The history of the ‘Iranian capitalism’ starts with the constitutional movement of 1906 - taking place at the same time as the Russian revolution of 1905 - after the English started searching for oil in 1901. Through crude oil exploitation and trading, capitalist development in Iran has been integrated into the world market right from the start. Since the 1960s, and after the ‘White Revolution’ of 1963 in particular, Iran has been a modern capitalist country, yet dependent on export of crude oil. The oil boom - and the explosion of the oil price after 1973 and 2005 - enabled the respective regimes to pursue a dictatorship of development: the public sector is about as important in economic terms as the private. ¹ Development and the huge state apparatus are financed by oil rents: through oil exports part of the surplus value produced by workers in other regions of the globe, particularly in the oil importing countries, flows into the banks of the state in Iran. ² As early as the 1970s this mixture of dependency on oil exports and forced development led to a dramatic economic crisis, which finally led to the Iranian revolution of 1979. STRUCTURALLY the regime of Ahmadinedjad faces the same problems today.

Crisis

Between 2005 and 2008 the increasing oil revenue resulted in a threefold increase of the volume of money and an increase in the inflation rate from 10.4 to 25.4 per cent. The regime tries to mitigate the effects of inflation by offering cheap credit and subsidies, but despite this homelessness and poverty worsen. The slump of the oil price from US$148 to 40 a barrel in summer 2008 created black holes in the state’s budget: in 2009 the state deficit stood at $25 to 30 billion, and $6 billion had to be re-designated in order to be able to pay the wages of the public sector employees. Iran needs credit, but, due to the global crunch along with other factors, has difficulty in obtaining it. Inflation continues to grow (food prices have increased by 40 per cent since the beginning of 2009) and manufacturing shrinks. In spring 2009 2.7 million people were officially unemployed, and it must be noted that anyone who had worked a single hour during the days predating the survey has been counted as ‘employed’, so that the actual figures are much higher.

In addition to decreasing oil revenues, Iran has experienced a drought since 2008. The breakdown of hydroelectric power plants results in power shortages, but most importantly the decline of water reserves leads to a dramatic slump in agricultural production: about a third of the cultivated area in Iran is irrigated. Just four years ago Iran became independent from wheat imports; in 2008 six million tonnes of wheat had to be imported again. Already before the outbreak of the current crisis the state had to draw $4.5 billion from the so-called «future fund« (a foreign exchange reserves fund introduced under Khatami) in order to pay for additional food imports. Despite the huge oil reserves the petrol crisis continues. In summer 2008 the state budget for petrol imports was depleted and the government had to use further US dollar reserves from oil exports for buying petrol from abroad, and had to push this through against the wishes of the parliament.

‘Oil Elections’

Before the elections workers had started a campaign against inflation and for a fourfold increase of the minimum wage. In the end the minimum wage was hiked by mere 20 per cent, which is below the rate of inflation. On 1st of May 150 workers’ activists and unionists were arrested while demonstrating for an increase of the minimum wage. They were only released on bail. In general the elections in 2009 were very much dominated by the economic crisis. The question of how to distribute the oil rent was the crucial matter of all debate: how much will be invested, how much will be distributed and in which form? In recent years a government crisis resulting in continual dismissals of ministers and recomposition of the Cabinet has developed at the this front-line. The finance minister, the head of the central bank and the minister for employment argue about the question whether inflation or unemployment poses the bigger danger, and whether the main harm is caused by the ever-growing volume of money or the increase of interest rates.

After the coming into power of Khomeini in 1979, poverty actually declined due to the revolutionary struggles and movements. Higher wages, the reinstating of the unemployed through workers’ councils, the occupation of derelict houses, the appropriation of land for house construction and for cultivation by peasants led to a significant improvement in living standards. After the islamist state power gained strength, and in particular after the Iran-Iraq War and the liberalisation of the economy by Rafsanjani, poverty was back on the increase.

Ahmadinejad’s propaganda of redistribution aimed at reversing this trend. In mid-2006, for example, he promised: «In three or four years time we won’t have an employment problem anymore«. This was supposed to be achieved by a package of «fast-acting projects«, such as credit for small enterprises and subsidies for the start-up companies of self-employed individuals. On top of that cheap credit was offered to pensioners, farmers, students, newly married couples and house owners. The economic preconditions seemed beneficial given that during his first four years in office oil revenues had increased to $266 billion, which was about as much as the total figure for the previous 16 years together (based on OPEC figures).

