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Exclusive: Petrol Price Hike Ignites Revolt in Iran

Exclusive: Petrol Price Hike Ignites Revolt in Iran

Sunday, 17 November, 2019 - 15:45

But, who took that decision? And, who is in charge? These were some of the questions raised within Iran’s ruling elite on Saturday amid reports of nationwide protests against the decision to triple the price of petrol, thus fanning the flames of rampant inflation.

The protests started in the capital Tehran where some drivers of the United Bush Company parked their vehicles in the middle of a major highway, blocking all traffic. There were also reliable reports of protests from Shiraz, Isfahan, Ahvaz, Tabriz and Mash’had. At least four people were reportedly killed in Sirjan, Behbahan and Tehran’s suburbs. Over 50 were reported injured in 11 cites, although in some places, for example in Isfahan and Mash’had there were reports of the police either showing sympathy for protesters or even protecting them against attacks by pro-regime militants.

The question “who took the decision’ was raised by Hamid-Reza Tabesh, a member of the Islamic Majlis (parliament) after Speaker Ali Ardeshir Larijani told members in private that there has been no consultation with the parliament. Tabesh called for an emergency session, implicitly calling for President Hassan Rouhani to appear in person to explain what had happened.

The question “who is in charge” came from former President Mahmoud Ahmadinejad in a speech in Zahedan, southeast Iran. “We cannot remain silent in the face of mass poverty and oppression by a handful of God-forsaken individuals,” he said. “We want to know who is in charge of this country.”

The answer isn’t easy. Rouhani’s Chief of Staff Mahmoud Va’ezi told reporters on Thursday that the decision to raise the price of petrol was taken by “the highest instances of the system”, implying that “Supreme Guide” Ali Khamenei had been involved. Khamenei’s entourage who claimed he does not intervene in routine government decisions quickly denied that.

That denial, in turn, was denied by the official agency IRNA, controlled by Rouhani’s faction, which quoted Khamenei as ordering the government to reduce domestic consumption of petrol from 105 million liters to under 65 million, presumably by raising the price.

Chief Justice Ibrahim Ra’isi has also denied his involvement, claiming that the judiciary does not intervene in economic decisions.

Two things are certain.

First, unable to make money by exporting oil, the Islamic Republic is getting desperately short of cash. Best estimates by the Central Bank of Iran indicate that the government has enough money to cover basic needs for a further 18 months. Tehran had hoped that, under a scheme proposed by French President Emmanuel Macron, it would be able to export enough oil to secure revenues of around $60 billion a year. That is, the minimum needed to cover “basic needs” including, payment of civil, military and security personnel, and financing the operations of surrogates and lobbyists abroad.

However, by last month it had become clear that the Macron “life-saver” scheme was getting nowhere and those other sources of money had to be found. The plan to raise petrol prices had been worked out in the 1990s, but shelved because there was no need for it as, thanks to help from US President Barack Obama, the Islamic Republic was able to increase oil exports and get access to some of its frozen assets.

To sugarcoat the decision, Rouhani decided to announce that the entire income from the price increase would be devoted to a special scheme for helping 60 million Iranians, or 70 percent of the population, who live below the poverty line. The problem is that the government seems to have no idea how this is going to be done. First, no one knows who will qualify as a recipient if only because living under poverty line is a flexible notion. Next, any payment in cash through bank transfers could be hit by an inevitable rise in inflation, reducing the actual purchasing power of the subsidy. Payment in the form of food and clothing baskets is also under discussion. But that, too, could open the way for mass corruption and with the state opting for mass purchases of food and other items contribute to further rises in prices of necessities for all citizens.

According to government estimates, the price rise could increase an extra $2 billion a year, which would mean just over $110 for each of the 18 million “poverty stricken” families Rouhani is talking about.

Interestingly, the total extra revenue is still lower than the estimated $2.5 billion the Islamic Republic spends annually on “exporting revolution”, including by financing the remnants of President Bashar al-Assad’s regime in Damascus (not counting the free oil he gets), Hezbollah in Lebanon, the Houthis in Yemen and a dozen other militants groups in Palestine, Afghanistan, Pakistan and even Latin America.

On Saturday, the Iranian leadership appeared divided and confused as how to cope with a situation that seems to be running out of control.

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