Iran’s Traditional Bazaar: National Benefits or Personal Profit?

Bazaar on Strike: the Government and Bazaar Confront

Two weeks of strikes and protests have continued in Iran’s bazaars in Tehran and other cities despite agreements between the government and the merchants’ unions, and in spite of of an official government announcement that declared an end to the disputes.  Thus the theory concerning the political aspects of the protests seemed to be plausible.  It facilitated the Green Movement’s ability to profit from the event.  However, as the bazaar became pacified the idea of bazaaris joining the Green Movement eventually faded.

Nevertheless, in an economy in which private businesses own less than 30 percent of the assets, and the government’s income is primarily obtained by selling the nation’s wealth, such as oil and natural gas, instead of collecting taxes, the bazaar cannot play a crucial role. Furthermore, the bazaar depends on the government as its largest customer and the government is the only one that owns outstanding financial resources.

On July 6, 2010 (15 Tir 1389), a part of Tehran’s traditional bazaar was shut down due to the demonstrations against the government’s proposals for a tax hike. Protests were prominent during the first few days and spread to other cities like Mashhad and Tabriz.  But what prevented it from persisting and joining the Green Movement?
Personal profits or political games?

One experienced trader protested to this writer: “Why should we pay taxes when we have had no income? They should calculate our income and tax us based on that. Based on our income, we should pay less taxes than in the previous three years.”

Strikes by a group of traders in Tehran resulted in a meeting between representatives from the merchants’ union and officials from the Finance Ministry.  The protests continued as they discussed some parts of the primary agreement—the parts that excluded their representatives from being involved in resolving the issues between the government and the traders.

As the conflict continued between the government and the traders, the government shut down the bazaar using the excuse of high temperatures and pollution. However, both official and traditional trader’s organizations remained unheard.

Why didn’t formal organizations such as the Chamber of Commerce officially announce their position? This question was addressed by a member of the Chamber of Commerce in Tehran. According to him, “The Chamber of Commerce was planning to announce its position about these recent events, but the unexpected governmental holidays prevented us from holding the official meetings.” (2)

According to a historian by the name of Farzaneh (all family names are withheld), there are political reasons behind the silence of the Trade Room members and their alliances who are indeed powerful among the traders. “Asgar Oladi, who is extremely influential in the bazaar, has been a critic of Ahmadinejad over the last year and has criticized him very harshly in some cases. Since we have not seen any reaction from him or his alliances, we can conclude that they are trying to use the situation in their own favor.”

Some believe that the state of the economy is the cause of all these events. As Majid, an economic expert and activist, explains, “The government is now in a financially critical situation. It is facing higher costs of maintaining its organizations including the anti-protest militia, and is losing income because of international sanctions. As a result, it is trying to decrease its budget deficit by increasing taxes. However, the government is now dug in its own hole! The result of an ideological government is that the Iranian economy is now, more than ever, in a deep recession. The economy faces large demands but can on produce a small supply. In such situation, the suppliers must pay higher taxes and they cannot shift it towards the demanders. Consequently, a decline in profits can be an excuse to protest against government proposals.”

Government facing numerous challenges

Not only are low revenues of private businessmen and their inability to pay taxes a consequence of the economic recession, but it also increases the quantity of bounced checks. Therefore, closing the bazaars can play an important role in raising the number of bounced checks. Based on official government statics, the number of bounced checks in 1388 (2009-2010) was the highest in the thirty year history of the Islamic Republic (3), and as the bazaar remains on strike the non-payment crisis becomes even more challenging.

Majid, an economics professor, explains the above issue and its direct effect on the basic parts of the Iranian economy (supply, demand and funding). “The monetary portion of the Iranian economy will be shocked and damaged if the strike in Tehran’s bazaar (an important part of Iran’s economy) continues.”

Despite the close relationship between the bazaar and the monetary portion of Iran’s economy, as well as the current economic recession, it is not clear what the government’s intentions are to force such high costs on traders. According to some experts, the government is trying to transform the bazaar into being dependent on the state.

But it seems that the government has failed to either control the bazaar or force it to depend on the government. Majid believes that this is due to the relatively independent position of the bazaar: “The two crucial factors of power and independence have always played specific roles dictating the results of an argument between governments and social and economic organizations. The bazaar as a whole is empowered by both factors to some extent.”

“The crisis would have spread throughout other cities and would have become more challenging if the government insisted on its proposals. The government giving up on its plans shows that people can achieve their goals through applying pressure on the government using independent organizations such as the trade markets or bazaars.”

However, as the situation becomes more stable and calm the government officially denies all the problems. According to Mahmoud Shokry, vice president of the executive branch of Iran’s revenue services, “Closing a part of the bazaar was not related to the tax hikes.  Currently, the taxes are increased by 15 percent and they are calculated based on last year’s revenues. From now on, the merchants’ unions will determine their own taxes.”   

His speech clearly verifies that the government has retreated on its previous proposals. But can this retreat lead to further progress for the Green Movement?

How far is the bazaar from the Green Movement?

According to Firouz, a financial analyst, “Iranian bazaars, as economic activists portray it, are the traditional part of the Iranian economy. The traditional traders are not interested in upgrading to modern methods of trade like advertisement, and offering services such as customer service, warranties and other post purchase services. However, in Tehran’s more modern bazaars and shopping malls, and in the shopping centers in Tehran, one can observe the divergence of these modern shopping centers from the old traditional bazaars.  So, it is not surprising that the strike did not have an effect on more modern shopping malls; even shops that were located close to the traditional bazaars did not join the strike.”

On the other hand, some social analysts believe that since the bazaaris failed to support the movement of the Iranian people over the last year, the bazaar protests did not spread throughout the country.

As Firouz explains, during the last ten decades, Iranian movements seeking democracy have been missing coordination between different social, economic, and cultural organizations. Each component of the movement such as the bazaar (the economic part), and students activists and artists (the social component), have been asking for their demands independently instead of uniting to reach their common goals. As a result, it is unlikely for them to reach their main social aims like freedom, justice and the right to privacy for all.

Consequently, it is unrealistic to expect a miracle from the bazaar strikes. These protests only took place in order to fulfill the interests of individual traders. One can only expect to witness significant changes in Iran’s society when the individual components of the movement work in harmony to reach their common goals. Only then can the greed of the bazaar benefit society as a whole.


References:
1)    Harana News, Tir 23rd, 1389 [July 14th, 2010]
http://hra-news.org/1389-01-09-08-12-36/2720-1.html
2)    Dowicheh World, Tir 22nd, 1389 [July 13th, 2010] 
http://www.dw-world.de/dw/article/0,,5790233,00.html
3)    Mehr News, Tir 23rd, 1389 [July 14th, 2010]
http://www.mehrnews.com/fa/newsdetail.aspx?NewsID=1116443       
4)    Mehr News, Tir 26rd, 1389 [July 17th, 2010]
http://www.mehrnews.com/fa/newsdetail.aspx?NewsID=1117879