Ahmadinejad's desperate gamble

This article is more than 10 years old
Ahmadinejad's administration depends on a redistribution of wealth for support. The flight of capital from Iran will hurt

This past weekend marked the arrival of what Iranians call Shab-e Qadr (the Night of Power). According to Islamic tradition, one of the odd-numbered nights in the last 10 days of the month of Ramadan corresponds with the first revelation of Qur'anic verse and is especially holy. Shia Muslims in Iran observe this on the 23rd of Ramadan. Additional commemorations are held on the 19th and 21st to solemnise the assassination of Ali ibn Abi Talib, cousin of the Prophet Muhammad and first of the 12 Shia Imams.

Since the death of Ayatollah Khomeini in 1989, official state services for Shab-e Qadr have been held at the late supreme leader's Tehran mausoleum and attended by thousands of worshippers. This year, however, all services in Iran's capital were cancelled. It was rumoured that millions of protesters were planning to show up to demonstrate against the government of Mahmoud Ahmadinejad.

The cancellation of such a religiously significant event signifies just how tense Iran's post-election political landscape still is. Although large-scale protests have been brought to a halt, the country has by no means returned to business as usual. Chants of "Allah-o Akbar!" still echo from the rooftops and security forces remain on high alert to squelch any protests that may take place.

The Islamic Republic has witnessed protests in the past, but never before has it been confronted with a movement that refused to die down. Despite the regime's best efforts to repress the reformist opposition, public displays of defiance seem to increase daily.

What distinguishes this year's post-election unrest from prior demonstrations has been the protesters' success at disrupting the government's fiscal priorities. By forcing the regime to defend itself against the threat of reform, protesters have managed to make the government incur unanticipated costs while simultaneously struggling to maintain the social welfare programmes and infrastructure spending for which money has already been budgeted.

The costs being borne by the Islamic Republic vary widely. At the lower end, the regime has been forced to clean up anti-government graffiti on buildings and monuments such as Tehran's Freedom Tower. At the upper end, security force numbers have been bolstered by paying new recruits the equivalent of about £120 per day – a small fortune by Iranian standards.

The regime has further paid vast sums to suppress the free flow of information. Iran's leaders have doubled their efforts to jam satellite and radio channels streaming in from abroad and have tightened their control over internet content even further.

Internationally, Iran has become more economically isolated than ever before. Top companies working inside Iran have refused to extend their government contracts or enter into new agreements until political stability returns. Meanwhile, millions of pounds have been whisked out of the country and into more reliable safe havens in Europe and elsewhere. The loss of foreign investment money has served to compound the already significant budgetary complications facing the regime.

Also looming large is the threat of new sanctions. Ahmadinejad has made clear that he has no interest in compromising in negotiations over Iran's nuclear programme, a hardline stance that is likely to invite potentially severe punishment. While the regime would be unlikely to suffer from sanctions directly, ordinary Iranians could feel the pinch and vent their anger against, and demand assistance from, their government.

Such financial pressures would hurt any government, but Ahmadinejad's government is especially vulnerable. The Iranian president has built his base of political support by redistributing Iran's wealth into the hands of society's poorest members. With less money available to continue funding his redistribution schemes, Ahmadinejad is being forced to gamble the loyalty of the veterans, civil servants and members of the working poor who have been his staunchest backers. As is true with most gambling, however, he faces poor odds.

The government's system of populist pay-offs is already in the process of being disassembled. Ahmadinejad created fury and frustration when he recently reversed the latest round of pension and wage raises his government had mandated just months prior to this year's election. According to online reports, some workers are seeing their wage payments delayed and overtime withheld. The fate of the government's popular low-interest loans and cash hand-outs is yet to be determined.

As money continues to reverse course and leave the pockets of his supporters, those who voted for Ahmadinejad are being left to wonder why the government deserves their continuing loyalty. Many of those unable to produce a good answer will join the reformist opposition and express their frustrations on the streets. As the core group of supporters backing the current government dwindles, the regime in its entirety becomes increasingly vulnerable.

So long as the will to protest remains, any next step the regime takes will be a notable gain for the reformist opposition. If the regime continues its suppression of civil rights, it erodes its support base and swells the ranks of those who sympathise with the reformists. Should the regime make concessions that lead to greater civil rights such as freedom of expression, it risks appearing weak and inviting greater demands for freedom. Such concessions also risk empowering the opposition further.

Right now, the regime has opted to ramp up repression; faced with the entailed risks of concessions, it has decided to go for broke. The opposition, on the other hand, can look forward to the new academic year, which will almost certainly facilitate further and consolidated protests.

Nick Zanjani is a Fulbright fellow working in Cyprus. He writes regularly on Iranian and Middle East issues