FIRE WITH FIRE

Despite recent talks on the future of Iraq that were dubbed a "success," the US and Iran continue to ratchet up the accusations and charges against each other. Call me naive, but I don't see a "meeting of the minds" happening at the bargaining table any time soon.

Days after the joint talks, the US tightened its squeeze on Iran, escalating financial sanctions against Iranian companies that are suspected of supporting their country's nuclear ambitions. The US has blacklisted or frozen the assets of 15 Iranian companies this year, prohibiting American companies and individuals from doing business with them. Click here to read the full article.

"We believe that there is a real potential that these sanctions will have the effect of changing the government of Iran's mind about the defiant policy it is currently pursuing," said US Treasury undersecretary Stuart Levey.

I doubt it. In the face of stringent United Nations and US economic sanctions, Iran hasn't backed down yet. And few Iranian experts believe the country ever will.

"I don't think if the assets of a few Iranian officials are frozen or if the state of California and the state of New York decide to divest from Iran, suddenly the regime will buckle and say 'we're going to change our nuclear approach'," said Karim Sadjadpour, an Iranian researcher for the Carnegie Endowment for International Peace.

Sadjadpour pointed to Cuba's success in weathering even more stringent US sanctions and with a far weaker economy. He suggested only "a more robust international coalition" would make a dent in Iran's stubborn nationalism. With volatile President Mahmoud Ahmadinejad at Iran's helm, it's unlikely that even that would change Iran's nuclear policy.

Labels: economy, Iran, nuclear, sanctions, United Nations, US, US-Iran talks

Posted by The Watcher at Saturday, July 28, 2007 | Permalink | Comments | links to this post

Are educated Iranians finally getting fed up with President Ahmadinejad's inflammatory, emotional rhetoric and near total avoidance of fact? In an unprecedented move, more than 50 Iranian economists met with the president to tell him his economic policies are "inexpert" and lacked "any basis in science." Read the full story here.

Condemning the president's economic policies, the economists told Ahmadinejad,
"In your government, economic policies are adopted without any basis in science
or the directives of the fourth development plan."

Iran's leading economists and financial leaders bluntly criticized Ahmadinejad for mismanaging Iran's oil wealth and failing to reign in the rampant inflation that has proved devastating to Iran's poor. In 2005 Ahmadinejad was elected largely on the strength of his promise to spread Iran's oil wealth to the country's poor, but it is the poor who have been most hurt by his capricious economic policies. In OPEC's second largest oil producer the rate of inflation is expected to rise to 17% by next March. The price of basic foods and services has risen sharply over the past few months.

With money supply growth running at a whopping 40%, economists charged that Ahmadinejad is emptying Iran's coffers without regard for the needs of future generations. Fulfilling rashly made campaign promises, the president is using Iran's wealth to fund a flood of infrastructure projects in the country's 30 provinces.

Seen as particularly dangerous by the country's economists was Ahmadinejad's decision made earlier this year to lower interest rates. Financial leaders lambasted the president for failing to consult either the central bank chief or economy minister.

"Such decisions are harmful and inexpert. The most sensitive financial institutions of the country will be weakened and in the not too distant future we will see the negative outcomes of these decisions," the economists said.

In past encounters, President Ahmadinejad has vehemently rejected criticism of his economic policies, denying charges that inflation is out of control and pointing to his pet building projects as evidence of Iran's technological progress. It will be interesting to see if the combined weight of the country's top economists and financial leaders can reign in the president or whether he will continue to plunder Iran's wealth for his own political gain.

Labels: banks, dissidents, economy, inflation, infrastructure, Iran, Mahmoud Ahmadinejad

Posted by The Watcher at Saturday, July 14, 2007 | Permalink | Comments | links to this post

In one of the world's most oil-rich countries, gas is being rationed and Iranians are angry. Despite 2005 election promises, President Mahmoud Ahmadinejad decreased gas subsidies in May, causing the price of gasoline to increase 25% to 38 cents a gallon. On Tuesday, after weeks of planning, the government implemented a rationing program that limits Iranians to 26 gallons of subsidized gas a month. Additional fuel can be purchased, but at a higher price yet to be announced. In protest, incensed Iranians rioted, smashing shop windows and setting fire to gas stations. Read the full article here.

Iran is the second largest OPEC exporter but lacks the refineries needed to process its lucrative natural resource. Unbelievably, Iran must import 50% of its gasoline to satisfy the growing needs of its citizens. Because Iranians like their gas cheap and plentiful, the government subsidizes gas sales to keep the price low. This has put a significant strain on the nation's economy. Proponents of the new measures hope that price increases and rationing will curb oil use and make funds available for government investment in oil and gas production.

Ahmadinejad could easily find himself in hot water with his fellow citizens. He was elected on the promise that he would share Iran's oil wealth with the nation's poor. Going back on that promise, even to bolster a seriously failing economy, could be political suicide.

"Ahmadinejad promised paradise," a Tehran resident railed, "but his government has made life hell for Iranians."

Labels: economy, fuel prices, gas rationing, Mahmoud Ahmadinejad

Posted by The Watcher at Saturday, June 30, 2007 | Permalink | Comments | links to this post