A protest by merchants selling gold and jewelry in Iran’s bazaar marketplaces will start its fourth week on Wednesday, triggered by the regime’s plan to add a tax of three percent on them. Discontent in the bazaars helped set the stage for the overthrow of the Shah and so the regime is looking at this challenge with great unease. The regime is finding itself in a worse position as each day passes by.
The proposed tax is causing an outrage among the gold merchants. As one explained, “Today one gold coin was $326. I buy it for $324 from the bank and with a $2 marginal profit I sell it on the retail market. If the VAT [value-added tax] is applied my customer would pay $326 plus $10 as a VAT to me and if he needs to cash the coin next week, he has to sell it at the same price he has bought it [for] or even for $2 less.”
The gold merchants in Tehran’s Grand Bazaar took action by shutting their doors, sparking a strike that has spread to major bazaars around the country. In Mashhad, over 100 gold merchants staged a public protest. Aware that the shutting down of the bazaars was a precursor to the fall of the Shah, the regime is panicking. In Kermanshah, regime thugs tried to force the merchants into opening for business and damaged their shops. Several merchants who fought back were arrested. Other merchants are said to be joining them. The top prosecutor is now threatening them, calling them “economic saboteurs,” an offense that sounds a lot like treason, which carries the penalty of death.
This is the second major confrontation between the regime and the bazaar merchants in less than six months. In July, bazaar shops around Iran closed after it was reported that a 70 percent tax increase was on the way. The government said it was an error and that the tax was only 30 percent. The strikes continued to grow and according to one report, about 500 merchants went beyond complaining just about the tax and called for a “death to dictatorship.” Shops were raided by the security forces, and one merchant died of a stab wound on July 7. Ultimately, the regime backed down but not without permanently creating bad blood with the bazaar merchants.
The loyalty of the merchants has been crucial to the regime’s survival as it loses support from its people. As the Associated Press mentions, “For decades, the ruling theocracy has counted on the thousands of bazaar families and businesses as some of their most stalwart backers.” To make matters worse for the regime, companies continue to make the decision that operating in Iran isn’t worth the cost of potentially being sanctioned by the U.S., the E.U., and other countries. Royal Dutch Shell, Total, Eni and Statoil have agreed not to make any further investments in Iran, although the sincerity of Royal Dutch Shell and Total is being questioned. Companies in Kuwait, Russia, India and Turkey have promised not to sell gasoline to Iran, and the end of money transfers to Iran by most banks in the United Arab Emirates is particularly stinging.
The overall desperate economic condition of Iran makes this internal tension exponentially worse. The rial has recently fallen 13 percent against the dollar. Steel producers in and around the bazaar in Tehran have held protests because companies tied to the Revolutionary Guards are importing foreign steel at a cheaper price. At least two protestors have been arrested. Factories are regularly closing, power outages are common, and workers often are laid off or work without seeing a paycheck. On September 27, about 3,000 workers at a tire factory went on strike because they are only being paid for a tiny fraction of their overtime hours under increasingly harsh conditions.
In addition, the youth remain as opposed to the regime as ever. In a shocking admission about the status of religion in Iran, Planet-Iran.com reports that the Deputy Minister of Islamic Guidance and Culture for Media Relations has instructed clergymen to back out of politics and return to the mosques because “mosque attendance has thinned out.” The ingredients exist for a nationwide general strike that could be fatal for the regime.
As previously reported here, the regime is fracturing and may not have the resources to put down a general strike and if they use excessive violence, a popular uprising will erupt. There are major elements of dissent in the security forces, including the Revolutionary Guards, the force tasked with keeping the regime in power. Top Iran expert Michael Ledeen has reported that the regime has executed about 700 disloyal members of the Revolutionary Guards and the Basiji militia after charging them with drug trafficking. There is a heated battle between the Majiles and President Ahmadinejad and between senior clerics and Ayatollah Khamenei. One member of the Assembly of Experts, the body that chooses the Supreme Leader, has written a five page statement making the case that Khamenei is violating the Iranian constitution.
A look at Iran today is reminiscent of the country in the period before the fall of the Shah and of Eastern Europe before the collapse of Communism. Almost all of the elements necessary to bring down the regime exist except for pro-active Western support. The regime’s life is bound to expire, but the question is how much destruction will be wrought before that time comes.