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Wednesday
Oct032012

The Latest from Iran (3 October): Blaming the "Enemy" for the Economy

The Tehran Bazaar today, with most shops closed and shuttered

See also Iran Feature: A Beginner's Guide to the Currency Crisis
Iran Snap Analysis: Ahmadinejad and The Economy's "Worthless Pieces of Paper"
The Latest from Iran (2 October): A Currency in Free Fall?


1902 GMT: More photos show that some of the crowds clearly turned to riots:


1840 GMT: Eskandar Sadeghi, of the AL-Monitor, writes that allegations are being made against Rafsanjani's son without any proof:

Regular readers may know that Mehdi Hashemi was arrested last week on allegations of corruption and charges that he provoked unrest in 2009. He returned to Iran this week and was arrested just a day after his sister:

 

See also Iran Analysis: Daughter in Prison, Son Back in Tehran --- What Now for Ex-President Rafsanjani?

 

 

1827 GMT: All-is-Well Alert. Mehdi Kalhor, a former advisor to President Ahmadinejad, has said that currency problems will be solved if economic officials will issue cheaper dollars, presumably through injecting foreign reserves into the market.

Kalhor said the currency market can be controlled, with the dollar becoming tissue."

The idea is that if the American dollar can become devalued, then then Iranian economic problems will just disappear.

1818 GMT: Iran. EA's James Miller posts several pictures reportedly taken in Tehran today on Iran News Now:


1800 GMT: Politics Watch. The Paydari (Constancy) Front, launched by figures such as the hard-line Ayatollah Mesbah Yazdi before the 2012 Parliamentary elections, has announced 17 members of its Central Committee. Notable omissions are MPs Mehdi Kuchakzadeh and Hamid Rasaei.

1755 GMT: Protest Watch. The conservative publication Nedaye Enghelab claims there were about 150 arrests today in Tehran.

The hard-line site insinuates that Mehdi Hashemi, the detained son of former President Hashemi Rafsanjani, is behind today's protests, though it offers no evidence for the claim.

1720 GMT: Bazaar Watch. New footage of the shutdown of the Tehran Bazaar today, with chants of "Leave Syria, Think of Us!", and shops on the streets also shut down:

1253 GMT: Arresting the President's Men. There may also be dramatic news on the political front....

Baztab claims that President Ahmadinejad lashed out at the Revolutionary Guards, the judiciary, and MPs in his Tuesday news conference because a warrant has been issued for the arrest of 1st Vice President Mohammad Reza Rahimi.

Critics of Rahimi have claimed for years that he was involved in the multi-million-dollar "Fatemi Street" insurance fraud. The judiciary has compiled a file on the case, but has not yet included Rahimi among defendants.

Ahmadinejad announced a "red line" in Summer 2011 against the prosecution of any of his Ministers or close advisors.

1250 GMT: Bazaar Watch. The "hard-line" Fater News reports that "hooligans attacked shops" on streets near the Tehran Bazaar, urging merchants to close.

The hard-line Raja News is also running the report.

1247 GMT: Change of Plans. Speaker of Parliament Ali Larijani has reportedly cancelled a press conference scheduled for this afternoon.

1245 GMT: Protest Watch. Claimed footage of protesters near the closed Tehran Bazaar today --- in the first clip, the crowd chants, "Decent Bazaaris, support, support, support us!":

Men mill about, then chant, "Leave Syria! Think of us!":

1225 GMT: Currency Watch. The website of SarafiJalali.com, a Tehran-based currency exchange, offers a clue as to why the Rial-to-Dollar rate has been suspended on some sites and why others are now blocked: “To comply with the policies of the Central Bank of the Islamic Republic of Iran, and to help organise the currency market of Iran, Sarafi Jalali for now will not announce any rates. Subject to permission from the central bank, the announcement of a new rate will be made.”

Mesghal and Mazanex, which EA monitors for exchange rates, continue to withhold any information on the Rial vs. the Dollar.

Several foreign exchange traders contacted by Reuters in Dubai, a major centre for business with Iran, said they were no longer quoting the Rial because they had lost contact with their counterparts in Tehran.

The moves are prompting speculation that the regime is trying to close down the open market for US dollars, funnelling business to the "trade room" it established --- with a discount on the rate for foreign exchange --- last week.

1215 GMT: Protest Watch. Claimed photos from today's protests and mobilisation of police near the Tehran Bazaar:

1055 GMT: Bazaar Watch. Baztab posts a full account of the morning's events leading to the closure of many shops in the Tehran Bazaar.

The website said an SMS message circulated last night asking merchants to shut today. Some did so, others went through the Bazaar advising closure for fear of damage and asked security forces for help.

Bazaaris then gathered at the nearby Sabze Meydan.

1045 GMT: Currency Watch. AFP reports, in line with our information, that Iranian police arrested currency sellers in Tehran today.

