“As I said to the people of Iran almost a year and a half ago: The United States is with you”, Mike Pompeo said in a tweet on Saturday, as protests raged in dozens of cities and towns across the Islamic Republic.
The demonstrations – which turned violent – stem primarily from a fuel price hike and attendant rationing.
The price of gas was raised to 15,000 rials/liter from 10,000 on Thursday, and each private car will be limited to a monthly quota of 60 liters. Above and beyond that threshold, gas will cost 30,000 rials per liter.
The government says the price increase will raise some $2.5 billion per year, which will go towards subsidies for millions of families persisting on low incomes. Other estimates cite numbers as low as $800 million a year, probably not enough to make a dent at a time when punishing sanctions have depleted the theocracy’s coffers.
The rial has actually stabilized in recent months, after plunging when the Trump administration implemented sanctions on the country’s oil industry, effectively stripping Tehran of its ability to source hard currency.
Inflation came down over the summer, at least according to some estimates.
On June 20th, #Iran shot down a #US drone over the #StraitofHormuz. Since then, by my measure, Iran's annual #inflation rate has plunged from 88%/yr to 24%/yr today. And, today's rate is drastically lower than Iran's recent peak of 399%/yr from Sep. 2018. pic.twitter.com/kQa1mXmxTf
— Steve Hanke (@steve_hanke) August 6, 2019
Recent stabilization and some marginal success with currency reforms notwithstanding, inflation is running high, and it’s at least possible that the new energy policy could make things worse.
One thing is for sure: It isn’t going over well among the populace so far.
Protests hit Tehran, Kermanshah, Isfahan, Tabriz, Karadj, Shiraz, Yazd, Boushehr, Sari and Sirjan, where one person was killed and a fuel storage facility was attacked, according to state media.
Some demonstrators are calling for the removal of Hassan Rouhani. “Rouhani, shame on you, let go of the country!”, people yelled, in Mashhad. It’s not clear Rouhani is to blame, though. According to two energy analysts who spoke to the Times, Rouhani was against the move, believing it could damage him in parliamentary elections. He was reportedly overruled by Khamenei.
The subsidies the price hikes will fund are earmarked for assisting some 60 million Iranians, the official announcement said. That’s ~75% of the population. And yet, it’s by no means clear that is going to pacify angry citizens who, irrespective of any subsequent handouts, will have to pay more for gasoline right now. (Citizens in many oil-rich nations are accustomed to getting gas at heavily discounted prices.)
The cost of taxis and public transportation is not changing, the government said.
In addition to the ham-handed implementation (the price hike was carried out overnight), the optics around the move aren’t great, coming as it does just a week after Rouhani claimed Iran had made a massive oil discovery. It also comes amid protests in Iraq and Lebanon, potentially emboldening the demonstrators.
Authorities have characterized the protesters as “rioters”, which wouldn’t be entirely inaccurate considering buildings were set ablaze in the chaos. Riot police fired tear gas and, predictably, state media is blaming external conspirators.
The demonstrators, General Prosecutor Mohammad Jafar Montazeri told state television, “certainly have roots outside the country”.
Take that with a grain (and perhaps a whole shaker) of salt, but you can absolutely expect the Trump administration to amplify the protests on social media – especially if they morph into something akin to the unrest that spread across the country in late 2017 and early 2018.
