Usually at the beginning of a new year we tend to take a look forward and try to give you some important events to look forward to in your trading year. However, right now something far more important is going on and we thought it would be best to take the time to talk about it: the Iranian protests.
What’s Happening? Since December 29 thousands of Iranian citizens have taken to the streets in protest. The mundane trigger behind the protests was the dramatic increase in the price of eggs by nearly 100% – this was caused by a recent breakout of bird flu that meant the death of millions of chickens, which led to a massive decrease of egg supply. Nevertheless, behind this simple trigger lie much more pressing and serious concerns: high unemployment rates, high inflation, and a very noticeable income inequality. In general, the state of the Iranian economy is not good and the sudden spike in the price of something as essential as eggs was the last drop – Iranians couldn’t take it anymore.
Initially, the first protests were directed at Iran’s president Hassan Rouhani. While Rouhani was in many ways popular in Iran for being a more progressive politician with a mind to revitalize the economy, he recently angered some by proposing to increase the price for gas. Some experts following the events in Iran have also argued that it is possible that the first line of protests was instigated by more conservative politicians looking to remove Rouhani from power.
Regardless of the reasons behind the first protests, the fact of the matter is that they spread like wildfire. As of today, nearly every important city and town in Iran is protesting, and now the object of their anger has moved onto Iran’s political system in general, in particular Iran’s Supreme Leader Ali Khamenei. Khamenei has endless authority in Iran and can interfere with the work of the elected government whenever he decides. The protests are currently showing us all that the people of Iran see this system as corrupt and dysfunctional; they want change.
So, What Now? While the conversation about what’s going on in Iran is still focused on that country, people are also eager to see how other states are reacting to the situation. In particular, when there is unrest in the Middle East people tend to turn to the United States, a country which previously sent missions to Afghanistan, Iraq, and more. President Trump had tweeted in support of the protests, but could the US actually start sending its armies to Iran?
Probably not yet. So far the protests have been mostly non-violent – the police has been arresting many of the protesters, but has refrained from using heavy-duty measures that are certainly at the government’s disposal. Reportedly around 20 people have died in the clashes, but that number is not significant enough to cause the involvement of international forces. The United Nations have stayed their hand for the moment, waiting to see what will happen, as this conflict is between the people of Iran and their government.
How is This Important? The protests in Iran are actually very significant. Iran is the third most important oil-exporting country in OPEC. If the protests turn to civil war, likely many of Iran’s oil facilities’ operations will be affected. Furthermore, peace in Iran is important on a larger scale for the security of the Middle East. Although ISIS has been pretty much defeated, it is worth noting that the organization was able to exist in the first place because of the conflicts in Syria which left the population vulnerable. Moreover, Iran is quite important as it has nuclear capabilities, so it is in fact in the interest of global peace that there are no major escalations of conflict there.
Right now we still don’t know exactly how serious things are, but we must follow the conflict in Iran closely, as the global financial markets are always affected by force majeure circumstances.