Witnesses said unlicenced vendors who usually walk the streets in the capital's central Ferdowsi area were rounded up and arrested.

AFP claims the Tehran Bazaar was closed and "senior uniformed police" present. "We are closed because we don't know what is going to happen" in the currency market, one shopkeeper said.

Tear gas was fired at protesters, with some throwing stone at the police.

Official currency exchanges have shuttered their premises, one licenced money changer said.

Another vendor said the Rial seem to have stabilised at 34000:1 to the US dollar, but stressed that almost no transactions were taking place.

1030 GMT: Currency Watch. We are following unconfirmed reports, including on the opposition website Kalemeh, of protests and arrests near the Tehran Bazaar. The site also claims that police have used tear gas.

The BBC's Amir Paivar is reporting that the currency market has suspended trade, with exchange bureaux closing and pulling the, shutters down.

0935 GMT: Currency Watch. ILNA is reporting that several currency websites have been blocked inside Iran today.

Leading websites such as Mesghal and Mazanex have suspended the posting of Rial-to-Dollar rates.

0915 GMT: Bazaar Watch. We have unconfirmed reports from sources inside Iran that parts of the Tehran Bazaar are closed today because of the currency crisis.

The conservative Asr-e Iran has a version of the story, saying there was a "closure" because of "suspicious movements" and mobile text messages.

The website quotes Ahmad Karimi-Esfahani, the Secretary General of the Islamic Society of Traders, that there have been "many disrupters" in the Bazaar this morning and that he expects the police to deal with them.

At the same time, Karimi-Isfahani that "the market is not closed" and is operating under "normal conditions", with the majority of shops open.

0815 GMT: Currency Watch. Mesghal has now removed the Rial-to-dollar rate from its website. Mazanex had done so earlier today.

0645 GMT: The Enemy Within. President Ahmadinejad complemented his Tuesday presentation of the foreign "enemy" with the assertion that 22 Iranian "ringleaders" causing the turbulence in the currency market had been identified, calling on the security services to take action against them.

Significantly, State news agency IRNA heads its article on Ahmadinejad's press conference with that assertion about the "enemy within".

0635 GMT: All-is-Well Alert. Minister of Economy Shamseddin Hosseini said in a nationally-televised interview on Tuesday night that the Iranian currency has strengthened and the price of foreign exchange is "definitely reduced".

The Iranian Rial, after a fall of 40% over a week, dropped --- according to currency websites --- another 3% on Tuesday to 35500:1 vs. the US dollar. At one point, reports put it at close to 40000:1 at some exchanges.

Hosseini claimed that turbulence in the "informal" exchange market was "not related to the official exchange market", adding that more official centres will be established. He asserted that the informal sector, causing all the problems, was only 10% of the currency market.

0555 GMT: Currency Watch. Mesghal has not updated its Tuesday figure of 35550 Rials to 1 US dollar. Another leading currency website, Mazanex, has removed the Rial-to-dollar rate completely.

0525 GMT: It is a measure of the recognition of Iran's economic problems that The New York Times, which tucked Mahmoud Ahmadinejad's United Nations appearance at the bottom of an article, devotes a 17-paragraph article to his Tuesday press conference, "Iran’s President Ties Recent Drop in Currency to U.S.-Led Sanctions". The BBC's flagship radio programme evaluates the episode in its second story, pushing aside the speech of Britain's opposition leader Ed Miliband to his Labour Party Conference.

Ahmadinejad's blame of the "enemy" is far from new, of course. What is notable is that his presentation shreds the position, maintained through September by the Supreme Leader and other Iranian officials, that the US-led measures were not succeeding. The "resistance economy", they said, would flourish while the West would suffer the economic blowback from its sanctions.

The challenge for the President is that his rhetoric does nothing to address the question of what his Government does in practice, rather than in speeches, to deal with the currency crisis, inflation, unemployment, and declining production. Indeed, Ahmadinejad dismissed that question on Tuesday, saying he and his Ministers were not to blame for the Islamic Republic's predicament.

Ahmadinejad's position also fuels a political fight. It was notable that his "Sanctions, Not Us, to Blame" declaration was directly opposite that of a Tuesday statement by Speaker of Parliament Ali Larijani, who repeated his assertation that sanctions carried 20% of the responsibility and Government mismanagement the rest.

The potential battle goes far beyond Ahmadinejad v. Larijani, for the President was not just citing an "enemy" abroad. He also took swipes at other politicians, the media, and even the Revolutionary Guards. As BBC Persian's Reza Asadi wrote, ""Ahmadinejad is attacking every official in the Islamic Republic in his presser like a wounded tiger."

Every official but one, that is. The President never mentioned the Supreme Leader.

Which raises the question, as we look to another day of economic developments, that conludes our analysis this morning: "What exactly is Ayatollah Khamenei doing?"

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