Iran International
Iranians will most likely experience their next shock when the government reduces fuel subsidies and prices rise dramatically, pushing inflation even higher.
Iran has one of the world’s cheapest fuel prices, with one liter of gasoline going as cheap as 5 US cents, or around 20 cents a gallon, while prices in other oil-producing regional countries is 10-20 times higher. In Europe, gasoline is almost 40 times higher than in Iran.
The history of subsidized fuel goes back to the period before the 1979 revolution, but since then the government has maintained the ever-growing subsidy, as the gap between prices in Iran and elsewhere has widened. As an oil-producing nation, ‘the government takes care of its people’ – has been the logic of fuel subsidies.
Official estimates in Iran put the total annual subsidy of cheap fuel as high as $60 billion, which is more than the country’s oil export revenues.
Now, the government is once again thinking of raising gasoline prices although officials and members of parliament continue to deny that it will happen this year. Mousa Ahmadi, a member of parliament’s energy committee on Sunday said that lawmakers and the government have not discussed a price increase, although his denial was less than categoric.
Already, in two southern regions the government has been experimenting with higher prices, by offering rationed cheap fuel to everyone, and 50 cents a liter unlimited supplies for those who want to drive more and have the money to pay for it.
A news website in Iran reported Sunday that the government has reduced the number of pumping stations on some highways, forcing drivers who need gas to buy it from road-side dellers at five time the price.
Reducing the subsidy, however, is a risky political move in a volatile domestic environment. Last time the government raised prices in November 2019, nationwide unrest ensued, with security forces receiving orders to fire at protesters. At least 1,500 unarmed people were killed, and the regime’s legitimacy was seriously damaged both at home and abroad.
In addition to the inherent risk, the government already scrapped food import subsidies in early May, which translated into an immediate jump in bread and other food prices. This led to days of protests, which were quelled by deploying thousands of specially maintained “anti-riot” troops, who used force and arrests.
The political environment, however, remains tense and the smallest incident could trigger a new round of protests among 80-million Iranians who have become impoverished over the years, especially since 2018. That was when the United States pulled out of the 2015 nuclear agreement and reimposed tough economic sanctions, especially on oil exports.
The national currency has fallen almost tenfold against the US dollar, with food prices rising by 60 percent in 2021, even before the latest decision to stop import subsidies. Some officials and even the government-controlled media say that tens of millions of Iranians have lost their middle-class status and can be categorized as “poor” because of constant high inflation, topping 40 percent annually.
But Iran’s economic problems are compounded by a growing popular perception that the Islamic Republic governing elite is just inefficient and corrupt, and even many insiders feel less constrained in recent months to speak out.
The only reprieve could come from a nuclear agreement with the US, which would lift economic sanctions, but Tehran has hesitated and the year-long talks in Vienna have stalled.
More people in Iran are concluding that the ruling regime stands at a crossroad – to solve its problems with the United States or continue an anti-West foreign policy and risk more isolation and internal dissent.
"Today, the enemies' most important hope for striking a blow at the country is based on popular protests... But the enemies' calculation is as wrong as many earlier ones," Khamenei said in his televised speech.
He also attacked “traitors” of Iranian descent who give “wrong advice” to the Americans about conditions the Islamic Republic faces.
Iranian opposition and activists in the United States and Europe have become much more vocal and organized in recent years, partly because of rising dissent inside Iran and bloody government crackdowns.
Khamenei was speaking on the death anniversary of Ruhollah Khomeini, the founder of the Islamic Republic and one day after Iran’s exiled crown prince Reza Pahlavi called for unity to overthrow the clerical regime.
Khamenei apparently could not help but see the political irony and implicitly warned that after the French Revolution, monarchy and decendants of the royal family returned to power in France.
The aging authoritarian ruler of Iran has in the past sharply condemned mass anti-government protests when they occurred in 2017-2018 and in November 2019, always seeing the hand of ‘enemies’ and calling ordinary protesters people who have been deceived.
Protests reignited in early May when the government of President Ebrahim Raisi scrapped billion of dollars in food import subsidies and overnight doubled and tripled prices for essential food items such as bread and cooking oil.
These protests were met with the overwhelming force of the Islamic Republic's security forces that have tens of thousands of specially trained troops to crack down on any show of dissent. But hardly the price protests had died down when on May 23 a 10-story building collapsed in the oil-rich Khuzestan province killing close to 40 people.
