The events of the last few weeks in Iran indicate that the country may be in for a repetition of the events of 1978 that led to the toppling of the Shah. Anti-government protests in Iran have reached a boiling point with the streets of several of Iran’s cities and towns reverberating with slogans demanding the overthrow of Supreme Leader Ayatollah Ali Khamenei. One can hear echoes of the “Death to the Shah” slogans of 1978–79 in these frenzied chants. Security forces have repeatedly opened fire, killing people by the dozens—possibly by the hundreds—in order to disperse protestors just as they did in the autumn of 1978.
Iran’s economy is in a tailspin, which is what triggered the protests. It is in far worse shape today than was the case on the eve of the Shah’s fall when there was a severe economic downturn because of economic mismanagement and misdirection despite the oil boom of the 1970s. The economic distress of the late 1970s was intimately related to the crony capitalism of the Shah’s regime that hurt the traditional merchant class, symbolized by the “bazar,” as well as the newly developing middle class. It was no coincidence that the religiously observant bazaris bankrolled the movement led by Ayatollah Ruhollah Khomeini that overthrew the Shah.
The resemblances of the situation today with the last years of the Shah’s rule are uncanny. The economic distress is in part the result of the economic sanctions, especially on the sale of Iranian oil, imposed by the United States since May 2018. Oil is the lifeline of the Iranian economy and accounts for a quarter of the country’s GDP and contributes about three-quarters of Iran’s public revenue. With oil exports slashed from 2.45 mbd to 0.26 mbd in the past year, the Iranian economy has gone into a severe recession. World Bank projections for 2019 indicate a negative growth rate of minus 8.7 percent in its GDP. The Iranian currency has fallen precipitately since the reimposition of sanctions with the unofficial rate plummeting to 135,000 to one U.S. dollar, thus adding to the financial woes of the Iranian public.