Iran To Pay Cash Compensation To Most Citizens As Prices Rise

Documents cited by the agency suggested at least 200,000 barrels of Iranian crude arrived in mid-April at the Cardon refinery, Venezuela's second largest, which processes 310,000 barrels per day (bpd), with another 400,000 barrels discharging this week at the country's Jose port from the tanker (VLCC) Dino I.

Fars News Agency recently reported that under a new agreement reached under Iranian President Ebrahim Raisi, Iran had exported to Venezuela 2 million barrels of condensate – a light liquid produced during gas extraction – in seven months, expanding trade begun under the previous administration in Tehran. Venezuela mixes condensate with its own heavy crude to produce a suitable feed for refining.

Iran in return is offering through National Iranian Oil Company (NIOC) a way for Venezuela to dilute and export its heavy crude, Reuters reported. The Dino I is scheduled to sail later this month with Venezuela oil for NIOC’s Naftiran Intertrade Company. Meanwhile the Venezuela-owned Maximo Gorki will discharge 2 million barrels of Iranian condensate at the port, while the Iran-flagged Derya waits in Venezuelan waters with another cargo.

In a recent voice message sent to all producers and presenters of Radio Farhang, the radio station's director, Alireza Habibi strongly warns them to avoid reporting economic woes and the government's responsibility and threatens them that mistakes will not be forgiven because these issues are now "viewed as [national] security matters."

In an audio recording of the message, which Iran International has acquired, Habibi also says that instead of discussing these problems, in the current circumstances, the media should strive to advance the "psychological security" of the society. "And don't include newspaper headlines that are gloomy, critical, or about high prices in the programs," he tells them.

Avoid criticizing the government, the official tells staff, until "the dust settles and smoke clears" because criticism of government may turn into "criticism of the state" in its entirety.

Supreme Leader Ali Khamenei who charts the country's macro-policies, including the economy, takes no personal responsibility for the failures and has on several occasions publicly blamed the government of President Ebrahim Raisi's predecessor, Hassan Rouhani, for economic troubles. In his speech to workers Monday, he made no mention of the politically sensitive rise in bread prices and urged everyone to support the Raisi administration.

Since 2017, Iran has seen several major protests fueled by economic demands rather than any specific political issue. The driving force of the unrest, including the nationwide November 2019 protests following an increase in fuel prices that left hundreds of protesters dead, and the 2021 water shortage protests in Khuzestan and Esfahan, were mainly ordinary people rather than political groups and parties.

In recent weeks, Raisi and his economic team have come under heavy fire for economic mismanagement from a wide range of critics -- including other hardliners who helped him to power in last year's elections.

Many blame Raisi's government for failing so far to reach an agreement with world powers to restore the 2015 nuclear agreement, which would lift US sanctions and give a boost to the badly ailing economy. But economic failures of the government, and the regime, are becoming more and more difficult to justify, even given US sanctions.

Raisi says his government has stopped the "growth of inflation", which is above 40 percent now, and that it will soon go down and show its effects but the hike in prices do not help convince those most affected by the hardships, that is a good majority of Iranians.

Poverty has soared in the country to unprecedented levels. According to official figures released by the interior ministry, in total, around 60% of the 84 million Iranians live under the relative poverty line of whom between 20 to 30 million live in "absolute poverty". In 2010, for instance, the number of those living under the absolute poverty line was around 10 million according to government statistics.

In the past few months prices of many commodities have risen, by several-fold in some instances, and the government is planning to remove the subsidies it pays for some foodstuff and other basic commodities. The announcement of plans to remove flour subsidies has already pushed up the price of many products including pasta, biscuits, pastries, and sandwiches.

Aoun Diab told the state-funded al-Iraqiya television that the ministry had forwarded a dossier to the government after Iran had failed to respond after requests to discuss its diverting six rivers flowing into Iraq. Diab criticized what he called a lack of cooperation and drew an unfavorable comparison with Turkey given a delegation from Ankara was due to arrive for a field study.

