Impact on Iran from the Increase of Petrol Prices11 m. | 2019-12-17
The protests in Iran that erupted from a price hike in petrol ended after shutting off the Internet for the entire country. This decision was made by the Security Council on November 16, just one day after the protests began.
Petrol Price Hike by 50 to 200 %
T he protests in Iran began on November 15, with the petrol price increases and its new restrictions. The following quotas were set for vehicles on per month basis.
The decision to raise the prices was made with the consent of the legislative, judicial and executive powers of Iran, which was supported by the Supreme Leader of Iran Ali Khamenei. However, the public was displeased and outright rejected the price hike.
T ehran and many other cities were subject to general public disobedience, demonstrators were blocking streets and attacking buildings of public and state significance (according to the officials, some of them were even armed).
According to the Interior Minister of Iran, there were attacks:
- On more than 50 military bases and police stations
- on 34 ambulances,
- on 731 bank branches,
- on 140 public places,
- on 70 gas stations,
- on 183 police cars.
Hundreds of vehicles were attacked, and a group of demonstrators consisting of 500 members were trying to attack the State television complex. Religious institutions were also targeted during the disorders, with calls against the Iranian state system. Schools and public institutions ceased working in some cities because of the situation.
The protestors set fire to one of the bank branches
Contradictory numbers on victims
T here were also victims, but with no concrete and official information about the numbers. The Iranian media revealed numbers on the death of 5 policemen (1,2,3), whereas contradictory information has spread on the deaths on significantly more demonstrators.
According to the report made by Amnesty international human rights organization published on December 2, 208 people were killed during the demonstrations. Some oppositional media had disseminated data on 366 victims. In addition, there was also information on a large number of victims, which have not yet been confirmed. It is noteworthy, that in this regard one of the deputies of Iranian parliament mentioned, that in order to avoid speculations official data on the death toll should not be published.
There were also many arrests during the demonstrations to disperse the crowds. Until now, there is no concrete information about the numbers of people taken in police custody, though the Iranian law enforcement agencies regularly report many arrests even after the end of the demonstrations.
On November 17, the second day of the demonstrations, there were approximately more than 1000 arrests. Later it was mentioned about 404 arrests in Khuzestan province, 150 in Alborz, 341 in Tehran, 100 in Tabriz, 240 in Kerman province and so on (1,2,3,4,5,6,7,8,9,10, 11).
According to one of the deputies of the Iranian Parliament, the number of people arrested reached 7000. On December 3, Iran’s judiciary Spokesperson announced, that the majority of the arrested were set free. He stated that 300 protestors are still kept in custody.
It's not known yet, what punishments await the accused but implementing instructions from foreign forces including having ties with the US Central Intelligence Agency is on list of offences. The Iranian authorities blame the US and Israel for provoking the protests with Washington openly supporting the protestors. The family of the last Shah of Iran Mohammad Reza Pahlavi was also encouraging the public .
A gainst the backdrop of discontent, the President of Iran Hassan Rouhani stated that the government had made the decision on the petrol price increase in an agreement with the Majlis and the Heads of the judiciary.
The “Omid” faction known as the reformists drafted a plan to restore the previous petrol price; in addition the deputies began collecting signatures to launch a non-confidence vote against Rouhani and Majlis Speaker Ali Larijani.
A possible calm was set, when the Supreme Leader of Iran expressed his support by emphasizing that the 3 bodies of the government are unanimous in this issue, with his support based on that outcome. With the Supreme leader in effect agreeing on the decision it set a tone for the public to comprehend that it was a fair and just process ultimately helping in somewhat calming the already heightened situation.
U ntil 2018, Iran imported part of the petrol needed for the country. In recent years Tehran gradually reduced the import volumes and stopped since October 2018. On February 18, 2018 the president announced, that Iran has already become self-sufficient in the field of petrol production. However, petrol is subsidized in Iran, is at the expense of public funds.
Iran produces 110 mil. liters of petrol daily and with high consumption as a result of smuggling the government initiated an action plan to make exporting petrol unprofitable. According to Iranian media publications, 20-40 mil. liters of petrol is smuggled out of the country daily. It turns out with Iran subsidizing the petrol which is then sold abroad inadvertently is increasing consumption. One of the main reasons for the restrictions is to reduce the export of petrol through smuggling.
