Who’s collapsing now?

APTOPIX Iran Ahmadinejad InterviewIranian President Mahmoud Ahmadinejad has been dancing a jig to the sounds of falling markets around the world, but now he’s finally facing the music at home.

Ahmadinejad, who has publicly rejoiced at the suffering of Western economies and proclaimed his country’s Islamic revolution the answer to such troubles, has for the first time admitted that Iran’s economy is in decline.

Actually, that’s putting it mildly. While Ahmadinejad was trying to present himself as a savior for the Iranian Republic, announcing in state-run media that he had accumulated a foreign exchange unprecedented in Iran’s history and cut the country’s dependence on oil revenues from about 62% of the national budget to a “mere” 52%, the reality for him is quite bleak. The state budget depends almost entirely on the sale of oil and natural gas, funding approximately 80% of government expenditures. When oil prices were approaching $150 per barrel, Ahmadinejad was riding high. But now that they are in the $40s again, Iran is on the brink of disaster.

For several months now, Ahmadinejad has come under increasing pressure – not so much for his bombastic statements regarding Israel, the Holocaust and Iran’s nuclear energy (i.e. weapons) program, but for the severe plunge that Iran’s economy has taken under him.

This has tremendous implications.

A conversation I had recently with a former member of the Muslim Brotherhood (and this idea has been repeated by others) was instructive. In Egypt, he said, the people saw how much the Saudis adhered to an extreme, all-encompassing form of Islam, and they saw how much Allah had blessed the Saudis with prosperity in the form of oil wealth. If only they would follow the Saudi example of piety, these Egyptians figured, they would surely reap earthly rewards as well. The opposite of this is also true — that the economic failure of radical regimes can be a powerful tool in undermining popular support for those regimes.

In my speeches, I have argued for significantly increased efforts to develop energy sources that can replace oil and natural gas, in order to deny Iran and other states like it the means with which they fight Israel and the West. Presently, market forces are doing what scientists have not.

In the absence of unforeseen circumstances, economic issues will remove Ahmadinejad from office in next year’s presidential election. That won’t solve the problems that he has created or exacerbated, of course… but it’d be a heck of a good start.

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One Response

  1. If only all our problems could be solved so simply….

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