Iranian rial 390.
(photo credit: Reuters)
President Mahmoud Ahmadinejad has apparently agreed to increase Iran’s interest
rate on bank deposits, causing the populace of his country to become
increasingly worried about the economy and the toll on future income. It appears
that the sanctions imposed by world leaders are having an effect – although
Ahmadinejad denies the squeeze.
According to various sources, the
sanctions are supposed to bring Iran’s oil industry to its knees. Not so –
countries such as Sri Lanka, China, Japan, Italy, South Korea, Spain, Greece,
Turkey and South Africa have remained aloof and refused to join the United
States and European Union in banning the import of Iranian crude. These
countries represent a petroleum import ratio of anywhere from 10% to
The pinch, however, is being felt in the area of foreign currency
sales. According to the IRNA news agency in Tehran, Ahmadinejad has upped
interest rates on bank deposits to “up to 21%.” Iranians have been instructed to
buy dollars only when traveling.
Hoarding of US currency had become de
rigueur in aristocratic circles in the country. It was the currency to covet,
but no longer. Now it will be at a premium, and will require government
permission to purchase. Ahmadinejad has acknowledged – albeit subtly – that the
sanctions have seriously degraded the value of the Iranian rial. One anonymous
Iranian politician depicted the current economy as the worst since the Iran/Iraq
Iran’s raising the interest rate resembles the tactics employed by
the Jimmy Carter administration to curb runaway inflation. Under his governance,
the Federal Reserve continued to raise interest rates to double digits. It was
great for job creation, but prices were so high the newly-hired could not afford
to purchase goods and services. The result was what came to be known as
The countries that joined forces to impose sanctions on
Iran did so in hopes of restricting the amount of currency available to purchase
the materials and expertise needed to continue its nuclear pursuits. The weaker
rial triggered a run on gold and foreign currency and further exacerbated the
problem as Iranians withdrew savings in order to make their purchases. Iran’s
economy has been further destabilized. People such as students, medical patients
and business owners seeking to purchase dollars or other foreign currencies will
be forced to prove need before a supply is made available.
interest rate is a risky move on Ahmadinejad’s part as inflation continues to
rise despite the increase. It puts his leadership position in the upcoming March
elections at risk in a parliament already critical of the despotic
The sanctions, far from causing the Iranians to rethink their
resolute rush to gain nuclear weapons, have resulted only in a more defiant
attitude, and have been labeled “ineffective.” They would, of course, be
more effective were China and India to join the list of countries imposing
restrictions on Iran.
If the Iranian people grow tired of Ahmadinejad’s
machinations, could we see a repeat of the tactics used to overthrow the Shah of
Iran? A weapon used by Ayatollah Ruhollah Khomeini when he engineered the
overthrow of the Shah was oil-related strikes. He took full advantage of the
freedom to use the media for his purposes.
Khomeini began to urge the
workers in Iran – from oil workers to garbage haulers – to go on strike.
Students were encouraged to riot in support of the working class. The strikes
proved to be very efficient at creating dissent. The strikes spread from the
Tehran oil refinery to the oil refineries at Isfahan, Abadan, Tabriz and Sharaz.
In one week, oil production fell by three million barrels.
Iranian people again employ that strategy against their government, blood will
flow in the streets. When the people revolted following Ahmadinejad’s
re-election in 2009, President Barack Obama did nothing to help them defend
themselves against reprisals. They would, I imagine, be very reluctant to try a
second time unless the US rallies behind them and the Western press is
supportive. If that does not happen, then there is little chance of revolution
Following the taking of the US embassy in Tehran, President
Carter tried to use sanctions to gain an advantage, all to no avail. Khomeini
was as strong-minded in his determination not to give up the hostages as
Ahmadinejad is in his unwavering resolve to secure a nuclear
advantage. The fact that oil prices are rising in the West only serves to
strengthen his decision to thumb his nose at the sanctioning
countries.The writer is a No. 1
New York Times bestselling author. His
The Protocols, addresses the role of anti-Semitism in the peace
process. It was officially launched at the Menachem Begin Heritage Center.