Iran rulers eye currency mess from protected perch

October 8, 2012 • Business

Iranians shop at Tehran’s old main bazaar in downtown Tehran, Iran, Sunday, Oct. 7, 2012. Iran’s parliament on Sunday abandoned its planned impeachment of a Cabinet minister over the free-fall of the country’s currency, opting instead to look for more effective economic measures, like cutting spending. The aborted move to impeach the minister reflects unease over the severe drop in the value of the Iranian rial, mostly because of Western sanctions over Iran’s suspect nuclear program. On Sunday the parliament approved outlines of a bill to restrict the government’s use of different exchange rates for its foreign revenue and requiring the return of some funds to the treasury. (AP Photo/Vahid Salemi)

DUBAI, United Arab Emirates (AP) — Just as Iran’s currency was rattling near bottom after a stunning free fall, officials in Tehran opened a trade exhibition that included advanced engineering tools, heavy machinery and robotics. Nearly every Iranian booth had some connection to the country’s powerful Revolutionary Guard and the ruling system it safeguards.

This display of the regime’s industrial muscle showcases why the collapse of Iran’s rial is unlikely to pose any immediate threats to the country’s real centers of power, despite protests last week that brought quick speculation in the West about the stirrings of a popular revolt.

The top end of Iran’s economy remains fully in the hands of the Revolutionary Guard and its networks, which span from oil to aerospace. And the lifeblood for the ruling clerics and the Guard still comes from Iran’s oil exports that — on paper at least — bring in tens of millions of dollars a day to buffer against the blows hitting the rest of the country: a tanking currency, skyrocketing prices for imported goods and double-digit inflation.

“There is a lot of breathless talk about the regime collapsing,” said Salman Shaikh, director of The Brookings Doha Center in Qatar. “It is no doubt under severe pressures and cannot ignore the currency situation, but the fundamentals of the economy, from the standpoint of the ruling Login to read more

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