In recent days, protests have broken out across several of Iran’s key cities. While principally focused on domestic and economic issues, the unrest carries the potential to dramatically influence Iran’s regional position. Although both sides have remained relatively restrained so far, an escalation in protest violence could drastically undermine President Rouhani’s government and its ambitions of regional hegemony.

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Over the past several days, demonstrations broke out in several cities across Iran. Mostly focused on the economic and foreign policies of controversial President Hassan Rouhani, comparisons have been drawn between these and the “Green Protests” of 2009. On December 27th, a smaller protest broke out in Iran’s second largest city of Mashhad, home to the Imam Reza Shrine and the nation’s third most important city behind the capital of Tehran and the seat of the Grand Ayatollahs in Qom. On the 28th, the protest grew larger with thousands of Iranians gathering once more. By December 29th, the protest had spread to Isfahan, Kermanshah, Rasht and even Qom. While the protests are the largest display of public dissent since the reformist rallies that gripped Iran in 2009, the authorities have responded heavy-handedly and hundreds have been arrested.

Much of the protesters’ anger is centred on a national sense of unfulfilled economic promise that has followed President Rouhani’s Joint Comprehensive Plan of Action (JCPOA) agreement, made between Iran and the international community in 2015. The JCPOA saw Tehran agree to limit the nation’s nuclear development activities in exchange for the lifting of sanctions which had long strangled the Iranian economy. President Rouhani had been elected and re-elected on a promise that economic growth would inevitably follow the deal, however the disappointing reality is an inflation rate of 10% accompanying an unemployment rate of 12.7%; a three-year peak. Much of Iran’s post-JCPOA economic malaise has been caused by U.S. President Donald Trump’s dramatic reversal of Obama-era rapprochement policies regarding Tehran, which has dissuaded investors who fear the potential for re-implementation of sanctions.

Should the protests continue, Rouhani will be faced with a difficult choice between further crackdowns – at a time when Saudi Arabia is demonstrating increasingly liberal and modernising policies – or allowing the demonstrations to continue, risking further escalation and threatening his political strength.

On December 19th, the spark for the protests came as Iranian government announced a financial austerity plan, which hit ordinary Iranians with twin blows of fuel prices increasing by 50% and the cancellation of financial support for 34 million Iranians. Despite these highly visible public cuts, the national military budget rose, driven by uncertainty surrounding the current U.S. administration and increased engagements in regional conflicts. The majority of the increased budget has been channeled towards the Islamic Revolutionary Guards Corps (IRGC), which is central to Iran’s foreign operations supporting proxy actors, such as Lebanon’s Hezbollah, the Assad regime in Syria, and the Shi’ite Popular Mobilization Units in Iraq. The Guard is highly active in Iran’s economy, and is accused by many of nepotistic monopolisation of many key sectors across the country. Government economists are reported to have cautioned President Rouhani that the austerity programme risked provoking unrest, and protesters are demonstrating their clear frustration with the budgetary decisions through protest chants of “Not Gaza, Not Lebanon, I Give My Life for Iran”, referencing the IRGC’s foreign operations programmes.

President Rouhani is unlikely to scale down the military’s budget given Tehran’s increasing commitment to its contest for regional hegemony with Saudi Arabia, coupled with the pervasive influence of the Guard in national politics. Should the protests continue, Rouhani will be faced with a difficult choice between further crackdowns – at a time when Saudi Arabia is demonstrating increasingly liberal and modernising policies – or allowing the demonstrations to continue, risking further escalation and threatening his political strength. So far the government has principally blamed the unrest on conservative hard-line critics of Rouhani, claiming that they are seeking to destabilise the government. Despite this, the hard-liners appear equally uncomfortable with the protests given the presence of anti-Supreme Ayatollah slogans, and overall the movement appears to be a genuine expression of economic frustration from the Iranian people.

Despite the high number of arrests so far, the security services have demonstrated a relatively moderate approach to handling the protests, however should the situation escalate, a tougher approach will likely be introduced. As was seen during the “Green Protests”, an escalation on both sides would almost certainly threaten Iran’s geopolitical standing, particularly given the global scrutiny attached to the JCPOA.

Most critically, any escalation that follows the unrest of recent days will carry the potential to weaken domestic cohesion and divert President Rouhani’s focus from regional ambitions, which could lead to increased instability in Tehran’s foreign operations theatres, allowing Saudi Arabia to capitalise on the situation.

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Lewis Tallon is a former British Army Intelligence Officer with several years experience working and living in the Middle East and North Africa region and Asia Pacific in geopolitical, armed conflict risk and threat intelligence roles. Lewis currently specialises in providing MENA-region geopolitical intelligence support to the oil & gas industry, and the financial sector.

For an in-depth, bespoke briefing on this or any other geopolitical topic, consider Encylopedia Geopolitica’s intelligence consulting services.

Photo credit: Khamenei.ir