Widespread protests recently erupted in Iran in reaction to a three-fold rise in fuel prices. They were met with brutal government crackdowns. The immediate question to ask is why: what, if any, is the rationale behind this destabilizing economic policy under already severe economic and political pressure in the country? Most analyses are generally divided between two political explanations: the corrupt and authoritarian structure of the Islamic Republic in breach of its own constitution as well as international human rights laws; and the imperialist interventions of the United States in the form of sanctions, media funding, and regional wars. These two analytical frames, each harboring merits in their own right, provide a general context to the history of Iran since the 1979 revolution, but scarcely address the issue of fuel prices in 2019.
Domestic and International Unity of Experts
The International Monetary Fund––a capitalist institution of 189 member countries with the stated goal of global economic cooperation and financial stability, and with the United States as its largest contributor ever since the fund’s establishment in 1945—issues extensive analyses and recommendations regarding economic and financial structures to its member states on an annual or biennial basis. In 2018, it published a pessimistic report regarding Iran’s GDP, listing a series of structural recommendations to maintain economic growth. Iran’s response is published as an appendix to the IMF document.
Jafar Mojarrad, the operating executive director of Iran in the IMF, is the author of Iran’s response. In his lengthy text, he accepts almost all of the IMF’s recommendations and states that Iran will execute them. What is unique about Iran’s relationship with the IMF in comparison to most other Global South states is that there is no structure of financial debt that binds Iran to IMF interventions. When we repeatedly speak of Iran’s opposition to international institutions, we leave out Iran’s voluntarily faithful compliance with this key international financial institution. In fact, when it comes to economic discourse and practice, Iran has rarely deviated from the major trends in the post-Reagan-and-Thatcher world since the late 1980s. Iran’s wide-reaching consensus on economic decisions tends to get sidetracked by its brute handling of popular reactions to them, as well as by the punitive responses to its foreign policies.
But what does Iran’s statement have to do with recent events? The excerpt below refers to the IMF recommendation for the reduction and gradual elimination of fuel subsidies. Mojarrad writes on behalf of Iran:
The staff recommendation of generating 4-5 percent of GDP in savings over the next 4-5 years through subsidy reform, expenditure restraint, and revenue effort seems feasible, but contingent on garnering broad political and public support. Fuel subsidies will be eliminated before end-2020/21 and the cash transfer program will be better targeted by removing the richest 20 percent of household recipients.
This is only a segment of the IMF’s recommendations, which include the increase of the retirement age, and other factors cutting down on the costs of pension funds. The significance of the excerpt is not only its revelation that the government had previously decided on the gradual elimination of all subsidies, but that they were also aware of the necessity for “garnering broad political and public support.” What does this amount to? This structural adjustment in Iran’s economy, per recommendations directly received from the IMF––which by 2015 had itself denouncedthe efficacy of austerity measures for economic growth––would, without a doubt, be faced with social resistance and widespread protests by the working class. The IMF warns in its document that the reduction in subsidies must be complemented by support for the most vulnerable households. The argument for eliminating energy subsidies, historically prominent in developing countries holds that they “are inequitable, distort production, are bad for the environment, and compete with more pressing expenditures in the public budget. The question is therefore not whether they should be eliminated but how. Sudden increases in energy prices are often met with protests and riots, and sometimes have to be abandoned.”[i]
The how of implementing this policy opens up the political life of this decision––especially in Iran where large numbers of informal taxi drivers, delivery men, messengers on motor bikes, and bread-winners for whom fluctuations in fuel prices cause immediate problems dominate the scene of everyday economic life in urban contexts. But this does not elide the more foundational question of the why or whether of this policy. It is a mistake to leave the decision over energy policies to economists and experts under the aegis of powerful global institutions and governments, while entrusting worries about crushing popular protests to human rights organizations. If we are to remain attentive to the specificity of the protests, we must reckon that both economic policy and political repression must be considered within the same framework of politics as the self-determination of the people.
The undemocratic manner in which the shocking hikes in fuel prices were introduced in the past week was devoid of any public conversation and entirely indifferent to “garnering public support.” President Rouhani did have the mandate of the popular vote and his plans for pro-market reforms were not exactly a mystery. But “political and public support” cannot be reduced to electoral victory. Such support does not seem to exist, and no attempts have been made to gain it. Structural adjustment programs, which have persistently engendered homelessness and poverty by means of dispassionate and technocratic economic reasoning, require cutting down on social welfare, support for workers, healthcare, public education, and overall public protections against corporations and corruption. The last instance of the elimination of food and fuel subsidies, during the Ahmadinejad presidency in 2010 was preemptively supplemented with low-income cash transfers. It had been publicly debated in parliament since the introduction of the subsidy reform bill in December 2008. This time around, a reform measure was introduced without warning, through non-popular (i.e., no cash-transfers) and non-political (i.e., no public deliberation) means. It is not incidental that the resulted uprisings are classified by the government as a matter of “security.”
