May 23, 2022 | The Dispatch

Protests in Iran Are Surging. The Biden Administration Can Help.

U.S. policy can no longer afford to be limited to seeking a new nuclear deal.
May 23, 2022 | The Dispatch

Protests in Iran Are Surging. The Biden Administration Can Help.

U.S. policy can no longer afford to be limited to seeking a new nuclear deal.

Chants of “Death to the dictator!” are once again crescendoing in street protests across Iran.

Early this May, the ultra-hardline government of President Ebrahim Raisi cut subsidies for flour and wheat pursuant to a greenlight in March by the Iranian parliament to slash select price controls. Days later, the government hiked prices on other staples such as dairy, poultry, and cooking oil. The decision sent prices soaring by a reported 300 percent and immediately sparked unrest, as some in Iran had anticipated. Although the month of May saw various other demonstrations—such as by teachers and bus drivers—the protests triggered by food price spikes have begun to spread across the country, with a reported six dead and a growing number arrested.

Despite attempts by Iranian leaders to downplay protests, more turbulence is expected. As such, the quickly changing facts on the ground in Iran mean that U.S. policy can no longer afford to be limited to the number and type of centrifuges installed, nor Tehran’s stockpile of enriched uranium. Various economic, social, and political forces have brought about these protests and are slated to sustain future ones. Turning a blind eye to each driver and continuing to see Iran policy through the sole prism of nuclear nonproliferation ensures that Washington will perennially be caught off-guard by the next iteration of protests, as well as their results.

At least six distinct factors, all likely to persist, are driving the current round of protests. First, and perhaps the most proximate, is the effect that the war in Ukraine has had on the back of pandemic-induced supply chain disruptions and inflation rates, which led to a global food crisis. Iran’s minister of agriculture, who is one of the few unsanctioned ministers in President Raisi’s cabinet, drew attention to the war in Ukraine as the driver of the price spike, while officials at the State Trading Company of Iran noted that much of Iran’s subsidized wheat was being smuggled out of the country. Despite Tehran’s efforts to be self-sufficient in the production of wheat, in the Iranian calendar year 1400 (March 2021 to March 2022), it imported more than 7 million tons of wheat. Iran is also highly dependent on imports from both Russia and Ukraine for cooking oil, with a reported 90 percent of Iranian cooking oil coming from abroad.

Second, Iran continues to face a worsening multi-year drought in already hard-hit areas. In fact, the current iteration of street protests began in the country’s impoverished but oil-rich southwest, an area previously hurt by severe drought because of abysmal water management by central authorities. Protests over water that began in this region last summer swept large portions of the country, culminating in broader anti-regime protests in the nation’s capital last July. Combining drought with the havoc inflation is currently wreaking on the purchasing power of the Iranian rial means that protests are not likely to be contained to one region, as is already being witnessed.

Third, Iran suffers from long-term economic mismanagement and corruption that have been exacerbated by the macroeconomic impact of the Trump administration’s “maximum pressure” policy, which relied heavily on economic and financial sanctions. Specifically, Iranians have had to deal with consistent two-digit inflation and massive currency depreciation for the last five years. On January 1, 2017, one U.S dollar was worth approximately 39,300 rials at the free-market exchange rate. On May 17, 2022, one U.S. dollar was worth 302,500 rials. In other words, one U.S. dollar is 7.7 times more expensive (relative to the free-market value of the Iranian rial) than it was five years ago.

Fourth, compounding this sense of a looming crisis is relative uncertainty over the fate of the nuclear deal and the prospect of sanctions relief, two unresolved matters that continue to inject huge risks and ambiguity into the economy, as well as drive suboptimal fixes to economic issues like inflation. The fact that the Islamic Republic remains the world’s foremost state sponsor of terrorism and the challenge of conducting proper due-diligence in Iran notwithstanding, an incomplete, short-lived, or increasingly politically tenuous nuclear deal is unlikely to assuage sanctions violations concerns for foreign firms, skewing the risk-reward ratio of doing business in or with Iran. Similarly, on the Iranian side of the ledger, uncertainty makes planning—be it for already marginalized private sector firms or large government-controlled entities in Iran—very difficult for anything beyond the short-term.

The politics of the nuclear deal may even be informing the Raisi government’s decision to press for subsidy cuts, as Raisi himself was a critic of the 2015 accord and has been looking to improve Iran’s economic situation in ways that go beyond deal re-entry. Both Raisi and Iranian Supreme Leader Ali Khamenei stressed earlier this year that the country’s economy should not be dependent on the prospect of sanctions relief in a deal with the West. Should the regime withstand the protests and make more economic cuts, its position at the negotiating table could harden and embolden Tehran to look at other non-deal options for its nuclear program.

