Iran: Imperialist Aspirations Mask Economic Decline

Of sailors, Shias and Sunnis

The recent incident of the Iranian capture of British naval personnel in the Shatt-Al-Arab waterway showed the world that the British military are either liars (if they were in Iranian waters) or incompetent fools (for allowing themselves to get caught if they were in Iraqi waters - apparently those fiendish Iranians have developed the technology to materialise out of thin air). Either way, it was a clear propaganda victory for Iran, symbolic of Iran’s growing influence as a regional superpower in the Middle East and Central Asia.

The US-led invasion and subsequent destruction of Iraq has in several different ways bolstered Iran’s fortunes as a regional player. It should not be forgotten that Saddam Hussein’s regime was sustained by the Western backing it received to wage war on Iran for several years after the so called Islamic Revolution of 1979. The Iran/Iraq war cost several hundred thousand lives on both sides which, although ending in a stalemate marked the two states as rivals for regional supremacy. The destruction of the Saddam regime has led to its replacement with a Shia regime (reflecting the Shia majority in Iraq) which, although being a puppet regime of the US, also ironically needs the support of Shia Iran against the Sunni militias determined to regain their former grip on Iraqi state power.

The Islamic Republic has also grown in stature amongst the Arab masses as being one of the very few regional states seen to be standing firm against the America and its Zionist outpost, Israel. This was given a further boost last summer when Iranian-backed Hizbollah were able to defeat Israel’s invasion of southern Lebanon, creating a massive surge in support for Hizbollah across Lebanon which has even extended to elements of the previously hostile Christian community. On Israel’s other fronts, the US-led Western aid boycott of the elected Hamas government in the Palestinian Authority has allowed Iran to step in as a major financial donor to the Authority.

Iran’s threat to the US

But the main threat Iran poses to US imperialism is its strategic significance not only as a major oil supplier in its own right but also in its potential to control the flow of oil through Central Asia to India and China, affecting the ability of Western powers to exploit recently discovered deposits in neighbouring Afghanistan. In the last issue of Revolutionary Perspectives we wrote:

What links Iran to the recent energy discoveries in Afghanistan is the struggle between the US and the Asian imperialisms to build and control the major supply and trade routes of oil and natural gas in Central Asia. Amongst the various projects, there is an Iranian one to build a pipeline (IPI), which would go from Iran and through Pakistan to India. If it were built, Iran would be putting itself forward as one of the central players in the export of oil and natural gas..... After China signed an accord with the Kazakh Government to build a pipeline to carry oil from the Tenghiz basin to the coast of the Sea of China, the IPI project plans a link which would carry natural gas to Beijing. It would make Iran not only an Asian lynchpin in the control and export of energy resources but also a staunch ally of Russia and China. Further, it would completely exclude American imperialism from the game... (1)

And this is not the only threat to US interests. Iran is one of the growing number of powers who are looking to conduct the oil trade in euros and other currencies rather than the US dollar. This represents a serious threat to America’s domination of the world economy. It is now widely accepted that it was Saddam Hussein’s intention to trade Iraqi oil in euros, that precipitated the American-led invasion and the overthrow of the Ba’athist regime. (2) At the end of March, the governor of the Iranian Central Bank, Ebrahim Sheibani, announced that Iran would end all oil sales in dollars. This includes major agreements. According to Iranian sources, approximately 60% of current oil exports are already traded in other currencies and this is likely to be extended to major deals with China and Japan.
All of these factors go some way to explaining Iran’s bullish standoff with the West over the nuclear enrichment issue. Although the UN has agreed to somewhat half-hearted sanctions, it is unlikely that Security Council members, Russia and China, will show much enthusiasm for more stringent measures. At the time of writing there are also indications that Iran may agree some form of compromise with the EU. Unlike the US, several EU countries have substantial interests in Iran. For example, the Germans have just signed a 6.7bn euro deal with Iran to build a high speed Maglev rail link between Tehran and the north-eastern city of Mashad. European powers have benefited from the US’s self-imposed economic boycott of Iran allowing them to operate there without American competition. They clearly have little interest in supporting a US intervention which would end that state of affairs. As for the United States, the neo-con plans for a military intervention against Iran are unlikely to come to fruition as long as the US army struggles to deal with the situation it finds itself in, in Iraq. In fact, the neo-con foreign policy agenda no longer dominates the policy agenda in the US. The neocons, after all, were the ideological architects of the current fiasco in Iraq and the failed Israeli attack on Hezbollah. There are indications of a shift in Washington towards a more pragmatic approach to Iran which recognises the limitations of US military capability. A high-ranking State Department official recently stated that “There is a choice: confrontation or diplomacy. We prefer diplomacy and we are trying to open two diplomatic channels - on the nuclear issue and on Iraq”. The US Secretary of State, Condoleeza Rice, has now carried this policy out by speaking directly to the Iranian Foreign Minister in Cairo. This does not mean that the US has abandoned a few dirty tricks to undermine the regime in Tehran but it does mean that a direct attack is currently out of the question.

