Iran threatens to withdraw from NPT if sanctions snap back

Compared to the same date last year, when the dollar was valued at 504,000 rials, the current rate represents a staggering 43% rise.

The rial began trading at 716,000 to the dollar on Wednesday morning but surged to nearly 720,000 rials by noon. Tether, which is an equivalent of US dollar in crypto markets, was being traded at 726,000 rials on the same day.

One notable shock to the currency market came on November 6, when the dollar initially jumped past 700,000 rials following the news of Donald Trump’s victory in the US presidential elections. But the currency began it decline in September after serious blows by Israel against Iran's main regional proxy, Hezbollah and an Israeli air strike that destroyed most of Iran's air defenses.

However, authorities temporarily stabilized the rate below that threshold, most likely by selling foreign currencies to support the rial. The downward trend resumed later that month after the International Atomic Energy Agency’s (IAEA) Board of Governors issued a resolution critical of Tehran for its nuclear program which has breached international regulations, producing 60% enriched uranium as Iran edges ever closer to nuclear weapons capability.

The rial has faced significant volatility throughout the year, influenced by volatility in the region and direct conflict between Iran and Israel.

Iran’s reliance on oil and gas exports for foreign currency earnings has made the country particularly vulnerable to international sanctions. Under Joe Biden’s presidency, sanctions enforcement eased somewhat, offering Tehran a lifeline. But the return of Donald Trump to the White House, combined with Europe’s increasingly tough stance to crack down on Iran's nuclear program, foreshadows greater economic strain for the Islamic Republic.

Inflation in Iran already exceeds 40%, and the rial’s devaluation will exacerbate price hikes, further eroding the purchasing power of ordinary Iranians.

Tens of millions have faced declining living standards over the past five years, with wages lagging behind inflation and around one third of the population now living below the poverty line.

The average worker now earns the equivalent of less than $200 per month, while official data suggests that $500 is the bare minimum required to meet basic needs.

As the dollar’s rise continues, the impact on daily life for Iranians grows more severe. Essential goods and services, already out of reach for many, are likely to see further price increases, deepening economic hardship and fueling public discontent.

Reformist-leaning media in Iran criticized Elmira Sharifi-Moghaddam, a female anchor for state TV channel IRINN, for posing challenging questions to President Pezeshkian about the state of the economy.

Commentators seen as reformists argued that her questions were unfair, overlooking long-standing issues Pezeshkian faces, such as sanctions and a deeply inefficient economic system.

However, the questions raised during the interview were far less probing than those typically posed by European or American TV anchors. The interview's style appeared intentionally crafted to align with state TV's political leanings, closely tied to the ultraconservative Paydari party, whose members are known to influence the broadcaster's news and current affairs policies.

A former Tehran mayor, Gholamhossein Karbaschi, who owns and runs the centrist daily Ham Mihan, criticized the President's decision to participate in a live one-hour interview on state television. 

In an article for Iran, the state-owned newspaper, Karbaschi argued that Pezeshkian should have refused the format dictated by state television, instead asserting control over when and how he addressed the nation

"He should have changed the state TV's game and chosen when and for how long to speak to the public," Karbaschi suggested, adding that Pezeshkian could have delivered "just two sentences to convince the people."

Karbaschi argued that the interview was intended to undermine the president rather than facilitate meaningful communication with the public. 

"What we saw on TV was an honest president speaking transparently while facing unfairly challenging questions," he wrote.

The former mayor also accused the anchor of frequently interrupting Pezeshkian and raising provocative topics, such as a potential gasoline price hike, to derail his explanations of the administration’s performance.

Karbaschi further claimed that the president was given limited time to express his views on the controversial hijab law.

Domestic media appeared to express frustration upon realizing that the interview with Pezeshkian, his second since taking office on August 1, differed from those with previous presidents – when anchors typically refrained from challenging their guests and even assisted in portraying their performance in a favorable light. This was especially true in interviews with former President Ebrahim Raisi, much of the media noted.

Conservative columnist Abdoljavad Mousavi commented that "Pezeshkian spoke in the same manner about everything, making it difficult to assess his weaknesses and strengths," but argued that the president spoke with candor and honesty.

In contrast, Amir Hossein Jafari, a columnist for the pro-reform outlet Rouydad24, argued that Pezeshkian's remarks on various issues "hardly convinced the public."

Jafari highlighted key topics addressed in the interview, such as gasoline price hikes, internet censorship, and pressures stemming from the new compulsory hijab law.

"Apart from hijab, the president did not say much about other matters," he noted.

The word "disparity" dominated Pezeshkian's interview, reflecting gaps between the government’s financial resources and expenditures, production and consumption levels, and public expectations versus what the government can realistically deliver.

Throughout the conversation, Pezeshkian emphasized the lack of funding as a core issue. He acknowledged several economic challenges, many of which have escalated into crises, but maintained that there is little the government can do to address these disparities.

Pezeshkian offered no tangible solutions for short- or medium-term problems, instead suggesting measures that would only have been effective had they been implemented years ago.

