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Hundreds Detained as Iran Rulers Clamp Down on Fuel Protests

Alaa Shahine

(Bloomberg) -- Iranian security forces detained hundreds protesting a sudden surge in fuel prices, signaling there would be little tolerance for unrest sweeping the sanctions-battered country.

Thousands took to the streets in several cities after authorities unexpectedly raised gasoline prices by as much as three times on Thursday. Motorists blocked highways in Tehran amid dense snowfall. Some set fire to bank branches and stores, according to the semi-official Fars news agency.

The unrest prompted Supreme Leader Ayatollah Ali Khamenei, who has final say on all state matters, to publicly back the price hikes on Sunday. Shortly afterward, parliament said it won’t try to force the government to reverse them, an apparent turnaround from an earlier stance.

“Setting a bank on fire is not the work of people, it’s the work of thugs,” Khamenei said, according to local media.

His comments may suggest the Islamic Republic’s rulers are prepared to take a harsher line against the protesters. About 1,000 people have been detained over two days, Fars reported, citing security officials.

The protests broke out as the economy reels under U.S. sanctions meant to curtail Iran’s influence in the Middle East. The International Monetary Fund expects Iran’s recession to deepen this year, with gross domestic product contracting 9.5%.

Inflation may accelerate to an average of 36%, the IMF has said, compared with under 10% in 2016. That was the year after Iran signed an accord with world powers to limit its nuclear program in exchange for sanctions relief. The U.S. pulled out of the agreement in May 2018.

Before Thursday night’s decision, gasoline prices were fixed at 10,000 rials a liter. Under the new pricing, most passenger vehicles will be limited to 60 liters of gasoline a month at 15,000 rials a liter, the state-run Islamic Republic News Agency reported. Any purchases above that amount will be priced at 30,000 rials a liter. Taxis, buses and trucks will have larger fuel allocations.

The government is targeting financial aid to some 60 million people, or about 18 million households, President Hassan Rouhani said on the sidelines of a cabinet meeting in Tehran. One third of them will receive the payments on Monday, with another 20 million by Friday and the remainder next week, he said.

A rise in gasoline demand meant that the country was at risk of becoming a gasoline importer again, Rouhani said. Iran’s real price for gasoline currently ranges between 55,000 rials and 60,000 rials, he said.

Officials said the fuel-price increase is necessary to raise funds for the country’s state welfare program, which supports 18 million families.

How Iranian leaders would react to further unrest might have consequences beyond the country’s borders.

Iranian allies and proxies in Iraq and Lebanon are already under pressure in the face of mass protests against worsening living standards, inequality and corruption. With some of these groups also under U.S. sanctions, any sign of weakness in Tehran could trigger more pressure from U.S. President Donald Trump.

In taking a hard-line position against the protests, Iranian officials could be relying on their experience in quelling unrest over the past decade. In a familiar tactic, officials said Internet access was restricted for 24 hours.

Fars news agency said 57 stores and dozens of bank branches were damaged in one province. Bloomberg News wasn’t able to independently verify the estimate.

(Updates with financial payments in ninth, 10th paragraphs.)

--With assistance from Arsalan Shahla.

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Neil Denslow, Andrew Davis

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