Inequalities fueled unrest in Iran. Will its leaders do anything to address the anger?

When the occasional Maserati roars through the crowded streets of Tehran, past crowded buses and shabby domestic sedans, pedestrians sometimes unleash streams of curses in its wake.

On the popular “Rich Kids of Tehran� Instagram account, attractive 20-somethings flaunt $1,000 Hermes sandals and frolic poolside at lavish mansions in a capital where, perhaps in another part of town, the desperate hawk their own kidneys to feed their families.

Before Iran erupted in the most significant anti-government protests seen here in nearly a decade, anger was simmering over the excesses of a privileged elite that profited from international sanctions, corruption and connections to an unelected theocracy.

Then members of the country’s two main political factions each tried to channel the public mood with a gamble.

Last month, announcing his latest frugal budget aimed at managing a years-long economic slump, President Hassan Rouhani for the first time called on the government to publish the amount it spends on every institution. It was a clear reference to the many Islamic schools and foundations connected to the ruling theocracy that receive lavish public funds with no oversight.

In the city of Mashhad, home to a $15-billion religious foundation that is Iran’s wealthiest, hard-line allies of Supreme Leader Ayatollah Ali Khamenei tried to undercut Rouhani by organizing a rally against his plans to raise gas prices and slash the monthly cash grants the government gives to citizens.

But the Dec. 28 rally quickly turned into a protest against the entire political class, spreading to dozens of cities as mainly working-class demonstrators set fire to government buildings and chanted both “Death to Rouhani� and “Death to the dictator.�

The ensuing week of unrest left at least 21 dead and prompted a swift security clampdown. The instability prompted the two political blocs that have jockeyed for power in Iran to close ranks to protect a system that has enriched them while millions struggle with unemployment, bankruptcy, rising prices and environmental degradation.

The hard-liners who see themselves as the pious guardians of the 1979 Islamic Revolution and the Rouhani-backing reformists who seek gradual economic and social reforms have each acknowledged the people’s economic struggles. But both sides have been badly damaged by the protests, and neither has explained how it would address the demonstrators’ demands for reforms.

“The way the protests have unfolded has brought the two factions closer to each other,� said Ali Reza Nateghi, an activist from the reformist camp who campaigned for Rouhani. “Unity among reformists and hard-liners has increased because at the end of the day we are all in the same boat.�

Images of demonstrators tearing down photos of Khamenei — who is supposed to be revered as God’s representative on Earth — were “a huge embarrassment for a regime that has spent billions over the last 40 years telling the world how legitimate they are,� said Alex Vatanka, a senior fellow at the Middle East Institute in Washington.

It was particularly surprising that the protests began in the countryside, in conservative regions that the clerics long thought to be their strongholds.

Rouhani, an establishment cleric, won two elections by promising to mend an economy that was devastated by the populist policies of his hard-line predecessors and increasingly isolated because of its nuclear program. The protests in his fifth year in power show how little he has been able to achieve even in a system where Khamenei is the ultimate authority.

Rouhani has alienated reformists by failing to win concessions from hard-liners and for failing to nominate any women or minority Sunni Muslims to his Cabinet. His austere fiscal policies, aimed at controlling inflation, have worsened the suffering of lower classes while mainly elites are seen to have gained from his signature achievement: the 2015 nuclear agreement that eased international sanctions against Iran and prompted a slow resumption of foreign investment.

“You can have sympathy for Rouhani, but there is a sense that this is government that doesn’t have a good grasp of what’s going on at the grassroots level,� Vatanka said. “There is this disconnect between the Rouhani government and the lower classes and the younger demographic, especially in the countryside.�

The origins of the unrest remain a subject of debate. Some Iranian officials have suggested they were instigated by former President Mahmoud Ahmadinejad, who won working-class support for initiating — at a time of high oil prices — the program that paid every Iranian a monthly stipend of $90, which Rouhani has sought to dismantle.

Others point to Rouhani’s election rival, Ebrahim Raisi, custodian of the Imam Reza shrine in Mashhad, which is also a massive conglomerate that owns banks, hospitals and other businesses. By one estimate, it accounts for 7% of Iran’s entire economy.

In unveiling his budget last month, Rouhani said he wanted to improve transparency by revealing details of the $6 billion the government spends annually to fund religious institutions. These entities are largely controlled by members of the ruling establishment and their families, and many were receiving money with no accountability.

“We have no way other than transparency to root out corruption,� he told Parliament. “We must all go inside a glass room so that people can see every step we take.�

Meanwhile, scattered protests raged for much of last year as financial institutions — many connected to the powerful Revolutionary Guards paramilitary organization — defaulted on payments owed to investors.

Millions of Iranians have placed their savings in these credit institutions, which control as much as one-quarter of the banking sector but have been compared by some experts to government-sanctioned Ponzi schemes.

“None of the banks were punished, none of the officials were punished, none of the money was paid back,� said Misagh Parsa, a sociology professor at Dartmouth College and author of a 2016 book, “Democracy in Iran.� “As early as last July, you saw protests against these banks where the slogans were becoming quite radical.�

At one such demonstration, Parsa said, investors chanted against the clerical establishment: “They enrich themselves through Islam, they have made the people miserable.�

The financial protests were just one precursor to the recent unrest. In Ahvaz, a town in the southwestern oil-producing region where desertification has caused blinding sandstorms and power outages, protests have taken place almost weekly for the last two years.

“One day it’s laid-off workers, one day teachers, one day people protesting the drought and the tiny particles in the air that suffocate them,� said Aboulfazal Abedini, a 36-year-old journalist who lives in Ahvaz.

Last week, he said, hundreds demonstrated against the government every night.

“The stories of the huge budgets of the religious schools draw their attention because their chronic problems aren’t addressed,� Abedini said. “So there is always a chance for rebellion.�

But it is not clear that either Rouhani’s camp or the hard-liners are willing or able to address people’s grievances.

After Rouhani unveiled his budget, Sadegh Zibakalam, a political scientist close to the reformist camp, said it would be difficult to cut the budgets of religious institutions.

“For now, nothing can be done,� Zibakalam told the semi-official ILNA news agency. “But at least we can make it transparent.�

This week, the commander of the elite Revolutionary Guards, Maj. Gen. Mohammad Ali Jafari, played down the size of the demonstrations, saying the total number of “troublemakers� nationwide was less than 15,000.

“That’s putting your head in the sand,� Vatanka said. “Even as the protests are seemingly dying down, this anger will be right on the surface.�

At 78 and in ill health, Khamenei still has time to embark on reforms to make Iran more inclusive and reduce the powers of clerics, analysts say. Rouhani, widely believed to seek the leadership for himself, might need to move to the center to placate the vast numbers of young Iranians seeking economic change and greater social freedoms.

But analysts say Iran’s establishment could instead hunker down to counter President Trump, who has cheered on the protests against a “brutal and corrupt� government — even after introducing his visa ban against Iranians. This month he has another opportunity to decertify Iran’s compliance with the nuclear deal, which could trigger tougher U.S. sanctions that would undermine Iranian moderates and worsen the pain for protesters.

“If the Trump administration seriously wants to do something, it should leave the nuclear deal alone because it’s working for now,� Vatanka said. “The biggest tool in the hands of the U.S. in shaping the behavior of Iranian regime is tapping into the anger of the Iranian population.