Iraqi officials have for months talked of filing a case with the International Court of Justice, while Iranian officials have suggested Iraq’s chronic water challenge – the United Nations in 2017 ranked it the world’s fifth most vulnerable country to water shortage and food availability – results more from Turkish dams.

In April, Minister of Water Resources Mahdi Rashid al-Hamdani accused Tehran of ignoring Iraqi water rights “even if its dams are filled with water."

Both the Tigris and Euphrates, Iraq’s most important sources of water, originate in Turkey, although tributaries come from Syria and Iran.

Across the Middle East, water shortages have fed tensions between countries and within countries. Iranian officials have warned of a further fall this year in precipitation.

The head of the Planning and Budget Organization Massoud Mirkazemi told state television that the government is in the process of “reforming the subsidy system…and we are close to final decisions.” He repeated the official argument that the government wants the subsidy to go to the people instead being wasted in different ways.

His remarks signal the implementation of a long-suspected plan to make hydrocarbon fuels and electricity more expensive. Iran has the world’s second cheapest gasoline after Venezuela and the cheapest electricity for more than four decades.

One gallon of gasoline is around 22 cents and citizens are said to be using too much electricity and natural gas which are similarly offered at extremely low rates.

However, inflation has stood above 40 percent in the past 12 months and food prices have risen even faster. As the people’s purchasing power has declined, many expect another round of protests. An increase in energy prices might be too much for the population to bear.

Mirkazemi said that in addition to energy subsidies, the government is providing another $20 billion to keep food and medication affordable.

As it tries to save financial resources after four years of tough United States’ sanctions, the government might be risking a popular backlash.

After days of chaos for people and politicians, with bread prices rising and essential commodities such as cooking oil disappearing from shelves, Khamenei’s unannounced meeting with workers’ representative appeared to be aimed at showing him as a supporter of labor.

In his speech at the event, however, Khamenei did not mention the economic crisis and rising prices and repeated a series of rhetorical statements that often Islamic Republic officials utter more as a wish-list than practical economic plans.

Khamenei called workers “the supporting pillar of production”, and repeated slogans such as “increasing job opportunities”, “equitable relationship between labor and capital”, and “job security”.

Unemployment, partial employment and declining wages have plagued Iran’s workers, specially in the last decade, when international and American sanctions have weakened the economy and a huge wealth gap has opened in society.

The highly corrupt “privatization” of government enterprises has led to the closure of many factories and companies, leaving tens of thousands of workers unemployed or unpaid for long periods of time. Labor unrest since 2017 has led to hundreds of protests and strikes.

Without mentioning the above-40-percent inflation rate and the politically sensitive rise in bread prices, Khamenei tried to express support for President Ebrahim Raisi’s government and called for all entities to support his administration.

Raisi is under fire even by some of his hardliner supporters for appearing as disorganized and clueless over the handling of the economic crisis, although his administration has taken credit for circumventing United States’ sanctions and exporting one million barrels of oil per day.

Khamenei also tried to show that the regime he presides over values the contribution of workers, but the first example he mentioned related to the 1980s and the war with Iraq, when he said 14,000 workers were “martyred” in battle. He also thanked workers to “standing up” to US sanctions and keeping production alive.

In fact, the sanctions have cost Iran a lot of non-oil sector production losses and the closure of thousands of small producers, according to what officials and government-controlled media have reported in recent years.

Khamenei also claimed that workers have supported his regime but admitted that workers have “rightfully” protested “wrong privatization”.

He went on to say that contrary to Communist system and “exploitative” capitalism the Islamic government is appreciative of workers contribution.

An average Iranian worker now earns around $150 a month and with rising prices cannot afford most daily food items, such as meat or fruits. In 1970s, before the revolution and the Islamic Republic, an unskilled worker earned around $140, when the Iranian currency was 4,500-fold stronger than today (US dollar at 70 rials in 1978 compared with 285,000 now). Skilled workers earned as much $500 a month in mid-1970s, which provided incomparable purchasing power at the time.

The Supreme Leader reiterated his support for Iran’s closed economic system, emphasizing that imports should be minimized and domestic production increased, although recently there have been complaints by officials and politicians about the low quality of Iranian cars, while imports remain restricted.