BRUSSELS — SINCE early April, Iran's economic crisis has caused riots and other disturbances in at least five Iranian cities, including a July 4 confrontation between squatters and revolutionary guards in the industrial city of Tabriz, according to sources contacted in Tehran.
The gravest outburst of violence took place in early June in the eastern city of Mashad where thousands of angry residents went on a rampage, burning buses, wrecking banks and government buildings, and looting government shops. In Tabriz, Mashad, and other Iranian cities, street violence began after city employees evicted squatters and razed houses built without municipal authorities' permission - the result of a desperate need for housing.
Housing shortages have been endemic in Iranian cities for decades, but the crisis over the past few months has reached an unprecedented level. Since 1987 real estate values in midtown Tehran have increased fivefold; apartments now sell for 1 million rials ($690) per square meter.
That means the monthly rent for a two-bedroom apartment in a middle class neighborhood is 200,000 rials ($138), the equivalent of a month's pay for a government employee. The Tehran daily newspaper Abrar recently ran a vitriolic editorial explaining that a worker would have to save his entire salary for 50 years in order to buy a small, two-bedroom apartment in the center of Tehran.
Western diplomats in the Iranian capital say the shortage of housing inherited from the imperial regime was exacerbated in the early 1980s by the baby boom that followed the 1979 revolution. In the early years of the Islamic regime, the government encouraged couples to have several children. As a result the birth rate reached 4 percent in urban areas and the Iranian population grew from 33.5 million in 1976 to 58.5 million in 1991. Half of that population is under the age of 15. In 1987 the Iranian gover nment reversed itself and began encouraging birth control. Abortion remains illegal.
The combination of an increasing population and a housing shortage has led to frustration among many Iranians, and forced some to squat in empty buildings or build houses illegally. The government has responded by evicting squatters and razing dwellings that violate city codes.
According to an Iranian journalist contacted in Tehran, those who took part in the recent riots were also protesting against various new taxes levied by cash-short municipalities and more broadly against the rising cost of living in Iran's urban centers.
Retail prices of commodities are going up by the day: A kilo of rice, a basic staple in Iran, jumped from 1,200 to 2,400 rials over the past two weeks. Meat prices rise by 5 percent every month.
Several commodities can be purchased with food stamps at government-subsidized prices, but many Iranians complain their jobs don't leave the time to stand in lines for low-cost goods. In many homes, both parents must work.
The raging inflation is the result of the step-by-step devaluation of the rial that President Ali Akbar Rafsanjani has undertaken over the past two years to eliminate the artificial overvaluation of the currency.
In the 1980s the government rate of the dollar was 70 rials, while the black market value was 1,450 rials. Today, all Iranian banks change dollars at the 1,450-rial rate.
But one woman contacted in Tehran says, "Our salaries have doubled or tripled but this is far from matching the inflation rate. We're actually paid in rials at the former official rate of 70 and we buy goods priced in rials but at the new rate of 1,450 per dollar." Most consumer goods available in Iran are imported after being paid for in hard currency such as the dollar.
President Rafsanjani is aware of his country's economic situation. On May 28, 48 hours before riots broke out in Mashad, he told parliament, "Iran will have to go through one of the most difficult periods of its economic and social history." Said one of his aides in Tehran, "the president is confident. We realize we're in a tight corner but the economic recovery is near."
Western diplomats in Tehran say Rafsanjani's monetary policy has been healthy thus far because the rial was grossly overvalued, but those diplomats wonder whether the Iranian government will succeed in stabilizing retail prices.