In Tehran’s grand bazaar, where hand-woven carpets and precious metals are sold on narrow streets under arched roofs, traders boast about how business has been done for hundreds of years based on trust. Promises to pay have been enough to secure stacks of goods from suppliers and parcel them out to shoppers.
But commercial faith is now collapsing. As US sanctions on the Iranian economy spread angst and uncertainty, a buyer’s word is no longer enough.
“I will not accept a cheque even from my brother,” says Hossein, a trader who sells gold ornaments and coins. He will only accept the equivalent of banker’s drafts, known as “coded cheques” in Iran, which can be cashed immediately and leave no records for the tax authorities.
“I don’t trust anyone and don’t know what may happen in the market at this very moment, let alone in coming days or weeks,” he says.
Such sentiments undermine the claims of Iran’s leaders, who have sought to minimise the significance of US pressure. President Hassan Rouhani has promised the country would still have enough income to avoid shortages of essential commodities, but for many Iranians the sanctions are fostering a sense of insecurity that goes beyond basic needs.
The bazaar’s traders played a crucial role in the 1979 revolution, when they joined hands with the clergy to overthrow the Pahlavi dynasty, and Iranians still pay heed to their views on where the country is heading.
President Donald Trump vowed to reimpose sanctions after pulling out of the landmark Iran nuclear deal in May; the latest measures came into effect on November 5, hitting Iran’s vital oil exports and banking sector.
The sanctions threat has led to a 60 per cent plunge in the value of the national currency, the rial, this year. Bankers have become nervous about restrictions that now stop them doing some international business. Food prices are soaring.
The International Monetary Fund expects Iran’s economy to shrink by 1.5 per cent this year and by 3.6 per cent in 2019 due to a drop in oil production.
Lay-offs in factories and small workshops are also rising, according to analysts, while demonstrations and strikes of workers have recently increased in protests over economic woes.
“We are hungry! We are hungry!” chanted hundreds of workers at Haft Tappeh Sugarcane Agro-Industry, a privately owned company, who have been on strike for about four weeks in protest over a four-month delay in paying wages.
Workers from Iran National Steel Industrial Group, another private business, have been protesting since last week as they demand that their salaries be paid. Unconfirmed reports suggest some workers have been arrested.
The Islamic republic’s leaders insist they will not back down in their confrontation with Mr Trump, refusing to countenance his demands for Iran to curb its ballistic missile programme and interventions in Middle Eastern affairs.
But traders in the bazaar say the Islamic republic should sit at the negotiating table with the US and make difficult decisions about its regional and defence policies. Iran has managed to ease the currency crisis in recent weeks by buying rials in the open market with foreign currency.
Stability of the currency market is a big lie. This is only a trick by the regime to say Iran has defeated the US and scare people who panic bought dollars and gold
Fabric merchant: But one fabric merchant says: “Stability of the currency market is a big lie. This is only a trick by the regime to say Iran has defeated the US and scare people who panic bought dollars and gold. The dollar rate will go up again soon.”
Shopkeepers complain about skyrocketing wholesale prices and the declining purchasing power of consumers.
Arya, a 32-year-old whose business selling fancy candle holders is stagnant, says: “When I want to purchase goods, I’m given the price at ‘this very moment if you come right now’ because that price can go up if I go 20 minutes later.”
He adds that he will not renew his lease contract early next year. “If this situation continues one more year, many shops will shut down.”
Iran’s leaders have pinned some hope on the EU’s willingness to stick with the nuclear deal and find ways to defy the US sanctions. But Iranian officials say the political significance of Europe’s promises is yet to yield economic benefits. In Hossein’s small gold shop Europe’s potential to be Iran’s saviour turns into a topic for impassioned debate. Customers and traders alike say it is only the US that can change their lives for good or bad.
“What can Europeans do when they could not stop their big companies from leaving Iran?” wonders Hossein. “Our gold imports from Turkey have stopped. Traders in Dubai refuse to sell us gold. They are all scared of US punishment.”
A customer shows up with a “coded cheque” worth 1.07bn rials to buy around 250 grammes of melted gold. He wants to shield his savings from currency fluctuations as he contemplates the costs of his daughter’s planned wedding.
“I should convert my [rial-based] savings into gold to afford a dowry,” he says. “Only gold can help me protect my family, not savings accounts in rials in these banks hit by sanctions.” —An arrangement with Financial Times
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