The recent demonstrations and protests in Iran over the increasingly perilous state of its economy are the latest and most powerful sign that the economic war is having a tangible impact. There is no doubt that punitive financial and economic sanctions have contributed greatly to the collapse of Iran's currency, the rial. Iran now suffers from hyperinflation and the rial has fallen by 80 percent in the past year. As history has shown, durable hyperinflation such as this can result in public unrest and, occasinally, regime change.
The conventional wisdom of the past was that sanctions against Iran would have little impact because of Iran's vast oil wealth. That was, in retrospect, flawed thinking. In the past year, Iran's acceleration of its nuclear program and defiance of the IAEA, its sponsorship of terrorism and its destabilizing actions in countries like Syria finally prompted the international community to act. The loss of Iranian oil has had little effect on the market so far, as countries like Saudi Arabia, Iraq and Libya have made up for the loss.