Protesters on Jomhouri Avenue, Tehran, Iran, June 24, 2018 (UGC)

Thomas Erdbrink writes for The New York Times:

Less than a year ago, he was running a thriving computer accessories business, driving a new car and renting a comfortable two-bedroom apartment in the center of Tehran. But last month, Kaveh Taymouri found himself riding a rusty motorcycle on his hourlong commute to his family’s new lodgings, a 485-square-foot apartment in one of the city’s worst neighborhoods, next to its sprawling cemetery.

When he arrived home one recent night at 10:30 from his new job at an arcade, there was no food on the stove. The sandwich he had for lunch would have to do.

Nevertheless, his wife and former business partner, Reihaneh, said she thought his mood was improving.

“At least he has stopped screaming in his sleep,” she said.

Before their “downfall”, as they call it, the Taymouris were the model middle-class Iranian family, prosperous college-educated business owners who made enough money to save for a down payment on their own home. Now, they are a model for a different sort: the millions of middle-class Iranians who almost overnight have seen their lives shrink, dragged down by economic forces beyond their control.

A Shambolic Economy

Iran’s economy is in a shambles, savaged by years of mismanagement and renewed economic sanctions.

The government has expanded the money supply by more than 30% annually for more than a decade, using the extra cash to cover budget deficits and other expenses. In the United States, by comparison, a broad measure of the money supply has increased by an annual average of 6.4 percent over the last decade, according to the Federal Reserve.

As a result of Iran’s rapid expansion of the money supply, says Djavad Salehi-Isfahani, a professor of economics at Virginia Tech University, inflation has exploded and by official figures is now running at an annual rate of 35%, compared with below 10% a year ago.

Donald Trump’s decision to leave the nuclear deal, known formally as the Joint Comprehensive Plan of Action and to reimpose harsh economic sanctions prompted the other major economic disaster to befall Iran: a collapse in its currency, Salehi-Isfahani said. The rial lost about 70% against the dollar before strengthening recently, but its rates are still fluctuating heavily.

“The withdrawal busted the expectations for an economic boom created by the JCPOA and Iran’s return to the global economy, which was expected to boost oil exports and foreign investment,” he said. “The reversal caused people to convert their rials into other assets, mainly dollars and gold.”

Collapsing Income

By raising the cost of imports, the currency collapse has reinforced the inflationary surge and decimated small businesses that, like the Taymouris’, rely on imported goods.

Taymouri, saying it was best to let his money — or lack of it — do the talking, sat down and calculated the financial calamity that had befallen the family in the past year. Their monthly income fell from 50 million rials, or about $1,400, a year ago to 10 million rials, or $90, at the current heavily devalued rate.

“If someone had ever told me I would one day live like this, I would’ve laughed,” Mr. Taymouri said bitterly, before falling silent. Finally, his wife spoke.

“I’m not really that sad, because we are not alone,” she said. “It’s happening to so many people.”

Taymouri attributed the fall in the currency to speculators as well as the government “for just having stood by”. Others blame Trump.

“It’s really because of Trump,” said Nasim Marashi, the 29-year-old author of a best-selling book Autumn Is the Last Season. The book, on the lives of three middle-class young women in Tehran, has had 35 print runs in four years. “He left the nuclear agreement, not Iran.”

The Shrinking Middle Class

Iran, with a population of about 80 million, has long had a large and thriving middle class, covering roughly everyone from bus drivers to lawyers and doctors, and earning an average of $700 a month in local currency, according to government officials. That income was frequently padded by unreported side businesses in the country’s large black market and government subsidies that lowered the cost of utilities, food and gasoline.

Politically quite influential, Iran’s middle class has consistently favored candidates like the current president, Hassan Rouhani, who support better relations with the West. But seldom have they been under as much economic pressure as they are today. Recently at least two people have been hanged after they were convicted in highly publicized trials for manipulating markets.

In a sign that the government is taking the issue seriously, Mr. Rouhani introduced his administration’s budget on Tuesday, and it included more support for state employees and more subsidies on basic goods.

Not all have suffered as much as the Taymouris, whose business was so vulnerable to the currency collapse. But Abbas Torkan, a former adviser to Mr. Rouhani, said recently that the middle class had shrunk by 50 percent.

Even for those in higher income ranges, the difficult times have meant a sudden lifestyle change.

Royalties checks for Ms. Marashi’s book dropped from 120 million rials a month to 20 million rials recently, she said. “Books aren’t a necessity.”

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