Forgoing a song: protest inside and beyond Iran

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See mintmobile.com. Hello and welcome to the Intelligence from the Economist. Today from London, I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. A few bright spots suggest that big economies are in good shape. Sorry to bring you bad news, but there's reason to expect that beneath all that, a global recession is brewing. Worse than that, that recession might not even bring inflation down. And Abe de Bonafini might have had an unremarkable life. But during Argentina's last dictatorship, her sons were disappeared. Our obituary's editor says she spent the rest of her days dogged and furious, an icon of resistance, whatever she was resisting. But first, Iran's regime has been killing its citizens on the streets as they crack down on protests that began in September after the death of a young woman, Mahsa Amini, at the World cup in Qatar, Iran's football team is representing their country and its unrest. During Monday's game against England, the whole team remained silent. During Iran's national anthem, the crowd could be heard booing, uncertain whether at their silence or at the anthem and the regime it represents. At a press conference later, their captain sent public condolences to all all the bereaved families in Iran. They should know that we are with them, he said. We support them and we sympathize with them. This morning, ahead of the team's match with Wales, their effort during the anthem appeared to be no more than a perfunctory mumbling, and there are genuine fears for the players that they could have.

Faced reprisals had they not sung the anthem here today.

All of it is a grave risk, women's bare heads and widespread demonstrations at home. The team's defiance abroad, whether after more than two months it represents a material challenge to the regime, though, is still unclear.

The silence of the Iranian players in their first match against England was very divisive. Back Home.

Greg Carlstrom is our Middle east correspondent.

Some Iranians both inside the country and in the diaspora thought it was a brave gesture. Some of these players live in Iran and even those who don't have family and friends inside the country who are vulnerable to the regime. Some of the diaspora chanted against the regime outside the stadium. But there was also criticism from other Iranians. Even some people who were critical of the regime didn't think the team went far enough. There were some slightly outlandish accusations that this gesture had been coordinated with the regime. And so there was some booing and some chanting inside the stadium during the match. Iranian state television actually cut the broadcast while the anthem was playing. And so this was seen as a critical gesture by the Iranian government, which is trying to discourage dissent at home amid ongoing protests.

And it's now 70 days since the killing of Mahsa Amini that kicked off all of these protests. How are they progressing?

I think the first thing to say is that it's very hard to get a holistic view on what's happening with the protests in Iran because they are scattered. They are often fairly small and fairly short lived. So this is not like say 2009 where there were massive protests in the streets of Tehran that we all saw. Having said that, what's happened over the past week is it does seem like the numbers have died down a bit. But that has been the cycle for more than two months now since these protests began. And every time they die down, inevitably there has been a spark that picks them back up again. And unfortunately, that spark is usually someone being killed by police or by security forces. We saw that about a week ago when a nine year old boy, Kian Pirfalak, was shot dead in the car with his parents while they were driving away from the scene of a protest. His father was also wounded and that led to crowds who showed up at his funeral to protest. And tragically, he is not the first child to have been killed in these protests. It's difficult to get hard numbers on this, but the United Nations High Commissioner for Human Rights said there have been many such cases over the past two months.

According to reliable sources, a conservative estimate.

Of the death toll so far stands at over 300, including at least 40 children.

This is unacceptable and for obvious reasons that has made so many people angry across the country. So much of the violence over the past two months has been directed first at women and then later on at children. And that has predictably enraged the population.

But all told, you you speak of this cycle has the character of these protests changed since they started.

The scale and the size of the protests has been somewhat consistent in that they are small scale. They pop up, particularly on university campuses, a major focus of protest. Over the past two months we've seen pop up protests, people tearing down dividers in cafeterias that separate men and women, students coming out of classes and staging small protests outside of classes. But there's been nothing sustained. This has been something of a cat and mouse game with authorities over the past two months, which makes it hard for the protests to gain any critical mass on the one hand, but also makes it much harder for the authorities to crack down against them. We've seen horrifying scenes in the metro in Tehran in recent weeks where security forces have opened fire on crowds of people. We've also seen in recent weeks some protesters committing acts of arson against buildings, institutions affiliated with the state. They have attacked police departments in some towns and villages. We also saw earlier this month the childhood home of Ayatollah Khomeini, the leader of the 1979 Islamic Revolution, which had been turned into a museum after the revolution burned down by protester.

But essentially the protests have been directed in this way, essentially taking to the streets.

It has been. We haven't seen the level of labor unrest or industrial action that would really broaden this out and make it a serious short term threat to the regime. If you go back in Iranian history, strikes were very important. During the 1979 revolution, hundreds of thousands.

Of demonstrators celebrate the ouster of the Shah and the return from exile of Ayatollah Khomeini, leader of Iraq.

