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Iranian Internet Crackdown Snags Businesses

A shortsighted Iranian government, in its zeal to quell dissidents with an Internet crackdown, has shot itself in the foot, as much-needed business activity has been halted. Once reeling from smothering economic sanctions, Iran was tossed a lifeline, and businesses were given some breathing room, by the Obama administrations controversial nuclear arms deal.  But in the recent protests, Iran, in seeking to cut off citizens’ communications, has reversed these gains by severing businesses’ communications.

The government seems to have conveniently forgotten or ignored the fact that companies use the same communications to do business as private citizens do to communicate. By blocking the popular messaging app Telegram last month to quash protests, the country’s small-business community bore the brunt of a communications breakdown that has reverberated across the economy. Ironically, this will harm the already bad economy that brought rioters out into the streets to protest in the first place!

Telegram is an encrypted social-media app used by more than 40 million Iranians. It has been widely used by Iranians in the month-long protests as a means of circumventing government attempts to censor communication. Tehran blocked the app and throttled internet speeds to stall the flow of communications during the protests, and businesses -especially vital small businesses - were swept up in the process.

This assault on an engine of economic activity in Iran has not sat well with ordinary citizens, as they are terribly inconvenienced by everyday businesses inability able to function as usual. Their disappointment and ire have been directed at President Rouhani, who supposedly had been making improving the economy and the plight of the ordinary Iranian a priority. Prior to this, he had used economic arguments to allow for more liberties, such as relatively unfettered access to messaging apps like Telegram.

It is telling that, in December, before the protests and the subsequent government crackdown,  President Rouhani proudly pointed out that 70% of services provided in Iran were carried out via the internet. Mr. Rouhani said technology would create jobs - a key consideration for a government that has faced huge public outcry over a 12% unemployment rate.

That perception of Rouhani has changed. Reza Shalbaf Zadeh, a developer and engineer at a parcel-delivery startup, said:

There was a mindset that Rouhani is standing in front of them and they won’t block Telegram, but that’s vanished now.

And with it, any momentum and goodwill the government may have garnered after promising that a softening of sanctions would lead to basic improvements in citizens’ everyday lives.

Indeed, there has been a pronounced economic effect from the crackdown. During roughly two weeks of unrest, bank transactions fell by 40%, Iran’s 35-year-old minister of information and communications technology, Mohammad-Javad Azari-Jahrom said. The national postal service’s income fell by 18% in the same period, the minister added. All this means less money flowing into the government coffers, which likely spells more and prolonged protests.

Echoing a common theme heard around the globe these days, he said it was necessary to strike a balance between meeting the country’s security needs and allowing people to communicate and transact business online. The national security versus privacy argument is one thing. But inhibiting free speech and vital everyday communication is a different matter, and is unnecessary unless Tehran is culpable of other transgressions.

As many as 50,000 Iranian firms use Telegram as part of their businesses, according to a Twitter account set up during the protests to document the economic fallout from the block. For many of those affected by the blackout, bankruptcy is in the offing. But in broad terms for the struggling Iranian economy, such repressive measures engender lack of confidence, and hence needed business investment, in the country.

Farid Khaheshi, "a veteran of Iran’s startup scene and the former chief operating officer of one of its biggest tech companies," decried the crackdown, saying it created an unstable climate for economic growth at a time when it was difficult enough already without government interference.

If we want to make considerable progress, we must avoid such unpredictable decisions no matter what the political necessities are."

Targeting tools people use to communicate and do business with discourages much-needed investment and is counter-productive.

In my opinion, and I am far from alone on this, it is evident that Rouhani is not calling the shots. The strings are being pulled by the theocrats. And that’s another big reason why people have taken to the streets. Their lives are being turned upside down by people who can’t be voted out of office. This leaves protests and demonstrations as the only way to possibly effect change in such a political system. Doubtless, it will not be the last attempt at censorship by the repressive theocracy. Nor is it likely Telegram will be the only future victim.

Image credit: By Gwoeii/Shutterstock.

Written by: Stan Ward

Stan Ward has enjoyed writing for 50 years. Writing has been a comfortable companion to a successful business and teaching career for him. Find him on Google+.

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