Painful Iranian subsidy cuts spark mad rushes on banks and food stands

Food, fuel and electricity prices have soared to record levels in Iran after the government cut subsidies on key products in December 2010, making it increasingly difficult for average Iranians to cover basic living costs. As a result, amateur videos show huge crowds rushing to grab the little remaining subsidized goods and government handouts left.

The Iranian government, under President Mahmoud Ahmadinejad's direction, is phasing out decades-old subsidies for petroleum, gas, electricity and certain food products in an effort to save up to 13 billon euros annually and beef up state coffers, whose already fragile state was further hit by four rounds of United Nations sanctions.

The government raised bread prices by 25% on April 26, the second hike in just four months. A loaf of the popular Sangak bread has gone up from 4,000 rials (36 euro cents) to 5,000 rials (45 cents). Its cost had already tripled when the December subsidy cuts came into effect.

Petrol prices have risen four-fold since December, with each car owner entitled to 60 litres of fuel per month at a subsidised price of 40 cents per litre, up from 10 cents per litre in 2010.

Every Iranian receives the equivalent of about 30 euros per month to compensate the subsidy cuts, but many say this is far from enough to soften the shock of sharply rising living costs.

This video shows clients of a bank in what appears to be the south-eastern city of Zahedan running in as soon as the doors open to take out their monthly government cash handouts, forcing the bank employee to scramble for cover. The 30 euro handouts, set up after the first round of subsidy cuts in December 2010, do not come at fixed dates but are announced by radio and state TV broadcoasts. Video posted on YouTube by IranMandegar.

Post written with FRANCE 24 journalist Lorena Galliot.

"One of my colleagues supports the cuts"

Nazane Daryani (not her real name), 42, works at the Tehran University of Medical Sciences. She moved back to Iran from Paris early 2010.

I have lived outside of the country for the past 20 years and moved back just 14 months ago, so I mostly compare prices here with what I was used to in Paris. Some goods are prohibitively expensive here: for a piece of beef that I used to pay 6 euros in Paris, I pay nearly 18 euros here in Tehran. More generally speaking, in France I would pay about 60 euros at the supermarket and leave with my arms full of groceries. Here, the same amount barely fills the little shopping basket.

There are quite a few people who support the cuts, though. One of my colleagues is very pro-government, and he argues that the subsidies were a huge drain on the state budget and that cuts are absolutely necessary to reduce wasteful government spending.”

"The 30-euro handouts are clearly not enough to compensate for the rising prices"

Mohammed Shirali lives in Ahvaz City, in the south-west of Iran. He works as an engineer in a Chinese oil field.

The subsidies haven’t been cut completely, but they are simply not enough for most Iranians. For example, people are entitled to 60 litres of subsidised petrol per month. If you use your car every day to go to work, that barely takes you through half the month. So for the rest you have to buy unsubsidised petrol, which costs 70 cents per litre instead of 40. The 30-euro handouts are clearly not enough to compensate for the rising prices. I estimate that they can cover meals for one person for about a week, if you don’t eat extravagantly. So what do you do the rest of the month?

The economic situation is even worse in the province of Khūzestān, where I live. We produce 80% of Iranian oil exports, yet people here are poorer and less educated than in the rest of the country and suffer from discrimination because they are ethnic Arabs, not Persians. That led to a day or protests on April 15, which were violently repressed." 

“The average middle-class family can no longer afford to pay gas and electricity bills”

Alireza Amirhajebi  is a retired journalist. He lives in Tehran.

The subsidy cuts are an absolute disaster for the most Iranians. The average middle-class family – let alone low-income families - can no longer afford to pay gas and electricity bills [Iranian news agency Mehr News reported in March that 30% of Iranians did not pay their last gas bill].  The rising costs affect absolutely every basic necessity: running water, heating gas, food… Everything is expensive. At first the prices rose gradually and people didn’t notice straight away, but inflation spiked due to UN sanctions and suddenly Bam! Everyone was hit.”

 

Scene shot in a cooperative in the city of Alvand (Qazvin Province) that sells subsidized frozen chicken cheaper than in regular markets. A huge crowd of people rushes in as soon as the gates are open. Video posted on YouTube by farhadwiss.