As sanctions crush rial's value, Iranians point fingers at Ahmadinejad

The International Monetary Fund is forecasting that Iran's 2012 gross domestic product will fall 0.9 percent, producing the first economic contraction in Iran since 1994. That shrinkage contrasts sharply with the IMF's overall growth forecast of 6.6 percent for all oil-exporting countries in the Middle East and North Africa in its semiannual World Economic Outlook report, according to Reuters.

Iran is losing $133 million per day in revenue due to sanctions – an annual total of $48 billion, or 10 percent of the economy – according to an August estimate by Bloomberg. Just one month after sanctions that banned Iran oil deals came into effect July 1, shipments from Iran were down 1.2 million barrels per day, or 52 percent.

In early October, the US dollar exchange rate that had held steady for years at just under 11,000 rials per dollar went as low as 38,000 rials per dollar on the street, hitting Iranians hard. Protests erupted around the Tehran bazaar, which partially closed for days.

"The current economic chaos is a result of irregularities, corruption, and wasting resources, not the negative impact of sanctions," says Saeed Laylaz, an economist in Tehran who has done prison time on security charges.

Government economic policies are "malfunctioning," he says. "I do not foresee any regime change as a result of unrest now and then; these riots could cause instability but not the collapse of the regime."

'The Americans are making me poor'

Iranians speak about limiting purchases of food and even critical medicines; about working several jobs – if they can be found – to make ends meet; and for those wealthy enough to send children outside the country for higher education, about trouble transferring funds to pay tuition.

"We are now paupers. It's official and irrevocable," says one Iranian trying to pay for school abroad for a son. "The Americans are making me poor. Can I love them for liberating me from my cash? Will they win my heart and mind?"

Limited though it was, the unrest prompted by the rial's tumble brought thousands of riot police into the streets, witnesses said, creating a tense atmosphere. Discontent in the bazaar is dangerous for Iran's Islamic regime, which has always counted on bazaar traders for support.

"I can't say that it is a coordinated strike to close the bazaar, but the point is that we are all suffering from the same issue. This terrible instability is harmful for all of us," says Mohammad Reza, a bazaar shopkeeper who, like others interviewed for this story, did not want to be further identified by family name.

Ahmadinejad's 'erroneous policies'

Religious leaders dismissed the financial problems as temporary and not as dire as portrayed. But they also seized on the opportunity to cast some of the blame on Mr. Ahmadinejad.

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