Vol. 74/No. 29      August 2, 2010

Textile, jewelry, and carpet merchants in Tehran, where the most important bazaar is located, began the strike July 6. Then shops started closing down in other major cities, such as Tabriz, Isfahan, Mashhad, and Hamadan.

Some businesspeople in Tehran donned black armbands and demonstrated, AP reported.

To diffuse the situation President Mahmoud Ahmadinejad suddenly declared July 11 and 12 would be national holidays, saying this was to conserve energy.

The merchants association, in negotiations with the government, won a reduction of the tax increase to 15 percent, although some traders pointed out that with a 10 percent hike already in effect, the actual increase is 25 percent. The New York Times reported that as of July 18, all shops in Tehran were open.

During a previous merchants’ strike in 2008, Ahmadinejad was also forced to yield after trying unsuccessfully to impose a sales tax.

The merchants’ action comes as the effects of the world capitalist economic crisis deepen in Iran. An article in the July 12 Financial Times of London reported that from March to May one of every eight checks written in Iran bounced, according to the Central Bank. Bank Melli said its overdue debts are nearly $46 billion, 860 percent higher than in 2005. The Iran Chamber of Commerce reported industries are working at only 40 percent of capacity. Unemployment is estimated at 25 percent, with many more underemployed.

Big merchants have been supportive of the capitalist governments that have been in power since the 1979 revolution in Iran, but many find themselves increasingly in disagreement with Ahmadinejad’s policies. Faced with a sharp drop in oil income and the effects of years of economic sanctions by imperialist powers, his administration has moved to raise funds by increasing taxes, among other means. The economic sanctions imposed on Iran make foreign enterprises wary of trading with Iranians and imports and exports more expensive.

A jeweler on strike in the bazaar told the Times that he blamed Ahmadinejad’s foreign policy for some of the economic problems. “When the government was opening anti-imperialism funds in Nicaragua and Venezuela with our money it should have thought about such rainy days when oil prices fall and it faces budget deficits.”

Others interviewed by the Times expressed resentment with the growing economic power of enterprises owned by the Pasdaran, the military force that is increasingly influential in the government. The merchants have traditionally been aligned with the clerical hierarchy.

Hossein Noqrehkar Shirazi, deputy oil minister, said in an interview with the Iranian news agency Khabar Online that Iran is selling oil at a discount to attract buyers. Sales are slowed by the difficulty getting around bank sanctions. Production has become more expensive.

Meanwhile, the September deadline for starting to lift government subsidies on basic goods is approaching. These subsidies—covering fuel, water, flour, bread, wheat, rice, milk, sugar, and transportation—were won after the 1979 revolution, qualitatively improving workers’ conditions. The parliament passed legislation last year to phase them out. Iranians with the lowest incomes are supposed to receive cash to cope with the increase in prices. The parliamentary research office estimates prices could go up as much as 60 percent.  
 
 
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