Poverty has affected 22 to 27 percent of Iran's population, the head of the state-run Institute of Labor and Social Welfare warned on Sunday as the country's economic outlook grows increasingly grim.
Ebrahim Sadeghifar said almost one in every four Iranians struggles to meet their basic essential needs.
"Today, poverty in Iran is not a marginal issue but has become an undeniable reality that affects a significant portion of society," he said.
On November 17, the Research Center of the Iranian Chamber of Commerce, in a report, warned that by the end of 2021, around 32 million people in the country were below the food poverty line. It further cautioned that this trend is rapidly expanding due to severe inflation in recent years.
On October 30, the Parliamentary Research Center also reported an increase in the poverty rate in 2023 to over 30 percent. It added, "Last year, at least one-third of the population could not meet their basic needs and lived below the poverty line."
In his Sunday remarks, the head of the Institute of Labor and Social Welfare which is affiliated with the Labor and Social Welfare Ministry called for examining and addressing the root causes of the expansion of poverty in political, social, and cultural issues.
Sadeghifar said statistics show an increase in school dropouts due to economic and social problems, adding that studies are needed to explain why poverty persists in Iran despite the country's oil resources.
Addressing the country’s persistent power and fuel shortages, Mohammad Bagher Ghalibaf said, “The real problem lies in management. One person blames another, and the cycle continues. Until we solve the management imbalance, we cannot resolve the energy imbalance.”
The rare remarks which contradict the official government line blaming the crisis on resource shortages, came as Energy Minister Abbas Aliabadi warned of a looming electricity deficit and unprecedented challenges in the coming summer, following a season of widespread blackouts and gas shortages.
With a projected shortfall of 25,000 megawatts of electricity next year, Aliabadi admitted that immediate solutions look bleak.
Ghalibaf spoke about institutional flaws in Iran’s energy sector, attributing inefficiencies to outdated governance structures. “There is an institutional flaw in the energy sector, both in production and consumption, leading to policy mistakes. Our energy governance is flawed,” he said.
Energy Minister Aliabadi acknowledged the gravity of the situation, apologizing for gas shortages and outlining the government’s inability to resolve them in the short term. He cited last summer’s 20,000-megawatt electricity shortfall and warned of worsening conditions.
“Winter’s cold can be endured with warm clothing, but navigating the challenges of summer is not as simple,” he said.
However, Ghalibaf proposed the establishment of an operational center to coordinate between the Oil Ministry, the Ministry of Energy, and Parliament. “To address the energy imbalance, supply and demand must align. While production must be a focus, consumption must also be controlled,” he said.
Gas shortages have also reached critical levels, with domestic consumption exceeding production capacity, resulting in rationing and significant strain on households and industries. Efforts to curb usage, such as a 2-degree reduction in heating temperatures, have saved 45 million cubic meters of gas daily, but structural issues persist, in spite of Iran owning one of the world's largest gas fields.
Widespread impact on citizens and economy
Massoud Pezeshkian, Iran’s President, has also raised concerns over systemic failures in energy management, saying “Iran is experiencing shortages in electricity, water, gas, the environment, and finances, with some of these shortages bringing the country to the brink of a precipice.”
Power cuts in the summer of 2024 caused significant losses for industries, estimated at $11 billion, according to Ali Mahmoudian, head of the National Union of Alternative Fuels.
The closures of schools, universities, and government offices due to energy management have further strained Iran’s economy, costing an estimated $62.5 million per day.
As the country braces for a potentially devastating summer, officials are divided on how best to navigate the crisis. Ghalibaf’s comments that management reforms are key contrasts with the Ministry of Energy’s focus on immediate consumption reduction measures.
Iran now faces the dual challenge of overcoming internal inefficiencies and adapting to the growing energy demands of a population grappling with economic uncertainty and environmental degradation.
“The most significant issue we have faced during the Taliban's rule has been about water rights and adherence to legal matters, rules, contracts, and treaties previously established with Afghanistan, which unfortunately have not been respected,” Fada-Hossein Maleki told ILNA on Sunday.
The comment comes amid escalating tensions over the construction of dams on transboundary rivers, which has significantly reduced water flow to Iran’s drought-stricken eastern provinces. The Pashdan Dam on the Harirud River, recently completed by Afghanistan, is the latest flashpoint in a long-standing dispute over water rights.
Maleki further criticized the absence of mutual cooperation under Taliban leadership, observing that the group's governance structure lacks the mechanisms seen in previous Afghan administrations, which allowed for regional collaboration on shared resources.
Esmaeil Baghaei, spokesperson for Iran's foreign ministry, underscored the importance of cooperation as well.
“Afghanistan is expected to cooperate in keeping the flow of water and removing the obstacles that have been created,” he said on Thursday, pointing to violations of the 1973 Helmand River Water Treaty.
The dispute over water rights is also critical for Iran’s Sistan and Baluchestan province, which depends on the Helmand River to sustain its wetlands, including the Hamoun Lake.
Once lush and teeming with life, the wetlands are now largely barren due to water scarcity exacerbated by upstream dams.
Hossein Sargazi, Deputy for Natural Resources and Watershed Management of Sistan and Baluchestan, warned about the worsening conditions: “All these measures threaten the inflow of water to eastern Iran. The situation in Sistan and Baluchestan has become very dire, and with the dust storms, the conditions are worsening.”
Sargazi also highlighted Afghanistan’s strategic use of water as a geopolitical tool. “The Taliban is seeking to establish hegemony through water. They want to claim control over mines, land, forests, and water, and thus require negotiation,” he said.
Afghanistan’s water management projects have drawn interest from foreign investors, complicating the situation further. Sargazi pointed to the involvement of nations like China and Turkey, which are leveraging the water sector to secure strategic footholds. The Pashdan Dam itself was constructedwith assistance from an Azerbaijani firm, showing the international dimension of the issue.
Iran has long struggled with securing its water rights from Afghanistan. In 1999, the Taliban halted the flow of the Helmand River entirely, leading to environmental and economic repercussions for Iran. While the 1973 treaty guarantees Iran a share of the water, enforcement has been inconsistent, often leaving Iran’s eastern provinces in crisis.
Recent diplomatic efforts have done little to resolve the matter, and officials fear that ongoing dam construction could trigger a deeper crisis in a region already grappling with climate change and drought.