Gas rationing in Iran ignites anger, unrest

Protesters burn at least 12 stations over the quota system, imposed to curb consumption of heavily subsidized fuel.
By Ramin Mostaghim and Borzou Daragahi
Special to Los Angeles Times
June 28, 2007

TEHRAN — They have endured religious police, political repression and international isolation.

But a quota imposed Wednesday on the purchase of subsidized gasoline sent Iranians to the streets, where they set fire to at least 12 gas stations, damaged government-owned banks and department stores and shouted slogans against the president, according to Iranian news agencies and witnesses.

To curb rapidly increasing gasoline consumption, the government of President Mahmoud Ahmadinejad on Wednesday began enforcing a rationing program that limits most motorists to 26.4 gallons a month at the subsidized price of about 42 cents per gallon.

Although Iran possesses huge reserves of crude oil and natural gas, it has too few refineries to meet the energy-hungry country's demand, forcing it to import more than $4 billion of refined petroleum a year, most of it from Europe. That dependence makes Iran vulnerable to economic sanctions from the West, which is pressuring it to halt uranium enrichment.

Ahmadinejad's conservative government proposed a complicated rationing system last year, but did not implement it on schedule amid public fury and technical problems. In March, it raised the price of the subsidized gas 25%.

But despite concerns voiced by supreme leader Ali Khamenei and security officials, the government revived the plan this week, putting it into effect with only two hours' notice.

"We live on an ocean of oil," said Kambiz Rahmati, 25, an electronics engineer working in a computer market in Tehran. "Why should we pay a high price for gasoline or suffer rationing?"

State-controlled television announced the plan Tuesday night, sending masses of people out into the streets. Motorists honking their horns in protest rushed to fill up in the hours before the plan went into effect. Crowds gathered, and as the clock struck midnight, melees erupted. Angry mobs in the capital set gas stations afire. A spokesman for the fire department told the daily World of Industry newspaper that 21 gas stations had been burned down. Others said at least a dozen were set ablaze.

Witnesses said demonstrators chanted slogans against Ahmadinejad, calling him a "pimp." Scuffles broke out between protesters and members of the pro-government Basiji militia.

Rioters smashed windows of chain stores and government banks. A witness said that a gas station was burned down in Garmsar, Ahmadinejad's hometown.

Government officials branded the demonstrators "hooligans," and said about 80 people had been arrested.

"I saw a looter carrying a television set on his shoulder from a shopping mall," said Nasser Eimani, a Tehran resident. "A Basiji intercepted him and a fight broke out."

Video of the burned gas stations appeared on national television, although the Supreme National Security Council issued a directive ordering newspapers not to publish "provocative" photos or articles regarding the unrest.

The capital's normally frenetic traffic eased Wednesday as motorists stayed home to conserve gasoline or waited in long lines to fill their tanks at stations guarded by police.

Some experts speculated that the rioting was organized by leaders of smuggling rings that sell subsidized fuel to other Persian Gulf countries at huge profits. Others attributed the unrest to broader frustrations with Ahmadinejad's economic policies and the effects of international sanctions.

"These types of revolts are not new," said Mustafa El-Labbad, a Cairo-based Iran expert and publisher of Sharqnameh, a journal about Iranian and Turkish affairs. "In Karaj and the outer parts of Iran, there are such rebellions every two or three months. They show the unpopularity of the country's economic policies."

Under the rationing program, Iranians will be able to buy fuel above the quota but at much higher prices, which will be announced later in the year, officials said.

Critics see the government's handling of the issue as symptomatic of what they call administrative incompetence and lack of foresight.

"This is the result of enormous mismanagement," said Michel Makinsky, an Iran specialist at the Poitiers School of Business and Management, in southern France. "They did not devote enough money [to] investing in refineries. They have inherited a situation which is now becoming critical.

"There is enormous waste of gas everywhere in the country. They have out-of-date cars and gas stations."

Most independent experts say reducing and eventually eliminating the fuel subsidy is a healthy move for Iran, which has limited cash reserves and major pollution problems.

The International Monetary Fund has been a huge proponent of reducing such subsidies, which it says increase public spending without any visible public good. Some economists say Iran's inefficient and exorbitant fuel consumption saps more than 7% annually from the nation's gross domestic product.

Reducing subsidies "is a smart thing to do because we should be giving subsidies to the poor, not to everyone," said an analyst in Iran, who spoke on condition of anonymity.

Iran's estimated 15% to 20% annual inflation rate, largely driven by depreciating currency, has for years caused festering resentment as prices for fresh produce and meat have risen to levels comparable with those in the West. Prices again skittered upward on anticipation of higher transportation costs.

Ahmadinejad won election in 2005 on a populist platform, pledging to bring a larger share of the country's immense oil wealth "to the tablecloths" of Iran's ordinary people, who have been squeezed by inflation and stagnant government wages.

Critics say that his administration instead has focused on imposing its conservative religious ideology and anti-Western and anti-Israeli foreign policy. This week, Ahmadinejad reiterated his prediction that the state of Israel would soon meet its end.

"When I say these words, expansionist powers grow upset and hold sessions," Ahmadinejad said Tuesday, according to the Fars News Agency. "But this is a reality that with every crime criminals commit, they come one step closer to demise and death."

The United Nations Security Council has imposed limited sanctions on Iran for refusing to halt uranium enrichment. The West fears it is part of a nuclear weapons program, which Tehran denies. The sanctions have taken a toll on the once burgeoning private sector as foreign banks and businesses shy away from Iran. And Tehran has not been able to benefit from record prices of crude oil, its main export.

"Ahmadinejad promised so much," said El-Labbad, the Cairo-based analyst. "But the economy has not gotten any better."