This latest move is reportedly part of an effort to tackle Iran’s budget deficit. In this sense it may be viewed as part of Iranian President Hassan Rouhani’s effort to address issues of the national economy without necessarily addressing the underlying problems of growing poverty and unemployment.
The Kuwait Times reports that the April 2014 subsidy cuts prompted no major unrest, even though some prior price increases had done so. But since that time there have been growing expressions of dissent with respect to the economic situation faced by the vast majority of Iranian laborers and public servants.
In April and early May, mass protests by Iranian teachers took place in numerous Iranian cities to call attention to the poor living standards for that profession. The pay for teachers stands to further decline in real terms in light of a national budget that fails to raise wages in line with the rate of inflation. Working class Iranians staged similar protests on International Workers’ Day, May 1, as well as supporting the teachers’ movement.
These protests have also highlighted disaffection with the Rouhani administration’s failure to live up to other campaign promises not directly related to the economic situation. Iranian security forces attempted to suppress worker and teacher protests both at the point of organization and during demonstrations. In response, teachers broadened their message to include demands for the release of teacher activists who had been taken as political prisoners owing to their organizing and public statements.
The relative lack of domestic outcry over the 2014 price increases may be attributed in part to the persistence of optimism in some circles about the Rouhani administration, which had been elected the prior year – an event that was described by some Western policymakers as a victory for moderation.
But since that time, unemployment and poverty have grown even as a small Iranian upper class has secured greater and more conspicuous wealth. Simultaneously, political imprisonment and government repression have continued unabated and the application of the death penalty has continued to expand, with Iran on track to exceed 1,000 executions in the year 2015.
The Human Rights Activists News Agency reported on Sunday that there had been at least 21 executions that went unreported in the period between May 5 and May 19.
These problems have been widely highlighted by international rights groups and by activists inside of Iran. And this has certainly contributed to worsening disaffection with the Rouhani administration, in addition to the already strong domestic opposition to the regime as a whole. With poverty and unemployment as hot button issues and sources of domestic pain, the end of gasoline subsidies may not pass without major dissent in the present instance.
An essay published in Payvand Iran News points to still further overlap between general disaffection with Rouhani and the recent economic travails of the vast majority of the Iranian population. In it, Drake University economics professor Ismael Hossein-zadeh claims that uncertainty about the nuclear negotiations between Iran and the P5+1 group of nations has been a major driving factor behind the current Iranian recession.
Potential investors and employers in Iran are receiving consistently mixed signals about the status of those negotiations and the prospects for them successfully ending with the elimination of international economic sanctions against the Islamic Republic.
These mixed signals were further highlighted on Monday when the Associated Press reported that chief Iranian nuclear negotiator Abbas Araqchi had claimed that Iran was prepared to provide “managed access” to Iranian military sites for inspectors from the International Atomic Energy Agency. Although such carefully controlled inspections still fall far short of the “anytime, anyplace” criteria held up by many critics of the P5+1’s negotiating positions, even this concession on Araqchi’s part contradicts the statements by the nation’s military leaders and by Supreme Leader Ayatollah Ali Khamenei, the final authority on all matters of Iranian policy.
Although Hossein-zadeh contradicts many Western analysts by suggesting that sanctions relief may not materialize at all, his essay seems to agree in other respects with critics of Iran’s fundamental political and economic structures. He points out, for instance, that President Rouhani’s economic plans evidently include no provision for curtailing the “incestuous business relationship between” banks and oligarchs, most of whom are closely affiliated with the regime and particularly with the Iranian Revolutionary Guard Corps.
Because such essential underlying factors have not been addressed, Hossein-zadeh finds that Rouhani’s limited economic initiatives, including increased prices and uprooted subsidies, have put domestic agriculture and industry in such peril that the elimination of subsidies could actually drive many Iranian farms and companies out of business.