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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
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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