Thanks to this boom the regime was able to respond to the worsening political isolation of the time and the beginning of economic sanctions by extending state-run economic policies. But according to a parliamentary survey only 38 per cent of the $19 billion spent on «fast-acting projects« actually created new jobs, the rest was siphoned off into different channels, mainly into real estate speculation. Due to the very high inflation, the strata of society which excluded from such public subsidies were further impoverished. The real estate bubble burst in spring 2008 when the government forbade the whole banking system to issue new real estate loans. This resulted in a drastic decline in demand for new houses – with the consequence that not only real estate dealers, but also public institutions and the state were left with a huge volume of bad debts. The banks have accumulated $27 billion of outstanding debt which is not paid back to them, and they themselves do not settle their debts with the central bank. The central bank’s debts and therefore the debts of the state grew by 106 per cent in the period between September 2007 and September 2008. This led to the state being unable to pay - or to pay only with delays - the wages of public employees and the bills for companies contracted by the state. In addition banks issue much less credit to companies: this credit crunch reduces demand for consumer and investment goods and aggravates the crisis.

Even according to Ahmadinedjad’s own central bank statistics, the numbers of poor people has increased under his government: already during his first two years in office rising from 18 to 19 per cent (14 million). In quantitative terms poverty is worse in the countryside compared to the towns, with young people particularly heavily affected. We can assume that nowadays more than 15 million people live below the poverty line, particularly single women, urban unemployed…

The government under Ahmadinedjad also failed on another important front, the reform of state expenditure and subsidies. Iran imports close to 40 per cent of the petrol it needs, paying world market prices. There is a lack of refinery capacity and pipelines. Cuts in the subsidies for oil products, energy and water have been on the agenda for years. In June 2007 an attempt to ration subsidised petrol to 100 litres per passenger car and to increase the price per litre from $0.08 to 0.10 triggered the so-called «petrol revolt«. Iran pays about $0.40 per litre. ³

The 2009 national budget aimed to cutting subsidies for petrol, diesel, gas and energy, and to pay a part of the sum (about $20 billion) directly to low income households - and to the companies affected! - instead. About $8,5 billion was supposed to be diverted to ‘boost the economy’. After hot debates in the parliament this project was put on hold shortly before the elections, due to the government’s fear that a further increase in inflation would fuel unrest within wide sections of society, in particular among the youth.

The Ahmadinedjad regime has failed in the most important fields of economic and social policy. In order to obtain an easing of the economic embargo, the regime in crisis was compelled - against its own propaganda - to harmonise its relations with the US, e.g. by giving logistical support for the US war effort in Afghanistan. Nevertheless the re-election of the regime had been assumed a sure thing, so the dynamic of events during the election campaign took many by surprise. There are two main reasons for the assumption that the government would surely confirmed.

The first reason has its role in any election process, and not only in Iran: the distribution of money. Before election pensions were increased significantly, about 2,000 automobile workers were given permanent contracts, and dividends - about EUR 80 - on the so-called «justice shares« were paid out…

The second reason plays a particular role for Ahmedinedjad: he is strongly rooted in the system of power, meaning within the Pasdaran and Basij. In factories, administrations, urban communities, villages etc. there are said to be 36,000 bases (Payghah) of the paramilitary Basij force. In 2008 their budget was increased by 200 per cent. To a certain extend these structures allow the regime ‘direct control’ of elections.

Problems of closing a vacuum of repression

In the midst of the crisis the elections were supposed to relegitimize the regime. Ahmadinedjad presented himself in his campaign as the representative of the poor against the rich elite, and at first the security forces allowed the protest assemblies of the youth to happen. There were even election debates between the opposing candidates staged on television. But from the beginning of June onwards these debates got verbally out of hand and the assemblies on the streets turned into huge protest demonstrations. It became clear that a protest vote was about to take place. People started to use the election campaign or the emerging public spaces increasingly for their own issues. They were joined by people who would not participate in the election and by the poorer sections of society. People debated in public, raised slogans and the followers of the opposing candidates swore at each other. But when somebody from the surrounding crowd shouted: «Guys, let’s discuss things in a proper manner, we have only these two weeks on our hands!«, he received applause from both sides - it was obvious that everybody shared his opinion. A temporary vacuum of repression had emerged which would be closed again after the elections, no matter who won.

But then protests grew to such a mass level that they could not be stopped so easily after elections took place. The protests increasingly focussed on the social and economic grievances such as inflation, and finally questioned the existing system itself.

