Iran’s first day without fuel subsidies

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Security is tight in the Iranian capital, Teheran, today, a day after the government slashed subsidies on gas and fuel. Anchor Lisa Mullins gets details from the BBC’s Iran correspondent, James Reynolds.Download MP3

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LISA MULLINS: One of the countries that the inspectors of tomorrow may work in is Iran.  The West expects that the Islamic Republic is building an atomic bomb.  Iran denies the claim.  Still, the U.S., the United Nations and the European Union have imposed sanctions, and Iran’s government having to cut spending to make ends meet.  That includes slashing subsidies on lots of goods and services.  This weekend Tehran axed the subsidy for gasoline.  The BBC’s Iran Correspondent, James Reynolds is in London.  He says Iranian drivers are having a pretty bad day.

JAMES REYNOLDS: Going to the gas station now, what a shock for most ordinary Iranians when they pull up to the pump and find their petrol has gone up to $1.50 a gallon, which is about a 400% rise from what they used to pay.  Now, of course, this price doesn’t compare to what a lot of your listeners will have to pay in America or what listeners will have to pay in Europe.  Still, for ordinary people in Iran, that is a huge leap.

MULLINS: And why would the price of gasoline have to go up in a place like Iran, in particular?  And why would it have to have been subsidized in the first place?

REYNOLDS: It was subsidized in the first place because that was the overall policy back in 1980, make goods cheap for everyone.  And, essentially, it’s taken 30 years to find that policy might not work.  Iran, of course, has huge amounts of oil reserves but it refines very little of that oil.  It even has to import a lot of the oil, a lot of it’s petrol cause it simply can’t refine it properly.

MULLINS: Okay, so, presumably, that would have a knock on effect on the price of everything that’s transported by truck in Iran?

REYNOLDS: Yeah, and the taxi drivers now are already saying, look, they’re going to have to put up their meters.  They’re going to have to put up their prices. Anything that you have to fill up a car or a truck or a van for, you can expect the prices to go up.

MULLINS: Okay, so tell us more about the reaction in Iran so far?

REYNOLDS: Well, first of all, the government was extremely worried because when President Ahmadinejad gave warning of the price rises on Saturday night, we understand from people in Iran, that the police were sent to guard petrol stations or gas stations cause they were worried about unrest.  They were worried because in 2007, when some rationing was announced, there were riots.  So far, we haven’t heard of any riots or unrest, but clearly the authorities are uneasy, which is why the police are manning gas stations.

MULLINS: Aside from sending security forces out on the street, what else has the Iranian government done to try and soften the blow for Iranians?

REYNOLDS: Well, there’s really one idea the Iranian government’s got at the moment which is this: cash handouts to the Iranians for the next two months to get them through the initial shock of the price rises.  So, we expect families and individuals to get, perhaps, $8 a month, perhaps, a bit more over the next two months in order to allow them to pay for, for high gas prices, to pay for when they go to the store and find the bread is suddenly more expensive, to be able to pay for that.  But, here’s the key point.  This runs out after a couple of months.  After that, by and large, they’re on their own.

MULLINS: All right.  The BBC’s James Reynolds.  Thank you very much, James.

REYNOLDS: My pleasure.

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