Subsidies, Inflation, Hijab: The Hot Issues Facing Iran in the Upcoming Year

After unprecedented anti-government protests swept Iran during the last Persian year, which ended on March 20, the Islamic Republic is hoping for a relatively peaceful year ahead. But many challenges persist, both domestically and internationally.

The depreciation of the national currency, rocketing inflation, uncertainty over subsidy policies, bankrupt pension funds, conflicts over mandatory hijab rules and continued protests by teachers and pensioners are among the main challenges facing the government.

Elections

Parliamentary elections set for March 2024, the first to be held after the ongoing nationwide protests erupted in September 2022, will be an opportunity for the authorities to create more space for critics within the Islamic Republic to join the government.

Almost all serious candidates from the reformist and moderate conservative movements were prevented from running in the previous two parliamentary and presidential elections.

In February 2020, the vote for the 11th Parliament recorded the lowest turnout since the 1979 revolution.

At the same time as general elections, the Assembly of Experts, a chamber of theologians which oversees the work of the Islamic Republic’s supreme leader, will elect its members.

Ongoing tensions behind the scenes over the succession of the 84-year-old Supreme Leader Ali Khamenei have caused concern. In September, the absence of 30 members of the assembly at its opening session made headlines.

Conflicts over Forced Hijab

Street protests calling for fundamental economic, social and political changes after over four decades of clerical rule have somewhat subsided, but tensions over the mandatory headscarf persist.

Women in Iran must conceal their hair with a head covering while in public and wear loose fitting trousers under their coats.

During Nowruz, the Persian New Year holiday period, authorities in different provinces announced the closure of tourist centers because employees and tourists were not observing the mandatory headscarf rule.

On March 30, the Ministry of Interior insisted on the need to enforce forced hijab and praised vigilantes who are acting as “promoters of virtue and preventers of vice.”

The statement insisted on the ministry’s resolve to act against “the few lawbreakers,” along with vigilantes, the judiciary, law enforcement and “related institutions.”

Friday prayer leaders have devoted a significant part of their speeches in recent weeks to the issue.

Gas Subsidies

The hottest issues facing the government include subsidies, particularly those related to gasoline and flour.

The government is hesitant to increase gasoline prices because such a move has the potential to trigger widespread protests like those seen in November 2018.

The lifting of flour subsidies last year resulted in angry demonstrations in several provinces.

Teachers’ Demands

Teachers have not received their March salaries and announced plans to hold protest rallies in the coming weeks.

Anger among pensioners has also grown as many pension funds are facing difficulties in paying their wages.

Currency

The Islamic Republic’s increasing isolation, a worsening economic situation triggered by years of sanctions and political instability sparked by protests has led to the free fall of the national currency.

In February, the rial had lost 94 percent of its value against the US dollar over the past decade and 55 percent over the past year, according to The Economist.

The dollar was trading at 530,000 rials in the open market on April 3.

Manipulating Inflation

The average inflation rate for the past four years reached 44 percent, an unprecedented situation since World War II.

Last month, the central bank did not disclose the point-to-point inflation for March of last year, but the figure could be extracted from the price index of the month, and the result is 63.9 percent.

Some Iranians have raised concerns that the authorities might be trying to manipulate statistics to fulfill Khamenei’s desires.

The leader of the Islamic Republic has expressed dissatisfaction with the government's economic policies and ordered that actions be taken to curb the inflation and boost economic growth.

Increased “Productivity” or Looting?

The planned sale of “surplus” public assets to the private sector is a very controversial issue.

Officials claim the privatization process will increase "productivity," while critics suspect it will benefit the Islamic Republic’s loyalists.

New conflicts in the region

Toward the end of the previous Persian year, Iran and Saudi Arabia agreed to resume diplomatic relations and reopen embassies.

However, there is a long way to go before the two regional foes can enjoy warm relations.

Meanwhile, renewed tensions emerged with the Republic of Azerbaijan at the start of the new year.

Azerbaijan has often had strained relations with Iran, which is home to more than 12 million ethnic Azeris, the country's largest minority group.

The Islamic Republic is also striving to increase pressure on the Iraqi government to put an end to the activities of armed Iranian Kurdish groups in the north of the country.

Attempts to revive the 2015 nuclear deal between Tehran and world powers have failed, and the war with Ukraine has also negatively affected Iran's relations with the European Union.