You had first oil refineries that went on strike and then the entire country staged the general strike. And that was really the nail in the coffin for the shah's regime in 1979. We haven't seen that this time. There are isolated bits of labor unrest. Just this week there are reports of a strike at an aluminum factory at a diesel plant. Firefighters in a couple of places have gone on strike. But none of this has really turned into a nationwide general strike. And I think part of the reason why is the level of economic distress in Iran. This is a country that first has been under American sanctions for a number of years. It's also a country that has just been mismanaged economically for decades. And large parts of the economy are controlled by the military or by clerical establishments. The economy has been mismanaged and so people can't afford to go on strike. And that's particularly true in sectors like the oil industry. Or the petrochemical industry, which are sectors that supply lots of revenue for the regime. But there are also sectors where people say, I have a decent job that pays me decently well by Iranian standards. I can't find another job like that if I lose this job. And so they feel like they can't afford to take the risk of going on strike and getting fired as a result.

So there isn't, at least up to this point, a national scale strike, a real economic pressure on the regime. But there does seem, from what we're hearing, to be a national scale defiance.

There is, both socially and to a lesser extent, economically. On the social part, I've spoken with plenty of people over the past couple of months who have said either they or their female relatives are going outside the house unveiled and not running into any issues for doing that and not feeling nervous about doing that. There's a feeling that something socially has shifted in a country where for so long so many Iranians chafed under the sorts of religious strictures that were imposed on them. And on the economic side, I mean, yes, as you say, there hasn't been a nationwide economic strike, but this comes after years of smaller scale strikes in various parts of the country that were mostly economic protests. People wanted better wages, better working conditions. We've seen a real growth in recent years of labor action in Iran. And so this hasn't yet snowballed into a nationwide economic movement. But there are calls for that and there are a lot of Iranians who are pushing to have it go in that direction.

You mentioned the word yet. I mean, where do you see this going?

That is a question that not just Iranians, but so many people around the Middle east are talking about, because this could potentially have such a huge impact on the region. But you hear different answers when you talk to Iranians in the diaspora. They think that this regime is on its last legs and that these protests in the fairly near future are going to bring about regime change in Iran. When you talk to Iranians inside the country and you tend to get a much more complicated view, some of them are also optimistic about where this is going. Some of them are very pessimistic and they think that the country is headed for perhaps a civil war, that it's headed for perhaps a Syria type scenario where the country cracks up and you have other Iranians who just think that the regime has held back until now, but at some point it's going to go out and just start shooting lots of people and put an end to this. So Iranians really don't agree on where this is going and if it's going to be anything good. And then there's the wild card hanging over all of this, which is the health of the supreme leader, Ali Khamenei, who has not been in great health in recent years. We did see him publicly a couple of months ago and he seemed to be okay, but there are persistent reports about him having cancer, having other health problems. He's old. He doesn't have a clear successor. The people who have been put out as possible successors are quite unpopular and not well regarded inside of the country. And so we don't know what's going to happen with the protests and we also don't know what's going to happen at the top of the regime. But I think the consensus, and most Iranians think this, is that something has to give, something has to change in the country in the not too distant future.

Thanks very much for your time, Greg.

Thank you.

On the face of it, there's been good reason to be more hopeful about the world economy over the past few weeks, weeks European shares have risen, along with hopes that the continent's immediate energy crisis might be coming to an end. And America's inflation rate earlier this month came in below expectations. US Stocks skyrocketed higher on Thursday, racking up their biggest daily percentage gains in about two and a half years after consumer prices data showed signs of slowing inflation that investors thought might get the Federal Reserve to ease up on its aggressive interest rate hikes. Investors seem to be cashing in on all this positive news. The Dow jumped 3.7% and the S&P 500 soared 5.5%, while the Nasdaq saw a whopping 7.3% gain. But they might be getting ahead of.

Themselves behind some spots of good news in recent weeks. In many ways, the outlook for the global economy is darkening.

Callum Williams is a senior economics writer at the Economist.

There's been fears about recession for months, actually, but now we're starting to see the first really convincing genuine signs the global economy could be heading into recession. The concern that we have is that the recession may not be enough to conquer inflation. There's really very scant evidence that the global surge in inflation is being defeated. If anything, in recent months, the evidence points the other way, that inflation is broadening out and becoming more entrenched.

Before we get to the inflation question, what are the signs that the outlook is, in fact, darkening?

We have higher interest rates across almost every country and those higher borrowing costs are starting to bite. So you Have Canada and New Zealand, where house prices are now clearly falling because home buyers face more expensive mortgages. House builders, really across the world, are cancelling projects. Homeowners are feeling less wealthy. And already both the Federal Reserve in America and the bank of England are seeing signs that companies are pulling back quite markedly on investment as a result of these tighter financial conditions.

But with all of those bright spots, there's a lot of talk of good, strong jobs markets, unemployment hitting record lows in many markets. How do you square that with this darkening picture that you're painting?

