December 26, 2010 in Nation/World

Prices soar in Iran after subsidies cut

Security forces deployed in case of unrest
Ramin Mostaghim Los Angeles Times
 

TEHRAN, Iran – The Iranian government’s removal of decades-old subsidies for food and energy in an attempt to boost its troubled economy has spurred price increases on everything from fruit and vegetables to gasoline, generated work stoppages and emboldened the political opposition.

In Tehran, the nation’s capital, taxi fares that officially were to rise by 10 percent shot much higher as drivers imposed their own price increases. Some truckers across the country refused to work, complaining of government threats to revoke their permits if they raised their prices to offset higher fuel costs.

Crews on ferry boats operating between Bandar Abbas port and Qeshm island in the Persian Gulf temporarily stopped working, complaining that the ticket prices set by the government had not gone up despite a fourfold increase in the price of fuel, the Mehr news agency reported.

The austerity measures, though long anticipated, have brought mounting public anger since they began Dec. 19. Government critics contend that they will hurt people with modest incomes while leaving the wealthy unscathed.

Some critics also say the government’s plan places the consequences of Iran’s confrontational foreign policy and nuclear program, which have provoked international economic sanctions, on consumers. Opposition leaders Mir-Hossein Mousavi and Mehdi Karroubi on Wednesday publicly questioned the wisdom of the new plan, calling it a “burden on the shoulders of the middle and lower classes.”

Iranian authorities say the cuts are part of an economic reform package that will contribute to the nation’s prosperity by reducing wasteful subsidies totaling as much as $100 billion a year.

Already, the prices of produce, diesel, gasoline, cooking oil, water and bread have risen dramatically. In downtown Tehran, the price of a loaf of brick-oven bread doubled overnight to 40 cents. Security forces have been deployed around the country in case public frustration boils over into civil unrest.

Some workers are bucking government demands and raising prices.

Hassan, a 50-year-old who delivers produce from a wholesale market in southern Tehran to the western part of the capital, said he’s increasing his fares by 15 percent because of the steep rise in the price of fuel. “For sure, grocery store owners will increase their prices even more than that,” he predicted.

Utility prices are expected to jump considerably under the government plan. According to local reports, electricity costs are expected to triple this month, and water will nearly quadruple, while the price of heating gas will increase more than fivefold.

The government has launched an aggressive campaign over the last few months emphasizing the need to raise money by cutting subsidies. But it has proved a public relations challenge for President Mahmoud Ahmadinejad’s government, which has worked to build its reputation among poor and working-class Iranians, especially in rural areas.

Mousavi and Karroubi, presidential candidates and leaders of the dormant protest movement that erupted after Ahmadinejad’s disputed 2009 re-election, blamed the government for the country’s economic woes, citing an unemployment rate of more than 30 percent, economic stagnation, inflation and international sanctions.

“Every day, factories are closed down and more workers are laid off and salaries are left in arrears, while the flight of investors, lack of investment security and absence of healthy economic competition paint a very dark picture for the country’s future,” they said in a joint statement that appeared on a news website with ties to Karroubi. “Meanwhile the government ignored the advice of experts, experienced people and scholars.”


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