It is likely that the economic “experts” of the state apparatus do not find it necessary to obtain a political, or parliamentary, or even partisan consensus. In light of decades of suppression of the left and religious forces’ submission to the calculations of liberal capitalist economics, the people’s violent reactions to these adjustments are likely to be deemed “normal” and justified as “a cost for development and stability.” The IMF is not a human rights organization and has no interest in the social and political ramifications of its economic recommendations. Unless, that is, these ramifications influence business conditions and foreign investment risks. Finally, global commentators too tend to agree that subsidy eliminations are necessary but that they were carried forth in the wrong time and in a wrong manner, or with inadequate preparations, standard among which are cash transfers. All the same, the recent hike in fuel costs and the suppression of protests against them show that there are as many paths to participate in the global financial system as there are states in the world. It also demonstrates that despite the right-wing intellectual excitement about “the priority of (economic) liberalism over democracy,” the former can be established by force, while the latter is forever deferred.
Sanctions or No Sanctions, Privatization Will Set You Free
What if these IMF programs and the recommendations of other heavyweight global institutions constitute the inevitable horizon of our condition? Our framework of political resistance and organization must be redefined by the possibility that an alternative form of ostensibly secular and Western-aligned government, would still formulate such a pious response to the IMF, albeit while promising to gain the necessary widespread political and popular support. Iran’s problem is hence twofold: on the one hand, the horizon of global capitalism, which cannot be taken lightly and under which an authentic independence requires joining the transnational, transregional, and transcontinental resistance against it; on the other hand, the contradictory and oppressive domestic horizon receiving and exerting international pressures.
These two horizons facing any popular politics in Iran, namely its local politics and the forces of global economy, relate to each other by virtue of a third element: the sanctions. Renewed in the wake of the Trump administration’s unilateral withdrawal from the nuclear deal in May 2018, the sanctions have had adverse effects on the lives of ordinary people in Iran, especially on their health. Far from being a new phenomenon, the reality of dealing with broad sanctions has beset Iran since the very first months of the 1979 revolution, in the aftermath of the hostage crisis. However, the imposition of the current sanctions de facto in place as of 2006, correlate with Ayatollah Khamenei’s reinterpretation of Article 44 of the Iranian Constitution in the same year, transferring eighty percent of Iran’s state-controlled industry from the government to the “private sector.” The move, which marks Iran’s constitutional shift towards economic privatization, is speculated to have been made in preparation for “bypassing” the sanctions. This means that in the name of an informal participation in the global economy, and almost overnight, Iran’s economy was entrusted to a powerful elite including the Revolutionary Guards Corps and their subcontractors, enabling rapid militarization and deep structural corruption.
The same IMF statement clarifies, “The implementation of the Joint Comprehensive Plan of Action (JCPOA) and the lifting of nuclear-related sanctions in January 2016 paved the way for Iran’s reintegration into the global economy.” However, in light of the immediately renewed sanctions on Iran’s imports and exports of petroleum and petrochemical products, we are faced with a paradoxical situation, at least at a discursive or ideological level, where both the sanctions and their absence are bound to yield more or less the same dictum so far as the political economy of Iran is concerned. That is, it seems that the decision to gradually eliminate the fuel subsidies serves both as a measure to soften the blow of sanctions and a necessary step towards integration into the global economy as recommended and commended by the IMF. From a global capitalist perspective, Iran’s path forward appears to be more or less determined irrespective of political contexts or consequences. But the forms that a full integration in global system takes will be contingent on the range of social resistances with which they will be met.
There is little doubt that US sanctions and the Islamic Republic’s authoritarian practices will widely condition those responses, mediating the intersection of domestic repression and global exploitation at critical junctures. But, if by the end of 2020/2021 all the fuel subsidies according to Iran’s bid will be eliminated, then the new target of the coming waves of violent protests should also be more crystallized: at stake are not only the long-lost legitimacy of US foreign policy or the Islamic Republic, but rather Iranian faith in global capitalism. In this sense, any prospect of emancipatory politics in Iran is bound to realize itself in alignment and solidarity with a plethora of regional and global social and political movements, whether in the Global South or in the many souths within the Global North itself, from the parts of France beyond Paris to indigenous Bolivia and from Baghdad to Baltimore.
[i] Djavad Salehi-Isfahani, Bryce Wilson Stucki and Joshua Deutschmann, “The Reform of Energy Subsidies in Iran: The Role of Cash Transfers,” Emerging Markets Finance and Trade 51, no. 6 (2015): 1144-1162.