Riot police deployed as Iran hikes fuel price 400pc
Published 20/12/2010 | 05:00
Iran's rulers showed that they were fearing another bout of mass unrest yesterday when they deployed riot police across the capital as a biting austerity programme took effect.
International sanctions have forced Tehran to quadruple petrol prices overnight in the first phase of a subsidy-cutting exercise that America hopes will undermine Mahmoud Ahmadinejad, the Iranian president.
Sanctions are severely hampering the country's ability to profit from its vast energy reserves and Mr Ahmadinejad has been forced to conclude that his government can no longer afford subsidies on fuel and food that amount to €75.4bn a year.
The deployment of riot police reflects the view that, as ordinary Iranians contemplate the consequences of their government's international isolation, the Tehran regime may have to pay a heavy political price.
Recent history suggests that the Iranian response is unlikely to be a shrug of the shoulders.
When the government imposed rationing on subsidised fuel in 2007, Iranian protesters responded by setting alight dozens of petrol stations in Tehran.
Mr Ahmadinejad has appealed for understanding.
"The people's co-operation and frugality are essential," he said in an interview on Iranian state television. "The successful implementation of this plan will benefit the whole nation."
In the first phase of a programme meant to see a return to free-market prices by 2015, subsidies are to be reduced by €15.3bn in the next year.
Motorists from this week will pay 25p (29c) a litre for petrol, a 400pc increase, even though the new price is well below market levels.
In an attempt to alleviate the pain, the government has already begun to pay £26 (€30) a month to every individual classified as poor, which is the vast majority of the population. The average annual salary in Iran is £2,300 (€2,700).
Yesterday, the initial response of Iranians seemed to be one of sullen resentment but observers warned that the public mood could swiftly sour if inflation resulting from the subsidy cuts outstripped the cash handouts.
The austerity programme has also exposed divisions within the ruling elite and Mr Ahmadinejad has faced opposition from factions in parliament and the powerful merchant class.
Despite its energy reserves, Iran is forced to import a third of its petroleum because of a lack of refining capacity.
By reducing demand from private consumers, Iran hopes to boost energy exports. (© Daily Telegraph, London)