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Iran’s currency and stocks have declined and most foreign airlines have suspended flights in anticipation of an Israeli retaliatory attack on the Islamic republic.
The rial had slid almost 5 per cent to 640,000 against the US dollar on the open market on Monday, from 610,000 on September 30, a day before Iran launched a ballistic missile strike on Israel. Tedpix, the main index at the Tehran Stock Exchange, fell to 2.007mn from 2.131mn — a drop of almost 6 per cent — during the same period.
Both have continued their steady decline this week, as many fear the threat of war will deepen Iran’s isolation and economic crisis.
Israel is preparing to hit back after Iran’s attack with scores of ballistic missiles this month, which Tehran said was in retaliation for the killing of Hassan Nasrallah, leader of Iranian-backed Lebanese militant group Hizbollah, and a senior commander of Iran’s Revolutionary Guards in air strikes on Beirut. Top Israeli officials have told the US they plan to target military sites.
The expectation of an Israeli attack has also resulted in travel chaos as airlines cancel flights, leading to soaring ticket costs and prolonged travel times resulting from rerouted journeys. Flydubai is the sole foreign airline still operating in Iran after carriers such as Emirates, Qatar Airways and Turkish Airlines suspended flights this month.
Many Iranians are now deeply anxious about the prospect of a potential war between Iran and Israel, which has vowed a “precise and deadly” response after an escalation of hostilities since an earlier exchange of fire in April.
But while regime loyalists insist that the Islamic republic is not afraid of war and embrace military confrontation with Israel, many fear that the country’s sanctions-hit economy can ill-afford another cycle of escalation.
“I panic at every loud noise and wake up in the middle of the night thinking Israel has attacked,” said Maliheh, a 65-year-old woman in Tehran. “On top of all the economic and political problems we face, this is what our life has become.”
Saeed Laylaz, a political economy analyst, said the government had been managing supply and demand in the currency market to curb large fluctuations.
“There is certainly a psychological atmosphere affecting the country,” he said. “But these new turbulences will not deter the Islamic republic from pursuing its regional policies or responding to any Israeli attack. Iran’s economy is accustomed to navigating political crises.”
Last week, Iran’s flagship carrier Iran Air also cancelled its flights to European destinations after the EU imposed sanctions on the airline over what it said was the transfer of ballistic missiles to Russia for use against Ukraine, a claim Iran denies.
“It took me three days to reach Tehran from Frankfurt after my Iran Air flight was abruptly cancelled,” said one woman at Tehran’s Imam Khomeini international airport.
Another passenger, a young man, described his ordeal travelling from Scotland. “I had to reroute through Georgia, and the trip cost me twice what I normally pay,” he said.
Israel has dealt a series of heavy blows to the Iranian regime’s so-called axis of resistance, a crucial tool of its foreign policy. Both hardliners and reformists mourned the killing of Hamas leader Yahya Sinwar in Gaza last week.
As tensions rose this month, Iran’s foreign minister Abbas Araghchi launched an intense flurry of diplomatic activity, touring nine regional countries and meeting Hamas leaders in Turkey. He has warned Israel against any attacks on Iran’s nuclear installations and energy facilities.
But frustration with their rulers’ ideologically driven domestic and foreign policies has left some in the country indifferent to the threat of conflict, arguing that the potential devastation of an Israeli attack pales in comparison with their current hardships.
“I’m 58 years old, living in a rented apartment with two unemployed adult children. How can I believe in any ideology?” said Hassan, a driver. “I’ve already lost my foreign clients. Foreign flights have come to a minimum. It’s already been terrible for me and will get worse.”
Data visualisation by Ray Douglas and Clara Murray
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