Iran’s recent domestic political developments have surprised many observers and analysts. Historically, the country’s political factions have tended to unite in the face of increased external pressure. However, this time, the reaction to intensified US pressure has been an escalation of domestic tensions, including calls for the impeachment of moderate President Hassan Rouhani.

One can try to understand the level of domestic tension and animosity within the factional paradigm, but the coincidence of these developments with major upheavals on the country’s foreign exchange market — including the devaluation of the rial to an unexpected and unprecedented level — suggests that other factors are at play. In fact, various announcements by Rouhani and his ministers regarding the publication of names of entities who have received hard currency allocations at the official exchange rate points to the political dimensions of the current situation. In other words, there are strong indications that the ongoing economic crisis in Iran is a direct consequence of domestic political shifts that are overlooked due to an overemphasis on external factors such as sanctions. As such, two interrelated domestic processes need to be understood: the pushback by some of the interest groups who feel that Rouhani’s post-nuclear deal reforms are undermining their interests, and the domestic competition over the future orientation of Iran’s international positioning.

The latter process explains why Foreign Minister Mohammad Javad Zarif recently felt it necessary to comment on the domestic tensions by stating that at the current juncture, “domestic cohesion” was more necessary than bread and water. However, it is also clear that those networks that have fueled the recent economic crisis by generating artificial demand for hard currency have little regard for the well-being of the economy and have sacrificed national interests for their own political goals. Thus, it is important to try to identify which interest groups feel most threatened by Rouhani’s reform process and how they put pressure on the administration.

As in other countries, Iran is no stranger to the overlap of business and political interests. For example, the Islamic Coalition Party (Motalefeh) was originally an association of traditional merchants — often referred to as “bazaaris.” Over the past few decades, it has become a political party that has participated in bargaining processes with the government. The Society of Industrial Producers (Jamiayate Tolidgarayan) is another example of a business interest group that has become a political entity.