Commentary Magazine


Iranian Currency Crashes

The Iranian rial has crashed. Over the past 36 hours, it has lost almost 30 percent of its value. The value of the dollar against the rial is now up around 300 percent from what it was just a couple years ago. After long denying that the sanctions have had any effect on Iran, President Mahmoud Ahmadinejad now blames outside “enemies” for the country’s economic trials. As the price of foodstuffs climbs for ordinary Iranians, the Iranian leadership hopes that it can blame economic hardship on the West and on sanctions. They will be fooling themselves. While Iranians would rally around the flag in the event of military confrontation or should any foreign power partner with the terroristic and cult-like Mujahedin al-Khalq against the regime, at no point have ordinary Iranians accepted their leaders’ attempts to blame the West for Iran’s financial predicament. Iranians are not fools: they recognize the result of the regime’s gross economic mismanagement.

While some in the Obama administration may breathe a sigh of relief on the logic that biting sanctions may bring the regime to the table and buy time against a potential Israeli strike, they should remain wary. A regime dominated by Islamic Revolutionary Guard Corps (IRGC) alumni does not much care about the economic hardship ordinary Iranians face. After all, much more so even than the grandpa who marched uphill both ways barefoot in the snow,  IRGC veterans will dismiss the complaints of anyone who did not suffer the deprivations of the Iran-Iraq war front.

The real danger is that, given the Iranian government’s dependence on high oil prices to subsidize basic foodstuffs and gasoline, that government will now lash out in order to create a price spike which they can take to the bank. This might mean renewed threats to close the Strait of Hormuz, or it could mean provoking an incident against a foreign tanker or American vessel in the Persian Gulf. In no way, however, will it increase the likelihood of Iran negotiating sincerely.