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Ahmadinejad's Economic Policies: Fantasy Over Substance
By Dr. Nimrod Raphaeli
04/17/2008

Readers are now familiar with Mahmoud Ahmadinejad’s oft-repeated statement that the Holocaust did not take place, and are aware of the conference of “historians and scholars” he convened in Tehran last year to prove his point.

A few days ago, in a televised speech from the city of Qum, often referred to as “the holy city” because it is the center of religious learning in Iran, Ahmadinejad referred to the terrorism act on 9/11 as “a suspicious event” in which a building collapsed in New York City and “it was alleged” 3,000 people were killed. However, Ahmadinejad emphasized, names were not published. The “suspicious event,” Ahmadinejad told his suffering audience, “served as an excuse to invade Afghanistan and Iraq.” But he did not stop there. He said Iran will carry on, [apparently a reference to the country’s nuclear program] until it puts an end to the “corrupt world leadership.” He did not say what will replace this leadership, but, clearly, he had himself and the Mullahs of Iran in mind. He also threatened to sever the hands of corrupt officials, whom he did not identify.

The preceding paragraphs are background. The focus of this editorial is Ahmadinejad’s habit of substituting fiction for hard data and misstatements for an honest portrayal of his country’s failing economy. We offered a similar observation in our editorial of February 4 [click here to read], in that case referring specifically to the fictitious figures on foreign direct investment in Iran. In a response to a report by the Central Bank of Iran that the country did not “attract a single dollar of foreign direct investment since March 2007,” Ahmadinejad accused his critics of “distorting the figures,” and declared triumphantly that foreign investments are “pouring on the country like rain.” In our February 4 editorial, we characterized his image as a rain of illusion.

Now comes the issue of inflation. Again, Iran’s Central Bank announced this week that inflation has risen to 22% in the month of March. The Iranian reformist daily Rooz reported yesterday that the price of basic commodities such as bread and dairy products had increased by up to 100 % in the previous few days, and the price of other goods, including industrial and semi-industrial goods, had seen a steep rise.

Shirzad. Source: Rooz

Taking Ahmadinejad to task for misstatements, Ahmad Shirzad, a member of the Majlis [Parliament] said in an interview with the reformist daily Rooz that the Islamic Republic officials, and especially Ahmadinejad, are using extensive propaganda about the progress of the nuclear program to conceal the “severe economic and bureaucratic crisis.” Shirzad said that Ahmadinejad makes “a lot of perplexing claims,” such as a statement that inflation had risen to 70 percent but he was able to bring it down to 20 percent-like a monster he had cut down to size. On another occasion he said “inflation was not a big problem.” [To read the full interview with Shirzad, click here.] When asked a few months ago about the rising prices of vegetables in Tehran’s markets Ahmadinejad came up with a facile solution: he said he was able to do his shopping from his old grocer at a much lower price. When confronted with the issue of sanctions he told his listeners that Iran has found ways to circumvent them; in fact, no international bank is prepared to extend credit to Iran or even to open a letter of credit for one its businesses. Not to mention that Iran’s fleet of civilian aircraft is being held together by a thread.

Unemployment is one of the burning issues in Iran. While official figures put the rate of unemployment at 12 percent, most observers rate it at 20 percent or higher, and, among the age group of 16-24, it is close to 50 percent. Ahmadinejad has made numerous provocative speeches excoriating his real or imaginary enemies, but he has never directly addressed the issue of unemployment He has recently committed one of the most foolish economic decisions imaginable: he converted all revenue dollars from the sale of oil into Iranian riyals, flooding the market with liquidity and exacerbating the problem of rising inflation. Not surprisingly, he has reneged on a commitment to explain his economic program on TV.

As discontent about his economic policies mounts, so do the repressive measures he has been taking against critics. Available data suggests that the economic system in Iran is nearing the breaking point. Should the system reach it, the world-and certainly the Iranian people-will hear from Mahmoud Ahmadenijad much less.

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