What are the “hidden causes” of price hikes in Iran?

As Iran’s population continues to struggle with poverty, inflation, and high prices, regime leaders continue to blame anyone but themselves for the bankrupt state of the economy.

On April 13, the state-run ISNA news agency reported that regime president Ebrahim Raisi was dissatisfied with the rise in the price of basic goods and ordered supervisory bodies to examine the “hidden causes of high prices.”

Raisi claimed that “high prices are illogical and unjustifiable” and tried to lay the blame on unknown sources, saying, “It is unacceptable that a certain company or factory in the private sector can suddenly increase the prices of its goods.”

These remarks are Raisi’s acknowledgment of his utter failure to control prices, as he repeatedly promised since he assumed the presidency in 2021. And they come at a time when the price of food, housing, fuel, and basic goods have seen an unprecedented hike in the past few months. According to the regime’s own official bodies, which often manipulate figures to paint a rosy picture of the economy, Iran’s inflation rate stood at 40.2 percent in 2021, a 3.8 percent increase compared with the previous year.

Raisi’s remarks were immediately met with a backlash by the public. Government corruption is the regime’s worst kept secret and is one of the recurring themes in protests across the country. Workers, teachers, government employees, and all segments of society have had first-hand experience of how nepotism and financial corruption in the regime have destroyed the economy and the lives of millions of Iranians.

But the more interesting reaction was that of the regime’s own media. In an article on the same day Raisi made those remarks, the state-run Javan newspaper, which is run by the Revolutionary Guards (IRGC), wrote, “Mr. Raisi! There are no hidden causes for high prices, look for the causes in the management of your own government.”

Another article in the same newspaper wrote about the mafia-style management of the economy, where powerful gangs that have close ties to the regime are controlling various industries. “No Mafia has succeeded without having influence in the government structure,” Javan wrote.

“The mafia is the government officials!” Javan wrote. “The university entrance exam mafia is run in the ministry of education… the automobile mafia is in the ministry of industries, mines, and trade.”

There’s an important pattern at work here. Regime officials usually blame their rivals for economic woes, government inefficiency, and other problems. Last year, regime supreme leader Ali Khamenei consolidated power within the so-called “principlist” faction, which mostly comprises officials with close ties to the Revolutionary Guards. Khamenei also facilitated his close confidant Raisi’s path to the presidency to make sure that as the regime faces more crises at home and abroad, there would be fewer internal disputes.

The new government spent its first few months blaming all the problems on the previous administration and promising to fix poverty, inflation, and other economic problems quickly. Now, nearly a year into Raisi’s presidency, economic problems did not go away, only its excuses did. And to shrug off responsibility, Raisi has no other option than to direct the blame—albeit in a very vague way—toward the main source of corruption: The IRGC.

The Revolutionary Guards and other entities which directly report to Khamenei have a very large share of Iran’s economy. Sectors such as meat, medicine, wheat, fruit, oil, automobile, and even university entrance exams are tightly controlled by the IRGC. Imports and exports are controlled by the IRGC, as are the supply chains of many vital industries.

And for anyone living in Iran, it is easy to fill in the blanks and conclude that the “factories and companies” to which Raisi referred in his remarks were a reference to the IRGC. This indirect attack on the IRGC and its affiliates has raised the ire of the state-run media, which again are largely controlled by the IRGC. Now, Raisi is faced with the dilemma that every so-called regime president faces: either face off with the Guards or take the blame for their continued destruction of the economy.

This once again proves that the real power running the country is the IRGC and Khamenei. The executive, legislative, and judiciary branches are just showcases that are meant to give Khamenei’s rule a façade of democracy. In practice, officials are only tolerated as long as they play by the IRGC’s rules. Even a criminal such as Raisi, who has earned his spot in the regime through decades of execution and torture, can’t cross paths with the IRGC.

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