@TEHRAN: Sanctions mean skyrocketing prices for Iranians

September 06, 2012

MANABU KITAGAWA/ Tehran Bureau Correspondent

Increasing stress of late has worsened the chronic hypertension of Vafaee, a 45-year-old trade firm employee in eastern Tehran.

Vafaee's apartment rent, where his family of three resides, is likely to be raised significantly this year.

Residential tenancy contracts in Iran are usually renewed every year. In May, Vafaee's landlord presented demands for a new deposit of 200 million rials ($16,000, or 1.25 million yen) and a new monthly rent of 13 million rials, both double the corresponding amounts he paid last year.

Vafaee's monthly wage is 13 million rials. That means all his paycheck will go to pay his rent.

He has scant hopes for a pay raise at a time when his firm is losing jobs under the intensified sanctions against Iran from the United States and the European Union over his country's nuclear program.

Vafaee said he gave up on taking out a loan because the bank demanded 10 joint guarantors when he applied for one.

He has only until the end of August to reply to his landlord. He is thinking about moving because he probably cannot afford the higher rent and deposit.

He has looked at about 30 inexpensive properties, but they were all "dirty and cramped." His only daughter will be attending college from September.

"I will have so many things to pay for, but all I could do is to live in a park if things continue like this," Vafaee said. "The administration of President Mahmoud Ahmadinejad is only antagonizing the public with the preposterous way it manages the economy."

One expert economist said housing rents are shooting up because cash is not flowing into manufacturing industries.

The international sanctions have made it more difficult to import raw ingredients and pay for them. That has led to factory shutdowns and layoffs, and banks have grown less willing to lend money to manufacturing industries. Investors are also staying away from the stock market.

Cash, with nowhere else to go, is being spent on speculating in real estate, pushing up land prices and housing rents, the economist said.

One real estate agent in eastern Tehran said monthly rents for 75-square-meter apartments now average 18 million rials, up nearly 30 percent from a year ago.

In Tehran, housing rents are cheaper in the south where more people of modest incomes reside. Citizens suffering from soaring rents are migrating south in quest of new domiciles.

Food prices are also shooting up alarmingly.

This is particularly true of chicken meat, which sells for 65,000 rials a kilogram at supermarkets and other retailers near the Tehran Bureau where I work. While prices have fallen since July, they are 60 percent higher than five months ago at some shops.

Chicken meat, being relatively inexpensive, has been a favorite of low-income people, but it now symbolizes inflation. The government is eager to keep the price down by subsidizing chicken farms and by exploiting sales channels that circumvent wholesalers to cut distribution costs.

Still, I have sensed declining public sentiment in marketplaces.

I visited a public food marketplace in mid-July, immediately before the Ramadan fasting season. As I was interviewing shoppers, a middle-aged man approached and chided me:

"Why is a Japanese citizen interviewing us on the price increases? Iran is not a poor country. It's a major power with a long civilization."

Another public marketplace was offering chicken meat at a reasonable price of less than 50,000 rials a kilogram. But the supply was so short that some 20 customers formed a line in front of a butcher's shop. As I was interviewing a homemaker who said she had been there for three hours, people stared at me with menacing eyes. I left the scene quickly after one of them asked me: "Is it funny to see how miserable we are?"

Even if the rising rents and prices can be attributed to the sanctions, nuclear development evidently lies at the core of the problem. But the Iranians, who don't enjoy freedom of speech, cannot openly denounce the government. I felt they are therefore venting their pent-up anger toward a foreigner like myself.

State-run television conducted an online public questionnaire in early July on whether Iran should proceed with its nuclear program.

BBC Persian and an Iranian reformist news website said 63 percent of the respondents favored suspension of the program. But state-run television said that only 24 percent called for a halt, while the rest demanded retaliation against the West, and that the BBC report is a lie.

While the truth behind the questionnaire remains unknown, I find it quite possible, given how I have felt while interviewing people, that more than 60 percent of them favor a suspension. If the 63-percent figure were true, that would be extremely inconvenient for the Iranian government that presses ahead with the logic that nuclear development is the "will of the people."

Iran is set to proceed with its nuclear program, ostensibly for civilian purposes, even at the cost of people's lives. Mahmoud Bahmani, the governor of the Central Bank of Iran, called it an "economic war." That is an expression the government uses to describe the state of intensified sanctions and to call on the public for perseverance and endurance.

But the continued price hikes do not mean that essential necessities are in short supply.

One diplomatic source said Tehran's leadership, with Ayatollah Ali Khamenei at the top, might decide to halt nuclear development "if shortages of goods were to become more evident and if the public were to begin to starve." For the time being, however, the leadership does not seem to be embracing such a deep sense of crisis.

Whatever the true intention--be it nuclear armament or not, the leadership will not back down easily from nuclear development, which it sees as a means to confront the United States, its arch-rival. I can't but feel really sorry for the Iranian public, which has been dragged into this mess.

***

Editor's note: Being a foreign correspondent is not all it's cracked up to be. As Asahi Shimbun journalists--assigned to 34 offices around the world--can attest to, the challenges of getting the story in a foreign land are much greater than on the homefront. In the Correspondent's Notebook series, Asahi Shimbun journalists will write about their experiences on the road, including the difficulties, the frustrations, the long hours, the roadblocks, etc. They will take readers along with them and give them a glimpse into their lives.

MANABU KITAGAWA/ Tehran Bureau Correspondent
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  • PROFILE/ Manabu Kitagawa, correspondent in the Tehran Bureau of The Asahi Shimbun: He joined The Asahi Shimbun Co. in 1991. He worked for the Hiroshima General Bureau, the Kyoto General Bureau, the City News Section in Nagoya, the City News Section in Tokyo, the Islamabad Bureau and elsewhere. He has been in his current post since April 2010. He is 43 years old.
  • Citizens wait in front of a butcher's shop in a public marketplace in Tehran for chicken meat to arrive. (Manabu Kitagawa)
  • Many customers visit this fruit shop in a public marketplace in Tehran that offers prices 10-30 percent lower than at supermarkets. (Manabu Kitagawa)
  • Graffiti on a housing wall in Tehran refers to "Dictator," in apparent reference to Ayatollah Ali Khamenei, the supreme leader of Iran. (Manabu Kitagawa)

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