Tehran municipality accused of ‘overstep’ after launching welfare projects

Tehran municipality has launched a series of welfare initiatives to help residents cope with soaring living costs, but the measures have raised questions about their financing and effectiveness, as well as whether the local authority is taking on responsibilities better handled by Iran’s national government.

The local authority has launched four projects it says are aimed at protecting citizens, including a housing project, freezes on the prices of 12 basic goods, and a maternity package.

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

In Iran, municipalities are responsible for local services and urban management, while the national government oversees broader economic policy, including efforts to control inflation.

Iranian law does give 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, make certain essential goods more affordable, and provide social welfare facilities and low-cost housing.

The dispute is therefore less about whether Tehran municipality can provide the services, and more about their scale and financing.

The municipality’s price-freezing initiative, dubbed the “Zero Inflation” project, has been the most controversial. It comes as year-on-year inflation reached nearly 90 percent last month, while annual food inflation hit 108.8 percent.

Doubts have been raised about 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 huge economic challenges faced by Tehran residents, worsened since the United States and Israel launched a war on Iran on February 28.

Tehran Mayor Alireza Zakani said the municipality had recently guaranteed prices ranging between 5 percent and 50 percent below market rates for the next six months.

Yousef Akandeh, a political activist, told Al Jazeera that freezing the prices of some goods or providing free services will not reduce inflation to zero alone.

“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 said, would have to begin with controlling liquidity growth and monetary discipline, which he said are nearly impossible amid the ongoing war.

The municipality has also introduced a maternity support 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 issue 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 said.

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

Amir Dabiri Mehr, a former adviser in the Tehran municipality, told Al Jazeera that although supporting the homeless falls under the municipality’s social responsibilities, the problem 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 said.

The municipality-affiliated Hamshahri newspaper said that 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.

The biggest crisis facing Tehran’s residents is housing, which is the national government’s responsibility, Mehr said. 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 said.

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

Tehran Mayor Zakani has, however, 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.

Zakani also said that the programme would draw on municipal resources, bank financing, and partnerships.