Rouhani vulnerable as bazaars closed in Iranian power struggle

Struggling economy expected to slide further as new US sanctions come into effect

Hundreds of merchants in the vaulted streets of Tehran's Grand Bazaar have shut down their shops this week in protests against a sliding currency that allies of Hassan Rouhani, Iran's centrist president, say are being whipped up by hardliners to push him out of office.

“Shut down! Shut down your shops. Co-operate with us,” a young man told shopkeepers in the bazaar on Tuesday.

“We are forced to close our shops,” said one wholesale dealer of gold who refused to be named. “Anti-Rouhani power centres have sent their agents to the bazaar. It seems there is a plan to make Rouhani a victim of the current economic crisis.”

When a few dozen protesters chanted anti-government slogans – “The enemy is here. They [the regime] lie that it is the US” – the riot police stood by. Hardline media outlets have given prominent coverage to the strike.


The bazaar played a crucial role in the 1979 Islamic revolution when traders joined forces with the clergy to overthrow Shah Mohammad Reza Pahlavi. The traders no longer wield that kind of power, but symbolically, the view in the bazaar counts a lot for Iranians.

This time, analysts say, it is at the centre of an intensifying power struggle, between pro-reform forces – allied with Rouhani – and hardliners who are largely based in the elite Revolutionary Guard and the judiciary. There are even rumours of a military intervention to take control of the government.

While Iran's top leaders have put on a show of unity against the US, which pulled out of the 2015 international nuclear agreement last month and is threatening Iran with tough new sanctions, there are fundamental differences over the future of the theocratic system and any future negotiations with their "arch enemy".

US president Donald Trump has demanded Iran stop its meddling in the Middle East and abandon its ballistic missile programme. He has, however, left the door open for talks as long as Tehran stops interfering in affairs across the region. In public, Iran is defiant, but analysts doubt it can resist tougher sanctions for long.

“It seems hardliners think that they may have no choice but to negotiate with the US but they do not want Rouhani to be the one,” said one reform-minded political analyst. “It is also strange that Rouhani is not doing much, as if the government also wants the crisis to get out of control so that hardliners are forced to swallow major concessions.”


The Iranian economy is expected to deteriorate further. The US will in August reimpose curbs on Iran’s ability to purchase US dollars, as well as any global trading in Iran’s gold, coal, steel, cars, currency and debt. Later in the year Washington will sanction the Islamic republic’s oil and energy exports, shipping and ports, and central bank dealings.

The “trade war” with the US – as Iranian officials like to call it – has rattled ordinary people and the business community. Many expect greater pain in the coming months when the new sanctions take effect. Iran’s currency, the rial, has already fallen by about 50 per cent against the dollar in the open market this year.

The government’s emergency measures – allocating hard currency largely to importers of basic commodities and imposing a ban on hundreds of imported goods, including cars – have pushed up prices of many products. Shopping malls, for instance, which are dependent on imported consumer goods including clothes and shoes, were stunned when the import ban was imposed overnight last week.

Meanwhile, many people are withdrawing savings and buying gold, hard currency, property and cars in an attempt to protect their assets.

“People buy only basic commodities these days or turn their savings into gold coins,” said one shopkeeper who sold French press coffee makers in the bazaar. “There is no reason to open our shops when we cannot buy new products which are too expensive because of dollar rates and have no customers for them.”

Hardliners have seized on the mounting public dissent to blame the president. "Sometimes it seems the country will be run better without the government [of Rouhani] Safavi, who is also a senior adviser to Iran's supreme leader Ayatollah Ali Khamenei, were followed by calls by some hardline members of parliament to impeach Rouhani.

"We give the government 10 to 15 days to give its plan on confronting the enemy's plots in the economic war," said Amir Khojasteh, an MP, on Monday. "Or else ... we will raise the president's 'lack of efficiency' [through impeachment]. This is to address public demand and we are not going to step back even one inch."

It is not clear if hardliners – who claim unconditional loyalty to the supreme leader – are in fact trying to press him to agree to an early change of the government. He has so far been supportive of the president and his team in public speeches.

“Ayatollah Khamenei is still against bringing down Rouhani,” said a regime insider who is a relative of the supreme leader.

“Rouhani will be lucky if he is still in office by autumn,” said one reformist analyst. “The current crisis is before the US sanctions have been put into effect, let alone when they really start biting.” – Copyright The Financial Times Limited 2018