Iran Gambles on Getting Back to Work With Virus Undefeated

(Bloomberg) --

Iran is gradually allowing people back to work amid the worst coronavirus outbreak in the Middle East, in what could be a test case for other countries attempting to balance economic revival with public health.

Unlike in Wuhan, China, where a months-long lockdown was relaxed only after China reported no new deaths from the infection, looser restrictions in Iran that were often flouted have slowed the spread but are nowhere near extinguishing it. The Islamic Republic’s leaders are gambling that they can restore parts of the sanctions-depleted economy without a new surge in illnesses.

Iran Gambles on Getting Back to Work With Virus Undefeated

It’s a daunting challenge, one that even tightly controlled China is struggling with and which will test the endurance of rich Western nations with vastly superior health-care systems in the weeks ahead. Politicians in countries with large populations of poor workers are also likely to pay close attention as Iran embarks on a path they may well have to follow.

“It’s practically impossible to have nobody leave the house,” President Hassan Rouhani said at a cabinet meeting on Wednesday. “Some people need to go out for production, transportation and other needs.”

Leaders around the world are facing a similar dilemma. President Donald Trump has mused about ensuring shutdown cures aren’t worse than the disease, and the White House is developing plans for the extensive testing that would reopen parts of the U.S. economy, most likely starting in smaller cities and towns not yet heavily hit by the virus. Denmark and Austria, among the first countries in Europe to close public life in response to the Covid-19 outbreak, have announced gradual relaxations. While in Japan, Prime Minister Shinzo Abe has declared a state of emergency in Tokyo and surrounding regions after earlier avoiding stricter measures.

Iran has been gripped by one of the worst outbreaks of the pathogen in the world -- almost 4,000 people have died and more than 62,000 have so far been infected, according to the latest Health Ministry figures. An additional 1,997 cases and 121 new deaths were reported on Wednesday.

But Iran is also especially vulnerable to a protracted work stoppage. Three-quarters of working Iranians are self-employed or toil for little pay in small enterprises, said Djavad Salehi-Isfahani, a professor of economics at Virginia Tech who studies Iran’s economy. Many of these businesses are unregistered and so beyond the reach of special government loan packages that rely on tax registration data.

“They are balancing economic suffering and the virus,” he said of the government.

Rouhani has told two-thirds of government employees and companies deemed “low risk” they can resume work gradually, as he tries to salvage what’s left of an economy battered by U.S. sanctions and generate revenue for hospitals pushed to the brink.

Not Listening

Some cities and provinces have declared themselves “white” -- or no longer reporting new infections -- but the situation in Tehran is still alarming to local officials.

On Monday, coronavirus task force chief Alireza Zali said the virus has reached a “pandemic stage” in the capital and that “not only aren’t we at a level to control the disease but it’s expanding.” Restrictions in Tehran will only be relaxed in a week’s time, according to Rouhani.

Restaurants, cinemas, schools, museums and shopping malls will remain closed. A ban on travel between provinces and cities will also stay, and the majority of people are still expected to remain at home.

Iran’s ruling clerics reacted slowly to the growing spread of Covid-19, with the holy city of Qom where the first cases were identified left without strict quarantine measures. Government failings were compounded by the refusal of many Iranians to listen to advice from an establishment they distrusted.

Millions traveled during the Persian new year in late March, defying official instructions to celebrate at home. Within days, a tentative slowdown in infection rates had reversed. Stricter curbs were imposed, and the World Health Organization said Tuesday that new cases in Iran were “flattening off.”

Then as Iran’s working week began on Saturday morning, central districts in Tehran were again humming with commuters who squeezed into metro carriages and buses even though the city is yet to ease social distancing rules.

Government Intent

The pandemic is expected to add five million to Iran’s unemployed, more than 20% of the workforce, according to a March 18 government report. Parliament’s research center estimates the crisis will trigger an 18.5% contraction in the economy, which had improved after shrinking more than 9% in 2019 as Trump’s campaign to force Iran into new talks on its nuclear program shuttered critical oil sales.

Rouhani, 71, has allocated 20% of the $36.6 billion budget to limit the impact of the virus, tapped the country’s sovereign wealth fund for one billion euros, and made Iran’s first approach for International Monetary Fund assistance since 1960, requesting a $5 billion loan. But any help will take time, and after a year of escalating military tensions with the U.S. and anti-government protests that had to be crushed with deadly force, many Iranians are losing hope.

“Living costs are pretty much the same as before the coronavirus,” said 35-year-old Alireza, who runs a mobile-phone shop in Tehran and declined to give his surname. “I have to pay for food, rent and bills -- and now masks, gloves and hand sanitizer -- but I can’t make the money for all of this if I stay home.”

Only two-thirds of 290 lawmakers were present on Tuesday as parliament sat for the first time since Feb. 25, with Speaker Ali Larijani and at least 40 MPs and other officials being treated for the virus. As proceedings got underway, the government made its intent clear, blocking an effort from some present to legislate for a full lockdown.

The leadership has “to keep the country’s wheels in motion and avoid a deeper economic crisis,” Health Minister Saeed Namaki said on state television.

©2020 Bloomberg L.P.

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