Tehran municipality accused of ‘overstep’ after launching welfare projects

As well as whether the local authority is taking on responsibilities better handled by Iran's national administration, tehran municipality has introduced a series of welfare initiatives to assist residents cope with soaring living costs, but the measures have raised questions regarding their financing and effectiveness.

Key points

• Tehran Mayor Alireza Zakani remarked the municipality had lately guaranteed rates ranging between 5 percent and 50 percent below market rates for the next six months.
• Yousef Akandeh, a political activist, informed Al Jazeera that freezing the costs of some goods or providing free services will not reduce inflation to zero alone.
• While the national administration oversees broader economic policy, including efforts to control inflation, in Iran, municipalities are responsible for local services and urban management.
• The dispute is therefore less regarding whether Tehran municipality can provide the services, and more concerning their scale and financing.
• The municipality's price-freezing initiative, dubbed the "Zero Inflation" project, has been the most controversial.

For context, the local authority has introduced four projects it states are aimed at protecting citizens, including a housing project, freezes on the rates of 12 basic goods, and a maternity package.

Questions have been raised regarding how they will be funded and whether the municipality is overstepping its traditional functions.

Iranian law does offer municipalities some responsibilites beyond conventional urban services, but Article 55 of Iran's Municipal Law does call for municipalities to provide for public food markets, produce certain essential goods more affordable, and provide social welfare facilities and low-cost housing.

Notably, the dispute is therefore less regarding whether Tehran municipality can provide the services, and more concerning their scale and financing.

In practice, the municipality's price-freezing initiative, dubbed the "Zero Inflation" project, has been the most controversial. While annual food inflation hit 108.8 percent, it comes as year-on-year inflation reached almost 90 percent last month.

Doubts have been raised regarding how the project will be funded and its effectiveness. Others believe that the measures could fuel inequality between the capital and other cities.

They are viewed as steps to address the massive economic challenges faced by Tehran residents, worsened since the United States and Israel rolled out a war on Iran on February 28.

"Even if we assume that the Tehran municipality succeeded in stabilising the prices of 12 basic goods, what about the rise in rents, medicines, transportation prices, and the rest of living expenses, " Akandeh asked.

Real steps to tackle inflation, Akandeh remarked, would have to commence with controlling liquidity expansion and monetary discipline. It he remarked are almost impossible against the backdrop of the ongoing war.

In practice, the municipality has additionally introduced a maternity backing programme offering mothers of children born this year monthly credits worth up to 40 million rials ($15) for two years for each newborn.

Akandeh raised the matter of institutional overlap, noting that a similar national scheme already exists.

"The government implements a similar package and provides monthly financial amounts for all newborns across the country and not just in Tehran, and if the municipality's package is independent of it, the Tehrani family may benefit from the national and municipal programme simultaneously, " Akandeh remarked.

Receiving backing from both programmes would not, in itself, indicate wrongdoing. But critics are instead raising the question of whether it is an appropriate employ of Tehran's municipal resources, particularly when the city faces competing spending demands.

Amir Dabiri Mehr, a former adviser in the Tehran municipality, informed Al Jazeera that although supporting the homeless falls under the municipality's social responsibilities, the challenge lies in a lack of transparency. The municipality is funded by taxes and building density licences.

"The people have the right to know what the municipality spends within the framework of its original tasks, and in tasks it has chosen for itself, and where it gets its resources from?" Dabiri Mehr remarked.

According to The municipality-affiliated Hamshahri newspaper, the "Zero Inflation" project is not funded by municipal budget subsidies, but through direct purchases from producers and reducing commercial profit margins in council-run stores.

Meanwhile, the biggest crisis facing Tehran's residents is housing. It is the national government's responsibility, Mehr remarked. Food and living expenses are the national government's responsibility.

"If the goal is to solve the people's problems, it seems that the biggest problem facing the residents of Tehran today is the housing crisis, and this dilemma cannot be solved by building an apartment building consisting of a few residential units, " he remarked.

Al Jazeera attempted to contact the Tehran municipality for comment but received no response.

Tehran Mayor Zakani has, nevertheless, defended the financing arrangements, telling a local newspaper, Hamshahri, that the Zero Inflation initiative would not rely on direct subsidies from the municipal budget, but instead on purchasing goods directly from producers and reducing commercial profit margins in city-run stores.

According to Zakani additionally, the programme would draw on municipal resources, bank financing, and partnerships.

In short, tehran municipality accused of 'overstep' after launching welfare projects is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.