Encouraged by the rising oil price and better relations with the US, the regime attacked the demonstrations heavy-handedly. Despite this the state was neither able to break their drive nor to gloss over the visible cracks within the regime: quite the contrary! Even after Khamenei’s open warning during the Friday prayer («The election has been decided at the ballot box, it will not be decided on the streets«, from now on reactions will get tougher) the protests became stronger and more radical once more. The composition of the protests changed - and many started to compare them to the revolution of 1979. This is justified in relation to the dictatorial character of the regime and to the long government crisis against a background of severe economic downturn. But the society in Iran has changed a lot since 1979: Teheran has grown from 5 million to 12 million inhabitants; the middle-class is not dominated by tradtional Bazaaris, but by modern professions (shop-owners, lawyers, professors…); the numbers of workers has increased significantly during the last decade.

In many aspects the current movement differs from the movement at the end of the 1970s: women play a much more active role; the nightly «Allahu Akhbar«-calls are not always expression of religious hope, but are first of all meant to provoke the regime, and there are many other slogans shouted, e.g. «Down with the dictator«. Although more and more factory and office workers take part in demonstrations and street fights, they turn up in the evening after work has finished. For the workers it seemed difficult to imagine putting an end to the regime through widespread strike action. Only the bus drivers’ union - which had previously boycotted the elections - publicly denounced any form of repression.

About the character of the movement

When it comes to an assessment of the movement the Iranian exile left is hopelessly at odds with itself. The debate is dominated by two different factions. Each of these factions focus on a certain element of the movement and declares it to be the essence of the movement itself.

One faction perceive the movement as a reactionary mobilisation of the upper strata of society against the underclasses. Some people with an ‘anti-imperialist’ outlook went so far as to adopt the position of Hugo Chavez and to denounce the movement as a «green wave« in the sense of the «colour revolutions«. ⁴ When it comes to colour schemes we can see that the Moussavi camp did not choose the green colour, it was assigned by lot by the official election commission. The protests were not instigated by foreign forces, and nor is it true that only followers of Mussawi were taking the streets.

The other faction perceives the mobilisations as an imminent revolutionary movement, which is rather wishful thinking than a reflection of reality. It is true that the movement has been based on the four social groups which have been hit the most by the current crisis – workers, youth, women and students – but (so far?) they have not articulated their own social situation. Repression still had the upper hand. The factories are situated outside the actual urban centres, and at workers are subjected to the control of company guards at work. Anyone leaving his job and taking part in demonstrations will face the sack the next day. For those 148 activists released after being arrested on the 1st of May, it was too dangerous to be seen at the demonstrations. And political groups can not act in the open: that would also be too dangerous.

Nevertheless, during the summer very different ways of taking to the streets could be seen. After Khamenei’s threats during the Friday prayers, Moussavi told his followers to stay at home. Despite this, Iran was shaken the next day by the heaviest mass protests since the Iranian Revolution. Demonstrators fought riots with the special police forces, the Pasdaran («Revolutionary Guards«) and the Basij militias. Banks were demolished. On that day more than ten people were killed. A worker activist saw that company buses did not drive back into the workers’ residential areas, but into town centre - to the demonstrations.

The Youth

Under Moussavi’s government (1981-89), with Chameneie as president, about 5000 political prisoners who had already been sentenced to prison terms where executed within three months in 1988 (today the names of 4486 of these are known). When the mass executions were mentioned at a press conference during the then representative foreign minister Laridshani’s Bonn visit, he cynically compared the high birth rates in Iran to the few thousand dead: «We get two million new people every year.« Those thousands are not there anymore but the millions of teenagers who today make up a third of the population are on the streets - and are a ticking bomb for the regime.

In the last 30 years the population has almost doubled from about 37 to 73 million people. Today there are 14 million pupils (1979 it was about 5 million), and around 700,000 teenagers a year are attempting to enter the labour market, with bad prospects: in the spring of 2009 the official unemployment rate was 11.2 percent, youth unemployment 17.8 percent and unemployment amongst young women 29%. Amongst urban teenagers it was 23.7%. Many try to make ends meet by working two or three jobs.

According to official UN statistics, about 2.8% of Iran’s population consume opiates. That’s the highest figure in drug addicts worldwide and ten times more than in England - which has about the same population size. But drug consumption is not confined to teenagers. According to a survey, 20 000 of 60 000 workers on the largest gas fields in the world take drugs. In 2002 the state had to change its strategy for dealing with addicts and methadone programmes were approved in a Fatwa.

The young people in the protests are fed up - be it students who have no prospects as unemployed academics, or proletarians whose living and working conditions continue to deteriorate under «reformists« just as much as under «conservatives«. They see no new perspective and will not legitimise the system: they mistrust institutions on all levels and they refuse the influence of religious authorities on society.

