Dispatch | Iranians Watch as Country's Economy Withers
09 Jul 2012 23:49
Losing hope, longing for a "jolt."[ dispatch ] Even before the European oil embargo began on July 1, Iranian citizens have had to deal with an increasingly unstable economy. On Wednesday, June 28, two days after a European Union meeting in Luxemburg in which the group formally approved the embargo and expressed disappointment over the latest round of nuclear negotiations, I have a conversation aboard a domestic flight with the young man in the seat beside me. Hooman is in the import-export trade. I ask him how business is going, given the current economic conditions. He shakes his head and says, "The depreciation of our currency has suffocated us. I have stopped all my purchases and am waiting to see how things turn out... I deal a lot with officials in customs, and bribery is rampant. This makes business even more difficult."
Hooman believes inflation is a major problem. I ask him if he blames the sanctions or the government. He responds, "Didn't we have inflation even before the [latest] sanctions?" He expresses anger with the Iranian president. "Something [Mahmoud] Ahmadinejad said that really upset me was the there is no inflation in Iran." He pauses and then adds, "He also claims in the same breath that there are no homosexuals in Iran."
How does one continue to do business during these poor economic times?
"I have deposited 200 million tomans [about 100,000 dollars at the open exchange rate] into the bank," he responds. "At least I am collecting interest on that. I refuse to make any more investments in these conditions."
Back in Tehran, I catch a taxi in Azadi Square. My driver starts to complain about the economy. "I bought a chicken for dinner the other night, and it cost me 7,000 tomans [$3.50]," he says, shaking his head. He also complains about the Ahmadinejad administration's economic policies. "Our incompetent president says that we can use monthly payments by the government to put a down payment on a new house for our kids."
Back in December 2010, Ahmadinejad enacted a controversial economic reform program that eliminated government subsidies on energy and basic commodities like bread, sugar, oil, electricity, and gas. To partially offset the resulting higher prices, the government provides monthly stipends of 45,000 tomans ($22.50) to every Iranian.
My taxi driver, who is almost 70 years old, is driving around Tehran amid the heat of the summer in a car without air conditioning. He is upset with his situation. "With this income, I can't even pay for my monthly electricity and gas bills," he says.
His circumstances are hardly unique. A few hours later, I find myself in a café on Enghelab Avenue. I am talking with a friend of mine when a young boy approaches our table and asks us to buy a fortune from him.
I offer to pay him twice his asking price if he will tell us how old he is and a bit about his life. He is 12 years old, and has been working since he was nine. I ask him if he knows how bad the exchange rates have become. He smirks and says, "Yes, the price of my fortunes goes up with the increasing price of the dollar."
The boy, Ali Reza, says he makes anywhere between 10,000 and 15,000 tomans a day -- less than eight dollars. I ask him what he does with the money. "I give it all to my family. I thank God, but I want to work more since it's the summer, and I am off from school."
The strained economic situation has a great effect on those in the lower economic strata throughout Iran. Vast numbers of young children have gone to work at bazaars or in the street, and underage workers are now a familiar sight.
By Thursday, June 28, the exchange rate for a U.S. dollar is once again hovering right around 2,000 tomans. That night, as I am sitting in a bracelet store, I overhear a man in his early fifties. "The exchange rate for a dollar has reached 2,060 tomans," he announces, accessing the Internet through his iPad.
This marked the second time in 2012 that the price of a dollar had surpassed 2,000 tomans. The previous time was in January, when the United States passed unilateral sanctions on Iran's Central Bank. Over the course of two weeks, the dollar's value rose from 1,400 to 2,000 tomans, then leveled off at 1,700 for several weeks.
I have a conversation with Amir, who has come to Tehran from the western city of Abadan to make some purchases. He builds doors and windows. "The economic situation under the presidency of Mohammad Khatami was very good. We had a good relationship with Turkey, and I imported a lot of my materials from them. Since then though, a few government-owned companies have entered the industry, flooding out the Turkish companies, and prices have shot up," he says.
Amir says that if you want to know how bad the economy really is, take a look at the police log in the newspapers. " Why do you think there is so much more criminal activity? Poverty."
What does he think is the underlying cause of the bad economy?
"Don't forget how stubborn and stupid Ahmadinejad is," he replies. "A combination of these two traits has led to the state of our economy today. All of the personnel in his administration, from [First Vice President] Mohammad Reza Rahimi to Esfandiar [Rahim] Mashaei [Ahamdinejad's chief of staff and close confidant], are corrupt. Look no further than the on-going embezzlement trials for proof."
Last summer, the Iranian judiciary unveiled a three-billion-dollar embezzlement scheme taking place among Iran's government-owned banks, the biggest case of financial fraud in Iranian history. It is widely believed that Mashaei and Rahimi played major roles in the scheme, but it seems as if the judiciary is not powerful enough to charge them.
