Iran – The cost of living and the regime’s risky bet

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For many years, the Iranian government depended on its domestic capacity to provide the Iranian people with their primary sources of living, such as food items. The government has spent a significant percentage of the country’s financial resources to avoid a shortage of essential items against the backdrop of harsh international sanctions. Its fear is that social unrest could flare up and spread, threatening the whole political system. The latest US sanctions have placed further pressure on the government’s outdated approach, coinciding with the additional negative impact of external variables such as the outbreak of the coronavirus pandemic, the decline in oil prices and the depletion of foreign currencies.

In recent times, protests have surged among Iran’s working class, who make up nearly half of Iran’s society, over worsening living conditions and low wages amid rising inflation rates in the country. The Iranian people have expressed their feelings of anger and frustration to Supreme Leader Ali Khamenei, demanding, via Iranian lawmakers, that the minimum wage be doubled. To date, the government has proved to be incompetent and incapable of dealing with the harsh living conditions experienced by millions of hardworking Iranians.

The minimum amount required to survive in Iran is estimated at 9 million tomans ($360) per month for a family of four. Yet the minimum wage for workers is 3 million tomans per month, with 14 million Iranians in this wage category. Millions of retirees receive pensions that are even lower than this. If we include the families of these workers, this means that at least 40 million people, or half of Iran’s population, are living far below the poverty line.

Many or even most Iranian workers are, therefore, forced to seek more than one job to survive and feed their families. This constant struggle to stay alive has a grave psychological impact, as well as social and even security ramifications.

While Iran’s rising food cost may be less of a problem in rural areas, where people can grow their own vegetables and rear livestock, the reality is different for the country’s urban population, constituting more than three-quarters of Iran’s population. Urban residents face massive challenges, especially when soaring prices are coupled with unemployment, depression, the lack of any social safety net and skyrocketing living costs. One of the main expenses in urban areas is the cost of renting, which has increased by more than 85 percent in the capital, Tehran, in a short period, and now consumes nearly one-third of the average Iranian household’s income.

Considering the sharp decline in the exchange rate of the local currency against the dollar in the past year, the 70 percent rise in the cost of imported commodities in 2020 had an unmistakably negative impact on the prices of local food items. Imported items such as livestock and poultry feed, for example, are critical to farmers, and their additional costs were passed on to already struggling Iranian consumers via price hikes.

All these factors mean that the Iranian people are suffering from a surge in food prices generally, leaving the great majority unable to buy dietary staples. This is, of course, even worse for the poorest, with poultry prices, for example, increasing sixfold compared to mid-2013 when President Hassan Rouhani took office. Recently, the price of eggs and red meat has increased by 88 percent and 44 percent respectively in a single year.

The Iranian people might have been able to offset the negative impact of soaring food prices on their living standards if there had been an improvement in income levels. However, incomes have not changed and purchasing power has dropped because Iran’s local currency has lost its value rapidly. Iranian studies suggest that the purchasing power of urban dwellers has declined to the levels last seen in 2001.

Despite this grim picture, the Iranian government has continued to bet on the endurance of the Iranian people to cope with their harsh living conditions, a huge part of which is a direct result of economic mismanagement, foreign policy misadventures and the regional expansionist plans of the supreme leader.

This is an extremely risky bet, which could see the tables turned on the government and the system overnight, should socio-economic conditions continue to worsen. As was noted in the book “Factional Protests and Social Mobilization in Iran,” published by the International Institute for Iranian Studies (Rasanah) in 2019, Iran’s volatile economic situation and the dire living conditions of the Iranian people mean that it is not possible to rule out protests breaking out again soon. However, they are likely to be much more violent, threatening and deadly than those witnessed in the recent past.

Source » eurasiareview

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