IRAN’S GOVERNMENT has shut down for two days, with all civil servants and public sector workers staying at home for an unexpected holiday, in a move apparently designed to save electricity.
The state is the biggest employer in the country, with about 2.2 million full-time staff. Officially, the reason given for the closure was an “unprecedented” level of midsummer heat.
But ordinary Iranians and analysts believe the government’s real motive was to cope with a severe shortage of electricity. “People should help [the government] by consuming electricity more considerately,” said Majid Namjoo, energy minister, on state television.
Last Saturday was a religious public holiday, but the government surprised many Iranians by announcing that state organisations would stay closed on Sunday and yesterday, before reopening today.
Mr Namjoo said national electricity consumption had increased by 8 per cent this year.
Reform-minded economists have warned that the government’s neglect of infrastructure projects, along with the consequences of international sanctions, would damage key sectors, including power generation.
The private sector was not officially affected by Iran’s unexpectedly long public holiday.
In practice, however, work at some companies came to a halt. “We need to be in constant touch with the state-owned organisation which has a contract with us,” one businessman said.
“But suddenly the government shuts down two working days after a public holiday which means the whole week is gone, while our contract specifically mentions fines for every single day of delay.”
Mahmoud Ahmadinejad, Iran’s president, has concentrated on transferring oil revenues to the poor, not investing in national infrastructure.
Iran’s ability to generate electricity is believed to have worsened accordingly. But the government points to its success in lowering inflation to 9.4 per cent — the first time it has been in single digits for two decades.
Some experts, however, say this is simply because of stagnation. One indicator is a rise in the number of bounced cheques. One out of every eight cheques bounced in the two months to May, according to the central bank in Tehran. This is the highest proportion recorded since the Islamic revolution in 1979.
“We would now rather not take the risk of accepting cheques,” a 45-year-old merchant in Tehran’s bazaar said.
Western diplomats outside Iran believe the country’s economic prospects are being undermined by chaotic decision-making.
“The government is in a state of denial and under Ahmadinejad has been for an awful long time,” said one diplomat.
“Economic policy is chaotic at best. Manufacturers are complaining about unpredictable tariff policies. But they also have problems with other areas of government policy that are just as unpredictable.”
The biggest uncertainty is whether the generous state subsidy of energy consumption will continue. Mr Ahamdinejad has talked about removing subsidies on oil and gas from September.
“This obviously could have painful consequences for consumers,” said a western diplomat. “But Ahmadinejad’s plan is ambiguous. Nobody knows what true prices are going to be once price rises come in. Nobody knows exactly when price rises are going to come in ... So there’s a huge amount of uncertainty.” – Copyright The Financial Times Limited 2010