Fifth, like more fuel to the fire, is the very presence of figures like Raisi—dubbed the “butcher” of Tehran for his role in a 1988 death commission that oversaw the execution of thousands of political prisoners—on the national stage. While he won the Islamic Republic’s tightly managed attempt to further constrict political space, Raisi’s “election” last summer was widely boycotted, marking the lowest ever recorded electoral turnout in the Islamic Republic’s history, which followed a similarly low turnout in parliamentary elections from February 2020. Domestically, the boycott can best be understood as the result of a troika of forces: strong distaste for Raisi given his past, a public rebuke of the regime that tried to use a scripted electoral contest to feign legitimacy abroad, as well as a death-knell in the domestic reform movement and so-called “moderate” wing of the political elite—whose continued calls for electoral participation fell on the deaf ears of a populace frustrated with the entire political system.

What support Raisi lacked from the street he sought to cement with the state for his uncompromising social and political stances. Since his first and failed presidential bid in 2017, analysts in Washington had posited that Raisi was being groomed as a potential ultra-hardline successor to Khamenei, who recently turned 83.

But as confidence begot overconfidence, in the face of these challenges the Raisi government took to initiating a politically and economically tenuous comprehensive subsidy reform endeavor, something his limited support base termed “economic surgery.” The policy targets the officially subsidized dollar rate that the Central Bank of Iran previously gave importers to buy basic goods and sell below the market price nationally.

As a result of Raisi’s new policy, importers must instead buy their dollars and sell their goods at a much higher rate in the NIMA market, a part of Iran’s multi-tiered exchange rate system and the exchange platform for importers and exporters. By way of example, the subsidized exchange rate for one U.S. dollar is 42,000 rials, while the price of a U.S. dollar on NIMA is now more than 250,000 rials, representing an almost six-fold increase. Meanwhile, as we mentioned above, the price of a single U.S. dollar in the black-market or free-market economy is now higher than 300,000 rials. When Raisi began his so-called economic surgery with the price of flour, bread prices surged and render families hungry. While Iran’s supreme leader ran cover for the move, not all of Iran’s principalists fell in line. For example, Raisi was castigated by traditional conservative outlets that called for his resignation, noting that “Bread, even during the Imposed [Iran-Iraq] War, did not become expensive.” With subsidy reform set to increase inflationary pressures in an economy already struggling, Raisi’s economic policy looks exactly like what would happen if a butcher was asked to stand in for a surgeon.

The sixth and final reason to expect more turbulence is the most important: attitudes and preferences of the Iranian people as reflected in changing patterns of national protest. Specifically, those of the urban and rural poor—which have formed the backbone of recent (2017—present) protests—and were the first and hardest hit by Raisi’s economic policies and previous shocks. The country’s deteriorating economic conditions have led to a significant increase in the number of Iranians living below the poverty line. According to official figures, currently 30 percent of the population lives below the absolute poverty line. Regime insiders and experts estimate that 60 to 70 percent of Iranians are below the relative poverty line. Coupled with a mountain of unfulfilled promises, as more and more Iranians have fallen into poverty, they have less hope in a solution to their plight coming from the regime and its factions, and are more willing to protest the Islamic Republic in its entirety. This sentiment is best expressed by a popular protest chant against regime elites of all stripes that goes, “Reformists, principalists, the jig is up!”

By twist of fate, the founding fathers of the Islamic Republic had hoped this class of more traditionally minded Iranians—dubbed the “oppressed” or Mostazafin and who made the revolution possible—would sustain and defend the Islamic Republic through bonds of faith and communal identity rather than concern over their socio-economic situation. As Iran’s first supreme leader, Ayatollah Ruhollah Khomeini, is reported to have said about the 1979 revolution, “People did not make a revolution for the price of watermelon. … They did it for Islam.”

The ayatollah could not have been more wrong, and not just about economics.

When reviewing various iterations of national protest since 2017, a new pattern of anti-regime uprisings emerges when compared to past protests such as those seen 1999 and 2009. This shift is visible across a series of factors, including protester geography and demography, slogans chanted, relative cohesion, and even levels of state violence against citizens. The most important lesson for Washington audiences to take away from these demonstrations is that the Iranian population has continued to risk life and limb on the street for wholesale change away from the Islamic Republic rather than settle for the promise of incremental change through the ballot-box and preserve the Islamic Republic.