He frequently remarked, especially regarding cultural issues, "Things should have been addressed when people were in primary school. It’s too late and too difficult to fix them now."

After the interview, Pezeshkian invited feedback on his X account. Many Iranians criticized his approach, calling him too timid.

"You should talk like a hammer!" one social media user urged.

Others expressed discontent over Pezeshkian’s perceived failure to uphold campaign promises, such as improving the economy, lifting internet censorship, and easing pressures on women over the hijab.

As one observer noted, "He has realized that things are not as easy as he thought when he made those promises during his campaign."

It comes as Russian airstrikes hit civilian areas overnight in a bid to push back fighters gaining ground just kilometers away from the city.

Hama’s fall would put major pressure on President Bashar al-Assad after the capture last week of Aleppo, Syria’s second city.

As rebels in the country continue to advance, the speed of their assault has concerned Assad's allies, with Iran sending Iraqi and Afghan militias to support the long-serving President.

The Syrian government, which has deployed troops around the frontlines of Hama and begun a conscription drive amid the unrest, were supported by Iran-backed Afghan and Iraqi militia. Amid the shortage of troops, checkpoints in Damascus and eastern Deir al-Zor have been put in place to sign up young men to join the army, residents told Reuters.

Tehran is unnerved by the rebel offensive in Syria, as the country serves as a crucial smuggling route for weapons shipments to Hezbollah, Iran's primary military proxy in the region.

Islamic Revolutionary Guards Forces (IRGC) also have outposts there. According to Arabic journal Al Majalla, Iran has 55 military bases in Syria and 515 other military points.

The Israeli military has said it is just 13 bases but says Iran has "appropriated Syrian defense assets". The Atlantic Council also cites camps which are essential to the IRGC such as Damascus International Airport, al-Tayfour Airport, Azraa Base, Sayeda Zeinab Base, al-Kaswa Camp, Zabadani Camp, and al-Qusayr Camp.

Both Russia and Iran have supported the Assad ruling family for decades and between 2015-20 were vital in helping Damascus claw back most of the country from rebel control after they captured swathes of Syria since 2011.

It comes as Russia has been focused on its war on Ukraine and Iran in its proxy war on Israel, which has been surrounded by Iran-backed allies from Iraq, Syria, Yemen, Gaza, Lebanon and the West Bank.

Syria is a key location for both Russia and Iran. Assad is a key link in Iran’s network of Shia militias around the region while for Russia, the naval port of Tartous and Hmeimin air base near Latakia are strategic bases.

At the United Nations Convention to Combat Desertification (COP16) in Riyadh, Iran’s Minister of Agriculture, Gholamreza Nouri, outlined progress made during bilateral talks.

"We laid the groundwork for developing infrastructure in natural resources, the environment, and agriculture between Iran and Saudi Arabia," Nouri said.

His remarks mark a significant development in the rapprochement fostered by the 2023 China-brokered agreement between the two nations.

Saudi Arabia cut diplomatic ties with Iran in 2016 after its embassy in Tehran was stormed during a dispute over Riyadh's execution of a Shiite Muslim cleric.

Tensions escalated further with subsequent conflicts, including missile and drone attacks on Saudi oil facilities and tankers in the Persian Gulf, attributed to Iran-backed Houthi forces, amidst a nearly decade-long war.

Saudi-Iranian relations have improved following the Beijing Agreement, with both countries exploring areas of mutual interest. Yet, trade between the two remains limited. Iranian officials have expressed an ambition to boost bilateral trade to $1 billion annually, a stark contrast to the negligible trade volumes recorded in recent years.

Flights resume amid warming relations

In a further sign of thawing ties, Iran Air resumed flights between Mashhad and Dammam after a nine-year hiatus.

"A deputy from Iran’s embassy, the representative of Iran Air, and representatives from Saudi Arabia’s General Authority of Civil Aviation welcomed arriving passengers in Dammam and stressed the need to facilitate the movement of people between the two countries," ISNA said.

While economic and environmental collaboration are key goals, the rekindling of relations is also part of a broader geopolitical calculus, Saudi and its Persian Gulf neighbor, the United Arab Emirates, working on backdoor diplomacy to reduce the military actions of Iran in the region and curtail its allies across the area.

Last week, Bloomberg reported that Crown Prince Mohammad bin Salman, the de facto Saudi ruler, made an offer of increased trade to Iranian officials in recent weeks in the hope of ratcheting down tension with the West.

Despite progress, challenges remain since the rekindled ties between the two countries, including the ongoing Yemeni Houthis' blockade of the Red Sea region since the war in Gaza.

David Ottaway from the Wilson Centre wrote in March that at an emergency summit of the 57-member Organization of Islamic Cooperation and Arab League held in Riyadh on November 12 last year, Saudi Arabia managed to quash Iranian efforts to mobilize military support for Hamas in its war with Israel.

