Iranian currency crisis threatens Mahmoud Ahmadinejad's rule

The Guardian - President's government is blamed for mismanagement and incompetence as rial hits all-time low
Iran's president, Mahmoud Ahmadinejad, has survived many crises during his seven years in office, both at home and abroad. But fears over the country's crumbling economy, which have exposed the extent of internal divisions at the top of the Islamic republic, could signal the beginning of the end.

Ahmadinejad has been left increasingly marginalised as the country's currency has plummeted, with analysts speculating that he is being used by his former allies as a scapegoat for the regime's problems.

With the rial reaching an all-time low this week, Ahmadinejad has been roundly rebuffed by his opponents, who blame his government for mismanagement and economic incompetence. The currency has lost a third of its value in a week, with the dollar now three times stronger against it than early last year.

At a press conference in Tehran this week, Ahmadinejad made a speech which highlighted the power struggle between his supporters and his conservative rivals in the parliament and the judiciary.

The president defended his economic policies and blamed the plummeting value of the rial both on western sanctions and a "propaganda campaign" perpetrated by his opponents at home.

Ahmadinejad's words widened the internal rift, prompting many of his parliamentary rivals – who form an overwhelming majority – to launch the strongest attack on him by regime insiders so far.

Abbas Rajaei, an MP for the central city of Arak, accused the president of "lying vividly to the people", and Kamalodin Pirmoazen, another parliamentarian, said he was inciting discontent among Iranians towards their officials. The influential MP Ali Motahari, an outspoken critic of Ahmadinejad, has also recently said that the president should not remain in presidential office "even for another single day".

These remarks echoed what the Iranian opposition leaders Mir Hossein Mousavi and Mehdi Karroubi, both currently under house arrest, said in 2009 when Ahmadinejad took office for a second term amid unrest and allegations of fraud.

They are the latest signs that Ahmadinejad, who has suffered a series of setbacks in his ongoing feud with the conservatives, has lost a great deal of his influence in the country – although he is still able to grab headlines abroad. Last week, while he was addressing the UN general assembly, his media adviser, Ali Akbar Javanfekr, was taken to Tehran's Evin prison. Ahmadinejad suggested this week that he wanted to inspect the prison, but authorities signalled that he would not be welcome.

It did not help that Tehran's Grand Bazaar, the heartbeat of the capital's economy, also went on strike and hundreds of protesters took to the streets, chanting anti-government slogans that described the president as a traitor". Iranian state TV, which rarely reflects public anger about the regime, reported the closure of the bazaar and the discontent about the devaluation of currency. Analysts saw it as a sign that pressure is mounting on the president.

Sadegh Zibakalam, a professor of political science at Tehran University, said Ahmadinejad was increasingly becoming a "lame duck". Zibakalam said Ahmadinejad was being used as a scapegoat by many of the same people who were his supporters in the past.

"Ahmadinejad's economic policies are not new. They have been in place from the beginning. If there's a failure, it's not limited to Ahmadinejad. The leadership of fundamentalists should be held responsible too."

Fundamentalists, who are believed to be close to the country's supreme leader, Ayatollah Ali Khamenei, have accused Ahmadinejad and his allies, including his controversial chief of staff, Esfandiar Rahim Mashaei, of attempting to undermine clerical power and advocating nationalism and greater cultural openness.

"Ahmadinejad and Mashaei don't think they need to obey clerical power. They both have not been loyal enough to the supreme leader," said Zibakalam. He predicted that Ahmadinejad, who cannot run for a third time under Iranian law, would not be able to ensure the election of one of his allies in the 2013 vote.

Hamid Dabashi, a professor of Iranian studies at Columbia University, said that some of the slogans used by protesters this week showed that the crisis was "much more deep-rooted" and had wider political implications.

"Now the endemic factionalism [in Iran] will try to ride on this crisis, as the Islamic Republic is gearing up for the next presidential election. The conservatives will happily blame Ahmadinejad for everything," he said. "And if [the former president Mohammad] Khatami plays his historic role of warming up the otherwise depleted political energy of the Islamic Republic, they may actually manage to regenerate some political legitimacy for the ruling regime."