Geopolemics.com

Countries: Iran
Posted on Wednesday, January 27, 2010 - 01:47 PM
	Towards a compromise? The continuing internal turmoil in Iran is beginning to take a toll. The regime has not dared to crush the opposition with the violence of which no doubt it is capable, but its warnings that a real crackdown is imminent have so far been largely ignored. The violence of the government side has so far no scared anybody, only excited resistance. The regime now seems undecided about whether to opt for a tougher crackdown or negotiate a compromise. Some moderate supporters of the regime seem to be reaching out to the opposition in order to reach a deal; some particularly hated figures could be sacrificed, such as prosecutor-general Saeed Mortazavi, an ally of Mahmoud Ahmadi-Nejad, who has been accused by a parliamentary committee of several deaths in custody. Among the ranks of the opposition there are also voices of moderation. Mir-Hossein Moussavi himself has so far refused to call for the overthrow of the regime, while former president Mohammad Khatami in January condemned radicalism on both sides and stated that most reformists were loyal to both the constitution and Supreme leader Khamenei and did not want a secular state. Russia and China waver The real problem for Ahmadinejad might be that if he cannot bring the situation under control, the faith that the Islamic republic is there to stay might be undermined even among the friendliest foreign powers, such as China and Russia. Supreme Leader Khamenei is also quite silent these days, which may not augur well for Ahmadinejad. Indeed for some time there were hopes in the west that China and Russia might subscribe to tougher sanctions against Iran on the nuclear issue, but such hopes are dissipating after China demanded that Iran be given more time. There is still some hope that China, fearful as it is of diplomatic isolation, would eventually distance itself from Teheran. Subsidy cuts to add fuel to the fire? An interesting development in January was the approval by Iran’s constitutional watchdog of a new law aimed at gradually eliminating fuel and food subsidies. The law is noteworthy because it comes at a time of great tension in Iran’s streets already and inevitably risk adding fuel to the fire once implemented. Already the modest cuts in fuel subsidies implemented in 2007 led to protests and riots and the cuts had to be postponed. The current bill establishes that the savings deriving from the cuts should be spent for 50% on helping the poorest households, for 30% on improving Iran’s infrastructure and for 20% to the discretion of the government, without any parliamentary supervision. The problem with the plan is that the government lacks accurate records of the wealth of its citizens and therefore effectively targeting money to the poor will be difficult. Ambitious plans The average rate of inflation continues to fall and it stood at a yearly 13.5% in December. The latest GDP figure show that growth declined to 2.5% in 2009 according to official figures, as a result of the global economic crisis and of sanctions. Nonetheless the government of Ahmadinejad maintains ambitious economic plans, as highlighted in the new 5 years plan. The target is an average GDP growth of almost 8% over the five years. That should be achieved through a US$20 billion investment in the oil and gas industry, as well as through the development of other sectors of the economy. The share of oil and gas out of total exports is expected to decline by 10%. However the IMF estimates 2009 GDP growth at just 1.5% and does not expect more than 2.2% growth in 2010; the 8% would be dependent on substantial foreign investment, but unless Iran’s international positions changes radically it is not clear how that could happen. Note: To read more, click here

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