shadow

Iran: As economy stumbles, tension grows between rich and poor

Why We Wrote This

How does one assess a society's resilience? One measure might be social cohesion. With Iran bracing for tougher US sanctions, resentment is growing against the well-connected who flaunt their wealth.

Vahid Salemi/AP/FILE
A woman in Tehran, Iran, drove past a billboard for a Western brand in 2015. Today even well-heeled Iranians complain about how renewed US economic sanctions are causing economic volatility and raising prices.

Two ways to read the story

  • Quick Read
  • Deep Read ( 5 Min. )

After President Trump withdrew from the Iran nuclear deal last spring, renewed US economic sanctions were imposed. Iran’s currency has plummeted, prices have soared, and economic protests have swept across the country. Even well-heeled Iranians grouse about how sanctions and economic volatility are raising prices. Yet Botox treatment centers are still packed with clients, for example – even as most ordinary Iranians brace for new medical shortages. Amid the protests, resentment has grown at the wide gap between Iran’s very rich who flaunt their wealth and the majority of Iranians who struggle to get by. The result is that Iran’s long-simmering social divide increasingly resembles two parallel universes. “It’s astonishing the last few years, this desire to show their wealth. It’s a sickness,” says a veteran observer in Tehran. “Ten percent of Iranians have lots of money, and 90 percent of people are in disaster,” says a middle-aged Iranian professional, who notes how some nights the wealthy gather with glittering cars outside certain malls. “I don’t understand it: If [most] people are in such a disaster, why is so much money spent on something not essential to life?”

There is wealth in Iran.

Decades ago, money here was a well-hidden secret, rarely flaunted, in keeping with the socialist ideals of Iran’s 1979 Islamic revolution.

But today? Ferrari, Porsche, and Lamborghini sports cars navigate as best they can through Tehran’s ever-congested traffic, their finely tuned engines designed more for racing along European motorways.

Rich Iranian youth post photographs online of themselves being, well, rich – at parties and poolside, in their cars and mansions, and spending money at shimmering luxury malls.

Into this picture of wealth insert renewed US economic sanctions, first reimposed after President Trump withdrew the United States from the Iran nuclear deal last spring.

Even well-heeled Iranians grouse about how sanctions and economic volatility are raising prices. And yet Botox treatment centers are still packed with clients, for example – even as most ordinary Iranians brace for new medical shortages.

As Iran’s currency has plummeted in value and as prices have soared, hundreds of economic protests have swept across the country this year. Anger over corruption and mismanagement has been exacerbated now by sanctions and the expectation of more hardship.

And in their midst, resentment has grown at the wide gap between Iran’s very rich who flaunt their wealth and the majority of Iranians, whose struggle to get by has become more daunting by the day. Many of the very rich are part of the regime, or are offspring of the well-connected, known by the derogatory term aghazadehs, which means “born to a nobleman.”

That tension is being made worse as Nov. 4 nears, after which new US measures aim to completely sever Iranian oil sales and deprive the Islamic Republic of its primary income.

Parallel universes

And tensions have been made even worse, for some, by the fact that the revolution promised economic “justice” and equality for all Iranians. Back then, even the wealthiest often lived humble lives.

The result is that Iran’s long-simmering social divide increasingly resembles two parallel universes, in which everything from conversations to lifestyles on one side are seen as foreign and unbelievable to the other.

“It’s astonishing the last few years, this desire to show their wealth,” says a veteran observer in Tehran who asked not to be named. “It’s a sickness. It’s a social disease, when there is so much pressure on ordinary people.”

He points to recent violence in the southern Iraqi city of Basra, where Iraqis took to the streets and burned cars and buildings to protest electricity and water shortages, and compares it to the added pressure that sanctions are already bringing upon Iranians, and upon their social divide.

“It’s the same here: Things are in short supply, and no hope in sight,” says the observer. “Before there was a socialist mentality in the head of everyone. It was a shame to show your wealth. These aghazadehs, they just want to show they are rich, no matter what.”

Scott Peterson/Getty Images/The Christian Science Monitor
Pedestrians in Tehran pass a shop window with traditional objects, Sept. 18, 2018, as Iranians try to lead normal lives while bracing for worsening US sanctions. So far this year the Iranian currency, the rial, has tumbled in value, prices have soared, and shortages of some goods have appeared.

