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Economists Say Iran Subsidy Plan A Weapon Of Political Control

A vendor arranges canned products on a shelf at a grocery store in Tehran on December 19, as the Iranian government began to implement its controversial plan of scrapping subsidies on energy and food products as part of reforms that had been in the pipeli
A vendor arranges canned products on a shelf at a grocery store in Tehran on December 19, as the Iranian government began to implement its controversial plan of scrapping subsidies on energy and food products as part of reforms that had been in the pipeli
By Robert Tait
A long-awaited radical overhaul of Iran's economy that has seen the scrapping of state subsidies is being used to punish and intimidate opponents of President Mahmud Ahmadinejad, analysts say.

Individuals and families deemed politically suspect or disloyal to Ahmadinejad's government are reportedly being denied cash handouts brought in to replace the extensive subsidy regime.

The claim, based on studies partly conducted by economists in Iran, comes after Ahmadinejad announced the end of subsidies in a move that saw fuel prices soar by 400 percent overnight.

Subsidies on a wide range of products are to be replaced by monthly cash payments of $40 per head, ostensibly targeted to those deemed most in need. The government has presented the plan as necessary to save the treasury up to $100 billion a year at a time when Iran's economy is under increasing strain from international sanctions imposed in response to its nuclear program.

However, Mehrdad Emadi, an Iranian economist based in London, says the compensation payments are being closely screened by the Islamic Revolutionary Guard Corps (IRGC) and volunteer Basij militia.

"You can see a political screening of people and categorizing them into groups -- who are with us and groups who have not made the right level of effort to be with us," Emadi says.

Motorists line uo outside a gas station in Tehran, as fuel prices soared.
Between 4 million and 5 million people who should qualify on financial grounds have yet to receive their first handout, according to a study, including many suspected of having participated in opposition Green Movement protests against Ahmadinejad's disputed reelection in 2009.

According to Emadi, if a family has had a "negative report" filed about it by the local Basij or IRGC office, where a family member "has been seen to be involved in antigovernment activities," they are being denied payments. "What we're talking about is not making bombs," Emadi says, "but participating in street demonstrations or, in some cases, having slogans written on the walls of their houses but they have not made the effort to clean the wall or cover it."

Intimidating Dissent

Emadi's comments are based on the findings of Beta-Matrix Research Consultancy, a consortium of Europe-based analysts that has liaised with academic economists in Tehran and two other Iranian cities, Isfahan and Qazvin, to study the government's preparations for the reform plan. The study found widespread delays in payments in areas such as Kurdistan and Sistan-Baluchistan, where there has been separatist unrest, while those to religious cities have been processed smoothly.

Far from liberalizing the economy and freeing up prices, the program is aimed at extending state control and creating a climate of fear among ordinary citizens.

"We see a great deal of tilting the system of distribution of the subsidy-compensation package towards a highly militarized mechanism where the Basij and Revolutionary Guard offices are taking control of the financial distribution of this compensatory packages in the neighborhoods," Emadi says. "This is very disturbing to local citizens because they truly feel intimidated when they have to go and provide extra documentation. Instead of going to a financial or administrative place, they have to go to the local Revolutionary Guard headquarters and it's not a nice place to visit when your documents are not complete."

The assessment is supported by Jamshid Assadi, an Iranian economist at the ESC Groupe Business School in Dijon, France, who says Ahmadinejad's goal is to create a system of "serfdom" that will turn citizens into "clients" totally reliant on the government for their livelihoods.

"This policy of eliminating subsidies and transforming them into cash does not have any objective in my opinion [other than] saying to the Iranian citizen: 'Wait a minute. If you need money, I have money to give to you. But I have not seen you in the street supporting my government. I have not seen you in the street attacking those people who object, who contest the election and my second term. But if you want to have some money every month, even more, come and be Basiji and then you will receive money,'" Assadi argues.

Opposition Will 'Regret' Resistance

The reform's introduction on December 19 was accompanied by massive deployment of security forces in Tehran and other major cities, as the authorities sought to prevent a recurrence of the riots that followed the imposition of gasoline rationing in 2007.

The authorities have warned that those who take part in "economic sedition" will "regret it forever."
Ahmadinejad and senior IRGC figures have warned against any protest this time, saying that those who take part in "economic sedition" will "regret it forever."

Amid an atmosphere of intimidation, no major displays of dissent have been reported.

Iranians face a grim future of falling living standards and increased repression, Assadi believes. "Unfortunately, I'm seeing very bad, hard days for Iran in the future because people are getting more and more dissatisfied economically. This is not a question of ideology, of politics, of liking democracy or not. This a question of 'I don't have money to feed my kids,'" he says.

