By Farangis Najibullah, RFE
Sitting atop the world's second largest gas and oil
reserves, Iran earned an estimated $80 billion in energy sales in the last
fiscal year as fuel prices spiked. But that windfall has not reached most of the
population, whose living standards have plummeted.
Food prices have soared, and worldwide increases are only partly
Shaya, a print journalist in Tehran, is one of millions of Iranians feeling the
pinch. He recently decided to abandon his career and find a better source of
income to pay the monthly rent for a flat he shares with his mother and younger
Now he works as graphic designer and also has a part-time job in publishing.
Whenever he finds free time, Shaya writes articles as a freelance reporter.
"Taking second and even third part-time jobs has become quite common in Iran,"
he says. "People are struggling with rising inflation and higher prices for
everything -- from gas bills to housing costs."
Shaya also gave up many aspects of his daily routine, along with his newspaper
job. Instead of driving a car, he now uses public transport, spends little on
clothes, and has cut back on eating out. Nor does Shaya rule out moving to a
smaller and cheaper apartment.
"Now I'm facing difficulties in paying my rent," Shaya said. "In the past few
months, I've found it difficult to pay for the car I've been renting. There are
many other people who face difficulties in paying for their daily essentials,
such as food or clothes."
Iran's Central Bank has admitted that some 14 million Iranians -- nearly a
quarter of the population of 65 million -- now live below the official poverty
line. In a recent report, the Central Bank noted that both poverty and inflation
have increased significantly in Iran since the election of President Mahmud
Ahmadinejad in 2005.
The official rate of inflation is currently more than 25 percent. According to
Central Bank figures, inflation stood at over 12 percent in 2005. Meanwhile, the
official unemployment rate is 15 percent, although some experts say the real
figure is closer to 30 percent.
The bank reported that prices for food have risen by more than 30 percent in the
past quarter compared to the same period last year.
While rising food prices have been a worldwide phenomenon in the past two years,
Iranians have also seen spikes in the cost of medical care, housing,
electricity, and services.
Iranian economists say the worldwide increase in energy and food prices is only
partly to blame for growing poverty and rising prices in the Islamic Republic.
In fact, as one of the world's major oil and gas producers, Iran has benefited
hugely from energy prices that have surged in recent months, reportedly earning
as much as $7.5 billion per month from oil sales alone.
Some Iranians experts blame their government's economic policies. Ahmadinejad
has increasingly been the target of criticism for mishandling the economy,
resulting in growing inflation, rampant unemployment, and tumbling living
Many Iranians say their salaries are hardly enough to buy food, and that only
the rich have benefited from Iran's oil and gas revenues.
Jamshid Pazhuyan, a professor at Tehran's Allameh Tabatabai University, said
that "mismanagement of the economy by the government is the main reason behind
people's worsening living conditions."
"Since we have energy resources, and since there were significant investments in
the social sector, in education and healthcare -- we expect to have much better
living conditions in Iran," Pazhuyan said. "But the economic management here is
too weak and incompetent to use these resources to increase economic
productivity and improve people's welfare."
One Tehran-based academic, who did not want to be named, said that
"Ahmadinejad's government has mishandled the economy to the point that oil and
gas revenues have worsened the state of the Iranian economy rather than boosting
The expert adds that the government must figure out ways to use energy revenues
to improve living standards. "Iran has to invest this money abroad instead of
spending all the funds inside the country," he said. "Iran has brought the cash
and spent it inside the country, causing horrific inflation here. In addition,
the government brings political shocks to the economy -- for instance, by
provoking the sanctions imposed by Europe and the United States. These shocks
have further worsened people's living conditions."
He concluded by stating that the president's economic and financial advisors are
Blame On Sanctions
Ahmadinejad and other Iranian leaders have repeatedly said that UN sanctions
have had little impact on the Iranian economy.
The UN has imposed three rounds of sanctions on Iran over Tehran's refusal to
suspend its disputed uranium enrichment activities.
Ahmadinejad has called the sanctions "worthless scraps of paper."
Many Iranian economists, however, reject his claims, saying the sanctions were
provoked by Iranian policies and have left the country's economy in dire
straits. "They have stopped foreign investment flowing into Iran and have sent
Iranian banks to the point of collapse after foreign financial institutions
severed ties with the country," the Tehran-based expert says.
Despite Iran's vast energy resources, the world's major energy companies have
left Iran one by one, and their walkout means fewer jobs and income
opportunities for Iranians.
"Iran's economy and its people have fallen victim to Ahmadinejad's policies,"
the expert adds.
One struggling Iranian, journalist-turned-designer Shaya, says that for now,
he's managing to pay his basic expenses with the income from his main jobs and
two part-time jobs.
But in the face of growing inflation and unemployment, he is not sure how long
he will be able to pay those bills -- or keep his jobs.
Copyright (c) 2008 RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036. www.rferl.org
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