(May 23, 2022 / Jerusalem Center for Public Affairs) On May 3, 2022, the Iranian government launched a program to reform or cut its subsidies for imported wheat. It withdrew the subsidization of flour for the food industry that had been in place for at least 200 years, prompting a drastic rise in the prices of bread, pasta and other essential food products, particularly cooking oil, poultry and milk products. In just a few days, prices for all kinds of bread rose ten- or even thirteen-fold and more. Pasta and oil products became scarce or almost disappeared from the shelves in large and small stores all over Iran. The government, for its part, asserts that the program aims to prevent the smuggling of tons of flour to neighboring countries and maintain Iran’s food reserves.
The ongoing war in Ukraine is threatening food security worldwide. Iran’s growing reliance on the Chinese economy has made Iran very valuable to the world economy and fluctuating supply chain. With sanctions still in place, Iran’s economy is in dire straits. In recent years, bread and pasta have been the most essential and fundamental foods for tens of millions of Iranians. The rise in prices sparked panic buying, and the media, which is overseen by the regime, reported that the latter had increased the food supply to the marketing networks across the country. Since May 6, the new policy has intensified protests and clashes with boosted security forces in several Iranian provinces.
Some Iranian media outlets tied Iran’s economic plight to the ongoing nuclear crisis, saying the state of the economy had been particularly dire for the population during the last three years in the aftermath of the Trump administration’s abandonment of the nuclear agreement. The media even asserted that during the eight years of the Iran-Iraq War, the economy was not in such a catastrophic state as it is today.
The new economic program went into effect at a time when inflation and constantly rising prices of essential services and products over the past three years had already sparked numerous protests across Iran. Teachers, laborers, farmers and other sectors have been relentlessly demonstrating all over the country. Even before the launching of the new economic reform program, according to official regime statistics at least nine million families (close to half the population) were under the poverty line or even under the absolute-poverty line.
Before the ten- to thirteen-fold rise in bread and flour prices, the head of the Flour Industries Union in Tehran confirmed that this year too the situation regarding grain is “terrible,” and Iran needs to import at least 20 million tons of grain—but only if the government has enough money to buy it. The senior official averred that Iran “has never been so dependent on imports of grain and wheat as this year.” Deputy Director of the Ministry of Economic Diplomacy at the Iranian Ministry of Foreign Affairs said that Iran intends to enter into a barter deal with Cuba, as part of which Iran will transfer oil and receive grain in return and that oil minister Javad Owji will soon visit Cuba.2
The canceling of the subsidies could also make bread unattainable for the millions of Afghan refugees now living in Iran. The new policy stipulates that bread is only to be sold to citizens with an Iranian identity card and not to foreigners.
Many government officials, including senior clerics and preachers, are hiding the fact that millions of Iranians have been unable to buy even a kilogram of meat in the last three years. Amid the high costs of all essential foods and other commodities, many Iranian economists have pointed out that, since Ebrahim Raisi became president in August 2021, he has forced the Central Bank of Iran to print money to fund the government’s ongoing expenses and pay the salaries of millions of state workers, teachers and the security forces, including the Islamic Revolutionary Guards Corps. Abdolnasser Hemmati, a former governor of the Central Bank, said on May 8 that the Raisi government had required the Central Bank to print billions of dollars over an extended period with no coverage, something hazardous for the economy.3 Earlier, he maintained that Raisi’s intention to cut subsidized foreign exchange for importers of essential commodities and the reduction of the local currency were some of the factors leading to price hikes.
The government tried to maintain an air of ambiguity for a few days4 without officially declaring the new economic policy. Yet its measures had already triggered a dizzying rise in the prices of bread and other commodities.5
Initially, senior officials of the Raisi government—who in recent weeks are facing fierce internal conflicts and a deep rift between their factions—insisted that the price of bread “has not changed and will not change at all.”6
Corruption at the Top
The Majlis (parliament) speaker, Mohammad Bagher Ghalibaf, was the first senior government official to confirm that the new policy had gone into effect despite its implications for essential commodities like bread, cooking oil, eggs, beef, chicken and more. He later said coupons would be provided for those products and revealed that Iranians would be allowed to buy only 300 grams of bread per day, though the announced weight could differ.
Ghalibaf, a former senior IRGC officer, announced the strict economic policy just as the Iranian media published numerous reports about his and his family members’ extensive corruption. In recent weeks, it was reported that his family had purchased two luxury apartments in Istanbul and that his young pregnant daughter had gone to Turkey in the last two months to buy baby clothes and returned to Tehran with more than 20 suitcases of luxury items.
