open expression of disenchantment over the economic costs of the regime’s interventions in Palestine, Syria and Lebanon.
The common anti-regime slogans of “death to the dictator” - a reference to Supreme Leader Ayatollah Ali Khamenei — are now being accompanied by shouts of “Neither Gaza nor Lebanon, my life for Iran.” A new element is the slogan “Javid Shah” (long live the Shah), a reference to Crown Prince Reza Pahlavi, who is based in the United States. Pahlavi is seeking to take ownership for the protests and position himself as a viable alternative. Given Iran’s fractious polity and Pahlavi’s own disconnect from the current generation of Iranians, this seems to be a hard ask. The monarchy remains a divisive issue among Iranians.
The intensity of the ongoing social turmoil and the regime’s typically harsh response has raised valid anxieties about the continued internal stability of one of West Asia’s most important geo-strategic players. The unfolding situation will be of deep concern for Iran’s neighbours. Iran is the second largest country in West Asia, second only to its geo-strategic and religious rival, Saudi Arabia. Both countries contest for leadership of the Islamic Ummah through competing Sunni and Shia sectarian ideologies. Both sects coexist peacefully in India, unlike almost every OIC (Organisation of Islamic Cooperation) country.
The traditionally close historical relations between India and Iran have greatly deepened in recent years, particularly through partnerships such as India’s management and operation of the strategic Chabahar Port. Membership of BRICS and the SCO enables both nations to broaden opportunities for cooperation. It is generally under-appreciated that Iran has weathered decades of financial and economic sanctions and adroitly managed to avoid isolation.
Iran is fiercely independent and positions itself as a vital geo-strategic actor, including in the global energy markets. It holds the world’s fourth largest reserves of crude oil and second largest reserves of natural gas. Exports of Iranian light, the much-valued low sulphuric content crude, amount to around two million barrels per day. Thus, the protests in Iran, coupled with the extraordinary incidents in Venezuela, have triggered an uptick in global crude oil prices, a rise that Delhi’s policymakers will be closely tracking ahead of the Union Budget.
The situation in Iran remains highly fluid. As per reports, riots and demonstrations continue to take place in major cities, including Tehran, Isfahan and Shiraz. The state of affairs seems to be especially critical in Iran’s provinces bordering Iraq which have Kurds in the majority. For now, the Islamic regime has shown no signs of disunity and the Supreme Leader has shown no inclination to compromise and reach out to his people. Pezeshkian was initially conciliatory but then retreated from public life.
India has been typically cautious, issuing only a brief travel advisory while eschewing any public commentary. After all, there are roughly 3,000 Indian students in Iran, including those in the religious seminaries in Qom and Mashhad, and this caution is warranted.
On the other hand, official comments from most Western capitals have been critical of the Iranian authorities’ harsh response. US President Donald Trump wavered between threatening to launch military strikes on Iran while simultaneously claiming that he had received messages from Iran for renewed talks.
It will not be lost on observers that the US has again stationed strategic bombers in Diego Garcia, the base from where it launched “Operation Midnight Hammer” last June. While calls for regime change may be premature and hasty, we may well be at the beginning of change within the regime. Any instability in Iran will have grave consequences both for the region and the energy markets.