"And because this state and government don't have any satisfactory responses to that and they are badly afraid of the Green Movement and people on the street, they are going to react very badly" to any protest, Assadi adds. "So people [are] going to get poorer and become more repressed."
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Comment Sorting
Comments
     
by: Khalid from: Cairo
December 21, 2010 04:10
Every news coming out of Iran is made into crisis, tragedy and oppression. Do you really believe that Muslim or any other informed audience buys it? Some average Joe in Texas may be believes you, but we know who is who and what is what.

You should focus more on the atrocities committed by the Western backed dictators and not Iran who is the only voice of the Muslim masses today.
In Response

by: Mark from: Toronto
December 21, 2010 23:00
Great point Khaled!

"Iran Subsidy Plan A Weapon Of Political Control"

You know what is a weapon of political control? US support for autocrat Mubarak. Western support for Saddam’s chemical weapons. US coup of Mossadeq in 1950s is a weapon of political control. Sanctions on Palestine after it chose Hamas in the freest elections in the Arab world, that is a weapon of political control.

Get your facts right!

by: Hyatullah Jawed from: Afghanistan
December 21, 2010 10:34
To Khalid from Cairo:

Dear Khalid, my country was not destroyed by western or even soviet union raid, but by Pakistan, Arab countries as a whole by muslims. We have experienced attrocities from muslim countries, not only from the governments but from the common people who commite suicide bomb attacks and kill civilians. Please do not speak from all the muslim community.Muslims suffering of a fundamental problem which is "ingnorance".!
In Response

by: Mohammad
December 21, 2010 21:48
@Hyatullah Jawed from: Afghanistan
thank you. I'm from Iran and you mentioned a very good point in your comment. People like Khalid never had any experience of being in Iran, and just keep talking about something which he doesn't know. Please open your eyes and think about each issue rather than divide every single things as muslim and non-muslim. If your goverment had increased gasoline price 7 times ,bread price,41 times ,electricity price 21 and etc., ..... in only one night without increase of your salary, you would have said so again? I was 25 years in Iran and 2 years till now in America, and you can not say something like this about western countries and I saw Islam here, and not in Iran.
In Response

by: Amin from: East Asia
December 25, 2010 01:53
Muhammad, don't think that you are the only Iranian here and so, stop forging lies. Without increasing their salary! Are you deaf or blind when you are speaking about your own country! In this subsides reform plan. each and every person has got paid before even any changes in the prices happen. How ignorant you are that you sit in US and betray your country like this.

by: RD
December 21, 2010 15:44
Regardless of the motives of the government, as difficult as it will be in the short term to remove subsidies, this is a sound decision in the long term. Anything cheap enough is more likely to get wasted. You will start seeing more people in Iran conserving energy and other goods without subsidies. The subsidies were not sustainable. I think the same thing will happen with interest rates in Iran. At double digit interest rates, no one will invest their money but will save it. Why take a risk with my money for a single digit return or losing it when for no effort, I can put it in an Iranian bank for double digit interest rates. Removing these subsidies will help Iran in the long term.

by: RD
December 21, 2010 15:46
What Iranians and Arabs should do is put aside their historical differences and religious differences and stand together against regimes who want to control them and oppress them. Who benefits the most if Iranians and Arabs weaken each other? Easy answer.

by: Nilufer from: Tehran
December 21, 2010 17:17
I do not support Ahmedinejad at all, but his subsidy reform program is truly a very, very wise and a much needed strategy for Iran’s economy. I am really surprised that he managed to put this through even though such great leaders like Khatemi could not manage it.
In Response

by: Mohammad
December 21, 2010 21:51
Niloufar, this is a good idea, but have to be done not in one night, but in many years, and also you need to increase salary of people as well. at this condition most of the people went under the poverty for sure. so please think and then say something unless you belong to a welfare family..
In Response

by: Amin from: East Asia
December 25, 2010 01:59
Mohammad, you have an agenda against this plan or against Iran. Don't you?
They did not do it over night but as you may can think of it! any project have to have a start one day. Also, this plan is thought of for many years now and it is going to be run for many years too. No worries, stay there in US and think that you are safe.

by: Jacob from: USA
December 22, 2010 05:35
The article should be called "Anything that Ahmedinejad does his opponents hate."

by: Kaveh from: Yazd
December 22, 2010 21:04
I totaly oppose Ahmedinejad, but for this one I have to give him a credit for, it must have been done and reformers failed to do it. It will hurt us a bit at the start, but in the long run it will benefit the entire country.

by: Ken Ruttan from: Canada
December 24, 2010 01:34
Ahmedinejad is not trying to make friends. His sole purpose is to gain power. This is but one more step. Deny food and anything else just because you disagree with him becomes a weapon not just politics.

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