Accusations and evidence of corruption that had allowed the owner to ignore regulations and building codes ignited protests in several cities in the province and elsewhere.
A general perception of constant government failures, endemic corruption and a losing battle against economic chaos has gripped Iran in the past few months, exacerbated by events in May.
Tehran’s refusal to compromise in nuclear talks with the West and lift United States economic sanctions has added to the perception of a downward spiral. Even in government-controlled media warnings of a deteriorating situation can be seen daily, while outlets under direct government control or affiliated with the Revolutionary Guard try to present a rosier picture.
In what could be seen as a manifestation of Khamenei’s constant denials about the crisis facing his rule, he claimed that popular support for “the revolution” today is stronger than when the monarchy was overthrown in 1979.
Khamenei, however, implicitly acknowledged that the building collapse in Abadan was a disturbing event, although he attributed its highly negative impact on the public to the “enemy”. This was presumably a reference to Persian speaking media and television stations based abroad that beam news and information into Iran, contributing to public awareness and debate.
“Today, the enemy seeks to destroy [the reputation] of revolutionary officials,” Khamenei said, adding that “those responsible for sabotage must be punished.”
During a press conference in Washington on Friday, Pahlavi said the current regime will fall in the near future but the transition to a new country needs a center to guide and concentrate democratic forces against the Islamic Republic.
He began a short speech expressing sympathy with the families of the victims who died in the collapse of Abadan’s Metropol building last month, which triggered protests in the southwestern province of Khuzestan and several other cities. He also paid tribute to victims of protests in the first half of May when the government raised food prices that led to days of demonstrations in towns and small cities.
Although the Pahlavi dynasty was toppled more than 43 years ago, many protesters in Iran chant slogans in support of monarchy, the dynasty and its founder Reza Shah, who began Iran’s modernization one hundred years ago. The popular support has elevated the political standing of the prince, but he has not campaigned for claiming the throne.
Corruption and mismanagement
Reza Pahlavi added that inefficiency and corruption in the Islamic Republic are not limited to one entity, city, or one group and is not limited to a particular period, noting that the whole country is suffering from disasters.
He mentioned the downing of Ukrainian Airlines Flight PS752 in January 2020 by the Revolutionary Guard and pointed at restrictions in the import of vaccines in the fist half of 2021 that led to thousands of unnecessary deaths, as examples of the disasters resulting from wrong policies or mismanagement of the government.
Khamenei ruled out importing United States- and British-made Covid-19 vaccines in January 2021, arguing that Iran was well placed to develop its own vaccines or should take them from more “reliable” sources. At the time, the US-German Pfizer, US-made Moderna and the British-made AstraZeneca were the only vaccines approved internationally.
Pahlavi added that today the biggest opposition and alternative to Islamic Republic is the Iranian people, who deserve to live in the best country and will reach their goal.
The exiled prince said the people are more united than ever and are standing with empty hands against their corrupted enemy. The priority of the country at this juncture is forming a central authority that can organize the protests to pave the path to victory against the Islamic Republic.
Calling on the army to stand with the people
He also urged the armed forces and officials who oppose the Islamic Republic but are working within the government to help disrupt the repression machine, saying a regime that cannot provide food for its people will not survive, and warned all those who are cooperating with the Islamic Republic’s crackdown to join the people.
His most forceful comment came when he said, “The current regime in Iran will be gone one day; even the USSR with so many nuclear warheads was toppled. Don’t bet on a losing horse, and don’t think you will be able to evade justice later,” he added.
The exiled prince went on to address the country’s traditional army, the Artesh, appreciating them for protecting the people against foreign enemies, and telling them that now it is time to protect the people from the common enemy within.
The traditional army’s command is dominated by the ideological Revolutionary Guard which is loyal to Supreme Leader Ali Khamenei, but many still hope the army can play a role one day to support the people.
He also called on Iranian expatriates to help the world hear the demands of the Iranian people, through sharing news from Iran in different languages and informing the governments of their countries about ongoing events in Iran.
“The most important thing I do in response to the Iranian people’s trust is to reinforce their voices. I don’t tell them what to do. I’m not a political leader,” Pahlavi said.
Underlining that those who live in the country know what they need better than anyone else, he stated, “The smart slogans the people chant indicate that they have identified both the problem and the solution.”
He added that Iran’s future is bright as all Iranians no matter their ethnicity are standing together in unity and solidarity, saying that “Our unity today guarantees our prosperity tomorrow.”