THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Volume X, Issue # 222, September 8, 2008
Dr. Almon Leroy Way, Jr., Editor
Government Committed to & Acting in Accord with Conservative Principles
Ensures a Nation's Strength, Progress, & Prosperity
IRAN'S FALTERING ECONOMY
By Dr. Michael Rubin
MAHMOUD AHMADINEJAD'S POLICIES & THE IRANIAN ECONOMY: INFLATION AS THE CHIEF DOMESTIC ISSUE IN
IRAN -- AHMADINEJAD'S POLICIES BLAMED FOR RUNAWAY INFLATION & SHORTAGES OF BASIC COMMODITIES -- THE
REVOLUTIONARY GUARDS DEPLOYED TO COUNTER POTENTIAL POLITICAL UNREST
FULL STORY:
While the international community focuses upon Iran's nuclear program, Iran's faltering economy dominates the Islamic
Republic's domestic debate. In his 2005 election campaign, President Mahmoud Ahmadinejad famously promised to bring
Iran's "oil [money] to the table of every Iranian." Oil prices may have more than tripled to over $130 per barrel, but few
Iranians see benefit. Across the Iranian political spectrum, officials and even the President's former allies have blamed
Ahmadinejad's policies for runaway inflation and shortages of basic commodities. Outgoing Finance Minister Davoud
Danesh-Jafari, acknowledged Iranians' frustration as he stepped down in May, 2008, "In economics, a government is not
judged by its intentions."
As Ahmadinejad increases subsidies and spending, inflation has become Iran's chief domestic issue. While the
government acknowledges an inflation rate of 18 percent, parliamentarians and central bank officials say the real rate is
closer to 25 or 30 percent.
Inflation has hit certain commodities hard. This past Winter, bread prices increased between 200 and 700 percent across
northern Iran. To alleviate prices, the government shipped bread from Tehran to the northern provinces, sparking shortages
and bread lines in Tehran. As a brutal winter dumped record snow across northern Iran, the Revolutionary Guards
deployed to northern Iran to counter potential unrest amidst gasoline, kerosene, and electricity shortages.
Inflation continues. According to the National Bank, rice prices rose 90 percent this spring. The price of other basic
foodstuffs has increased 30 percent. On May 19, 2008, the head of the Butcher's Guild complained that declining
purchasing power was undercutting the public's ability to eat meat, once a staple of Iranian cooking.
Politicians are distancing themselves from their President. Parliamentarian Hossein-Ali Shahriari, an ideological ally of
Ahmadinejad, quipped, "The economic team of the government is the main reason behind rising prices." Former President
Ali Akbar Hashemi Rafsanjani quipped, "You can't improve the economy by raising beggars."
Ahmadinejad has remained stubborn in the face of accelerating inflation. He has ordered the Central Bank to lower interest
rates to ten percent and clashed with the Director of the Bank after he refused. Sarmayeh, Iran's main financial daily,
ridiculed Ahmadinejad's new Finance Minister after he denied any relationship between interest rates and inflation. As the
Central Bank issues 100,000 rial notes for the first time, the government's only proposed solution is to knock zeros off Iran's
currency. Ahmadinejad refuses to accept responsibility and instead, in a number of speeches in April and May, 2008, has
blamed shadowy mafias and conspiring competitors.
Austerity measures have failed, due to lack of fiscal discipline. Upon questioning, Oil Minister Gholam-Hoseyn Nowzari
acknowledged that the Iranian government spent $4 billion above budgetary limits to import gasoline, obviating the
self-sufficiency sought by rationing.
Privatization schemes have also languished. While announcements of impending factory privatizations are many, sales are
few. The reformist daily Aftab-e Yazd observed, "The misguided policies of the government hit us harder than the
sanctions of the foreigners."
As tempers rise, however, Ahmadinejad calls on Iranians to have faith. During the Islamic Revolution, Ayatollah Khomeini
famously quipped, "You can't have a revolution over the price of a watermelon." As the Islamic Revolution nears its 30 year
anniversary, Ahmadinejad may test that proposition.
LINKS TO RELATED TOPICS:
The Middle East & the Problem of Iran
American Foreign Policy -- The Middle East
Islamism & Jihadism -- The Threat of Radical Islam
Page Three
Page Two
Page One
International Politics & World Disorder:
War, Peace, & Geopolitics in the Real World:
Foreign Affairs & U.S. National Security
Page Two
Page One
Islamist Terrorist Attacks on the U.S.A.
Osama bin Laden & the Islamist Declaration of War
Against the U.S.A. & Western Civilization
Islamist International Terrorism &
U.S. Intelligence Agencies
U.S. National Security Strategy
Dr. Michael Rubin, a Ph.D. in History (Yale University) and a specialist in Middle Eastern politics, Islamic culture and Islamist
ideology, is Editor of the Middle East Quarterly, a senior lecturer at the Naval Postgraduate School, and a resident
scholar at the American Enterprise Institute for Public Policy Research. Dr Rubin is author of Into the Shadows: Radical
Vigilantes in Khatami's Iran (Washington Institute for Near East Policy, 2001) and is co-author, with Dr. Patrick Clawson,
of Eternal Iran: Continuity and Chaos (Palgrave Macmillan, 2005). Dr. Rubin served as political advisor to the Coalition
Provisional Authority in Baghdad (2003-2004); staff advisor on Iran and Iraq in the Office of the U.S. Secretary of Defense
(2002-2004); visiting lecturer in the Departments of History and International Relations at Hebrew University of Jerusalem
(2001-2002); visiting lecturer at the Universities of Sulaymani, Salahuddin, and Duhok in Iraqi Kurdistan (2000-2001); Soref
Fellow at the Washington Institute for Near East Policy (1999-2000); and visiting lecturer in the Department of History at Yale
University (1999-2000). He has been a fellow at the Council on Foreign Relations, the Leonard Davis Institute at Hebrew
University, and the Carnegie Council on Ethics and International Affairs.
The foregoing article by Dr. Rubin was originally published in the Euro-Atlantic Quarterly, July, 2008, and
can be found on the Internet website maintained by the Middle East Forum, a foreign policy think tank which seeks to
define and promote American interests in the Middle East, defining U.S. interests to include fighting radical Islam,
working for Palestinian Arab acceptance of the State of Israel, improving the management of U.S. efforts to promote
constitutional democracy in the Middle East, reducing America's energy dependence on the Middle East, more robustly
asserting U.S. interests vis-à-vis Saudi Arabia, and countering the Iranian threat.
(Article URL: http://www.meforum.org/article/1978)
Republished with Permission of the Middle East Forum
Reprinted from the Middle East Forum News
mefnews@meforum.org (MEF NEWS)
September 7, 2008
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THE PROGRESSIVE CONSERVATIVE, USA
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Dr. Almon Leroy Way, Jr., Editor
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Conservative Government Ensures a Nation's Strength, Progress, & Prosperity