By the time you read this column, Iranian economy will have just one week before it collapses, thus bringing down the regime established by Ruhollah Khomeini in 1979. That is if you believe US Treasury Secretary Scott Bessent, who last week predicted the collapse in two weeks’ time.
Don’t tell anyone but I don’t believe that is going to happen.
At the same time, I am glad that Bessent has replaced War Secretary Pete Hegseth as the talking head on the stalled war with Iran.
Why am I glad?
Not because it gives the Khomeinist regime a breathing space as advocates of “maximum sanctions” always suggest, but because it halts wanton but far from adequate military action that has turned this war into a series of tragicomic gesticulations while inflicting untold hardship on Iranian people and doing serious damage to world economy.
At the same time, the halt in bombing deprives the leftover Khomeinist regime from a chance to wrap itself in patriotic tricolor masquerading as defender of the nation rather than the faith.
My guess is that part of the Trump team that has realized that the war as designed and pursued so far won’t produce anything resembling a victory convinced the boss that it had better be halted at least until the midterm election in the US.
The Iranian economy isn’t going to collapse as Bessent hopes for several reasons.
First, we don’t have an economy in the normal sense of the term in any of its versions.
This is not a market economy as found in regular capitalist societies because it functions through different and at times rival markets: white, brown and black each of which respond to the current challenge in different ways. Alongside that, we have seen the emergence of a parallel barter-based economy with its own rules especially in border provinces.
More importantly, Iran is self-sufficient in energy, something that is the Achilles’ heel of modern capitalist societies.
If it reduces exports of gas and electricity to Iraq, Armenia and recently to Russia, the regime is unlikely to face a big shortage in that field.
Even then, rationing remains an option.
Iran is also unlikely to face mass famine because it produces 89 percent of the food it needs while exporting to several neighboring nations including Russia.
If continued long enough, but how long is a piece of string, Trump’s “maximum pressure” could lead to further fall in the value of the Iranian national currency, fanning the fires of inflation higher.
But that, too, may have unintended consequences. Iranians as long as records show, have always been great in saving.
Decades ago that took the form of collecting gold and jewelry or buying land because there was no stock exchange and no culture of investing in stocks. There was no bond market because the government had massive revenues from oil exports and didn’t need to borrow.
Even today, Iran is one of few countries unburdened by massive debts and/or budget deficit.
Today, much of private savings in Iran comes in the form of buying foreign currency, Bitcoins and/or gold and silver.
And that benefits the government which is the main supplier of foreign currency earned through oil exports. This means the state earns dollars while most of its expenditure is in rials.
The Revolutionary Guard with its tentacles in Mafia-land also benefit because they run a massive smuggling and bootlegging network across Iran and other countries.
Bessent’s belief that economic warfare as the talisman for victory is one version of the old Marxian misconception that “it’s the economy stupid!”, and that poverty and hunger lead to popular uprising and political change.
The experience of the past year has shown that Iran even if crushed in material terms cannot be defeated in political terms with a short sharp shock-and-awe campaign as designed by Hegseth.
Today, perhaps for the first time in decades, there is a realistic chance of thinking of regime change in Tehran. But for that chance to be translated into reality, the leftover Khomeinist regime must be defeated politically. And that requires intervention by the Iranian people. That intervention, however, cannot take place under bombs or a steep rise in quotidian hardship.
The recent lull in bombing showed that many Iranians are prepared to return to the domestic political battlefield against a regime that has led them into conflict virtually with the whole world.
Last week, we witnessed demonstrations by university students in Tehran, teachers in more than a dozen cities and medical auxiliaries in four provinces. There is talk of bazaars planning shutdowns in dozens of cities within the next week or so.
That signals a possibility that if the lull endures, Iran may return to the nationwide rebellious mood it had shown before the bombing stopped it thus bringing the regime back from the brink.
The leftover Khomeinist coterie cannot solve Iran’s domestic economic, social and political problems. At the same time no military and/or diplomatic scenario can solve the regime’s problems with the outside world.
At home, the regime is digging its own grave by responding to the deepening economic crisis with desperate not to say suicidal measures. They are talking of raising bank rates from 22 percent to perhaps 30 percent when the rate of inflation is in the top 60s.
The Islamic Prosecutor in Tehran says he has fielded a special squad to crack down on buyers and sellers of foreign currency and gold and jewelry.
The Islamic Chief Justice suggests that shopkeepers who raise prices should be hanged.
Regime economists suggest issuing bonds for the sale of part of the oil industry and a number of other public monopolies to siphon back the greenbacks millions of Iranians have been hoarding for years if not decades. It is like putting Titanic’s furniture up for auction before it hits the iceberg.
Iranian people need a chance to catch their breath and resume their fight for freedom and dignity.
An ersatz diplomatic accord of the kind successive US administrations have craved for will only prolong the regime’s shaky tenure. A resumption of aimless bombing will force Iranian people back into the defensive in the name of protecting the country.
With Hegseth told not to brag, Bessent is fielded to play the same tune in the different tone of “it isn’t billy!”
