Arash Aramesh

The government of President Mahmoud Ahmadinejad announced in the first week of July that it intended to raise taxes on Iran’s merchants and members of the bazaar, the country’s traditional center of goods and merchandise distribution. This tax hike was estimated to be as high as 70 percent. The bazaar in Tehran reacted and launched a general strike.

It has been over a week since the bazaaris in Tehran closed down their shops and protested the government’s decision. Fearing massive economic losses, and alienating this conservative segment of the Iranian society, the government announced July 12 that it would reexamine its tax increase proposal.

The Iranian bazaar is politically important to the Islamic Republic for a number of reasons. First, the bazaar has always had excellent ties to Iran’s clerics. Members of the bazaar are still among the most important financial supporters of the clergy. The Iranian government, deriving much of its legitimacy from the clerics, cannot afford to alienate large segments of their supporters. In addition, and perhaps more importantly, the government must prevent this influential segment of society from finding common cause with the opposition movement.

Second, the bazaar’s geographic location is politically significant. Located in central and southern Tehran, the bazaar, and the neighborhoods surrounding it, are believed to be an important political base for traditional conservatives currently known as the “principlists.”

Third, unified strikes in the bazaar can have both economic and psychological impacts. Despite changing patterns of distribution in the Iranian economy and the rise of chain department stores, the bazaar still plays an important role as a major supplier of goods to Iranian consumers. By going on strike, the Iranian economy can lose a substantial amount of money. Furthermore, the concentration of shops in one large geographic location will magnify the psychological impact of a unified strike.

As the government in Tehran feels the pressure from the bazaar, key government agencies such as the Ministry of Trade and the Ministry of Economy have pledged to look into the matter. Iran’s Deputy Trade Minister went as far as saying that taxes will remain at their current level and there will be no future tax increases.

Finally, the government reached a deal with members of Tehran’s bazaar. According to this deal, bazaaris will only see a 15 percent increase in their taxes. This has angered merchants in other cities, especially the city of Tabriz in the province of Eastern Azerbaijan.

On July 14, members of bazaar in Tabriz launched their own strike protesting the bilateral deal reached between the central government and the bazaaris in Tehran. They feel betrayed by the bazaaris in Tehran who accepted a deal favorable to them and not necessarily in the best interest of provincial merchants.

The strike in Tabriz is also a strong indicator that events in Tehran can quickly spread to other major cities and even become an excuse for provinces to express their grievances towards the central government’s discriminatory behavior towards ethnic and religious minorities.