Such lifestyles could not be more different from those of average Iranians, who have seen their purchasing power fall, struggle to make ends meet, and have borne the brunt of large-scale layoffs – all while watching the youth of Iran’s ruling elite, especially, parading their silver-spoon lives.

“The government should act seriously [against] these people, who take these special privileges to become that rich, to hand them in to the judiciary,” says Mahdi Rahmanian, managing director of the reformist Shargh newspaper. “This money has been earned through illegal and illegitimate ways.”

On Sept. 30, Iran’s judiciary handed down three death sentences to people convicted of corruption and disrupting the exchange rate market. Also last week – amid another bout of currency volatility – the Tehran police chief announced the closure of 15 websites for publishing “wrong” dollar exchange rates, and said market brokers were “under police surveillance and they will be severely punished,” according to Reuters.

The Iranian rial has fallen from 43,000 per dollar at the start of the year, to a record low two weeks ago of 190,000 per dollar. Though the rial has gained in recent days, the International Monetary Fund this week forecast that the Iranian economy would shrink 1.5 percent in 2018, and a further 3.6 percent in 2019, due to declining oil exports.

The currency’s collapse has decimated the savings of many Iranians, so the backlash against luxury living has been sharp on social media, where Iran’s economic chasm often appears at its widest. One young cleric, for example, launched a “name and shame” campaign on Instagram called “No to Rule by Aristocrats,” in which he upbraids Iranian officials for their flashy lifestyles and lavish spending of state money.

An app for the wealthy: 'Luxagram'

Now with a quarter of a million followers, Seyed Mahdi Sadrossadati has criticized top representatives of Iran’s supreme leader in far-flung provinces. He has also questioned the amount of cash spent on the gilt-domed mausoleum of Ayatollah Ruhollah Khomeini, the founder of the revolution renowned for his ascetic lifestyle, who died in 1989.

“Whoever has a responsibility in the Islamic Republic but doesn’t adhere to Islamic values is acting against Islam,” Mr. Sadrossadati told the news website Al-Monitor last month. He said images often come secretly to him from close relatives of those he exposes.

The result is that many officials and their children deleted social media accounts or “removed pictures of their rich lifestyle,” he said. “It has also made it harder for others to boast of their luxurious lives.”

Wealthy Iranians have nevertheless created “Luxagram,” a private social networking app with monthly fees. It calls itself a “VIP service” that “is a fun and quirky way for you to share your luxury moments with your affluent friends.”

“Ten percent of Iranians have lots of money, and 90 percent of people are in disaster,” says a middle-aged Iranian professional who asked not to be named. He notes how aghazadehs gather with glittering cars outside certain malls, especially on Thursday and Friday nights.

“I don’t understand it: If [most] people are in such a disaster, why is so much money spent on something not essential to life?” asks the professional.

“Iranians are very flexible people, they can live in very good conditions, and in very bad conditions,” he says. “I’m tired of this disaster… Every morning you wake up like in front of a black hole. You think: ‘If I go out of my home, I must pay for food and a taxi. But if I do not go out, I will have no job.’ ”

Such resentment helps drive increased social tensions, which are not unnoticed by regime insiders.

'We should let them vent'

Hamidreza Taraghi, a conservative analyst and senior official in Iran’s largest charity, the Imam Khomeini Relief Committee, acknowledges the disparities and the tensions but says the important question is how far Iranians have come since 1979, when “the social-economic gap was huge.”

“Of course, we want it to be much better than where we stand now,” says Mr. Taraghi. He counts more than 2,000 protests nationwide in the past six months, almost all over economic complaints and lost jobs. Ostentatious displays of wealth, even in remote towns, have only helped fuel local rage.

“We should let them vent their anger and their protests,” says Taraghi.

He then lists statistics from what he says are 40 years of accomplishments, including widespread literacy and higher education rates, and dam, railway, and airport building, adding that the country’s youth have no memory of the dire situation before the revolution.

Still, while some note that Iran’s social and economic fault lines are decades old, norms are changing.

“Corruption has run too deep to be tackled,” says a former journalist in Tehran. “Nowadays for many people it’s not a shame, it’s being smart. If you can rob a piece of the cake for yourself, this is considered being smart enough to do this, not being too corrupt or a bad person.”

He adds, pithily: “It’s not ‘name and shame,’ it’s ‘name and get credit for it.’ ”

Give us your feedback

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

 
of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.