Amir is one of many middle-class Iranians who deeply admire the Turkish model of governance and look on at their neighbor's international standing with envy. "When I was in Turkey years ago they didn't even have color photography," Amir recalls, "but look at how powerful they have become now. They are even part of NATO. But our country is faced with a stagnating economy that is becoming more and more isolated."
The E.U. embargo went into effect last Sunday, three days after my conversation with Amir. In a news conference the following day, July 2, Ministry of Foreign Affairs spokesman Ramin Mehmanparast declared, "The U.S. and the E.U. should be prepared for the exacerbation of the financial and economic crises and the spread of social unrest as a result of this action. Not only will the Iranian people not relent in the face of policies of pressure and threats, but the sanctions will unify the people in the face of the enemy and reinforce self-sufficiency."
Belying that claim, this past Wednesday, in a poll taken by a website under the control of the state broadcasting network, 63 percent of the respondents said they favored a halt to uranium enrichment in return for an easing of economic sanctions. News of the quickly circulated around Facebook, Twitter, and other social media. Soon after, the poll and its results disappeared from the government-run website.
The day before, I had left for Mashhad, Iran's second largest city, to learn more about the economic conditions there. Around 11 a.m., my friend Mahmoud and I head over to Saadi Avenue, the city's main electronics retail strip. Mahmoud says that a few years back the place was filled with shoppers at this time of day and it was impossible to find a parking spot. But now the sidewalk is deserted and there is ample parking on both sides of the street.
We visit an electronics parts showroom and ask the manager if there has been any drop in sales. He answers, with more than a touch of emotion, "Oh yes, sir. My income is down to two percent of that of six or seven years ago. I'll have to close down the showroom and walk away from the business."
Next, we drop in at one of Mashhad's biggest authorized Sony dealers. The place is empty. The manager explains that his orders are inexplicably languishing in customs, and I recall Houman's mention of rampant corruption in the customs department.
A few hours later I find myself in a clothing store, whose owner, Madjid, a tall man in his mid-fifties, is considerably more content. He says that summer is the wedding season, bringing many customers to his shop. "Thank God. I am satisfied, I sell my wares at the same price I paid in dollars, so I don't lose. People's need for formal wedding clothes is such that price increases don't deter them from coming in."
A few streets over, we enter one of the fanciest shoe stores on Ahmadabaab Avenue. Davood, the manager, tells a very different story. He says, "I am forced to lower prices. Customers are shocked when they see a tag of 110,000 tomans [$55] on a pair that was only 80,000 tomans [$40] last week. So, I have to cut into my profit to retain customers."
Upon my return to Tehran, I wind up in a discussion about the state of the economy with Sara, a 25-year-old who graduated two years ago from one of the country's top universities. She is a resident of north Tehran. "I can sum it up thus: I really feel destitute. Half the money I have in my pocketbook at the beginning of the week, say 100,000 tomans [$50], is gone by midweek," she says. "And then, it seems like I haven't bought much, like I have filled up my car and gone to the supermarket twice."
Sara recognizes that she is still relatively well off. "Many are unemployed, but I'm working and have a good salary, as compared to others. But I really feel that I can't stretch my money enough to cover much, let alone save anything, which I have had to let go."
She says that in the middle of her growing financial predicament she was arrested by a the Gasht-e Ershad (Guidance Patrol -- the morality police). "The detail picked me up and it cost me 550,000 tomans [$275]. The police have vans stationed at every major intersection in Tehran and they arrest any female whose hair pokes out of her scarf, has a somewhat short manteau, or happens to have nail polish on her toes, and fines them."
I ask Sara about the changes to her lifestyle that she's had to make. "I practically can't afford anything any more," she replies. "I never asked the price of what I wanted, but not now. Its been a while since I bought any clothing. Going to fine restaurants was one of my main pastimes. Now, I can't really remember when was the last time I visited one. I make one million tomans a month [$500] and believe that this is really the minimum. I mean that I can hardly cover rent, utilities, groceries, and dry cleaning."
Sara lives with her parents to make ends meet.
The dismal economic conditions have convinced many young graduates that they have to leave the country to continue their studies and have any hope for a better life. Sara has been thinking along those lines, but she adds, "The situation is a wreck, yet because of the exchange rates I have abandoned thoughts of going abroad to study."
Who does she blame for the current conditions? Sara says, "I hold the regime responsible, definitely and fully." She adds, reminding me of Amir's sentiments, "I envy Turkey, it is progressing so well."
I ask for her view of Iran's economic future. Sara replies, "I have no hope, none at all, given this regime and its policies, unless the situation gets a jolt."
Copyright © 2012 Tehran Bureau