19.05.2022

Luxury amidst poverty

Soaring prices and shortages of basic foodstuffs have triggered anti-government protests and riots, reports Yassamine Mather

In the week when the governor of the Bank of England talked of apocalyptic food shortages in the UK, and when inflation is approaching double figures in Britain, it does not take much to understand how the war in Ukraine, India’s decision to ban wheat exports and the rising price of fuel have affected the price of food in the global south and added to the misery of its peoples.

India’s decision came after wheat prices rose to record highs - in some spot markets hitting 25,000 rupees ($320) per tonne, well above the government’s minimum support price of 20,150 rupees ($260). All this when global agricultural markets are under severe pressure following Russia’s invasion of Ukraine. According to German foreign minister Annalena Baerbock, up to 50 million people, particularly in Africa and the Middle East, would face hunger in the coming months unless ways are found to release Ukrainian grain, which accounts for a sizeable share of the worldwide supply.

When it comes to Iran’s Islamic Republic, you have to add the growing effects of US and European sanctions, plus decades of economic mismanagement - not to forget rampant corruption and the way senior clerics and leaders of the revolutionary guards continue to use the black market to accumulate astronomic wealth, while the majority of the population face poverty. Iranians have seen spiralling inflation and subsequent food price increases long before the war in Ukraine started, but the situation has deteriorated considerably over the last few weeks.

One of the immediate effects of sanctions has been the constant drop in the value of the Iranian currency and the inevitable rise in the price of food imports. Most Iranians had become accustomed to filling their stomachs with carbohydrates. Rice - part of the country’s staple diet - is no longer affordable for many. Iran used to have rice fields, but senior clerics and their allies in the top ranks of the revolutionary guards realised that large profits could be made through importing rice. As a result, the lack of support for this type of agriculture, in addition to a shortage of water necessary for irrigation, has resulted in the destruction of most of the country’s rice fields. In 2020, Iran paid $885 million for imported rice, becoming the world’s fifth largest importer. However, in 2022, as uncertainty over the nuclear deal grows, the country has a budget deficit of $21 billion. The value of the Iranian currency is falling to such an extent that in the last few months eating rice-based food has become a luxury. A 10kg bag of rice now costs more than one million tomans ($33) - well beyond the budget of even middle class families. That is why most Iranians have turned to bread and pasta to feed their families.

In the last few weeks the country has also witnessed shortages of wheat and cooking oil. Then, to add insult to injury, the government of president Ibrahim Raisi removed the subsidies on ‘artisan’ bread and pasta, and, although it has promised to retain subsidies on flat bread until the end of 2023, most Iranians are sceptical as to whether this promise will be kept. Over the last few years the Islamic Republic has faced pressure from the International Monetary Fund and the World Bank to reduce/abolish subsidies on many commodities as part of the conditions for the loans it has accepted from these institutions. However, in the current climate of global tension - and the absence of a nuclear deal that would herald the end of western sanctions - the government faces a foreign exchange crisis. So it has cut back on its budget and state subsidies, causing price hikes of 300% for a variety of flour-based staples.

The Islamic government’s official website tells us that subsidies have had to be cut, as many middlemen were buying subsidised flour from local industrial businesses with a surplus to smuggle abroad and make a huge profit. For most Iranians none of this matters: they relied on subsidies, and the unexpected cuts have led to scarcity of pasta in stores, as people rushed to buy it at the old prices. All this has been followed by protests and riots in many places. According to the MP, Ahmad Avai, at least one person was killed in the city of Dezful.

Government media outlets are claiming that demonstrators attacked shops and set fire to a mosque, and that dozens were arrested. But the authorities’ main concerns are about the slogans shouted by the crowds, directed against Raisi and supreme leader Ali Khamenei. They have been widely shared on social media: “Raisi, have some shame, let go of the country!” “Death to Khamenei, death to Raisi!” … As a result the internet was cut for several hours in most Iranian cities - a well tested move by the regime to prevent protestors from communicating with each other.

Tensions

All this came after weeks of mounting tension between the various groups within the conservative faction of the Islamic regime, which currently holds the reins. In the 2021 presidential elections, the conservative cleric, Ibrahim Raisi, was elected, which ensured that both the parliament and the government were firmly controlled by the traditionalists. Having lost power, most of the regime’s reformist politicians have moved considerably to the right, and these days look more favourably to the west.

However, we are seeing cracks within the conservative faction - in particular between the group led by Raisi and the one headed by parliament speaker Mohammad Baqer Qalibaf, former mayor of Tehran and commander of the revolutionary guards. A few weeks ago a scandal broke out after photos appeared on social media showing Qalibaf’s daughter and son-in-law in Turkey purchasing various luxury goods totalling millions of dollars. This from the daughter of a politician who “champions domestic production” at a time when most of the country cannot afford basic food. Qalibaf blamed Raisi’s allies for the ensuing outrage against him. Amir Hossein Sabeti, a conservative journalist, tweeted on April 20 that Iranians had greater tolerance of hardship during the 1980-88 Iran-Iraq war compared to today, because officials at that time did not “live in palaces” and “buy layette sets from abroad”.

It was no surprise that some conservative groups started blaming Raisi for the riots against food prices. The rightwing paper, Jomhouri Eslami (‘Islamic Republic’), called on the president to resign. After all, he was the candidate who had promised to ‘eradicate poverty’, while ‘kicking the United States out of the region’. But on May 9 Raisi addressed the nation, saying he would not evade making “hard decisions” and called on people “not to panic”. He also promised ‘electronic coupons’ to reduce the impact of the price rises and announced that a monthly “subsistence allowance” of four million rials ($13.4) would be allocated to each citizen. Far from reassuring the population, Raisi’s address created more “panic”, as people rushed to supermarkets to stock up on goods.

The state department in the US has expressed solidarity with the protestors, prompting an angry response from a number of workers’ organisations. The Haft Tapeh union, which has headed various protests against privatisation, issued a statement saying we ‘don’t want support’ from a country responsible for causing wars and creating economic disaster for the global south.

We need to remember that part of the problem is that successive Iranian governments - whatever their label, conservative or reformist - have adhered to the IMF and World Bank ‘restructuring’ programmes, which are part of the explanation for the growing gap between rich and poor. This gap is a reflection of the constant striving of governments to keep up with global capital’s demands for the abolition of state subsidies and for privatisation. The official rate of unemployment (below 12%) is nowhere near the real figure, even if we take into account low-paid, precarious employment. No-one has job security - unless, of course, they are associated with a faction of the regime or the security forces.

In such circumstances mass opposition is inevitable. However, for the time being it is unlikely that the working class will be able to assert itself. True, there have been strikes and protests by teachers, sugar-cane and steel workers, while bus workers in Tehran walked out on May 18, but the reality is that the ‘capitalist mullahs’ (as people are calling them in the streets of Tehran) have managed to decimate the organised working class. Steel and oil workers are no longer employed by single, state-owned industries. Large industrial complexes are subcontracting every aspect of work to smaller contractors.

As a result, organising industry-wide strikes, let alone nationwide strike action (a significant factor in the overthrow of the shah’s regime), is far harder.