Iran feels pinch of US embargo, Gulf war

Shortages, rationing, skyrocketing prices, long lines at the stores, ice-cold homes, inadequate fuel for cooking, a growing black market. These and other hardships are the very practical outcome for Iranians of, first, the American embargo and, now, the war with Iraq.

The economic squeeze flowing from the United States embargo, imposed after the seizure of the hostages, took a long time to be felt. In fact, it has taken the war with neighboring Iraq to bring Iranian leaders to admit they are in economic straits.

But there is no doubt today that the war has severely worsened the shortages originated by the embargo.

One reason is that a major port of entry of goods into the country, the Gulf port of Khorramshahr, is now under Iraqi occupation and no longer functioning. Ships bringing much-needed imports to Iran were trapped in the Shatt al Arab waterway during the first days of the fighting.

One Iranian merchant said, "One of the ships bringing the goods I need, from China, was just unloading when the fighting started. It was hit by Iraqi fire and the goods spilled all over the harbor. Another ship was waiting to unload when the war broke out. It was hit and sank."

Iran has another port at Bandar Abbas, at the other end of the Gulf. This has been relatively untouched by the war. But foreign merchant vessels have shunned the Gulf since the hostilities began, stopping all maritime trade between Iran and the rest of the world.

This has reduced Iranians to thinking in terms of their necessities, and the official propaganda, drummed in by the state-controlled news media, encourages them to look at anything above the basic needs as luxuries.

But even the basic needs are in increasingly short supply. Iranians who have become used to plenty over the past few decades, thanks to handsome oil revenues , have learned over the past few months to stand for hours in long lines for the things they need. The lines, first noticed after the Western embargo began last summer, grew in length after hostilities with Iraq started.

"Whenever I see a queue somewhere, I get into it first and then ask what it's for," said one Iranian woman.

Despite rapidly rising prices, people hardly dare to haggle about the cost of the goods they must purchase. They now seem ready to pay literally three or four times the prices they paid a year ago for things like eggs, meat, rice, sugar, soap, washing powder, and cigarettes.

The government of Prime Minister Muhammad Ali Rajai has begun phasing in a system of rationing in a bid to control prices and ensure equal distribution. Mr. Rajai began by rationing gasoline after the bombing of a number of Iran's refineries, particularly that at Abadan.

Private vehicles were allowed 30 liters a month -- less than what the average driver previously had used per week. To end car queues, coupons have been distributed to automobile owners to last them through the next few months, until March. Taxis and vans have been allowed 15 liters a day. But Mr. Rajai also tripled gasoline prices, setting off screams of protest from cab drivers.

Despite the high prices, a black market in gasoline coupons has sprung up, with 30-liter coupons selling for a minimum of 1,000 rials ($14 at the official rate). This, in effect, has more than doubled the already tripled prices.

In another subterfuge, bazaar merchants with large gas-guzzling automobiles have simply bought up about half a dozen taxis each, used their registration cards to get the coupon, and put away the taxis themselves for the duration of the crisis.

But it is perhaps poetic justice that whereas over the past five or six years Iranians lived in warm comfort while others in oil-importing countries had to shiver because of the oil-price hikes, this year it is the Iranians who are shivering, even though their country sits on vast underground reserves of oil and gas.

Kerosene and diesel oil used for heating homes was one of the first things Prime Minister Rajai rationed. One Iranian complained: "They give me for a month just enough kerosene to last 15 days. What am I going to do during the other 15?"

To make sure electricity is used sparingly during "the other 15 days," Mr. Rajai also clamped a graded surcharge on power consumption per family per month above a certain "poor man's level."

Also just put on the coupon rationing system are eggs, meat, rice, and sugar -- whenever these are available.

"It's a good system if it works," said one housewife. "This will ensure that everyone gets a fair share. The trouble is that the things we need are hardly ever available. I waited two hours before I got my share of sugar at the supermarket today. Why does it take so long for the sugar to come?"

It was not a very intelligent question. A large Iranian sugar factory is situated near Ahvaz in Khuzestan Province, where most of the fighting with Iraq has been going on. Besides, even in peacetime, Iran needed to import sugar, which was sold at subsidized prices to the Iranian public. The sugar is still subsidized when sold at the official rate. Iranians complain about the prices nevertheless.

Many Iranians, however, believe there may be worse to come. "Most of Iran's winter vegetables came from Khuzestan," said one. "We'll probably have a scarcity of vegetables this winter because of the war."

When the trade embargo began in the summer, Friday prayer leader Ayatollah Ali Khamenei bragged to a fundamentalist gathering, "We have stored away enough food to last us several months if hoarding doesn't occur." Ayatollah Khamenei has not bragged about Iran's food situation since the war began.