Sunday, 14 October 2012

Spare a thought for the poor Iranians

There is economic cataclysm going on in Iran. What guns and rhetoric have failed to do might be achieved by grubby old economics - the downfall of the nut cases who have been ruling Iran for sometime.

The Iranian rial has plunged into free fall. It declined by 25% in one week in October against the US dollar. Since the beginning of 2011 it has fallen by 70+%. It was some 10,000 rial to the US $ in 2011. Its now around 30,000 rials to the US $. The rial is now virtually worthless. Inflation by official estimates is some 25%, in reality more like 70%. There is economic chaos.

Why is this important ? You only have to look towards  the street protests that have sprung up in Iran to see how this is affecting everybody in Iran - the rich, the poor, and yes, even the mullahs. But, wait a minute. Iran is oil rich, right ? It should be rolling around in wealth. And yet, the country  is in deep crisis and the population is suffering.  Why ?

If ever there was an example of how a rotten government can destroy its people, it is Iran.  By all rights Iran should be a rich country. It is an ancient and rich culture and full of extremely bright people. And above all, it is swimming in oil. But unfortunately it has a government that must surely compete with North Korea and Zimbabwe for the title of the worst government in the world. It exports terrorism, it dips its fingers into every trouble spot in the region - it finances the Hezbollah in Lebanon, it backs the Syrian regime, it supports the Hamas in Gaza........ It is trying its best to build a nuclear bomb.

Consequently it has pissed off the world. Crippling economic sanctions have been the result. Nobody bar Russia and China, and to some extent India, is trading with it. It has been kicked out of SWIFT - the international banking settlement system. Therefore everybody, including Russia and China have to deal with it via the back door.  If anybody trades with Iran he has to virtually receive suitcases of cash in return. That's not easy to do on scale. So even exporting oil has become difficult.

End result is that the rial is plunging like a stone. So everything becomes incredibly more expensive. Food prices are doubling. Luxuries, which might even be necessities in other parts of the world, are becoming unthinkable. The common Iranian, like most others in the world, cares two hoots about religious purity and dogma. He wants to fill his stomach. And then wants to buy a mobile phone. After that he wants to post on Facebook. Simple.  If you deny that from him for too long and make him slide backwards, his patience will break and he will burn the beards of those who are stopping him. 

So for Israel and the hawks in America, here is a pleasant thought. You don't have to nuke Iran to stop them from acquiring nuclear weapons. The rial is doing the job for you brilliantly. With a bit of journalistic license I say, the bill is mightier than the bomb !

22 comments:

sriram khe said...

Hmmm ....

I am not a big fan of sanctions. The sanctioned-regime is always one that has tight controls over its peoples. I mean, when was the last time we imposed sanctions on a democracy, right?

As you note in your post, the overwhelming majority in the sanctioned-country suffer. They suffer not because they screwed things up, but because of their messed up government.

I am not at moral ease with that suffering we inflict on them. A suffering that clearly would not have happened if we hadn't imposed sanctions on the country.

Iran continuing to enrich nuclear fuels didn't prevent the average Iranian family from having decent food. The shortages and price increases have resulted from our actions.

Because we are upset with those nuclear plans, we have declared economic war on the country. Again, we should recognize that it is a war. As you also note, it is a war via the dollar as opposed to bombarding them with bombs.

I am not in favor of wars. A war in defense might be necessary. But, clearly we are going on the offensive here. We are dismissing the sufferings of the civilians as collateral damage. We think that somehow this is a damage that is all worth it. But, the suffering we have deliberately inflicted on millions of civilians is a serious moral issue.

So, perhaps finally we do have something where we disagree, eh ...

I wish that we, especially Americans, actually discussed these issues. But, we don't. It is unfortunate that wars of any kinds seem to unite both Republicans and Democrats. It is only a matter of difference in the magnitude--Obama is content with an economic war against Iran, whereas the Republicans seem to want the real thing with "the rockets' red glare, the bombs bursting in air" ...

Prats said...

"the bill is mightier than the bomb" Absolutely true sir.

Ramesh said...

@sriram - A little disagreement, but not much. I am more sympathetic to economic sanctions - how do we deal with a virtual rogue government acquiring nuclear weapons in a volatile area. Doing nothing would be an equal "war" but on somebody else. But as you say there must be an informed debate in each country and actioned accordingly - no bang bang. In fact there is UN provision for trade with Iran in food, medicines etc which India does quite a bit on bilateral rupee trade for oil. After I wrote this post, I happened to lunch with a friend who trades with Iran !!

@Prats - :)

Appu said...

Food->Mobile->Facebook! new postulate on the hierarchy of needs huh!! me likey :))

Sandhya Sriram said...

