By Nader Uskowi
The rapid decline of Iran’s currency rial continued today when it hit yet another historic low of 15,570 rials per US dollar. Last Thursday, the rial was trading at 13,850 per dollar, a drop of 13% in just one week.
The heightened tensions between Iran and the UAE over the trans-shipment of goods at Dubai ports destined for Iran seem to have caused panic in the country’s foreign currency market this time. But the decline of rial has been steady and without break during the Ahmadinejad’s presidency, and especially this year. In 2011 alone, the value of rial has plummeted by 45% (in December 2010, the rial was trading at 10,850). Since 2006, the rial has lost 71% of its value (from 9,200 at the beginning of Ahmadinad’s presidency).
The reason I look at the relationship between the value of the country’s currency and Ahmadinejad’s presidency should be obvious: the hardline policies of this president on the nuclear issue are increasingly pushing Iran toward isolation. In an age of global economy, the country’s ties to the world, to its financial and banking system, to its transportation system and now to its system of free flow of goods have increasingly weakened. The rapid drop in the value of rial should not have come as a surprise to the government. Even if the Central Bank of Iran intervenes aggressively in the currency market during the coming days, a recovery will be temporary in nature, controlling the current level of panic in the market, but would not resolve the long-term decline due to the underlying causes.
What does the country get as the results of these hardline policies? Tons of enriched uranium. But for the people of the country, whose purchasing power is rapidly declining due to high inflation, partly as a result of the currency’s declining value, more enriched uranium does not prevent increasing economic hardship. Look at Pakistan! Many, many bombs, probably more than some Western powers have in their inventories, and an economy is state of ruins. The rising price of oil gives Iran the luxury of coping with many issues Pakistan is unable to cope, but any serious disruption to the oil export will have adverse effects for the country, and would make its problems pale in comparison to Pakistan’s.
There must be a way out of the current impasse. Cooler heads must prevail. Iran should declare victory over its stated goal of the ability to enrich uranium, that’s done and nothing else could be achieved by enriching more, at least for the foreseeable future when the country does not even have any nuclear reactors that can use a fraction of the fuel already inventoried. A moratorium in enrichment makes perfect sense and can be the basis of a serious negotiation with international organizations to end the impasse and the sanctions. That’s where this government should go.
Unless the government is bent on making as many bombs as Pakistan has. Then they might create a real disaster. And the question is why? Often the answer given by some readers of this blog is that the bomb would prevent the US and Israel from attacking Iran. My argument has always been that having no bomb and no program to make the bomb is the most efficient way of preventing an attack on Iran.
Unless the worries are not the attack on the country, but having the bomb to prevent a type of attack that would result in a regime change, as in Libya. Bombs for preserving the regime! But the price would be so high, most probably in the form of a total oil embargo, that the regime might fall on its own weight faster than anyone could pronounce the word attack. This would be having the bomb for the wrong reason.
Cooler heads must prevail. There is still time for diplomacy. The government should, and has declared victory over its enrichment program. Nothing more could be achieved by following the policy of the past six years. And as a result, a disaster could be prevented. And the regime would continue on as long as the people accept it.