The economy and the working class

However, any advances made by Iran in the imperialist chess game belie a profound political and economic crisis facing the Islamic Republic, and Iran’s robust stance particularly in relation to the nuclear enrichment dispute, is driven in substantial measure by the need of the Ahmadinejad leadership to rally domestic support amongst an increasingly disaffected population. Ahmadinejad was elected on a populist platform promising the re-distribution of oil revenues to the working class. Unsurprisingly, the reverse has happened and, whilst GDP per capita shows a modest growth, Iran is no exception to the global trend for a widening gap between rich and poor. Reliable statistics are difficult to come by but official unemployment figures are in the region of 12%. This is a conservative estimate and the real figure is more likely to be around 20% and even up to 50% for youth unemployment. Inflation is high at 13.6% according to the Iranian Central Bank, or 23.4%, according to the Majlis (Iranian Parliament) Research Centre. The IMF estimates the figure to be around 17%. The economy is heavily dependent on the revenue from oil production, without which it would probably be in free fall.

The conditions of life for workers are deteriorating. Some have not been paid for months, tens of thousands have been laid off and, at a conservative estimate, some 12 million people (around 20% of the population) are living below the poverty line. Despite its best efforts, one of the few things that the Islamic Republic has been unable to ban is the class struggle. A year ago, in Revolutionary Perspectives 38, we wrote about the Tehran bus drivers’ strike and the vicious repression perpetrated by the Islamic Republic which beat up and imprisoned the strikers. Since the bus drivers strike the worsening economic conditions have compelled the working class to sustain a certain level of militancy despite the ever present risk of state terror against them. For example, last summer, over 200 workers in a Tehran soft drinks factory went on strike in July in protest against having not been paid for three months and, last June, workers in a Tabriz porcelain factory staged a protest against not having been paid for five months. More significantly, on March 5th 100 000 teachers in the capital went on strike which went on to 8th March when 10 000 went on to picket the Majlis parliament in Tehran. As well as a wage increase, the demonstrators also demanded greater freedom, and equality between men and women. Many students joined in the demonstrations and, even more significantly, so too did factory workers who were struggling to get several months of arrears in wages paid. The teachers’ strike was important enough to have closed many schools throughout the country. In a country like Iran where institutional repression is at a very high level and where union organisation which is truly independent of the regime is weak and marginal it seems that the protest were organised and spread in a spontaneous fashion. Predictably this has been followed by state repression and hundreds have been arrested.

Of course, all states will deploy terror against the working class when their interests are threatened by proletarian militancy. But, in Iran, repression is the standard response of the state to any protest, no matter how limited a threat it poses. This is not just a question of a tyrannical leadership but represents a profound weakness at the heart of the state both on an economic and political level. The state has little room for manoeuvre and the ever worsening conditions for workers represents a profound structural malaise within the economy for which there are no quick fixes. Even if Ahmadinejad’s populist program to re-distribute oil revenues were to be carried out, which will not happen, this would not address the fact that beyond the oil sector the Iranian economy is in decline, and even if there were to be some re-distribution, it would only bring short lived gains for the working class.

In recent weeks, there has been a new round of social oppression. The religious police have been rounding up women whose dress has not complied with the strict Islamic dress code or hijab. The present crackdown has also been directed at some men who are deemed to have unsuitable hairstyles. However, it is predominantly a campaign of terror against women orchestrated by ultra-conservative Islamists, the powerbase behind Ahmadinejad. It is an opportunity for the conservatives to flex their muscles in the face of a growing opposition within the ruling class that is forging some sort of unity between liberal reformists and “pragmatic conservatives” headed by the ex president Rafsanjani. Ahmadinejad is criticised for his incompetent handling of the economy which is dominated by a corrupt and inefficient state sector. What the reformist critics want is economic liberalisation like that spearheaded by Margaret Thatcher in the 1980s.

The danger for the working class is that they will be drawn to the reformists on the promise of freer social conditions. But the reformist agenda can offer nothing but more economic misery for the working class. They are likely to be laid off in even greater numbers than at present and lose what few social benefits they have, if a major privatisation programme were to be implemented. The greatest challenge for Iranian workers will be to struggle for their own interests and not allow their struggle to be hijacked by the liberal wing of the bourgeoisie. This means creating their own independent political organisation which encapsulates not only the lessons of the last thirty years in Iran but also incorporates the historical experience of the world working class. As everywhere else such a struggle will not be victorious overnight nor can it be fought in a single country but Iranian workers have a proud tradition which only the massacres of the monarchists and the mullahs have temporarily eclipsed.


(1) Revolutionary Perspectives 41: “Lebanon: The next war will not just be a civil war”.

(2) E.g., Energy Bulletin, August 2005: “Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Bourse”.

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