In recent weeks, the rial, the Iranian currency, is in freefall. Since Donald Trump questioned the Iran nuclear deal last October, the rial has dropped nearly 50% against the dollar. Half of this drop came in March when John Bolton, a long-time opponent of the Iranian nuclear deal, was appointed national security advisor to the White House. Uncertainty is now at its height following Donald Trump's 120-day ultimatum to the signatories of the Iranian nuclear deal, which expires on May 12. If the defects of the Iranian nuclear agreement are not corrected according to Donald Trump's wishes, then it threatens to withdraw unilaterally from the agreement and launch a new battery of sanctions against the Iranian regime. These new sanctions would add to all the difficulties already existing for the Iranian economy in this highly uncertain context: stop foreign investment, freeze projects already concluded with foreign countries, unable to repatriate export earnings, all cashed in abroad, which has the effect of restricting the country's access to foreign currencies ... The banking system is also strongly affected by lax regulation and the accumulation of bad debts on the banks' assets. The cost of its bailout is estimated at $ 200 billion by experts (about half of Iran's GDP).
The economic and political consequences of this banking and monetary crisis are already immense for the country. Iranians rush to the exchange offices or to unofficial stockbrokers to obtain foreign currency. Many companies close, unable to import products from abroad. The implicit inflation rate deducted from this exchange rate drift is 60% per year (compared to the official inflation rate of 9% per annum).
The Iranian government has put in place emergency measures to deal with this situation: freezing the bank accounts of currency traders, threats of death sentence against the "perpetrators of fraudulent speculation" on the foreign exchange markets, sharp increase in interest rate by the Iranian central bank, limitation of purchases of foreign currency, imposition of an official exchange rate of rial against dollar (1 $ = 42 000 rials). But these measures do not really help to calm the storm that started. At a price of 42,000 rials, dollar holders refuse to sell their currencies and it is therefore on the black market that the dollars are exchanged at a price of nearly 70,000 rials for a dollar.
This deterioration in the country's economic situation is part of a climate that has lasted for almost six months. Protests against the regime of December 2017 and January 2018, whose motives were both economic and political, were suppressed in the blood, causing dozens of deaths. The Iranian youth, who placed high hopes in the program of economic reforms promised by Rouhani, is rebelling both against the religious authoritarianism that has raged in Iran for nearly 40 years, against the Iranian expansionism in Iraq, Syria, and Lebanon, which is at the expense of the domestic economic situation, against poverty and inequalities, and against the regime's corruption. In fact, Iran has immense gas and oil resources, the fruits of which are monopolized by a tiny religious and military oligarchy: Ali Khamenei controls a single empire of 95 billion dollars while the Guards of the Revolution and the foundations nuns are also at the head of colossal wealth. Rouhani's "liberalization" reforms turn out to be mere clientelist privatizations, with additional redistribution of wealth from the bottom to the top of the income ladder. At the same time, social spending (subsidies for the purchase of staples and gasoline for the poorest) is shrinking. Drought is another critical issue for Iran, with 90% of the population living in areas of high water stress and rainfall reaching its lowest level in 50 years this year. Strong population movements, campaigns towards the periphery of big cities have already taken place, provoking an unprecedented social and health crisis. Fifteen million Iranians out of a total population of 80 million live in shantytowns, 40% of Iranians live below the poverty line and 30% of 20-24 year olds are unemployed.
The strategic stakes of the Iranian situation are enormous for Israel and for the Middle East.
Iran is in a "corner", where it is difficult for it to not respect the terms of the agreement (even if Trump withdraws) and to start a war with Israel, this type of initiative that can trigger the fall of the regime. It is likely that Iran is seeking Russia's support to establish its presence in Syria, following recent strikes against the Syrian regime's chemical facilities and the announcement of the forthcoming withdrawal of US troops from Syria. Israel will continue to play all its cards to avoid this presence, but its shadow war against Iranian installations in Syria could become severely compromised if Syrian-Iranian bases are set up, under the protection of anti-terrorist systems. Russian air. Iran could also opt for an invisible presence in the form of Afghan or Pakistani populations, infiltrated in the Syrian army, under Iranian financing. This is probably the most sensible approach to consolidate its influence in Syria while avoiding the risk of an external conflict that could mobilize youth against the regime again.
Other scenarios are also possible: an open conflict with Israel or Trump's increased pressure on the country's economy could eventually defeat the mullahs' regime and lead to a complete rebalancing of maps for the Middle East.
The coming months will be decisive to know which of these scenarios will come true ...