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IRAN: No end in sight for gold bazaar strike as government plays down economic woes

October 4, 2010 |  2:12 pm

Gold markets across Iran remained shuttered in recent days as a strike against a 3% value-added tax entered its second week

Video of the markets uploaded to the Internet from the capital of Tehran all the way to the southern provincial capital of Ahvaz showed darkened, locked stalls and empty corridors.

Monday was a religious holiday in Iran, and observers are waiting to see whether the strike will continue Tuesday. 

Merchants and jewelers claim the government is looking to fill its coffers by taxing small businesses unfairly. The government continues to paint the union of goldsmiths and jewelers as a group of greedy and corrupt businessmen.

Lawmaker Hasan Khastehband, a member of the parliamentary economic committee, blamed the strike on a handful of gold sellers involved in illegal smuggling.

"[These gold sellers] are agitating the goldsmiths to impede the implementation of the VAT because they do not want to make their illegal transactions transparent and revealed," he was quoted as saying by local media outlets.

The current impasse comes amid deepening economic woes as the Iranian government struggles under Western sanctions and unrelenting inflation and unemployment. The government is in the process of implementing a plan to raise taxes and cut subsidies for basic commodities and foodstuffs, but has run up against the stubborn bazaari merchants, a powerful interest group.

Picture 4It's difficult to gauge the extent of the damage caused by the strike, but gold merchants say they are responsible for the recent devaluation of the Iranian rial against hard currencies. Iranian money has dropped 30% in value in recent months, and 20% just in recent weeks. 

In the past, bazaaris have been able to win concessions from the government over proposed tax hikes by striking.

Meanwhile, the police are warning that they will intervene to put a stop to "economic sedition," attacking foreign-based Persian-language media outlets for producing incendiary reports about the state of the Iranian economy.

"Of course, the day after the Smart Subsidy Plan [subsidy cuts] is implemented ... BBC, Voice Of America and others will turn into an operation headquarters and launch a joint attack and try to disappoint the people about the plan," national police chief Brig. Gen. Esmail Ahmadi-Moqaddam told an Iranian television channel.

"Therefore, it is necessary for the police to be prepared for such a situation," he continued. "The enemy is counting on this issue at the moment."

-- Meris Lutz in Beirut and Ramin Mostaghim in Tehran

Top video: Tehran's gold bazaar is shuttered the second week into the gold bazaar strike. Credit: YouTube

Bottom video: Ahvaz gold bazaar in southern Iran also remains shut as the strike spreads. Credit: YouTube