Given their lack of attachment to any political faction in the system, these newer protests are leaderless and less cohesive. And while political in nature, they are touched-off by seemingly non-political issues and events, be they socialenvironmentalsecurity, or increasingly, economic to demonstrate popular dissatisfaction with the regime. Seldom has the Western or international press been able to understand this. One rare exception was a recent headline from ABC News on the current iteration of protests which read, “Bloody protests in Iran are not just about food prices.”

But why exactly would a protest triggered by economic matters end up being political in practice? As one Iranian dissenter speaking to France 24 recently put it:

“There were lots of anti-Khamenei slogans simply because he’s the one responsible for our situation. His politics over the past 30 years have brought us here—useless uranium enrichment, interfering in internal affairs of neighbouring countries, stupid enmity with Israel, the list is long … They are imposing famine on us for their stupid opposition to the USA, while they all are corrupt and living a luxurious life, buying luxury condos in Canada or Turkey.”

In the winter of 2017, for instance, Iranians poured out into the streets protesting the high price of eggs. Protests continued into 2018, creating varied and sporadic demonstrations against the regime even into the summer. In the winter of 2019, Iranians again hit the streets to protest high gas prices. Within days, each set of protests became a referendum on the legitimacy of the Islamic Republic rather than merely the price of eggs or gas, an assessment seemingly shared by the regime based on the ferocity of its response against protesters at each juncture.

In 2017, Iranian authorities blocked various social media platforms to prevent Iranians from communicating with one another and sharing their stories with the outside world. In 2019, as protests metastasized across the nation, authorities escalated by enacting a national internet blackout for nearly a week and killed a reported 1,500 protesters, making the 2019 uprising the bloodiest since the 1979 Islamic Revolution.

Now with food prices triggering protests, distinctly political chants heard in various iterations of national uprisings from 2017 to 2021 are being recycled by the Iranian people, sharpening the divide that already exists between state and society. Thus far, there have been temporary interruptions in internet services, as reported by NetBlocks. But should protests continue, another blackout and more direct violence against Iranian protesters is likely.

This brings us to the question of U.S. policy. For years, the U.S. has been exceptionally cautious in its approach both to protests inside Iran as well as to countering the Islamic Republic. This has especially been the case in the nuclear era (2002—present). Perhaps most famously, Barack Obama’s administration failed to offer support to the 2009 protests known as the Green Movement, settling instead for belated and tepid rhetorical encouragement simply because he sought engagement with the clerical regime to facilitate a nuclear deal that ended up enriching the Iranian people’s oppressors. In 2009, protesters in Tehran had even taken to chanting, “Obama, Obama, are you with us, or with them?”

Prudence and caution are a must in foreign policy. But so too is a proper understanding of the strengths and weaknesses of one’s adversary. While options like aggressive containment or rollback can and should be applied to the Islamic Republic drawing on lessons from the Reagan-era playbook against the Soviet Union—and there has been no shortage of ink spilled on this issue in Washington over the years—policymakers should make no mistake, the Islamic Republic is no Soviet Union. Despite similar patterns of foreign aggression, domestic repression, and a precarious internal climate compounded by a failing economy, the Islamic Republic is smaller, weaker, and less globally integrated than the Soviet Union. It also does not—at least not now—possess nuclear weapons. As much as it wants to be an alternative to U.S. power and ideology on the world stage, it simply is not. In this regard, settling for less and constantly pulling punches against the Islamic Republic makes little strategic sense. That is especially the case given that sustained anti-regime protests can create a domestic vector for pressure against Tehran that can aid U.S. policy. And if supported and stewarded wisely, could one day lead to a wholesale change in the U.S.- Iran relationship.

For its part, the Trump administration took it upon itself to course correct from the Obama years. This led to the breaking of several taboos related to the embrace of unilateral economic sanctions and the busting of myths pertaining to American support for popular protests, something Trump did early and often. But beyond vociferous support, sanctions that could crater the economy, and designations that would name and shame rights violators, the Trump administration ran into implementation challenges related to its maximum pressure policy. Namely, how best to provide maximum support for Iranian protesters who were increasingly subject to arrest, torture, internet outages of varied duration and scope, and of course, the use of cold-blooded and lethal force.

At the height of protests in 2019, the authors warned that there would be more waves of demonstrations and strikes in Iran. Washington couldn’t then, and still cannot now, afford to be caught flat-footed in the fight against the Islamic Republic and in support of the Iranian people. To that effect, we recommended the development of a protest policy playbook of sorts, some of which, when looking at U.S. policy in the open-source, appears to have been implemented by the previous administration. One example are localized designations, meaning targeted sanctions against security forces and their commanders engaged in, or other officials supportive of, crackdowns against Iranian protestors active in the same exact jurisdiction witnessing protests. This could be, and seemingly was, complemented with sanctions against additional regime elites and security organs for a pincer effect. Other elements from that playbook, such as telecommunications support and satellite internet provision, still have not been implemented and would stand to meaningfully alter the balance between the street and the state in Iran.

