Accessibility links

Breaking News

Tehran Bazaar Gradually Reopens After Tax Protest

Some Tehran shop owners are defying the call to reopen.
TEHRAN (Reuters) -- Most shopkeepers in Tehran's main bazaar have reopened for business after a protest against a new sales tax, but some defied calls from their trade union to go back to work.

Protests by influential merchants broke out in several cities last week, posing an economic and political challenge to President Mahmud Ahmadinejad before a 2009 presidential election in the world's fourth-largest oil producer.

It was the first time bazaar traders had closed their shops on such a scale since the 1979 Islamic Revolution, when they played a key role in ousting the U.S.-backed shah.

In the face of the protests, the president on October 10 suspended for two months the 3 percent value added tax that came into force late last month. But Iranian media said shop owners wanted it scrapped altogether and Tehran's sprawling bazaar was virtually closed on October 12.

Shops stayed closed on the morning of October 13 but many later pulled up their shutters for customers, a Reuters witness in the vast and covered market place said. Police patrolled the bazaar's winding streets and alleys but there was no sign of trouble.

"We try to make a living. We've got a family to worry about," a clothes vendor said when asked why he had opened.

'Go Back To Your Jobs'

A shop owner selling watches said it seemed that union officials had asked prominent merchants to resume business.

"I'm hoping they [the government] will permanently withdraw the VAT plan," he said, like others declining to be named.

Many textile shops remained closed, however, defying a call by their own union broadcast via loudspeakers in the bazaar.

"Open up! Go back to your jobs! The VAT plan has been suspended," the message urged.

Ahmadinejad came to power in 2005 on a pledge to share out Iran's oil wealth more fairly. But political opponents and other critics say his profligate spending of petrodollars has fueled inflation, now running at an annual 29 percent.

Iran also faces the prospect of lower oil income, with the price of crude down around 45 percent from a July peak of $147.

"What the government should have done instead of splurging was to invest Iran's record oil profits," the English-language "Tehran Times" daily said in an editorial.

Leading reformist politician Mehdi Karrubi on October 12 became the first major figure to announce he would run in next June's election, when Ahmadinejad is expected to stand for a new term.

Some analysts believe Ahmadinejad remains the favorite to win the election as he enjoys the apparent support of Iran's Supreme Leader Ayatollah Ali Khamenei, especially in his handling of Tehran's nuclear dispute with the West.