Iran may abandon austerity to pacify protesters
Significance Beginning in the conservative city of Mashhad, the mostly small-scale and leaderless demonstrations spread across many provincial towns over several days, sometimes turning violent. Following the publication of President Hassan Rouhani’s proposed 2018/19 ‘austerity’ budget, key slogans protested government corruption and neglect of the poor and unemployed -- although the basis of the regime itself also came under fire. Impacts US support for the protesters and announcement of new sanctions will assist Tehran’s efforts to portray recent events as foreign ‘sedition’. Inflation could spike on the back of populist economic policies and exchange rate deterioration as foreign investment prospects recede. The central bank will not implement exchange rate unification plans, since the government profits from the status quo.