While the Biden administration promised to put human rights at the center of its foreign policy, its track record on holding human rights abusers to account and standing with the Iranian people has been at best, lackluster. The current crisis offers the administration an inflection point to ponder what went wrong, an opportunity to act on the sole profession of support for the Iranian people it offered amid the current crisis, and perhaps most importantly, time to align means and ends on a broader Iran policy.

Here’s exactly how.

First, the administration should understand that its quest for a nuclear agreement centered on the 2015 accord known as the Joint Comprehensive Plan of Action (JCPOA) is fundamentally at odds with its professed support for the Iranian people. In a nutshell, sanctions relief to the Islamic Republic—including to its terror-underwriting organs—that flows from this nuclear deal would end-up lessening the political and economic burden on those who would engage in or call for cracking down on Iranian demonstrators. Free from the specter of foreign threats related to its nuclear program, the regime would have more resources, manpower, and attention to spend on threats it perceives internally in any post-deal scenario.

Moreover, Iran’s nuclear advances under the Biden administration make such an agreement increasingly ineffectual as a tool of counterproliferation. But even if no deal is achieved, Washington’s perceived eagerness for an accord has led to the handicapping of other tools that could have been helpful to Iranians protesting last summer as well as now. With more than a year of unenforced sanctions, Iranian officials have generated enough illicit revenue to spend where and how they please, and not on bread or subsidized wheat for their people.

Citing a troika of Iranian nuclear advances, regional malign activities by Iran-backed proxies, as well as repression of Iranian protesters by security forces, the administration should announce a formal end to the current round of nuclear negotiations in Vienna as well as a termination of its policy to resurrect the JCPOA. Unless Washington frees itself from the current self-defeating cycle of nuclear diplomacy, supporting Iranian protesters will join a laundry list of items— a meaningful Syria policy, pressure against Hezbollah narcotraffickers in Latin America, and sanctions on Iran-backed terrorists in Yemen among them—that were all sacrificed on the altar of a nuclear deal with Tehran.

Second, the administration should more aggressively embrace the bully pulpit against the Islamic Republic in general, but specifically on the human rights file by naming and shaming rights violators and memorializing protest anniversaries. Even as the Trump administration prepared to restore some of the toughest economic sanctions on Iran, it continued to vocally support Iranian protesters. As Iranians took to the streets in 2018, they chanted for the first time, “Our enemy is right here, they lie when they say it’s America.”

Accordingly, late and lukewarm responses from the State Department are likely to have a demoralizing effect on protesters and perhaps even be interpreted by the regime as a measure of American trepidation and thus pave the way for a greater cycle of repression. A coherent, clear, and consistent message of support from the highest levels, such as from the president, vice president, secretary of state, national security adviser, or various press secretaries is likely to go a long way. Complementing these messages, U.S. officials ought to consider virtual meetings with prominent protestors or relatives of deceased protestors to put the spotlight on their struggle. These messages and meetings should be shared on U.S. government affiliated outlets and social media channels, which at present, stand to have significant room for improvement. As Iranians were taking to the streets earlier this May, the main U.S. government Persian-language Instagram account was posting about spin classes. This is an own-goal and was rightly chastised by Iranian—American organizations and activists.

A corollary to embracing the bully pulpit is stepping up the aforementioned targeted designations campaign as per the protest policy playbook idea. Using videos circulating on social media about protests in specific towns and provinces, the U.S. government can collate protest data by town, province, and region, and move to sanction any local law-enforcement, semi-official vigilante group, Basij paramilitary, and Islamic Revolutionary Guard Corps (IRGC) leadership structures in each region. The same can be applied to the judicial and political apparatus in each province in the aftermath of a protest.

Third, Washington should embrace changes seen in its risk tolerance to use non-kinetic tools like sanctions in the Russia context and transpose them to Iran, where supporting the Iranian people also tugs at the same moral and strategic nexus as supporting the Ukrainian people. In this regard, Russia’s invasion of Ukraine triggered a series of asset forfeiture actions and sanctions by Washington against Russian oligarchs and their families across a host of jurisdictions. The point of such actions was presumably to increase the costs—both figurative and literal—of being part of the Kremlin’s elite. Washington should study the legal and political feasibility of using a combination of exposures, asset freezes, visa prohibitions, and other prohibitions against the interests of regime officials, security organs, and business elite from the Islamic Republic to potentially include those of their families who reside in Western countries. In addition to signaling another way to hold regime elites accountable, it would send a clear message to autocrats and kleptocrats alike that America will not be a safe haven for funds pilfered from other nations.

