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Protests Erupt Across Iran After Gasoline-Price Increase

Abeer Abu Omar

(Bloomberg) -- Protests erupted in cities across Iran, leaving at least one person dead, after the government unexpectedly hiked gasoline prices, the semi-official Iranian Student’s News Agency reported.

The fatality occurred during clashes in Sirjan in the southern province of Kerman on Friday, ISNA reported, citing the city’s acting governor, Mohammad Mahmoudabadi. Protests spread on Saturday to Tehran, where motorists blocked highways and intersections with their vehicles in a dense snowfall, according to the Fars news agency.

A special economic commission decided late Thursday to boost gasoline prices by as much as three times and also to ration the motor fuel, the state-run Islamic Republic News Agency reported. The price increase came without any prior warning.

The protests highlight the challenges that Iran’s ruling establishment faces as it struggles to reverse an economic downturn triggered by U.S. sanctions. President Hassan Rouhani’s government is under immense pressure to offset the impact of a severe plunge in oil exports and avert a national crisis.

The International Monetary Fund forecasts that Iran’s government deficit will widen as a percentage of gross domestic product, from 2.7% in 2018 to 4.5% this year and 5.1% in 2020. The oil price Iran needs to balance its budget will more than double over the same period, as U.S. sanctions curb sales of the country’s most important export, according to the IMF.

Read: QuickTake: Iran’s Nuclear Program

Iran’s Supreme Economic Council, a body comprising Rouhani, the head of the judiciary and the leader of Iran’s parliament, met on Saturday in response to anger at the fuel-price increase. On Sunday, Iran’s parliament plans to debate a bill to reverse the price increase and effectively nullify the decision, Aliasghar Yousefnejad, a lawmaker and member of the parliamentary executive board, told the state-run IRNA in an interview.

It’s unclear whether parliamentary votes can overrule rulings by the Supreme Economic Council. The last time Iran introduced fuel rationing was in 2007 during hardline President Mahmoud Ahmadinejad’s second term. That prompted protests at petrol stations and some were even set on fire. Rouhani’s government ended the policy in 2015.

Iran is just the latest -- if most populous -- Middle Eastern nation to see public outrage over bread-and-butter issues like living expenses transform in recent months into potent political protests. Demonstrators have forced leaders in Lebanon and Algeria to resign and toppled a regime in Sudan. Hundreds of people have died in Iraq as security forces there cracked down on protests that have pushed the government to the brink of collapse.

Officials condemned the protesters. Iran’s Attorney General Mohammad Jafar Montazeri told state television that demonstrators who blocked roads and fought with security forces “certainly have roots outside the country, and we have seen in these past two days cyberspace being used to try and provoke people.”

Dump Truck Protest

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

Officials said the increase is necessary to raise funds for the country’s state welfare program, which supports 18 million families. However, the surprise announcement provoked widespread criticism and alarm on social media.

Fars posted a video purporting to show onlookers cheering as a dump truck emptied a full load of bricks and dirt on to the Imam Ali highway in Tehran. Demonstrations have flared in Iran’s second-largest city of Mashhad and in oil-rich Khuzestan province, home to a large ethnic Arab population, IRNA reported. Police also clashed with protesters in the northwestern city of Tabriz, according to the Khabar Online website.

Neighboring Iraq ordered two of its biggest border crossings closed to travelers -- though not to goods -- along its southern frontier with Iran. It did so at Tehran’s request, the Iraqi Border Ports Commission said in a text message.

(Updates with parliamentary vote on the price increase in sixth, seventh paragraphs)

--With assistance from Khalid Al-Ansary.

To contact the reporter on this story: Abeer Abu Omar in Dubai at aabuomar@bloomberg.net

To contact the editors responsible for this story: James Amott at jamott@bloomberg.net, Bruce Stanley, Sara Marley

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