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Despite Petrodollars, Iranians Struggle To Make Ends Meet

  • Farangis Najibullah

Food prices have soared, and worldwide increases are only partly to blame

Food prices have soared, and worldwide increases are only partly to blame

Sitting atop the world's second-largest gas and oil reserves, Iran earned an estimated $80 billion in energy sales in the last fiscal year as fuel prices spiked. But that windfall has not reached most of the population, whose living standards have plummeted.

Shaya, a print journalist in Tehran, is one of millions of Iranians feeling the pinch. He recently decided to abandon his career and find a better source of income to pay the monthly rent for a apartment he shares with his mother and younger brother.

Now he works as graphic designer and also has a part-time job in publishing. Whenever he finds free time, Shaya writes articles as a freelance reporter. "Taking second and even third part-time jobs has become quite common in Iran," he says. "People are struggling with rising inflation and higher prices for everything -- from gas bills to housing costs."

Shaya also gave up many aspects of his daily routine, along with his newspaper job. Instead of driving a car, he now uses public transport, spends little on clothes, and has cut back on eating out. Nor does Shaya rule out moving to a smaller and cheaper apartment.

"Now I'm facing difficulties in paying my rent," Shaya says. "In the past few months, I've found it difficult to pay for the car I've been renting. There are many other people who face difficulties in paying for their daily essentials, such as food or clothes."

Iran's Central Bank has admitted that some 14 million Iranians -- nearly a quarter of the population of 65 million -- now live below the official poverty line. In a recent report, the Central Bank noted that both poverty and inflation have increased significantly in Iran since the election of President Mahmud Ahmadinejad in 2005.

The official rate of inflation is currently more than 25 percent. According to Central Bank figures, inflation stood at over 12 percent in 2005. Meanwhile, the official unemployment rate is 15 percent, although some experts say the real figure is closer to 30 percent.

The bank reported that prices for food have risen by more than 30 percent in the past quarter compared to the same period last year.

While rising food prices have been a worldwide phenomenon in the past two years, Iranians have also seen spikes in the cost of medical care, housing, electricity, and services.

Financial Mismanagement?

Iranian economists say the worldwide increase in energy and food prices is only partly to blame for growing poverty and rising prices in the Islamic republic. In fact, as one of the world’s major oil and gas producers, Iran has benefited hugely from energy prices that have surged in recent months, reportedly earning as much as $7.5 billion per month from oil sales alone.

Some Iranians experts blame their government’s economic policies. Ahmadinejad has increasingly been the target of criticism for mishandling the economy, resulting in growing inflation, rampant unemployment, and tumbling living standards.

Many Iranians say their salaries are hardly enough to buy food, and that only the rich have benefited from Iran's oil and gas revenues.

Jamshid Pazhuyan, a professor at Tehran's Allameh Tabatabai University, says that "mismanagement of the economy by the government is the main reason behind people's worsening living conditions."

"Since we have energy resources, and since there were significant investments in the social sector, in education and health care -- we expect to have much better living conditions in Iran," Pazhuyan says. "But the economic management here is too weak and incompetent to use these resources to increase economic productivity and improve people's welfare."

One Tehran-based academic, who did not want to be named, says that "Ahmadinejad's government has mishandled the economy to the point that oil and gas revenues have worsened the state of the Iranian economy rather than boosting it."

The expert adds that the government must figure out ways to use energy revenues to improve living standards. "Iran has to invest this money abroad instead of spending all the funds inside the country," he says. "Iran has brought the cash and spent it inside the country, causing horrific inflation here. In addition, the government brings political shocks to the economy -- for instance, by provoking the sanctions imposed by Europe and the United States. These shocks have further worsened people's living conditions."

He concludes by stating that the president's economic and financial advisers are essentially clueless.

Blame On Sanctions

Ahmadinejad and other Iranian leaders have repeatedly said that UN sanctions have had little impact on the Iranian economy. The UN has imposed three rounds of sanctions on Iran over Tehran's refusal to suspend its disputed uranium enrichment activities. Ahmadinejad has called the sanctions "worthless scraps of paper."

Many Iranian economists, however, reject his claims, saying the sanctions were provoked by Iranian policies and have left the country's economy in dire straits. "They have stopped foreign investment flowing into Iran and have sent Iranian banks to the point of collapse after foreign financial institutions severed ties with the country," the Tehran-based expert says.

Despite Iran's vast energy resources, the world's major energy companies have left Iran one by one, and their walkout means fewer jobs and income opportunities for Iranians.

"Iran's economy and its people have fallen victim to Ahmadinejad's policies," the expert adds.

One struggling Iranian, journalist-turned-designer Shaya, says that for now, he's managing to pay his basic expenses with the income from his main jobs and two part-time jobs.

But in the face of growing inflation and unemployment, he is not sure how long he will be able to pay those bills -- or keep his jobs.
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