Actually, economics, currency and all these financial stuff are for people that are bothered about them. there is a parallel Black, dark and self sustaining market that runs parallel, infact larger than the economy itself which balances the demand and supply position for the economy. i think, Iran will not change. unless, something like egypt happens and the whole set of people who run this economy are upturned.

gils said...

punchline soobberu...intha oorla kaetta Bill is mightier than Barack nu ssolraanga :D:D one speech is all it takes..

Ramesh said...

@Zeno - If you haven't yet got to Maslow's hierarchy in OB1 - perhaps you could spout this alternate theory !!

@Sandhya - Oh there is a huge black economy. In fact the exchange rates are from the black - the official rate is some 12000 rials. But the laws of economics apply even in the black economy. If you spend the money on arming hezbollah and building a nuclear bomb , then what hope do you have ...
@Gilsu - Ha ha- your riposte was even better than mine :):)

TMM said...

Hmmm. I know of a country with an ancient culture of at least 5 millenia , has had centuries of intellect shaping it's destiny, has been the world's first in bringing out thoughtleadership on philosophy, math, astronomy, has a large population (and hence statistically a much higher chance of intellect that will help rule the world), reasonably well placed in terms of resources, probably has more thn 50% of the fuel of the future (Thorium) and yet it's currency has plunged if not as much as Iran, but by atleast 15% in a year. The sad degradation of values in politics and public life and decay of governance is possibly plunging this country into a downward spiral. Does this ring a bell? It does for me despite being about 100 Longitude east of this place!!

Asha said...

I know nothing about the economics & iranian politics unless it comes through this page. Thanks , so simply written that even I could understand.

But I am aware of the difficulties these people face since many Persian friends go there to meet their family annually. Each time she talks about her family there she has tears in her eyes. But the aam junta of iran are a cultured and enterprising lot like you say. Many Persians have made hyd their home. In fact most of the bakeries, hotels and readymade shops are run by them here. Apparently, the strong cultural similarities influenced the qutub shahis that they modeled their beloved hyd on the Persian city of Isfahan. In fact, the topography of hyderabad’ icon charminar itself owes its origin to ‘Char bagh at isfahan.

They found the culture so similar that many Iranians call hyd their home and around every corner we have an irani hotel which sells irani chai and irani samosa. enterprising, cultured, humble people and blessed with beautiful complexion. Hope a better governmen rules them and help them fluorish.

Ramesh said...

@Kiwi - All true (but I didn't know about the Thorium bit ). I almost drew a parallel to this country to warn the dangers of governance degradation, but the more nearer comparison for this country is Russia where there is a similar kleptocracy - where there is loot happening on a scale unimaginable. In both places everybody steals from the state like there's no tomorrow. Alas !

@Asha - Very true. Persian contribution to India and especially to Hyderabad is immense. A lot of our culture, especially music, is shaped by Persian culture. Not to speak of Parsis, one of the most noble of groups in India.

Deepa said...

I was going to lament about the country TMM mentioned and then refrained, thinking I bash it almost everytime! But yes, there is a parallel in the fact that, people suffer because of a disallusioned leadership.

Shy said...

Basic necessities need to be fulfilled before man can begin to think or wonder about religion and the associated terror that seems to come along with it these days in the Islamic countries. It would be true for every country, we can worry about everything only when we have a roof over our head, three meals to eat and satisfied that our children are fine... when any of these suffer, be prepared for unrest, cheating, murder!!! though our politicians are a different breed and will scam us so that the 1000000000 generation of their family does not suffer!!!!

Anonymous said...

Ramesh, a very interesting read and I must say, some facts that I was not aware of..... as I read you blog I just could not help but think..... is Iran becoming a target for say.... the oil hungry US.... to make some form of 'occupation' move on... the bill may well be mightier than the bomb - but OIL trumps all !!!

Trevor

Ravi Rajagopalan said...

Iran is one of those cases where India has had to play a very careful hand, and at the same time, not talk too loudly about it. The Iranians have always been traditional friends of India, and like the Afghans, have always refused to make common cause with the Pakistanis. Indians are liked and respected in Iran and vice versa. One Islamic bomb is bad enough - two would be disaster as far as India is concerned. Hence there is no way India can support an Iranian bomb. At the same time, India cannot countenance any kind of Israeli air strike on a friend. And the Israelis are friends, upgrading our rotten MIG 21s and the like. And the Americans are friends...It is a chess board of great complexity.

Soon after the fall of the Taliban in 2002, the United States reached out to Iran to make common cause and there was some Track III or Track IV stuff going on. Just as ping pong broke the ice between China and the United States in 1972, in Iran's case it was none other than the DEA and drug trafficking. Iran is the major interdiction point for drugs from Pakistan and Afghanistan into the West. For a brief while, the flow of raw material choked off almost completely.

Then of course Perle, Wolfowitz, Rumsfeld, Cheney and other such assorted neo-con idiots realised that the Iranians were MOSLEMS! and they killed off the co-operation, invaded Iraq, neglected Afghanistan, etc etc. You've seen the movie.

