“It is impossible to predict Iran’s political path ahead, but a free-falling currency amidst deteriorating economic fundamentals is simply unsustainable.  Rising social unrest may not lead to regime change, but one can hope that the leaders will take a step back from confrontation and take a step instead towards some reform.”
~Win Thin, global head of emerging markets strategy at Brown Brothers Harriman 

The video above shows a “sea of people” protesting the Iranian government over major economic problems Iran is experiencing.  More specifically – Iran is now experiencing 70% MONTHLY hyperinflation in its economy.  And once you have hyper-inflation … it’s very hard to get that monster back in the bottle.  More on Iran’s struggle with hyperinflation HERE.

Many conservatives would rather see America rush into war; they feel the only way to deal with Iran is through force.  That’s the view of the majority of Mitt Romney’s foreign policy team (mostly holdovers from the Bush foreign policy team) along with the right wing ideologues whom Israeli Prime Minister Bibi Netanyahu has aligned himself with.  The Republican/Israeli two spoke axis is driving a lot of bluster about war with Iran.

So – while the neohawks call for war … President Obama has shrewdly worked with the Russians and Chinese to implement serious sanctions against the Iranian government that they would not have agreed to without much prodding and diplomacy.  Russia and China view American hegemony as a direct threat to their countries so they often will look to see a balancing effect on the U.S. and generally have no interest in making things easy for us.  But Obama negotiated with both countries to make sanctions work and that persistence with sanctions has avoided a repeat of the conservative push for yet another war with an oil rich middle eastern country.

A couple of days ago – I said if President Obama won a 2nd term … the Iranians would negotiate on their nukes program HERE; given the current downward spiral this hyperinflation is taking them on …. that could be revised to his first term.  As I’ve said before – Iranians are negotiating with the Americans … it just isn’t as public as it would be for political purposes.

Israeli newspaper Haaretz has the NY Times story on the U.S. rejecting an Iranian plan to end sanctions in return for concessions on their nuclear program HERE:

Iran recently proposed a nine-step plan to end the confrontation with the West over its nuclear program, but American officials have rejected the plan as a non-starter, the New York Times reported on Thursday.

According to the report, Iranian officials attempted to garner support for the plan last month at the UN General Assembly in New York.

The Iranian plan, which is based on a previous plan submitted to European officials in July, calls for gradually removing economic sanctions imposed on the country by the West in exchange for ending work at one of two sites where Iran is enriching uranium.

Secretary of State Hillary Clinton is saying if Iran would just cooperate fully on this … they should be able to address the issue of sanctions promptly HERE:

“They have made their own government decisions – having nothing to do with the sanctions – that have had an impact on the economic conditions inside of the country,” Clinton told reporters when asked about the protests.

“Of course the sanctions have had an impact as well, but those could be remedied in short order if the Iranian government were willing to work with the P5+1 and the rest of the international community in a sincere manner,” she added, referring to a group that includes the five permanent members of the U.N. Security Council – Britain, China, France, Russia and the United States – as well as Germany.

While the rial’s slide suggested the Western sanctions were having a serious impact, many businessmen and ordinary citizens say the government is at least partly to blame for the currency crisis.

And Bloomberg has Europe’s view on Iranian sanctions HERE:

The U.K., France and Germany are pressing for new sanctions to bring Iran’s economy to its knees and curb its nuclear ambitions, according to several European diplomats, as rioting over the country’s tumbling currency suggests the existing sanctions are taking a toll.

In a confidential letter to the 27 EU member states, portions of which were provided toBloomberg News, the foreign ministers of Europe’s three largest economies criticized Iran for its lack of openness over its nuclear program and called for raising the cost to Iran’s leaders of refusing to abandon what the U.S., Europe and Israel say is a covert nuclear weapons program. Iran says its program is solely for civilian energy and medical research.

Marketwatch says Obama’s approach is working HERE:

On the upside, Thin notes that Israel for now has backed away from the threat of a military attack on Iran.

“Tightening sanctions and also giving them more time to work should be seen as a viable policy, and is the tack that the U.S. is taking,” he said. ” We believe an attack on Iran would very likely strengthen the position of the hardliners in Iran and blunt any recent progress by moderates there in regaining a measure of influence.  Protests against rising inflation and shortages have sprung up this past week, and could signal a weakening of public support for the country’s rulers.”

More on the Iran economy by Al Jazeera below:

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