Mahdi Ta’ab, a senior cleric in the IRGC, said that Khamenei is the chief supporter of the Majlis chairman and that this strong backing from the Leader had silenced all of Ghalibaf’s opponents. Ta’ab also accused President Raisi’s family of being behind the exposure of the Ghalibaf family’s life of luxury. Although Ta’ab later apologized to Raisi’s family, he did not retract his words. Many see Ghalibaf and his family as epitomizing the plush life of regime officials, even as the worsening plight of tens of millions of Iranians does not affect the government’s policy at all.
Harsh Criticism of the Government’s Policy
Amid the spike in prices and the shortages of essential commodities, on May 8, 2022, the conservative newspaper Jomhouri Eslami, considered one of the country’s most important, asked the president in an editorial:7 “How much time does it take to understand that the country is not managed through talk therapy?” It has been less than a year since Raisi became president, and the publication of such an editorial in the regime’s press is seen as unprecedented.
The newspaper added: “Now, when it is clear that you and your government cannot solve the economic problems, you must show courage and move aside to let skilled individuals rescue the people and the country from this dangerous predicament.” Jomhouri Eslami also noted that the dizzying inflation, which stems from the government’s irresponsibility, is already devastating the population as the country becomes more challenging than ever to manage. The citizens’ distrust of the regime is mounting dangerously. Recently, Majlis members and many economic experts in Tehran have made grave warnings about the raging inflation consequences in Iran.
Two of Raisi’s deputies, Mohammad Mokhber and Mohsen Rezaee (who are also very much at loggerheads and even tried to dismiss each other from the government), claimed that once the new economic policy was launched, 10 to 13 dollars would be directly deposited in each citizen’s bank account to compensate for some of the spikes in bread prices. They added, however, that the sum would be provided for two months only. Other economic ministers claimed that the government program “would eventually succeed” and be to their benefit, notwithstanding the citizens’ deep fears.8
On May 9, 2022, President Raisi, who had long been mum on the subject, confirmed in a television appearance9 that the new policy had been adopted and called on everyone to support his government so that Iran could contend with the economic hardship. He promised that the difficult decisions would eventually lead to economic prosperity while admitting that the unpopular measures had jeopardized his own standing. Trying to mitigate the criticism of his program, he said that, in two months, “electronic coupons” would be issued to low-income households to help them cope with the program.10 Raisi also said he had consulted with many economic experts before beginning the policy and had invited other experts to assist the government. Hours before Raisi’s television appearance, in a meeting with a group of workers, Khamenei, who had not publicly addressed the issue for long weeks, called on all citizens, and workers in particular, to support the government. He also appealed to all the regime authorities to back the president’s “important economic measures.”
Raisi is continuing to advance his ambitious economic program. In a meeting with ministers of his government on May 15, he called on them to try to convince the Iranian public of the “wisdom that lies in the reform of the subsidies,” which was aimed at allocating them more equitably, and to thank the public for cooperating with the unpopular measure he had taken. Trying to reassure the poorest sectors, Raisi said that the lowest strata would keep receiving the subsidies they needed. He added that despite the hostility of the Farsi-language media outside of Iran, “the Iranian people are smart enough” to prevent it from achieving its goals and sowing chaos in the country.11
Meanwhile, citizens from all over Iran were reporting to the Farsi media in the diaspora, including BBC Persian in London and Radio Farda in Prague, that the Iranian regime has been beefing up the presence of the different internal security forces, with many vehicles of these forces turning up at intersections and squares in the large cities. On May 8, Reuters reported that the visit by Syrian President Bashar Assad occurred while many security forces were stationed in streets and squares to confront the widespread protests. After Tehran bus drivers went on strike on May 16, 700 police and Revolutionary Guard buses were mobilized to provide bus service to Tehran passengers for free.12
The Protest Is Growing
Despite the internal security forces’ deployment, wide-scale rallies in Iran are protesting the dire economic situation and the regime’s recent measures, which have prompted a sharp rise in the prices of essential commodities. Four citizens were reportedly killed during the demonstrations,13 and dozens were wounded and arrested. There are reports of the use of live fire, tear gas and water cannons.14
As in the past, the government media speak only of sporadic demonstrations in some cities, during which “lawbreakers have tried to commandeer the legitimate protest and change it into an insurrection,” calling for lower food prices, attacks on public buildings and businesses and throwing stones at security forces.
According to the Iranian media, which is trying to downplay the protest, the demonstrations are concentrated in the struggling southwestern province of Khuzestan, where most of the population is of Arab origin. Violent clashes with security forces have been reported in the cities of Izeh, Andimeshk and Dezful. Clashes have also occurred in Yasuj, the capital of the Kohgiluyeh and Boyer-Ahmad province; in Shahrekord, the capital of the Chaharmahal and Bakhtiari province; and in the city of Jungan. In this province, a mob overran a base of the Basij militia amid cries of “Death to the Leader!”15 Meanwhile, the protests are spreading in the Fashapuyeh district of the Tehran province, the Lorestan province, and other provinces. During the demonstrations in Andimeshk, Omid Sultani was killed,16 and slogans voiced against the regime included “Death to Khamenei!”17 Also reported was the death of Saadat Hadipur in the city of Hafshejan in the Chaharmahal and Bakhtiari provinces.18 In the city of Kermanshah, a large sign at a crossing with a picture of the Leader was overturned as the crowd rejoiced. 19
Voria Ghafouri, who is of Kurdish origin, a star of the Iranian soccer team and a player on the Esteghlal team, condemned the regime and asked, “How can the officials not be ashamed of themselves?” His words went viral on social media. He added: “I am powerless … there are many problems, demonstrations in [the city of] Ahvaz. … Hoping for the best. The Iranians deserve a better life.” 20
The IRGC-affiliated Fars News Agency claimed “all the media of the enemy are working around the clock to foment riots and disorder in Iran” and trying “to foil the current government’s efforts to implement its economic policy and narrow the economic gaps.” In the article, Fars accused the opposition Farsi media at the BBC’s Persian Service and in other foreign outlets of spreading “lies” about exporting flour to Karbala in Iraq while Iran is suffering a shortage, a gas station being set afire in Khuzestan and so on; it also tried to justify the government’s measures.21 In addition, an audio file was leaked to social media in which a senior official of the government’s broadcasting network told Iran’s broadcasters and radio announcers not to level any criticism at the government’s economic program and not to reiterate objections from the press. In Khuzestan, the regime also shut down Internet data communications for days, and it considerably slowed22 the speed of data transmission in other areas.23
The Iranian regime has shut down or slowed the Internet to block reporting from conflict zones and prevent collaboration between different protest groups across Iran.24
In recent years, wide-scale unrest has increasingly broken out in Iran. It has been motivated by factors like socio-economic difficulties (late 2017-early 2018), rising fuel prices (November 2019), water shortages (July 2021) and other aspects of the citizens’ plight. Nevertheless, the current unrest is the first substantial challenge—both domestically and internationally—for President Raisi, whose name is mentioned as a possible successor to the Supreme Leader.
In all cases, the regime cracked down hard and lowered the flames, but did not wholly extinguish the protest that continues to roil under the surface with growing frustration over poor economic performance. The current round was primarily sparked by the spike in flour prices—which are a consequence of the ongoing war in Ukraine that affects food prices worldwide, the growing reliance on the Chinese economy and the continued sanctions on Iran as the nuclear talks in Vienna continue to stall. To these factors must be added Iran’s own built-in-fundamental problems, including corruption and inept and sectoral management, which have led to inflation, currency devaluation and a growing budget deficit.
The current round of protest will end through suppression, since the regime has drawn some lessons from previous rounds of confrontation. But the primary factors behind it will continue to smolder under the surface and constitute an ongoing challenge for the Islamic regime. The outbreak of the current protest in Iran that coincided with the continued deadlock in the nuclear talks has again put the issue of regime change on the agenda. The regime is managing to contain the protest, which is less wide-scale than compared to the recent wave of protests, and managed to avoid any casualties. The opposition within Iran and abroad also suffers from disunity between the different groups with disparate agendas. In addition, the extent of support for the opposition by the West, particularly the United States, is doubtful as the war in Ukraine continues and the current administration is determined to rejoin the JCPOA. The Iranian regime will continue to follow its inflexible stance in the nuclear talks as long it feels unconstrained by the demonstrations.
IDF Lt.-Col. (ret.) Michael (Mickey) Segall, an expert on strategic issues with a focus on Iran, terrorism, and the Middle East, is a senior analyst at the Jerusalem Center for Public Affairs and at Acumen Risk Advisors.
This article was originally published by the Jerusalem Center for Public Affairs.
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