Even now, while the crackpot Ahmedi-Nijad raves in the UN and the people of Iran suffer, the Iranian Drug Administration stops roughly half the drugs at their border. The IHT had a wonderful piece on it a few days ago.


sriram khe said...

I shall continue to march on to my own beat :)

The US' bomb is not a Christian Bomb; the Indian one is not a Hindu Bomb; the Chinese one is not a Confucian Bomb ... but, when a country that is home to Muslims creates nukes, it becomes ... Islamic Bomb? Sure, even a few Pakistanis and the Saudis celebrated them as an Islamic achievement. But, even the notorious nuke-peddling AQ Khan was excited by it only because it was a Pakistani bomb and not because it was an Islamic Bomb.

The rest of the world referring to these as Islamic Bombs further strengthen the suspicions and conspiratorial voices among quite a few Muslims that the Western world is being anti-Muslim.

India says it won't sign on to any NPT, and would play the nuclear game by its own rules. The US sells India all kinds of technology. The same US wants to choke off Iran, which is not doing anything different from what India did.

One might say, well, India is not belligerent but Iran is. But, people in pakistan routinely accuse India of being aggressive. Like beauty, aggression too depends on the beholder.

Ultimately, yes, all these countries are playing a big time game, and we are all pawns. Mere pawns, who can and will be sacrificed at any time if it suits their strategies ...

The drug war is one of the worst things that the US could have engaged in for 40 years. It has created havoc within the US, in Mexico, in Central America, in South America, in Afghanistan, .... I am rooting for a couple of states where legalizing marijuana is on the ballot. (Full disclosure: I don't do drugs, don't drink, no smoke, ...) passing them is the only way we can begin to start changing the horribly expensive ($$$, lives, politics) war on drugs ...

So, there ... :D

Ravi Rajagopalan said...

@sriram: as the philosopher said, we should take the world as we find it. Nuclear hypocrisy has ruled the planet since 1945. I don't like it, I don't approve of it. However, it is what it is. No one should have a nuclear weapon. However, if there is a playground club of big boys and bullies who have sticks and knives and there are no cops to disarm them, it is better be with the bad boys even while holding your nose.

I am no Hindu fanatic, nor am I a Muslim hater. However, the record of people of the Islamic faith in proliferating nuclear weapons is not good. You are wrong about AQ Khan. Until such time as a Hindu, a Jew or a Christian spreads nuclear technology around, I will continue to state that an Islamic bomb is not good for humanity. It follows that a Hindu bomb is no good either. But that's the world we live in.

I respect your position. But at my age, the bones are brittle and iron has entered my soul. I hope you understand.

Ramesh said...

@Deepa - Alas, so true.

@Shy - Absolutely. Maslow's hierarchy hods good always. And yet somehow when it comes to religious extremism, all logic seems to fly out of the window.

@Trevor - Yes, OIL may indeed triumph. Although in this case I think American policy is also being pushed hugely by Israel. On its own , I don't think the US would be so belligerent, but with the Jewish lobby to be catered to, it is being pushed.

@Ravi & sriram - Fascinating debate and I both agree and disagree with you !! Yes there may not be an Islamic bomb, but there is certainly Middle Eastern bombs. I wouldn't worry if Malaysia or Indonesia, Muslim states built a bomb, but anybody in the Middle East is a cause for huge worry.

Vincy said...

Interesting post and amazing comments that followed the post..

I too would not have given much attention to Iran if not for your post on this subject.

As in all cases, the common man would be the worst hit. While we need to be anxious about the uncertainity in our own economy being best corruption centre of the world, it is sad to read about the state of affairs of Iran. Are we an Iran in the making, may be with a different composition though?

Ramesh said...

@Vincy - Amazing comments, isn't it ? Yes its always the poor, who neither have religious dogma not ideological madness who get hit. As I commented earlier, we are more Russia than Iran - where organised looting by a few is the order of the day.

Vishal said...

just goes on to prove that fact that war is not a sustainable proposition in today's scenario.. common man does need common things and of course at a common bill. Looting by any means is what makes the common man suffer at the day of the day... Indeed, the bill is mightier... :)

Reflections said...

And there[Iranians] are all steadily trickling into UAE....we see them all around us & everywhere.

The situation is serious & my H & his friends are predicting a war within the next 6 months.

A very interesting read Ramesh...knew quite a bit of it[the topic is a hot favourite in social get-togethers...some of the conspiracy theories are to be heard to be believed:-/].

Ramesh said...

@Vishal - Yes war is a stupid thing to do and yet mankind's supreme ability to incredible stupidity is alas, our biggest curse.

@Reflections - Oh yes, you would know much more about it. Would be great to hear your views. Don't think the war will happen though. America has no appetite for any more wars and without America, it is unlikely that anybody, especially Israel will try it.

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