Iran Economy NewsLeaving Iran's middle class behind

Leaving Iran’s middle class behind


Washington Post: Middle-class urbanites think they’re being singled out by a government plan that will soon cut off state subsidies and boost the prices of a wide array of everyday products.

The Washington Post

By Thomas Erdbrink
Sunday, November 7, 2010; A10

IN TEHRAN Last year, Tehran’s writers, doctors and small-business owners formed the backbone of a grass-roots opposition movement against President Mahmoud Ahmadinejad. Now these middle-class urbanites think they’re being singled out by a government plan that will soon cut off state subsidies and boost the prices of a wide array of everyday products.

Members of Iran’s middle class are already bearing the brunt of U.S. and European sanctions intended to curtail the country’s nuclear weapons program. But in the coming weeks they expect to be hit again, when the cost of gasoline, bread, electricity and other staples are set to increase to market levels, with some prices possibly rising as much as tenfold. While the rural poor will be partly compensated by direct cash handouts from the state, many in Iran’s cities will have to fend for themselves.

The subsidy overhaul lays bare a deep rift between the Islamic Republic’s leaders and the influential middle class over what kind of country Iran should be, three decades after the 1979 revolution.

“For our leaders we represent all that has gone wrong with the revolution, so they punish us,” said Mehdi, a copper trader, as he steered his 2008 Toyota Corolla through Tehran’s chaotic traffic on the way to his office.

Mehdi’s father was a well-known revolutionary and a war hero who died on the frontlines of the Iran-Iraq war in 1980. “I am proud of the revolution he supported,” Mehdi, 30, said. “But not of what has happened to it now.”

What Iran needs, he said, is a responsible government, more personal freedom and friendly relations with the rest of the world in order to move forward. “The middle class has updated itself to modern times,” said Mehdi. “Now I want our leaders to do the same.” Like most people interviewed for this article, he asked not to be identified by his full name out of fear of retribution.

Controversial plan

The subsidies, which have kept prices here artificially low, are scheduled to be lifted this month, but the exact date is being kept secret to prevent unrest and hoarding.

Government officials have urged people to be ready to tighten their belts, and security officials have warned against any forms of protest. Late last month, hundreds of checkpoints concentrated in middle-class areas of the capital were set up as a show of strength, manned by paramilitaries carrying automatic rifles.

Ahmadinejad has said the program is an attempt to redistribute wealth to the poor. When it is implemented, some 60 million Iranians, including most of the country’s poor and lower middle-class residents, will receive the equivalent of $40 a month in their bank accounts to compensate for the steep price increases. But the remainder of the population, about 15 million by government estimates, including many in the urban middle class, will have to fend for themselves.

“The subsidy plan will lead to the middle classes becoming more dependent on the state. They will be poorer and lose influence,” said Abbas Abdi, a political analyst critical of the government. “The government will be pleased with this.”

The subsidy change comes as Iran’s small but vibrant private sector – a haven for the middle class – is being hit by increasingly tough sanctions designed by the United States. Prices for transport, insurance and financing are rising because of the measures and, lacking the financial cushion that state companies can tap, private manufacturers, importers and factory owners say they are being forced to lay off workers.

A cultural shift

Iran’s middle class has long been at odds with the country’s revolutionary leaders, who dislike their moderate values.

In the revolution’s aftermath, Iran urbanized at rapid speed. Illiteracy was nearly wiped out, universities became accessible for all social and economic classes, and the most remote villages were connected to the national electricity grid. But the changes came at a price for Iran’s leaders.

As carpet weavers, shopkeepers and farmers moved to Tehran, bought cars and sent their children to universities, their revolutionary fire was slowly extinguished. A jump in income, education and access to health care led to explosive growth of the middle class in the capital and other large Iranian cities. Entrepreneurs, physicians and artists became new role models for many of the country’s upwardly mobile, trading places with revolutionary heroes and influential clerics.

Travel agencies catered to this growing group, offering trips to Dubai, Europe and the beaches of Turkey; art galleries flourished. The country has one of the highest rates of Internet usage in the Middle East, with almost 28 million Iranians connected.

The changes heralded increasingly loud political demands for more personal freedom, moderate policies and better foreign relations. In the past decade, the middle class formed the base of a moderate movement of clerics and politicians attempting to modernize and reform the Islamic Republic from within. Socially, the ascendance of the middle class led to a boom in divorces, a rise of a status-driven culture and a strong increase in housing prices.

Government pushes in

Many middle-class demands and much social behavior fundamentally differ from the views of Iran’s leaders, who often bemoan the “Westernization” of some in the country. They have successfully blocked each attempt by middle-class representatives to translate their growing social influence into political power.

Instead, educational centers frequented by the middle class have increasingly been targeted, after some leaders criticized their curricula for being too Western. Azad University, the country’s largest academic institution, was brought under government control last week, and a key medical university was disbanded. Internet and satellite transmissions are increasingly filtered and parties representing middle-class demands for reform have been declared illegal.

“When the government takes steps to control the society, they aim at the middle class,” said Behdad, a 42-year-old journalist who has been unemployed since his newspaper was closed two years ago. “The less we manifest ourselves, the better, the government thinks.”

So when members of the middle class emerged as the engine behind months-long anti-government protests after Ahmadinejad’s disputed June 2009 election victory, they were violently swept off the streets by security forces.

“The middle class is the biggest class in Iran,” said Amir Mohebbian, an analyst who in the past supported Ahmadinejad. “And it is at the forefront of the struggle between modernity and tradition in our country. They want to be heard.”

In the Islamic Republic’s official discourse, after the revolution, all are equal, even though some deserve more attention than others. “The Iranian nation is made out of 75 million God-worshiping, faithful and system-supporting people,” Ahmadinejad said during a speech in March. “Of course, the downtrodden and the needy are the top priority to help.”

But for a west Tehran homemaker, the government’s wish to help the poor by giving cash seemed shortsighted. “My husband is an importer of chemical products, but due to sanctions he can’t bring any into the country anymore,” said Kazhal, 53, while sitting at her kitchen table.

“He used to employ a dozen people. I guess they are poor now, too,” she said. “If we didn’t have this government and those sanctions, both rich, poor and those in between would have work.”

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