Fourth, things that may not have seemed possible just a few years ago appear quite possible today. As Washington moved to tighten sanctions on Iranian oil throughout the Trump administration, the Islamic Republic looked for ways to continue to illicitly export oil to generate revenue from buyers like China as well as to support its few state partners like the Assad regime in Syria or the Maduro regime in Venezuela. These actions meant Iranian tanker activities ran afoul of U.S. sanctions and their extraterritorial reach, leading to tense but also creative moments on the high seas that resulted in things like the temporary seizure of a tanker by British Marines and authorities in Gibraltar in 2019.

While Washington has had a mixed record of success in enforcing sanctions against Iranian oil tankers, the U.S. has been able to seize Iranian oil cargos in violation of sanctions under both the Trump and Biden administrations as well as sell this oil. In fact, families of victims of terrorism have previously called upon the U.S. to seize and sell Iranian oil that is sold or transferred in violation of U.S. sanctions in order to adjudicate outstanding terrorism judgements against the Islamic Republic. But there is no reason why, should normative, legal, and strategic concerns be sufficiently assuaged, that should oil sanctions be vigorously enforced and more seizures and sales of illicitly exported Iranian oil occur, Washington could not channel those proceeds towards some form of freedom or strike fund that might be able to covertly support Iranian laborers who go on strike, much like U.S. trade unions did with the Solidarity movement in Poland during the Cold War.

Fifth and last, but certainly not least, as protesters continue to turn out despite being met with force, it is imperative that the Iranian people have internet access to both communicate and organize with one another domestically, as well as to be able to share videos and stories of their struggles. In the absence of independent political parties and a free press, Iranians have been relegated to using internet-based platforms and social media through anti-filtering applications to voice discontent. Keenly aware of this dynamic, the Islamic Republic has allocated significant time, attention, and resources to developing capabilities to surgically cut internet access at local levels while reportedly working with China on creating a national intranet to fully cut off the country from the outside world.

It is in this space where the most amount of creativity is needed, and not just by the Biden administration, but by big-tech entrepreneurs willing to engage in myriad public-private partnerships that amplify the full breadth of U.S. government capabilities. One potential solution to bypass Iran’s internet clampdown and support Iranian protestors is satellite internet service. Elon Musk’s Starlink has developed a commercially viable alternative already being used in Ukraine, which may be able to offer Iranians internet beyond the reach of the regime’s censorship. While the application of this technology is not at a one-to-one between Ukraine and Iran, its proven functionality means that creative tech minds and those engaged in covert action on behalf of the U.S. government should be talking to one another. Accordingly, the Biden administration should task all relevant national security bodies with ways to address this problem and facilitate conversations to plug the logistical, legal, technical, security, and other pitfalls such an idea is likely to have while playing into the creativity Iranians have shown in the past to get around other bans imposed on them.

While one challenging and obvious hole in the above idea pertains to the flow of hardware for satellite internet services, there is an instructive corollary: satellite television in Iran. Despite years of Basij paramilitary, vigilante, and law-enforcement force raids against people’s homes, the steady and available stream of cheap satellite TV hardware and demand by the Iranian people for this technology forced the regime to change its tactics. While smuggled hardware related to satellite internet services is likely to be confiscated early on, the satellite TV case demonstrates that continuity of effort is key in any contest of wills and attempt to penetrate the regime’s firewalls, be they physical or virtual.

More than a year into indirect nuclear talks with Iran , the Biden administration is struggling to show something for its own continuity of effort in looking at Iran as only a nuclear problem. Should Biden broaden the aperture and take stock of the evolution in street protests and the problems that persist inside Iran, he may find that it is still possible to align one’s head and one’s heart on matters of foreign policy in the Middle East. Here’s to hoping that the chants of Iranian protesters reach the president’s ears.

Behnam Ben Taleblu is a senior fellow at Foundation for Defense of Democracies (FDD), where Saeed Ghasseminejad is a senior adviser. Both contribute to FDD’s Iran Program and Center on Economic and Financial Power (CEFP), among other projects. The views expressed are their own. Follow Saeed on Twitter @SGhasseminejad. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.

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Iran Iran Global Threat Network Iran Nuclear Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance