In Iran, living in the moment

In Iran, living in the moment

By Kim Murphy, Los Angeles Times Staff Writer
August 23, 2007

MAHMUD ABAD, IRAN -- It is a rare three-day summertime weekend, and that means a headlong rush out of sweltering, smoggy Tehran toward the shores of the Caspian Sea.

The narrow highway is hopelessly jammed; drivers abandon their cars for the kiosks selling sodas, ice cream bars and hand-woven souvenir baskets along the roadside. Families despairing of a hotel room spread out straw mats four rows deep on the sidewalks and parking lots of this beach town, snoozing for the night alongside itinerant rice harvesters.

On the wide public beach, men help their sons build sandcastles and women wearing long nylon coats and flowing head scarves plunge eagerly into the tumbling waves, giggling and shouting like raucous black seabirds in the cool saltwater.

Did someone say there was a gasoline shortage?

Since June, Iran has rationed gasoline to about 26 gallons a month for most private cars, leaving many families doubtful about their summer vacation plans and raising fears of pandemonium when school resumes in September and burned-through ration allocations run dry.

The rationing program is designed to stem the nation's crippling reliance on imported gasoline, in a country that has one of the world's largest proven oil reserves. The dependence on foreign gasoline, a result of the country's shortage in refinery capacity, is costing Iran more than $5 billion a year and rendering the nation vulnerable to the possibility of a new round of international sanctions that could cut off the fuel shipments.

The rationing has become the eventual focus of most conversations in Tehran, and the catalyst for a robust black market in fuel as holiday-makers seek ways to get to the shops and the seashores.

Although bookings have been down 25% to 30% here in the popular Caspian beach resorts since the rationing took effect, the crowd for the three-day holiday weekend this month was as big as ever. Hotels were turning away disappointed carloads of beachgoers well into the night. In restaurants offering plates of grilled sturgeon, Caspian trout heaped with coriander and saffron-sprinkled rice, diners were elbow-to-elbow.

Morteza Zarif Ali Hosseini, a printmaker, was camping in a dome tent along the beach with his wife, child and brother's family (they had crammed into one car for the 3 1/2 -hour journey from Tehran). He said he saved up his gas allocations for the long-planned trip.

"Praise God, once a week we use the car now," he said.

Iranian officials announced that average gasoline consumption had declined by more than 20% shortly after it began the rationing in late June. The rationing program is an effort to reduce the country's vulnerability in the event the United Nations elects to target gasoline exports to Iran when it reviews the nation's nuclear program.

"It's not just a matter of U.N. sanctions. Just to give you an idea, since 10 years ago, we have tripled the amount of gasoline we import. And if we don't stop it, we have no idea what this will lead to," said Mohammed Sadegh Jenan Sefat, an economics writer for the Tehran-based publication Kargozaran, which is allied with the party of former President Hashemi Rafsanjani.

What has many economists and officials worried, though, is that the "smart cards" issued in June with six months' worth of gasoline allocations may already be running close to empty for many families.

Considering that the debut of rationing sparked riots at a dozen gas stations, banks and department stores, officials here are worried -- so much so that parliament is seriously considering upping the allocations.

"To imagine what would happen if the government says, 'OK, this is the ration -- no more allocations.' We cannot imagine this scenario," Sefat said.

"For now, people are just seizing the moment and consuming what they can. They're not thinking about the future. So their behavior is completely unpredictable."

In Tehran, taxi rates have skyrocketed, not only because drivers must buy extra fuel at black-market prices, but because many have elected not to drive at all, finding it just as profitable to sell their ration allocations to other drivers.

"I'd guess that as many as 50% of the sedans in this city have run out of their allocation already, and the rest are about to run out," said Ahmad, a Tehran taxi driver who would give only his first name. He made his living driving a taxi in the capital until recently, when selling his 238-gallon-a-month gas allocation suddenly seemed easier and more lucrative.

On a recent afternoon, he stood at a busy street corner and hopped into a taxi cruising past. He went with the driver to the gas station, where he used his rationing card to fill the man's gas tank and stuffed a large wad of riyals into his pocket before being dropped off down the street.

"There are all these rumors that taxi drivers are misusing these opportunities. But in fact, we're just helping our fellow citizens if they are in distress," he said.

In Tehran, he said, black marketers are selling gas for 300% above the ration price of 42 cents a gallon. "But out in the provincial cities, the price is much, much more. People are desperate there. You have people stalking the streets for gas."

Still unclear is whether the rationing program has stemmed the seepage of subsidized Iranian gasoline across the borders into Turkey and Iraq, where steeply higher prices have contributed to a robust smuggling network.

Bijan Bidabad, a former central bank economist, estimated that half of the fuel savings so far may be from an interruption of smuggling networks. "But ultimately, the rational solution to stop the smuggling is to equalize the prices," he said.

That's something the government, fearful of a backlash, still seems unwilling to do.

Instead, it is increasing production of hybrid cars that use compressed natural gas, moving to increase refinery capacity and preparing, it seems, to dole out more gas allocations.

Kamal Daneshyar, chairman of the parliament's energy committee, said the government had been looking at a $9-billion tab to import gasoline this year before the rationing program cut the cost by $4 billion.

"We are pushing in parliament to force the government to announce a free market rate above the rations, so that nobody is in trouble because of the unavailability of gas," he said.

Absent that, he said, "I believe that the government is willing to announce more allocations."

And what if the U.N. eventually elects to block gasoline exports to Iran?

"It's a good excuse for the government to impose stricter rationing," Daneshyar said. "With stricter rationing, with more and more public buses and less high-consumption cars, then we can cope with any restriction."

Iran says fuel consumption down 27%

Iran says fuel consumption down 27%
30 July 2007
by Reuters

Iran's daily gasoline consumption has dropped by about 20 million litres since the No. 2 OPEC oil producer started to ration motor fuel in June, Oil Minister Kazem Vaziri-Hamaneh was quoted as saying on Sunday.

He did not specify how much fuel Iranian drivers were now using but officials had said Iran consumed 75 million litres a day, 40 % of which was imported, before rationing was introduced on June 27.

"During this time 20 million litres of gasoline was saved per day on average," state television quoted Vaziri-Hamaneh as saying.

The move last month to start rationing gasoline sparked protests by motorists used to cheap, abundant fuel. It aimed to curb consumption in the Organization of the Petroleum Exporting Countries member, which does not have enough refining capacity to meet domestic gasoline needs.

Some Iranian officials had worried costly fuel imports were making the country increasingly vulnerable when world powers are considering ratcheting up United Nations sanctions against Iran over its atomic plans.

Iranian oil official Hojjatollah Ghanimifard said on July 17 his country would cut its gasoline imports by at least 14 % from August.

Private drivers receive 100 litres of fuel a month at the heavily subsidised price of 1,000 rials (11 U.S. cents). Many complain it is not enough and have urged the government to offer more, even if they have to pay a higher price.

But the government fears this would send inflation, now running at about 16 % year-on-year, even higher.

The United Nations has imposed two rounds of sanctions over Tehran's failure to halt disputed nuclear work the West says is aimed at building atomic bombs. Iran dismisses this charge, saying it only wants to generate electricity. A third set of sanctions is now in preparation.

The United States, leading efforts to isolate Iran, has described Tehran's gasoline imports as leverage in the row.

Venezuela Agrees To Sell Gasoline To Iran

Venezuela Agrees To Sell Gasoline To Iran
Jul 4, 2007

Venezuela has agreed to sell gasoline to Iran, the South American county's energy minister said in comments published Tuesday, a week after the Islamic country imposed a fuel rationing program that has sparked violence.

"Yes, Iranians have asked to buy gasoline from us and we have accepted this demand," Rafael Ramirez told the Iranian daily newspaper Shargh. The reformist daily said Ramirez refused to elaborate on the deal.

During a visit to Iran this week, Venezuelan President Hugo Chavez called the two "strategic partners." Ramirez accompanied Chavez on the visit.

Last week, the Iranian government began rationing fuel, causing angry Iranians to smash shop windows and set fire to dozens of gas stations in the capital Tehran and several other cities.

The government says the fuel rationing will free up funding for development projects and make the country "invincible."

Iran is one of the world's biggest oil producers, but it doesn't have enough refineries, so it must import more than 50% of the gasoline its people use from abroad.

© 2007 Dow Jones Newswires

Banning the story

"What can I do with three liters? Set myself on fire? Please let the authorities hear my voice that we cannot live like this. Life has become very difficult for us, I cannot support my wife and children anymore."

http://www.rferl.org/featuresarticle/2007/06/1cf0d8b2-d8e1-421e-9737-48063be9ef08.html

Iran's Gas Riots

Iran's Gas Riots
By Kenneth R. Timmerman
FrontPageMagazine.com
June 29, 2007

This week’s gasoline riots in Tehran were entirely predictable. They are also the clearest measure we have seen in recent times of the remarkable fragility of Iran’s Islamic regime.

Predictable, because they have been debated publicly in Iran for weeks and delayed several times, for fear of adverse public reaction.

A measure of the regime’s fragility because large numbers of Iranians have braved repeated threats to protest gas rationing and price hikes in one of the world’s largest petroleum exporting countries

Mahmoud Ahmadinejad came to power in August 2005 on promises that he would put more of Iran’s oil revenue on the tables of ordinary Iranians.

During the election campaign two years ago, he toured Iranian cities and towns, promising a new high school here, a municipal swimming pool there, a new factory, a new gymnasium, rural development, whatever.

Until now, he has been unable to deliver on those promises, squandering Iran’s windfall oil profits on public subsidies to such un-Iranian groups as Hezbollah and Hamas. People know this, and they resent it. And that is what ultimately led to this week’s gas riots, with petrol stations set ablaze in Tehran and in cities across Iran. http://thespiritofman.blogspot.com/2007/06/petrol-crisis.html

So far, the economic vulnerability of the regime has not translated into regime-threatening political vulnerability; but just wait, says one prominent Iranian businessman encountered in London, who sees similarities in what is happening in Iran today with the final years of the former shah.

During the late 1970s, he reminded me, the Iranian economy, flush with cash from high oil prices, was beset by high inflation, just as it is now. The shah’s answer was to find a few businessmen who had raised prices and throw them in jail, he said.

In April, the Research Center of the Iranian Majlis ( the rough equivalent of our Congressional Research Service) announced that inflation had risen by a stunning 22.4% for the calendar year that ended on March 21, and projected 24% inflation for the current year.

That is an unbelievably bad performance of what is supposed to be a populist government, especially when coupled to double-digit unemployment and the growing scarcity of foreign investment as the U.S.-led sanctions begin to bite.

Just as the former shah, the current regime is also seeking scapegoats: the United States and Israel (surprise, surprise). To make their case more convincing, they have singled out an Iranian businessman who fled the country on February 21, who was recaptured by Iranian intelligence agents three weeks later in a brazen extraterritorial operation in Oman.

Shahram Jazayeri was a cause celebre in Iran by the time he was dragged out of a small tourist hotel in Khasab, an Omani port in the Strait of Hormuz on March 14. Before fleeing Iran, he was sentenced to fourteen years on corruption charges,

Jazayeri made it known at the time that he had documents implementing family members of the Islamic Republic’s Supreme Leader, Ayatollah Khamenei, in business deals described by the court as corrupt. “That connection to the House of the Leader – the very summit of the state - made him radioactive,” Iranian analyst Shahriar Ahy told me.

Jazayeri’s family, whom I contacted in Canada not long after he was recaptured and tortured in Evin prison in Tehran, insisted that he had been framed and that his extensive network of businesses was legally sanctioned by the Iranian authorities. They insisted that he still hoped the courts would exonerate him. Fat chance.

Ayatollah Khomeini, the figurehead who spearheaded the shah’s overthrow, liked to say that the revolution wasn’t about the price of watermelons. It was his way of saying that the Iranian people would endure all kinds of economic hardship, if they identified with the regime.

But this week’s gasoline riots show that Iranians do care about the price of watermelons – at least, when they can see just how rich their country ought to be (because of high oil prices), and how little of that wealth is trickling down to them.

Consider this, the Iranian businessman in London told me.

When Iranians travel to Dubai, they are humiliated. They fly out of Mehrebad airport in Tehran, which was constructed some 45 years ago, and land in a modern, state-of-the-art fantasy-world in Dubai. To make the insult even more grating, unlike their native land, Dubai has no oil. No oil, and yet they are so rich!

The only reason Dubai is prosperous and Iran remains mired in poverty comes down to effective leadership – and the lack of it. And Iranians can see this every time they travel to the UAE.

Working quietly behind the scenes, the Bush administration has won agreement from bankers in Dubai to stop clearing Iranian government financial transactions. Because Dubai has become the economic lifeline connecting Iran to the outside world, this has been a major blow to the regime.

Just last week, sources in London told me, the British government agreed to a U.S. request to put pressure on the HSBC bank to stop clearing Iranian government financial transactions as well. Since HSBC handles approximately 50% of Tehran’s remaining international business, this is an additional heavy blow.

And the economic pressures are about to expand. While in London this week, I learned of a British government proposal, now being discussed as a draft United Nations Security Council Resolution, that would ban Iranian government-owned ships and aircraft from international travel.

According to Lloyd’s List of London, the proposed UNSC resolution, as currently drafted by Britain, would prohibit Iranian ships not only from landing at foreign ports but from transiting international waters. That is an extremely far-reaching sanction that would cut off an estimated 40% of Iran’s daily oil exports, at least in the short run.

The British measure “would effectively strip Iran of the right of innocent passage, enshrined in the United Nationals Law of the Sea Convention,” Lloyd’s List wrote on June 27

The most immediate target of these latest sanctions would be the National Iranian Tanker Company (NITC), which operates a fleet of around thirty http://www.nitc.co.ir/aboutus.htm Very Large Crude Carriers.

Iran could eventually contract with other shipping companies to lift their oil, but they would then have to compete with other exporters in the Persian Gulf and most likely would have to offer significant price incentives to get their oil on board.

All of this points to one simple fact, as far as U.S. policy toward Iran goes: financial sanctions have proven to be a far more effective tool than political pressures or political inducements, as fashioned by the State Department.

This regime in Tehran has never ceased a single act of bad behavior because the West has offered it a bribe. On the contrary: the greater the bribes, the more bad behavior we have seen.

Over the past six moths, as UN sanctions have slowly begun to bite, the State Department continued to hold out hope that the economic “pain” could be ended, if only the regime would suspend its uranium enrichment program.

Until now, the regime has said no. To show their resolve, Iran’s leaders chose instead to impose gasoline rationing, to spread the coast of sanctions across the population.

For the first time, the law of unintended consequences is working in the West’s favor. The popular reaction to the gas rationing has shown the regime’s vulnerability.

Now we need to take the next step and provide serious aid and political support to the pro-democracy forces inside Iran as they step forward to confront the regime.

The alternative to doing so will be war.

Petrol stations burn in protest at Iran rationing

Petrol stations burn in protest at Iran rationing
Nasser Karimi
June 28, 2007
The Guardian

Iranians set fire to a dozen petrol stations in Tehran in the early hours yesterday, angered by the sudden start of fuel rationing, a step that threatens to further increase the unpopularity of President Mahmoud Ahmadinejad.

After the violence security was strengthened at several stations, and there was calm as Iranians lined up to fill their tanks under the new restrictions, which limit private drivers to 100 litres (22 gallons) a month.

The government has been warning for weeks that it would start rationing, but the announcement on Tuesday, only three hours before the measure went into effect at midnight, sent Iranians rushing to fill up.

The rationing is part of a government attempt to reduce billions of dollars in subsidies it pays to keep petrol prices low. Iran is one of the world's biggest oil producers, but has few refineries and imports more than 50% of its petrol needs. The government says money saved from subsidies can go to building refineries, improving public transportation and job creation.

But a rise in petrol prices last month and now the rationing are feeding discontent with Mr Ahmadinejad, who was elected in 2005 on a platform of helping the poor and fixing Iran's ailing economy.

"This man Ahmadinejad has damaged all things. The timing of the rationing is just one case," said Reza Khorrami, a teacher who was among those lining up at a Tehran petrol station.

The short notice appeared to be aimed at preventing a rush to hoard petrol.

Yesterday a group of legislators tried to draft a bill for cancelling the rationing, but failed to win majority support.

Iran Cracks Down on Dissent

Iran Cracks Down on Dissent, Parading Examples in Streets
By NEIL MacFARQUHAR
June 24, 2007
New York Times

Iran is in the throes of one of its most ferocious crackdowns on dissent in years, with the government focusing on labor leaders, universities, the press, women’s rights advocates, a former nuclear negotiator and Iranian-Americans, three of whom have been in prison for more than six weeks.

The shift is occurring against the backdrop of an economy so stressed that although Iran is the world’s second-largest oil exporter [this is incorrect, it is the fourth-largest] , it is on the verge of rationing gasoline. At the same time, the nuclear standoff with the West threatens to bring new sanctions.

The hard-line administration of President Mahmoud Ahmadinejad, analysts say, faces rising pressure for failing to deliver on promises of greater prosperity from soaring oil revenue. It has been using American support for a change in government as well as a possible military attack as a pretext to hound his opposition and its sympathizers.[...]

Young men wearing T-shirts deemed too tight or haircuts seen as too Western have been paraded bleeding through Tehran’s streets by uniformed police officers who force them to suck on plastic jerrycans, a toilet item Iranians use to wash their bottoms. In case anyone misses the point, it is the official news agency Fars distributing the pictures of what it calls “riffraff.” Far bloodier photographs are circulating on blogs and on the Internet.[...]



The National Security Council sent a stern three-page warning to all the country’s newspaper editors detailing banned topics, including the rise in gasoline prices or other economic woes like possible new international sanctions, negotiations with the United States over the future of Iraq, civil society movements and the Iranian-American arrests. [...]

Analysts trace the broadening crackdown to a March speech by Ayatollah Khamenei, whose pronouncements carry the weight of law. He warned that no one should damage national unity when the West was waging psychological war on Iran. The country has been under fire, particularly from the United States, which accuses it of trying to develop nuclear weapons and fomenting violence in Iraq.[...]

The three Iranian-Americans are being held in the notorious Section 209 of Evin Prison, the wing controlled by the Intelligence Ministry, and have been denied visits by their lawyers or relatives. Iran recognizes only their Iranian nationality and has dismissed any diplomatic efforts to intervene. A rally to demand their release is set for Wednesday outside the United Nations.[...]

“People don’t want to come to conferences, they don’t even want to talk on the phone,” said Abbas Milani, the director of the Iranian studies program at Stanford University. “The regime has created an atmosphere of absolute terror.” [...]

Not that everyone has been intimidated. More than 50 leading economists published a harshly worded, open letter to the president saying his policies were bringing economic ruin. High unemployment persists, there has been little foreign investment and inflation is galloping, with gasoline alone jumping 25 percent this spring.

Gasoline rationing is expected within a month, with consumers so anxious about it, reported the Web site Ruz, financed by the Dutch government, that skirmishes broke out in long lines at some pumps on June 17.

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