The meeting also managed to stall pressure on the six Arab states that now have diplomatic ties with the Jewish state—Egypt, Jordan, the United Arab Emirates, Bahrain, Sudan, and Morocco—to cut them. After the Gaza war, talks to normalize relations between Saudi and Israel which progressed into the public domain, have also been stalled, a move which will please Tehran.

Iran's former President Ebrahim Raisi and bin Salman (MBS) met during the summit to discuss various possible areas for cooperation, including Saudi investment in Iran’s sanctions-hobbled economy.

It was here that bin Salman allegedly warned Raisi that Iran "would have to rein in the activities of its regional Arab allies and proxies as the quid pro quo for any Saudi financial or economic aid", Ottaway said.

The hardline Islamist-led forces are unlikely beneficiaries of fallout from neighboring conflicts in which key Syrian allies Iran and Russia are sapped and distracted while uneasy neighbor Turkey presses its advantage.

Syrian president Bashar al-Assad, accused of war crimes by many Syrians and rights groups, fended off an armed challenge to his rule following Arab Spring democracy protests in 2011 with help from Iran-backed Hezbollah fighters and Russian air power.

But much has changed. The war in Ukraine has preoccupied Russia, Hezbollah limped to a ceasefire with Israel and Iran finds itself on the backfoot in a multifront confrontation with Israel in which it has lost the initiative.

“Over the last year, Hezbollah's forces inside Syria got weaker,” said Ibrahim Al-Assil, a Syrian analyst at the Middle East Institute in Washington, D.C.

Al-Assil said he was detained by the Syrian secret police in 2011 while taking part in a peaceful protest against Assad in Damascus. He said he was interrogated and tortured for four days at a Syrian military Airport.

“Now even Russia is overwhelmed and busy with the war in Ukraine,” said Al-Assil who founded the Syrian Nonviolence Movement but now predicts deadly upheaval. “The battle is not going to be easy. It's going to be bloody. It's going to be brutal."

The Israeli military has launched dozens of strikes on alleged Iran weapons facilities, smuggling routes and warehouses, curbing the ability of Iran and its allies to help.

The Israeli military announced on Tuesday in a new release that their Air Force conducted a strike in Damascus targeting Hezbollah’s representative to the Syrian military, Salman Nemer Jamaa.

Israel said Jamaa was a Hezbollah operative who was a key figure in enabling weapons smuggling to Lebanon from Syria, in a sign the Jewish state would still pound its Lebanese adversary despite the calm next door.

How far can Iran go to support Assad?

Whether Iran in its cash-strapped and weakened state can afford to come to Assad's rescue remains a key question.

“Is Syria the hill the Iranian regime is willing to die on? I don't think so,” said Hazem Alghabra, who grew up mostly in Syria was a former advisor to the US State Department on Near Eastern Affairs.

The Iranian establishment may understand its weakened position, and Hezbollah forces could be demoralized and underequipped after a punishing 14-month wrestle with the Mideast's top military power.

“The Iranian regime is not going to make big decisions while they're being chased literally by Israel and the United States. The Iranian regime moves when there's an opportunity, a weakness," Alghabra said. "They operate a bit like a virus, whenever they see a weakened immune system, they move in it."

Who are the rebel forces?

Two of the main rebel forces, Hayat Tahrir al-Sham (HTS) and the Syrian National Army (SNA), are both backed by Ankara.

HTS, known as the Organization for the Liberation of the Levant, is a former Al Qaeda affiliate that pledges to build a state based on Islamic principles.

They are made up Islamist insurgents with Jihadi ideology and former Free Syrian Army factions. They managed to take control of key places in Syria such defense factories in Aleppo, a thermal power station and an air base, according to monitors and eyewitnesses.

All met with little resistance, Greg Brew, an Iran analyst with the Eurasia Group told Iran International.

“Assad's forces have essentially melted away,” said Brew. “Turkey is largely in the driver's seat when it comes to extracting real concessions and real advantage from the situation."

Ankara, while supporting anti-government rebels, may not want Assad to fall, however.

Turkish President Recep Tayyip Erdogan may be using the Islamist insurgents to push a reluctant Assad to acquiesce to a Turkish sphere of influence in Northern Syria, allowing the millions of Syrian refugees in Turkey to return.

Weakened Syrian control over the area may aid Turkey's goal of undermining Kurdish foes further to the East who could also soon find the US military umbrella under which they have operated for years yanked away by an isolationist President Trump.

“Turkey is in a position to extract the greatest gains, the greatest advantage from this sequence of events, even if it hasn't been dictating the events, it does look likely to benefit,” said Brew.

On Tuesday, US airstrikes hit the Eastern Syria in the city of Deir Ezzor. The day before, US backed anti-Assad forces took several villages there from Iran and Iran-backed Assad forces.

While regional power politics may mean Israel and Turkey do not seek Assad's outright ouster, Syrian people trapped in the conflict are at the mercy of the country's clashing internal foes.

Syrian's suffered under the human rights abuses of their president but are likely wary of the Islamist insurgents who have pushed out his forces in recent days.

"People now are focusing on survival," said Al-Assil.