Iran Protests Suggest Trump Sanctions Are Inflicting Serious Pain

The deadly drama playing out in Iran since last Friday, leaving more than 100 protesters dead, shows three things. Tehran is increasingly in desperate economic straits, in part because of intense U.S. sanctions; Iranian popular discontent with the regime’s economic mismanagement seems to have reached a breaking point; and the regime is more frightened of popular unrest than at any time in recent years.

The latest explosion of popular protest in Iran began on Friday after the government rescinded fuel subsidies, which essentially tripled the price of gasoline—a painful blow to millions of ordinary Iranians already struggling to survive a debased currency, high unemployment, and a shrinking economy. But the demonstrations that began over fuel subsidies quickly became a sweeping, nationwide protest against the Iranian regime itself, with outbreaks in dozens of cities in every Iranian province, targeting especially government buildings such as police stations and state-owned banks.

The government’s response has been much more brutal than in previous outbreaks of protest, such as in 2017-2018, including a near-total shutdown of the internet and unrestrained use of violence by security forces. Groups including Amnesty International have documented at least 106 deaths during the protests, as regime security forces have used live ammunition to target demonstrators. The brutal crackdown is both evidence of the regime’s desperation at its own inability to sway popular opinion and a result of watching weeks of similar deadly protests (also directed against Iran) in Iraq and Lebanon.

“Fundamentally, it is an economic protest. But clearly, among some protesters, there is the opportunity to make broader complaints about the government,” said Henry Rome, an Iran analyst at the Eurasia Group.

The fuel price reform, which effectively raised the price of gasoline and diesel for most drivers from about 8 cents a liter to about 25 cents a liter, is meant to save the government a few hundred million dollars over the course of a year, as well as husbanding increasingly scarce supplies of motor fuel, which can be exported for greater earnings than essentially giving it away domestically. The government hoped that its plan to redistribute most of the revenue from the price hike back to low-income families would blunt the pain of the measure, but delays in getting cash back into people’s hands left the protests still simmering through Tuesday.

The fact that Iran would risk sparking such widespread anger for minimal economic gain underscores the dire condition of the Iranian economy, hammered by U.S. sanctions in its inability to export practically any oil, one of the main sources of revenue for the government.

“They did the reform because they are broke,” said Alireza Nader, a senior fellow at the Foundation for Defense of Democracies (FDD). “People can’t afford a 300 percent increase in gas prices, but the regime didn’t have any other choice.”

Though it was a calculated risk, the fuel price reform was meant as a way to spur consumption among lower-income groups and save gasoline for export, Rome said.

“It’s constructive for economic resilience—it will improve the fiscal situation and help insulate the country from sanctions, but the way they are doing it with such extreme violence will erode support,” Rome said.

Another problem is that many people simply didn’t believe the government would follow through on the cash transfers. Yet another is that they worried that higher gas prices would just trickle down to higher prices for all sorts of other consumer goods, at a time when annual inflation in Iran is officially at least 40 percent and perhaps as much as five times higher.

Though Iranian officials, including President Hassan Rouhani, have blamed foreign countries and especially the United States for organizing the uprising, the U.S. role is—as far as is publicly known—mostly indirect, rather than actively supporting opposition groups. Since U.S. President Donald Trump reimposed sweeping sanctions on Iran’s economy, including the ban on oil sales, Iran’s economy has been in a free fall. Because of the increased pinch from sanctions, the International Monetary Fund recently revised downward its expectations for Iran’s economy: It now expects it to shrink by almost 10 percent this year.

But the protests, like those that also swept the country in 2017-2018, are about more than just U.S.-inflicted pain. Many Iranians are irate at rampant corruption and economic mismanagement, constants in the 40 years since Iran’s revolution.

“The underlying grievances were there without the maximum pressure campaign, but it’s the fiscal strain that the government is under which has forced it to take these steps, which has brought those grievances to the fore,” Rome said. And once people are in the street, narrow protests can snowball.

“Once there is an avenue open for protest, the dam is burst,” he said.

If redoubled U.S. economic pressure is contributing to Iran’s distress, does that mean the Trump administration’s maximum pressure campaign is working?

If the administration’s goal was to change the calculus of Iranian leaders regarding the country’s destabilizing activities in the region and its pursuit of nuclear technologies, the answer seems to be a clear no. As the U.S. economic noose has tightened, Iran has lashed out even more—attacking Saudi oil tankers and allegedly even a major Saudi oil facility, in addition to spending billions of dollars to prop up proxy terrorist groups throughout the region. At the same time, Iran has steadily reneged on its commitments under the 2015 nuclear deal and has resumed enriching uranium at higher levels and installing more advanced centrifuges, which could shorten its path to the bomb.

If the Trump administration’s goal was to destabilize Iran to the point that the regime faces an existential threat from within, the economic pressure may be paying dividends—though of an uncertain coin. Iran’s response to the protests this week has been unprecedented levels of violence and killings. Some Iran observers see that as a sign that the regime feels it is inexorably doomed.

“This is a full rebellion, not a fuel protest,” said Nader of FDD. “The regime wants an internet blackout so they can massacre their way out of this. But there is no way out. Even if this round is crushed, there will be more of this. There is no more oil and increasing isolation. So I don’t see any way for the regime to get out of this.”

Others think that the combination of cash handouts and brutal repression will, as so many times in the past, shore up the regime’s hold on power.

“This is not regime-threatening from an immediate security point of view. They have repressive force and are not afraid of killing their own people,” Rome said. “They are not going anywhere. These are not the initial tremors of another revolution.”