A lmost 40% of the Iranian revenues come from oil sales, but it is already a year since Iran is having difficulty in selling its oil because of the US sanctions. Currently, Washington also threatens to sanction those countries who will buy oil from Iran.
The Iranian Government has attempted alternative option for solving social problems. It was announced that the whole income from the increase of petrol prices would completely be directed to the most needy sections of society. Generally, the additional social support along with the existing benefits will be given to 18 mil. families, about 60 mil. people. Each of them will receive 550 thous. rial monthly, this envisages more than $3 billion in additional expenses annually.
Peoples having sufficient income, will not receive additional benefits:
480 mil. rial
40 mil. rial (= 152.864 AMD)
600 mil. rial
50 mil. rial
720 mil. rial
60 mil. rial
840 mil. rial
70 mil. rial
960 mil. rial
80 mil. rial
Families that meet certain criteria of “luxury” will not take advantage of these benefits. Particularly, for those who have two flats or with a combined net worth in real estate exceeding 9 billion rial (in cities, 12 bil. rial).
The decision made by the Iranian government results in:
- the base or quota price of petrol increasing by 50% by reducing subsidies,
- the petrol price outside the quota increases so that illegal exports are not profitable,
- the revenues made from offshore petrol sales and saved as a result of reduced subsidies is distributed to those having low-income.
Complaints are Inevitable
C omplaints against setting quotas for petrol led to protests under the ruling of the former president Mahmoud Ahmadinejad in summer 2007, when the restrictions were milder. 100 liter limit was set for lightweight passenger cars instead of today’s 60 liter.
Before midnight people went to gas stations to buy spare petrol with the onset of the price increase and it quickly ran out because of the panic, as a result of which the drivers turned to demonstrating.
The inflation, currency fluctuations, unemployment and the other similar problems caused some large dissatisfaction resulting in public movements in Iran.
- At the end of December 2017 and in early January 2018, there were demonstrations against inflation in Iran, which was caused by the rise in egg prices.
- There were demonstrations in summer 2018 as well, which spread mainly to the markets of Tehran and other major cities in Iran. The shopkeepers went on strike and complained of the record devaluation of the rial.
- Generally, there were also several other protests against social problems in 2018, but with narrower coverage.
The rise in the petrol price became a cause for people to raise their voices publicly again.
Demonstrations against rise in petrol price in various cities of Iran.
The Risk for a Chain Price Increase
T he next concern for Iranian society was that the rise in petrol prices could influence the price of other products. In this regard, the Iranian energy minister issued a statement that the tariffs for water and electricity would not rise by the end of the year. Although the Iranian authorities mentioned many times that they were trying to prevent inflation, some prices for products went up during this time. According to the member of the economic commission of the Iranian Parliament Rahim Zare, the following products and services increased in price:
- Pickup Truck rental - 100%,
- taxi - 30%,
- liquid gas – 40%,
- imported rice – 25%,
- egg – 20%,
- tomatoes – 700%.
According to the Governor of the Central Bank of Iran, the rise in petrol prices will indirectly raise prices for other products by approximately 4 percent.
T he authorities were ready for the protests, a day after the demonstrations the Internet connection was disconnected, which somehow deprived the protestors from the opportunity to act more systematized. It also helped the Iranian law enforcement to calm down the wave of discontent cracking down almost immediately.
4 days after the launch of the protests, the government announced that the situation in the country already had calmed down. It’s obvious that the government had already developed techniques to calm down protests, which was necessary to prevent the interference of foreign forces as well.
The authorities had to go through the petrol quota to prevent the illegal export of petrol. Moreover they had to reduce the subsidies to make the smuggling exports unprofitable.
The petrol price hike could lead to other chain increases, which the authorities would probably try to soften up with benefits. That money will come from the high-income earners.
To avoid the rise in consumer prices, electricity and so on, the targeted subsidies may be introduced in the country.
When the shutdown of the internet allowed to quickly disperse the protests, it will be more and more difficult for the progressive forces inside the country to persuade the conservatives to abandon the policy of blocking the internet and social networks.
 The money in Iran is accepted to count in tomans, which is equal to 10 rials, though we will later use the official form only, which is rial, in order to avoid misunderstandings.
 Currency rates are calculated 125.000 rials per dollar and 477.7 AMD per dollar, which are the market exchange rates of December 4.
 The same day Iran launched the 3rd and final block of “The Persian Gulf star” gas processing plant. It produces 36 mil. liters of petrol daily.
 The population of Iran is 83 million.