As Iranian New Year looms, economy continues to struggle


Iranians shop for Noruz, the Persian New Year, at a market in Tehran on Wednesday. (Atta Kenare/AFP/Getty Images)

As the Iranian year draws to a close, leaders here are attempting to manage the expectations of a public that has seen few signs of the economic improvement promised by President Hassan Rouhani when he took office in August.

Despite some progress toward a lasting nuclear deal that could potentially end years of crushing sanctions, fiscal growth has been slow, and many here worry that the incoming year — 1393 on the Iranian calendar — will bring even leaner times.

“The Rouhani government is under a lot of domestic and international pressure, and considering the limited resources and authority his administration has, we cannot expect much from them,” said Hassan Sanati, a manager in a Tehran housing agency.

While currency rates have stabilized at more than 10 percent above where they were when Rouhani was elected in June, little has changed for most Iranians, who are struggling to make ends meet.

Nowruz, the Iranian New Year that begins Friday, is celebrated at the beginning of spring. It predates Islam by many centuries but continues to be an important part of Iranian identity and constitutes the main holiday season in Iran.

Following the start of the new year and the Nowruz holiday vacation, ­prices are typically set on a range of goods and utilities, and the annual budget is implemented. In recent years, it has often meant sharp price in­creases for gasoline and other sources of energy.

In its annual report, the Ministry of Economics and Finance said Iran is still suffering from high inflation and deep stagnation, which has led to negative growth of more than 5 percent in the past year.

The continued bad news has prompted Iran’s supreme leader, Ayatollah Ali Khamenei, to ask Iranians to embrace what he calls a “resistance economy,” which means more reliance on domestic production and less rampant consumption of imports.

The resistance economy “is a long-term solution for the country’s economy and for achieving the lofty economic goals of the Islamic establishment,” Khamenei told a gathering of economists last week in Tehran.

Although Khamenei remains adamant that his plans do not constitute austerity measures, many here think they will be asked to sacrifice more in the coming year.

“We are accustomed to an increase in utility prices each year, but now they are talking about increasing gasoline by 30 percent while the government has only promised to give our salary a 20 percent increase,” said Masoud Mirahmadian, a 33-year-old government office worker. “All in all, I am not hopeful.”

Rouhani is also planning reforms to the monthly cash payout program that his predecessor, Mahmoud Ahmadinejad, implemented in late 2010. The payouts replaced heavy state subsidies on many goods and services.

To offset high prices during Nowruz last year, Ahmadinejad ordered an additional one-time payment of 800,000 rials (about $25) to most Iranians’ bank accounts.

Rouhani, who opposes the cash handouts, offered an alternate plan to help Iranians cope with the high prices of the holiday season. In February, his administration made available baskets of goods to millions of Iranian families that included staples such as rice, cheese, chicken, cooking oil and eggs.

But the plan backfired when many lower-income people were inexplicably deemed ineligible to receive the handout, and many who were able to get them complained about the poor quality of the goods.

That episode prompted Rouhani to apologize in a nationally televised interview and to set up a series of 400 price-controlled temporary markets throughout the country, including four in the capital.

At one such market in Shahrak e Gharb, a neighborhood in western Tehran, hawkers sell everything from locally sourced goat cheese and organic foods to knockoff designer bags and T-shirts.

Business at the market is brisk.

“There isn’t any shop in the neighborhood that has everything for sale. For the holidays, it’s so convenient to not have to run around the city. I wish the market was here all year long,” said Fatemeh Rezaie, a newlywed housewife.

But not everyone is satisfied with the markets, and some consider the initiative a cosmetic fix amid larger difficulties around the corner.

“It’s brought so much extra traffic to the neighborhood, and for what? People come here and end up spending too much money because they think they’re getting a good deal,” said Khashayar Mozaffari, a retired accountant who lives nearby.

Ali Kashani, a vendor selling locally produced natural extracts of various plants and flowers used in popular Iranian drinks, said that no matter how much of his product he sells, he will lose money at the market.

“Shoppers love it because the prices are low and controlled, but for us it doesn’t make sense to sell here,” Kashani said. “I live an hour away, gas is expensive and so are our production costs. But I’ll stay until the end, and hopefully find some long-term customers.”

Jason Rezaian has been The Post’s correspondent in Tehran since 2012. He was previously a freelance writer based in Tehran.
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