Living Under The Cloud

By Azadeh Moaveni / Tehran

The early risers in my neighborhood arrived at the local bakery one recent morning to find the doors locked and the stone oven cold. They milled about for a while and then began speculating about why the bakery should mysteriously be shut. Before long, they settled on an explanation: the Iranian government had sent all the country's flour to Lebanon. Since the war in Lebanon ended last month, Iranians have become convinced that their government is spending outrageous sums on Lebanon's Shi'ites to shore up support for Iran's longtime client Hizballah. The rumors grow more outlandish every day: the Lebanese are receiving free SUVs or plasma televisions. As shop owner Behjat Karimi, 47, put it, "What else of ours are they going to give away next?"

The bakery, it turns out, was merely closed for remodeling. But a general sense of suspicion still hangs in the air, and Tehran probably can't ignore it. To the outside world, the Iranian government projects an image of national resolve as it defies U.N. Security Council demands to stop enriching uranium. But the regime's ability to withstand international pressure may depend on how forgiving Iranians are about the sluggish economy. The rate of inflation is at least 19%, and unemployment has edged up to 15%. At a press conference last week, President Mahmoud Ahmadinejad fended off criticism of his economic program by swinging attention to foreign policy and calling for a debate with President George W. Bush. Some former Iranian officials and other analysts speculate that Ahmadinejad is stoking the nuclear crisis with the West in part to divert attention from the economy. "This is the first government in years to make big economic promises to people," says a close associate of Ahmadinejad's with knowledge of his government's thinking. "If it fails to deliver, it will be a catastrophe not just for this administration but for the entire regime."

The war in Lebanon has provoked economic anxieties. Nightly news broadcasts that Iranians watch on their illegal satellite dishes show Hizballah doling out thick stacks of cash to displaced Shi'ites, courtesy of Iran. Because President Ahmadinejad enjoys pandering to public sentiment in the Arab world, the flow of Iranian resources to Lebanon is no secret. But this spending on a faraway Arab community infuriates Iranians and revives an ugly Persian chauvinism that considers Arabs uncultured and backward. One story I heard last week has the wife of Hizballah leader Sheik Hassan Nasrallah receiving a gift of Iranian caviar and thinking it was some sort of jam.

The discontent is rising. At a recent dinner party, all my guests rattled off fresh complaints about the government's misplaced priorities: a businessman who legally imports foreign goods says the government hasn't stopped the influx of smuggled products; a musician couple can't find affordable housing in Tehran; an English teacher at a government-run language institute complains of the school's harsh new dress code. "Instead of caring about our coat lengths, maybe [Ahmadinejad] should pay attention to what counts," says Farah, 32, the teacher.

For now, the Establishment doesn't seem threatened by people's grievances. But moderates are worried that a serious confrontation with the U.S., possibly involving military strikes, would provoke a legitimacy crisis for the regime. All of which suggests that Iran may defy the West over its nuclear program for as long as it can manage, and adapt at the last minute to avoid a military clash. Until then, even the threat of sanctions could prove useful by offering Iran's President an external source of blame for the nation's economic problems.

Iranians seem resigned to the likelihood that with tensions rising, the situation at home is likely to get worse. Earlier last month, police confiscated all the illegal satellite dishes in my neighborhood under the guise of preventing the broadcast of impure content. The "real" story circulating among residents went like this: a regime official had recently begun importing small, laptop-size satellite dishes that work indoors. If the government rounded up the rooftop dishes, everyone would be forced to buy the official's dishes. For a while, people on my block stood outside debating what to do. The elders finally shook their heads in dejection while their children traded ringtones on their mobile phones.

> To read Azadeh Moaveni's new blog about daily life in Tehran, Lipstick Jihad, visit time.com