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Resentment builds in Iran over price hikes, overhaul of state subsidies

An Iranian man pumps gasoline into his car at a petrol station in Tehran on December 19, 2010. Iranian petrol prices surged four-fold as the government started scrapping subsidies as part of a long-awaited overhaul of the economy, despite staunch opposition from conservatives.
An Iranian man pumps gasoline into his car at a petrol station in Tehran on December 19, 2010. Iranian petrol prices surged four-fold as the government started scrapping subsidies as part of a long-awaited overhaul of the economy, despite staunch opposition from conservatives. (Atta Kenare - Afp/getty Images)

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Washington Post Foreign Service
Friday, December 24, 2010; 4:47 PM

TEHRAN - Nearly a week after President Mahmoud Ahmadinejad launched a plan to overhaul a long-standing system of state subsidies, Iranians are reeling from drastic government-ordered price increases for staples such as fuel and bread amid signs of growing frustration and anger.

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Among the first to feel economic pain from the politically sensitive price hikes, which began Sunday, have been truck drivers, taxi owners and bread sellers, and many truckers appear to have stopped working in protest. On the streets of the capital, in offices and on public transportation, expressions of alarm, worry and outrage are heard everywhere. In the past, price increases have led to unrest in Iran.

The government argues that the changes are necessary for Iran's economy to grow. But parliament has said it opposes the way the overhaul is being implemented and complained that the government has not shared details of its elaborate economic plans. An influential lawmaker, Hamid Reza Katouzian, has called the price hikes "shocking."

The government says it has fixed the new price rises to prevent runaway inflation. It has employed members of the paramilitary Basij militia to crack down on merchants who are overcharging, the commander of the organization said last week. But those most affected by the price hikes complain that they are losing money, because the government's fixed prices do not allow them to completely account for the new costs in their products and services.

At the city's Rah Ahan train station, a sandwich seller who gave his name only as Ali complained that after the price of traditional bread was raised from about 15 cents to 40 cents, he was losing money badly.

"I'm not allowed to increase prices, but the government can," he said as commuters hurried through the grand hall of the 1920s train station. "We are all losing money. People are extremely upset."

South of the capital, at the vast Tehran truck terminal near Akbarabad, there were no truckers to pick up goods ranging from fresh tomatoes to cigarettes and bring them to and from Iran's 31 provinces. After the price of diesel fuel was officially raised from the heavily subsidized price of 6 cents a gallon to $1.32 a gallon, thousands of drivers nationwide simply stopped working.

Farhad Gholizadeh of the Tak Tarabar transportation company said he had never seen the normally bustling terminal so empty. "The government has given small, cheaper rations [of fuel] depending on the type of truck, but they quickly run out," he said. "Most of the drivers have pulled up their hand brake and stopped working until they are allowed to increase their prices."

A colleague stepped in and complained that the government itself increases prices tenfold but forbids many others to do the same. "This is crazy," he said.

Prices for taxis, buses and ferries have also been fixed by the government. Some transportation services, such as city buses, domestic flights and the metro, are not allowed to raises prices at all, while others, including inter-provincial buses and certain taxis, can increase their fares up to 18 percent, the Mehr News Agency reported Tuesday. Incognito inspectors are said to be checking prices, but not many people have encountered them.

"Gasoline becomes 60 percent more expensive, and I get to increase my fare by 8 percent," said a Tehran taxi driver who did not want to be identified. "Now where is the logic in that?"

Iran has a history of unrest over price hikes. In 1996, helicopter gunships were used to put down riots in the poor Tehran neighborhood of Eslamshahr after the price of bread was increased. In 2007, when the government raised fuel prices and imposed fuel rationing for private vehicles, angry mobs burned down gas stations and supermarkets.


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