As Economic Unrest Intensifies, Ahmadinejad Backs Down

Fox News, October 16, 2008

Alireza Jafarzadeh


In a major setback for the ayatollahs’ regime, widespread strikes by traders and merchants erupted in Iran’s larger cities, reportedly in reaction to a new Value Added Tax (VAT) imposed by Mahmoud Ahmadinejad’s administration. Witnesses described the unrest as “an expression of protest reminiscent of the days of the Iranian revolution.”

Ahmadinejad beat a fast retreat, promising a two-month delay for the tax. “There were worries that the strike would turn political” an official told a state news agency.

The delaying tactic failed, however, and the strikes escalated, as more cities and more traders joined in. When nearly the entire Tehran bazaar went on strike on Sunday, the government backed down again, and announced the new tax had been postponed “indefinitely.”

Confident that this would put an end to the turmoil, the government announced on state radio and television that all shops in the Tehran Bazaar would reopen the following day. Wishful thinking. State-controlled ILNA news agency reported on Monday, October 13, that contrary to media reports, Tehran’s world famous Grand Bazaar remained closed for the sixth day in a row. Despite intense pressure by senior bazaar figures intimately affiliated with the regime, most merchants are still talking about continuing their strike.

Just days after declaring the recent economic turmoil in the West “divine punishment,” the ayatollahs’ regime finds itself in the midst of an economic crisis perhaps more severe.

There are reports from Tehran that the regime has dispatched a large contingency of security forces to surround the Grand Bazaar. According to BBC world service, “large numbers of police are now patrolling the bazaar. Journalists have been turned away. Camera crews caught filming have been ordered to hand over their tapes.”

According to the New York Times, security forces were stationed in the bazaar but traders still refused to open their shops. The Los Angeles Times, quoting a state-controlled news agency, wrote, “Protesters angry over the tax smashed a branch of the state-owned Bank Saderat.”

Last year the sudden announcement of a fuel price hike plunged Tehran and other major cities into anti-government riots. Many protesters were arrested, several of them eventually resurfacing among the 29 people hanged in one day last summer.

Under the ayatollahs’ rule, Iran’s oil-based economy is fundamentally dysfunctional. The official inflation rate is 30% and there is double-digit unemployment. Hundreds of protests, sit-ins and strikes by trade unions, teachers, and others prove beyond any doubt that the economic problems are endemic. The strikes in the bazaars of Tehran and other major cities are unprecedented since 1979.

It would be a mistake to view the bazaar, which played a key role in the 1979 anti-monarchic revolution, as a homogenous class loyal to the ruling regime. A significant segment of bazaar merchants are nationalist traders who, financially and politically, have been the backbone of the Iranian resistance since 1979. Some have in fact been executed for their active support of Iran’s main opposition, the People’s Mojahedin (PMOI/MEK). For many in the bazaar, their opposition to the regime goes beyond mere economic issues.

In the same way, the current dissatisfaction goes far beyond a new tax. According to the Financial Times, “Frustration among Iran’s lower and middle classes over rising prices has been growing,” raising fears in the government that a prolonged protest in the bazaars could embolden other disaffected groups such as school teachers and university students to join the protest, “albeit for different reasons.”

The Iranian people are well aware that the regime’s coffers are flush with oil revenues from recent extraordinary price hikes, far exceeding any budgetary forecast. And they are well aware where all this excess cash went: While more than half of Iran’s population lives in poverty, the mullahs have been busy funding terrorism, tyranny, and the nuclear weapons program. Without the reign of terror, the ayatollahs will not be able to quell dissent.

Time after time, outbursts over specifics soon become opposition targeting the entirety of the regime. Last week, hundreds of students at Shiraz University apparently rejected the misguided debate in some western circles about exploiting the schism between “radical extremists” and “radical pragmatists.” Protestors interrupted a speech by Revolutionary Guards commander-turned-politician Ali Larijani, the speaker of the Parliament, chanting “death to dictators,” “free all imprisoned students,” and “we are fighters, men and women; fight us and we will fight.” Outside the auditorium students shouted: “Larijani, shame on you, leave the university.”

“It does not matter what the event is; it could be the loss of the national soccer team, sudden loss of electricity, the cutting off of drinking water, or the sudden and unexpected rationing of fuel… They all can spark a riot… Although most of these riots are put down after the security and military agencies intervene, every outbreak adds to the collective memory of the people, who will use it as capital or a learned experience for the next uprising,” wrote Etemad, a major state-run daily. Western governments are yet to detect this Achilles Heel of the Ayatollahs.