So that's right. In many countries, unemployment is at or near record lows. For example, the euro area, which has a reputation for having pretty high unemployment, Unemployment there is actually at its lowest level of all time. So there's clearly a lot of strength, residual strength in rich world labor markets. And the American job market, for example, is continuing to add jobs, even if at a slightly slower rate than in previous months. But if you take a kind of broader look, there are now signs of weakness emerging in the labor market data. So there's a rule of thumb that economists like to use, which basically says that if the unemployment rate rises by half a percentage point or more relative to its low over the previous year, then this is a decent leading indicator of a recession. And what our analysis finds is that in roughly a quarter to a third of rich countries, that is now indeed what's happening. They're quite small countries at the moment where it tends to be happening. So, for example, Denmark and the Netherlands. But this is a sign that a serious slowdown is now underway.

Okay, you make a good case then, that the recession is coming. The question then is how deep should we expect it to be? Are we in global financial crisis territory?

Once again, I don't think we're in global financial crisis territory at all. I mean, bear in mind that this recession is, to a great degree being deliberately engineered by central banks who are raising interest rates. And so to some degree, they do have control over how deep they want the recession to be. There's good reason to think that the economy is entering recession in fairly decent shape. So, for example, if you look at excess savings that households are still sitting on, so these were savings that were accumulated during the pandemic because people weren't spending and because they were in many cases receiving a lot of money from the government, this will allow many people to continue to spend even as their incomes decline. I think the other thing, really important thing actually for people to bear in mind is that as of yet, at least, There really is no evidence at all that we're going to get a rise in unemployment similar to what we saw in 2007-2009. And that's really because of the starting point for labour markets. Demand for labour has a long, long way to fall before it matches supply. And what we're seeing so far, which is actually a fairly encouraging sign, is that as demand for labor falls, employers are basically taking off job postings from job websites and that kind of thing, but they're not in large numbers yet firing workers. This is generally a good sign.

But you did say that there were signs that inflation was not only not getting better, but broadening out. What makes you say that?

Yeah, so this is the key risk. If inflation is broadening out and getting worse, then central banks will have to do more to try to slow the economy. Now, there are lags between higher interest rates and lower inflation, but these lags are not well understood. So it could be the case that what central banks have already done in terms of raising interest rates will, in time, prove to be enough to bring inflation down. You also have the fact that lower energy and food prices are already helping to drag down headline inflation, the inflation figure that's basically reported by the news networks. But if you look under the hood of what's going on, core inflation, which excludes the volatile components such as food and energy, is getting worse in lots and lots of countries. And then if you look even deeper, you can look along three dimensions. One is to do with the breadth of inflation. The other is to do with what is happening to wages. And the other is to do with what's happening to inflation expectations. On those three dimensions, things are very clearly getting worse.

Okay, walk me through those three dimensions, then.

So let's look at breadth first. And what this really means is how many different types of goods and services are seeing fast price rises. So we looked at the consumer baskets of 36 mostly rich countries, and back in June, So this summer, 60% of prices in the median inflation basket were rising by more than 4% year on year. And now that 60% has turned into 67%. So there's more goods and services, which are getting more expensive quickly. And this is partly to do with a very strong dollar, which means that outside America, imports become a lot more expensive. But it's also, and really more to do with what's happening in domestic economies, which is what. So this is where the second factor, wages, comes in, and they're a pretty good guide to the future path of inflation. There is some evidence that pay growth in America has reached a plateau of around 6% year on year, which is by historical standards still extremely high and unsustainably high, given that productivity growth is weak. There's also some evidence that pay growth in Britain has reached a peak too. It's very high, but it's no longer rising. But if you look elsewhere, actually pay growth continues to strengthen. So there's new research that's come out from indeed, which is a jobs website in partnership with the Central bank of Ireland, and that shows that job postings in the Eurozone are posting ever higher salaries. JP Morgan has done some work on French wage inflation and it says that wage inflation there has further to go. And there's other examples where there's really no sign yet that wage growth is coming down.

And what about the third dimension that you mentioned, expectations, which is the sort of confusing thing at this stage?

Yes, people don't have a good idea of how people's beliefs about inflation translate into actual inflation. But that said, the latest data is not encouraging at the moment, in the median rich country, the public expects that prices will rise by about 5% over the next year. There's no sign that that's come down from earlier this year. And then if you look at what companies say about future price rises, companies are the economic actors who actually set prices. And so there's a survey by a group of economists that find that American firms are looking for inflation over the next year of about 7%, and that's the highest level since the survey began in 2018. So as yet, expectations data are still very concerning.

So even though a global scale recession seems to be coming, there is no expectation that that's going to tame the inflation as you might otherwise expect.

