Turmoil in China and Iran

From Hong Kong to Tehran to Buenos Aires, the world seems in turmoil. A question is getting louder, what is triggering global unrest. There is so much unrest throughout the world at any point that it would appear to be merely the normal chaos. However, a point is very clear reasons for turmoil are unique for each country and often multiple. China and Iran are very different places, each with its own geopolitical circumstances.

One of the conspiracy theories suggests single element that is common to all countries, economic chaos of 2008 that originated from the United States. More than a decade ago the international economic system got a jolt and the turmoil continues to date. The weakness in the global economy is magnified by the unsolved problems lingering since 2008. It is also evident that economic problems have transformed into political ones. Add to this the shift in US strategy, away from military interventions to economic confrontations. The shift in US strategy is affecting the global economic system in general abut China and Iran in particular.

Let the analysis begin with riots in Hong Kong. In 2008, China was a powerful exporter, but also dependent on exports for social stability. The financial collapse created a profound crisis. An economy built on efficient exporting staggers when its customers are unable to buy its goods. The export crisis compounded the financial crisis, as cash flow from exports contracted. This followed a series of purges designed officially to weed out corruption and unofficially to find scapegoats for China’s problems and to intimidate potential opposition. Chinese government promising prosperity started opting austerity. The purges were the beginning of a systematic repression in China that sought to retain Chinese economic dynamism without an equivalent political dynamism.

Things got worse when the United States, China’s biggest customer, imposed punitive tariffs on Chinese goods and demanded access to China’s markets. There was also an implied demand for political concessions. The pressure from the United States increased the pressure still present from 2008. It in turn intensified suppression. Chinese insecurity compelled the Communist Party to seek increased control over Hong Kong, with an extradition law that would permit China to extract Hong Kong citizens. This triggered the worst instability in Hong Kong.

Let us move from China to Iran, the two countries having no similarities. The 2008 crisis triggered a slowdown in consumption and therefore in production. In the long run, this inevitably caused major declines in the prices of commodities, the most important being crude oil. Iran continued to export despite economic sanctions. However, low oil prices weighed on it, causing pressure on the economy, and eventually restlessness in the society. As with China, the US imposed economic penalties on Iran for reasons that have little to do with the economy. Regardless, the effect of the global shift in oil pricing, coupled with intense economic pressure from the US, over the time generated intense unrest and government repression.

There has been unrest in countries in which the US has strategic interest. Lebanon, Argentina, Chile and others all went into crisis for idiosyncratic reasons – including an emerging global economic slowdown. In all these countries, there are political problems that do not derive from 2008 economic crisis but certainly by US pressure. In some, such as Lebanon, there are economic problems that are mostly caused by external forces.

According to some analysts, while no general theory of unrest seems plausible, a special theory gets credential. The countries most dependent on either industrial exports or the sale of industrial commodities were harmed the most, though some have recovered. The addition of US economic pressure as a tool of foreign policy has compounded this problem, generating unrest. The US pressure would not have been nearly as effective without 2008. It is now triggering internal political consequences that are threatening the ability of regimes to cope.

Iran faces a difficult time and the stakes are high, from potential war with the United States to reversal of its gains across the Middle East to future of its revolutionary state. It is a defining moment for Tehran – perhaps the most critical since the Iranian Revolution of 1979 that has been prompted by the Trump administration’s “maximum pressure” campaign of sanctions. On top of all protests in Iran, Iraq and Lebanon have also charged the atmosphere.

What’s clear is that the growing scale of the challenge makes it difficult for Iran to pursue its earlier approach toward mounting US pressure. It is also not clear how Tehran will respond to this historic test with more military escalation, diplomatic compromise – or a combination of both.

Diplomats in the Middle East argue that the United States has put itself in a good position to shape that choice. They argue Washington could take advantage of Iran’s increased difficulties by working more closely with European and Mideast allies to frame an offer that would ease sanctions but put in place a process that would block Iran’s path to a nuclear weapon and end its foreign policy of regional meddling.

However, that sounds like wishful thinking in the world of Washington’s distractions, transatlantic distrust and Iranian outrage. Trump administration officials are sanguine, arguing that at the very least the sanctions have cut deeply into the resources Iran can invest in its proxies. Protests at home and abroad are usefully soaking up regime energies.