Financial news

Sharp rise in petrol price sparks protests across Iran

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Via Financial Times

Thousands of people in Tehran, Shiraz and other cities and towns across Iran took to the streets on Saturday to protest against the sharp rise in petrol prices, while security forces used tear gas and batons and shot in the air to disperse demonstrators.

The biggest protests since December 2017 have so far cost at least one life in the southern town of Sirjan, local officials confirmed. In Tehran, people stopped their cars on some of the main roads, including Imam Ali, and chanted anti-regime slogans, eyewitnesses said.

A local journalist in the southern city of Shiraz said at least two petrol stations had been set alight. “People chanted: ‘Enough rise in prices’,” the reporter said, adding: “Security forces used tear gas.”

Another resident in Shiraz said shootings could be heard in the city. “People are out in the streets without any tendency to go to work.” A resident of Bushehr said the port city in Iran’s south was “chaotic” after protesters blocked some of the main crossroads.

The government of Hassan Rouhani, which has acknowledged a sharp fall in its income due to the US sanctions, increased the cost of petrol by 50 per cent without earlier notice at midnight on Thursday. Iran’s oil minister, Bijan Namdar Zanganeh, had denied last week that there would be any change in petrol policy. “They lied to us in a nasty game,” said one Tehran resident.

Since Friday motorists are entitled to buy 60 litres of petrol a month at IR15,000 a litre, a 50 per cent price increase. Extra fuel would still be available, but at IR30,000 a litre. This was part of efforts to offset the sharp fall in income, notably petrodollars — the country’s lifeline — brought about by US sanctions.

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A restaurant worker in Tehran said there could be no retreat this time unless the government reversed its decision. “We will set this city on fire if they do not change their decision.”

Mohammad Jafar Montazeri, Iran’s prosecutor-general, warned on Saturday that any disruption of public order such as stopping cars in the streets or attacks on state properties was a crime and would be dealt with seriously.

A leading hardline member of the parliament, Mojtaba Zonnour, suggested on Saturday that the legislative body should intervene immediately to reverse the rise in petrol prices, which he said was illegal because the government did not seek permission from the parliament.

Most public attacks are directed at Mr Rouhani whose signature achievement, the 2015 nuclear accord, has been seen as a failure since Donald Trump pulled the US out of the agreement in May last year and imposed the toughest sanctions to date on Iran.

Iran’s centrist president has in recent weeks focused his public speeches on the need for talks with the Islamic republic’s enemies, widely understood to be a reference to the US. But he has faced resistance from hardliners who have made it clear they do not want to make any compromises on Iran’s regional and defence policies.

The increase in fuel prices is intended to generate greater income for the government to buy basic commodities and medicine and pay civil servants, workers and pensioners. But Iranians fear the decision could put them under more pressure. Inflation is already above 40 per cent and the economy under severe distress, according to the IMF, which has predicted that Iran’s economy will contract by 9 per cent this year.

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Despite the economic hardships, Mr Rouhani’s government had managed to stabilise the economy throughout most of 2019. “It was a few months that I was feeling some stability until the petrol decision was announced and [that] made me so anxious again about the future,” said one Tehran housewife.

While the atmosphere in Tehran and big cities is tense, it is not clear how far protesters are ready to go. The Islamic republic is nervous that the Trump administration has capitalised on public dissent to bring its leaders to the negotiating table and make huge compromises. Meanwhile, anger over economic grievances and corruption has triggered weeks of anti-government protests in Lebanon and Iraq, Iran’s neighbour.

The government of Mr Rouhani tried to head off a backlash by announcing extra cash handouts to compensate for the rise in petrol prices. “It is just another lie,” said a Tehran shopkeeper.

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