Workers

The ratio of workers to the overall population has remained constant since 1979, i.e. their number has doubled within about 30 years; today around 1 million industrial workers work in businesses employing more than 10 workers. They can be roughly assigned to three categories: textiles and processing of agricultural products; oil industry; new industries, especially cars. The importance of the first, traditional category is diminishing. Oil workers took a decisive part in the revolution of 1979 with their strike. Their number has remained about the same since but the structure of the oil industry has changed considerably with part-privatisation and outsourcing. Thus the oil workers’ organisational ability has been subverted. It used to be a compact unity, passing on experience to new workers. Skilled workers all came to new refineries from the oldest refinery in Abadan. They established connections between all the refineries involved in the strike of 1978-79. During the Iran-Iraq war the refinery in Abadan was destroyed, many workers became war refugees, the politically active among them often left the country. The remaining ones have retired by now (or went into early retirement).

The electrical/household appliances industry is gaining importance. But the central industry by now is the car industry. It employs 118,000 workers, i.e. four times the number of 1979. Here we also find the most significant dynamics of the last ten years: in 1996 203,000 cars were produced in Iran, 2006 it was already 917,000 and in 2008 it was 1.2 million. This puts Iran in 16th place in the world. The state has a 40% share in the largest car producer of the Middle East, Iran Khodro (the largest competitor by far is Saipa with a market share of 35% in Iran). Iran Khodro is infamous for stressful work conditions, long working hours and its powerful plant security. A large part of its workforce are temporary workers. Iran Khodro has also been hit by the crisis and made a loss of $120 million during the last business year. But already before the crisis the sale of cars had to be generously subsidised with credit handouts.

On the 2nd of May 2009 there was a strike at Iran Khodro. The workers had received a record bonus of $1000 in 2006, which had was reduced to $300 in 2007 and 2008 and was not going to be paid at all in 2009. After protests by the workers $150 were paid. Only after the short strike the company raised the bonus back up to $300.

A future prospect?

Since the summer the economic crisis has further intensified. After a 60% decline in the building industry the crisis has now reached other sectors. 600 factories are threatened with insolvency. Ahmadinedjad’s job-creation measures have failed.

Wildcat has featured several reports about workers’ protests in Iran over the last few years. Despite repression and a ban on organising there continue to be strikes and workers’ actions. The teachers’ and especially the bus drivers’ strikes were a qualitative step. There was an uprising at the sugar factory Hafttappeh in 2008. If, from a carrot and stick approach, only the stick remains, if the daily protests of workers continue to be repressed, as happened some weeks ago with the 5-day strike at Wagon Pars⁵, previously the largest manufacturer of railway cars in the Middle East, then much stronger workers’ protests are to be expected.

Even though protests have been met with massive repression and even though the events around the power struggle between two ruling factions were reinterpreted, those with knowledge about the Iranian economy are asking by now whether «after the green wave, a wave of blue collars might not be on the way« - and a much tougher one at that.

Fußnoten:

[1] Iranian official statistics show a working population of 20.47 million, comprising 5.48 million employees in the private sector, 5 million employees in the public sector, 1.53 million ‘employers’ and 7.36 million self-employed. The public sector ranges from state militias (the Pasdaran) to the employees of the state-owned automobile industries. The total population is 73 million.

[2] Iran is the fourth-largest oil producer in the world and has the third-largest reserves of crude oil (10 to 11 per cent of known global reserves). Iran produces about 4 million barrels per day, of which 1.42 million is for domestic use (domestic demand has trebled since 1980); the rest is exported. Due to insufficient refinery capacities Iran has to import about 170,000 barrel of petrol per day, which cost the government $4 billion in 2006. State subsidies for petrol amount to 12 per cent of GDP. Iran is world’s seventh-largest gas producer, and holds the world’s second-largest gas reserves, although currently Iran still imports more gas than it exports.

[3] Pictures of the petrol revolts: www.bbc.co.uk/persian/iran/story/2007/06/070627_ag-petrol-rationing-pics.shtml

[4] The term «colour revolutions« refers to what were often US -sponsored social movements, intended to weaken or overthrow an unwanted government. An example is the «Orange revolution« in Ukraine.

[5] Wagon Pars, which formerly employed 1700 workers, has met with financial trouble during its privatisation. After non-contracted workers had been fired the company intended to send the remaining workers into early retirement under bad conditions, and had not been paying wages for months. The workers smashed windows in protest and destroyed the company’s canteen. On the 25th of August they started a sitting protest in front of the factory door. Because of the tense situation (two important factories nearby are also just about to become insolvent) Pasdaran and police anti-uprising units were positioned close to Wagon Pars, in order to prevent a march of the workers into town. After five days the strike was ended through a combination of part-payment of the unpaid wages, repression by the plant security and the propaganda of the Basij base inside the factory.

Iran: A new warm-up?

Oil Rent