I would probably answer that a bit more softly. I mean, if, for example, central banks decided to raise interest rates to 30%, there would be a huge recession and inflation, I feel confident in saying, would come down a lot. The question, though, is more finely balanced because central banks don't know how far to push the economy in order to get inflation down. I think what the past year has shown is that economists still really don't understand what causes inflation. They don't understand what causes it to go up. They don't really understand what causes it to stay high. Now, there is a silver lining there because that also probably suggests that they don't really understand how it comes down. And so there is a possibility that inflation will take everyone by surprise and suddenly crash and we'll be back in a lovely situation. Where inflation is 2% and the problem is solved. But the evidence so far suggests that inflation is going to prove stubborn even as the economy slows. What we're left with is that policymakers have a bit of a tricky choice, which is either they decide to squeeze the economy tighter and push the economy into a deeper recession, or they let prices spiral.

Well, I expect we're going to be talking again about either of those unhappy scenarios in the future. Thanks for your time, Callum.

Thanks, Jason.

On February 8, 1977, a man was carried out of a house in La Plata, near Buenos Aires in Argentina. He was hooded and unconscious. This was Abe de Bonafini's elder son. Jorge.

Annroe is the Economist's obituaries editor.

He had been tortured in the house and abducted by men who were working for the military junta who ruled Argentina at the time on December 6, 1977. Ten months later, her son Raul, her younger son, was also arrested and beaten up. He had been to trade union meeting in another town. They were just two of the around 10,000, she said, 30,000 people who were forcibly abducted by the regime. They were shot or they were drugged and then thrown out of helicopters into the ocean. She had lived through those two boys. She was enormously proud of them. Jorge was a maths teacher. He had studied physics at university. As for Raoul, he too had been to university studying zoology. She herself hadn't done anything of the sort. She'd barely finished primary school because her parents were too poor to afford the bus fare. She was desperate to learn about all the subjects that the boys learned at school and tried to pick up things from the books they brought home. And in fact, anything she knew seemed to come through them. Otherwise she didn't read or study much at all. And she certainly hadn't read Marx. Although both the boys signed up with the Communist Marxist Leninist Party of Argentina, which was a militant outfit and prepared to fight to overthrow the junta. When the boys were taken, her first thought wasn't to sit down and cry. She said she felt that lions were growing inside her. She became fierce and angry as well as sad, and she began to race round all the places she could think of morgues, hospitals, psychiatry offices, police stations, just to see if anyone had any word of where her sons had gone. Everyone gave her the brush off, and at one point she found herself sitting in a corridor in the Ministry of the Interior, waiting and thinking that if she stayed there long enough, somebody would have to come and see to her. But nobody came. The people she did most notice also Hanging round the ministries and the courts were women like herself with tragic faces. And she realized that these were mothers in the same position as herself, who had lost their sons or their daughters. So the answer was to band together. And in 1977 they did and formed the Madres de la Plaza de Mayo. The Mothers of the Plaza de Mayo, which is the large square in Buenos Aires in front of the President's palace. At first they took to wearing babies, white terry cotton nappies on their heads, so that they symbolized motherhood and the loss they felt. But then these became white scarves. They kept up all their marches through the years of the junta, even though their first leader was actually abducted and drugged and killed by the regime. In the end, they became so daring that they actually began to have 24 hour marches round the square and to spill out from the square into the streets. But by 1986, when the junta had actually gone for three years, the movement of the mothers actually split apart. So she formed a wing which was called the Madres de Plada de Mayo Association. And this one was not, she said, a human rights organization. They were political and their priority was to sweep away the whole corrupt system of government in Argentina. This surprised a good many people. And her views, when looked at in detail, horrified quite a few people who heard her. She opposed not only fascism and militarism, but also neoliberalism, globalization, capitalism itself, the IMF. When the 911 attacks occurred on the Twin Towers, she was actually happy because she felt that America was getting its comeuppance, for in fact, as she put it, being the country that had killed more people than any other in the world with its proxy wars. So gradually it had morphed from being a general human rights organization, with mothers really marching and protesting out of love for their sons, into what seemed to be quite a violent political movement, in a sense at least violent in the ideas it had. But she was very clear that she hadn't really depended from the aims of the Mothers, because she too was bringing to mind her sons all the time. Because she was not only the seeker after her son's missing bodies, she actually became the dogged promoter of her son's missing ideas.

Ann Ro on Abe de Bonafini, who's died aged 93. That's all for this episode of the Intelligence. The show's editors are Marguerite Howell and Chris Impey. Our sound engineer is Will Rowe. Our senior producers are Sam Westrin, Jack Gill, John Jo Devlin and Rory Galloway. Stevie Hertz is our US Audio correspondent and our creative producer is William Warren. Our producers are Alize Jean Baptiste and Kevin Kaners. With extra production help this week from Emily Elias, we'll all see you back here on Monday.