WASHINGTON, Jul 13, 2010 (IPS) – Last year’s Iranian political demonstrations have given way to economic protests that could prove more worrisome for the Tehran government.
The unrest includes the first prolonged strike in the Tehran bazaar and protests by industrial workers who have gone unpaid for months.
While these incidents are not directly related to the latest round of U.N., U.S. and European penalties against Iran – and do not appear to have been coordinated with the opposition Green Movement – the new sanctions contribute to a climate of uncertainty that is undermining the Iranian economy and rattling Iran’s leaders.
“Sanctions could be the proverbial straw,” says Djavad Salehi-Isfahani, a professor of economics at Virginia Tech who is on sabbatical this year at the Belfer Center at Harvard’s Kennedy School of Government. “These little things can suddenly coalesce.”
Salehi attributed Iran’s economic woes primarily to the drop in oil prices and to Iranian government policies: over- stimulating the economy when oil prices were high and then cutting back on spending to reduce double-digit inflation.
Inflation is now down to about 9.4 percent, but unemployment is officially 14 percent overall and close to 30 percent for young people, Salehi said.
While wealthy Iranians are still spending freely in the cappuccino bars of North Tehran, they are not hiring new workers or investing.
