PATRICK MARTIN, JERUSALEM — Iranian President Mahmoud Ahmadinejad must have missed the lesson of Joseph in Egypt, as set down in the Koran. The story of the young man who interprets Pharaoh’s dreams and advises him to store grain during the years of plenty appears to be lost on Mr. Ahmadinejad.
During the recent years of plenty in oil prices, his Iranian administration certainly didn’t put away much of the revenue it received. Numbers from the International Monetary Fund show that Mr. Ahmadinejad has presided over a spendthrift regime, where increased expenditures have outpaced increases in revenue. The President has dipped repeatedly into the country’s rainy-day oil stabilization fund in order to subsidize life for many of his poor constituents, rather than save it for the lean years.
Now Iran is paying the price. Of the Middle East’s oil producers, Iran, OPEC’s second-largest producer, is the hardest hit of all. With daily production of about 2.5 million barrels, Iran loses about $1-billion a year for every dollar drop in the price of oil.
As oil goes, so go Mr. Ahmadinejad’s political fortunes. And while his vaunted nuclear program is not immediately threatened, those in the West who seek to prevent Iran from developing nuclear weapons should gain considerable economic leverage as a result of the financial crisis.
As recently as last month, Mr. Ahmadinejad put on a brave face, boasting that Iran was capable of enduring oil prices as low as $5 a barrel. But last week the Iranian President was forced to admit his government will have to come up with a new budget, based on more realistic price estimates.
With inflation at about 30 per cent and unemployment at 10 per cent, Mr. Ahmadinejad has run out of political options, says David Menashri, chair of modern Iranian studies at Tel Aviv University. “Thirty-per-cent inflation is a terrible hardship for someone on a fixed income,” he said, noting that “800,000 people are added to Iran’s work force every year; the government can find jobs for only about half of them.”
Even before the current economic crisis and the collapse in the price of oil, Mr. Ahmadinejad’s economic management had come under sharp criticism. His attempt to introduce a modest value-added tax failed when shops in the country’s bazaars went on strike. And flooding the economy with cash through subsidies led to the current inflation.
A freeze on the price of petroleum meant that no one wanted to invest in building refineries in the country, so Iran has continued to import much of its gasoline. It also meant that Iran lost money every time someone filled up with gas, a situation that forced the President to take the highly unpopular step of rationing gas consumption. Mr. Ahmadinejad must have gambled that the people unhappiest with the rationing, the affluent, weren’t likely to vote for him anyway, said Roger Stern, a policy analyst with Princeton University’s oil, energy and the Middle East program.
Despite his growing number of critics, Mr. Ahmadinejad could still survive and win next June’s presidential election. “It’s all up to Supreme Leader [Ayatollah Ali Khamenei],” Dr. Stern said. “If the Supreme Leader wants him to stay, he’ll stay.”
There’s reason to believe, however, that the Supreme Leader may be ready to cut his losses.
As Iranian writer Amir Taheri has pointed out, there are two schools of thought in Iran’s revolutionary movement. One school, called “constructionist,” follows the model of Communist China. Constructionists believe Iran, like China, cannot prosper in an atmosphere of tension with the outside world. Rather, the country “must find a place in global trade, thus giving the major powers a stake” in Iran’s survival.
The second school, Mr. Taheri writes, follows a model more like North Korea. These people believe genuine Iranian society cannot exist if it is exposed to global commerce dominated by “infidels.” This school argues for Iranian self-sufficiency and personal modesty. Mr. Ahmadinejad, who lives in a modest three-bedroom house in a poor section of Tehran, is of this school.
Until recently, both schools of thought were applied in various ways in the country. Today, they are at odds. The country’s establishment, led by former president Hashemi Rafsanjani (reportedly the richest man in Iran), favours the constructionist approach, and recent comments by Ayatollah Khamenei suggest he does, too.
Could the pinch that Iran finds itself in lead it to abandon its controversial nuclear program? Not a chance, says Dr. Menashri. “It’s a source of national honour, now.”
Besides, “it was started and justified years ago when oil was below $50,” he said. “They won’t retreat from it just because of economic difficulties.”
Dr. Stern agrees, adding that it’s important to distinguish between Iran’s civilian nuclear program, and its apparent effort to develop nuclear-weapons technology. “One thing that Iran has learned from North Korea is that you don’t give up your weapons technology for nothing,” he said.
A cash-starved Iran, however, gives the West a lot more leverage in its negotiations over weapons, he added.
Don’t look for Iran to cut back, either, on some of its other controversial initiatives, such as aid to Lebanon’s Hezbollah movement and to Hamas in Gaza. Iran spent an estimated $1.2-billion (U.S.) on Hezbollah in 2006, and it’s not about to trim that by much, said Dr. Stern. “These are sources of legitimacy for the revolution,” he said. “Iranians in the lower, working classes welcome this sort of initiative – it gives them pride.”
As if the economic crisis weren’t bad enough for Mr. Ahmadinejad, Canada’s former Liberal justice minister, Irwin Cotler, unveiled in Jerusalem this week an impressively argued petition to hold Iran to account for Mr. Ahmadinejad’s incitement of genocide.
Released on Tuesday, the 60th anniversary of the Convention on the Prevention and Punishment of the Crime of Genocide, the petition argues that the Responsibility to Protect doctrine, coupled with the terms of the genocide convention, compels the international community to stop genocide before it occurs.
“In the case of Iran,” said Mr. Cotler, “there is no justification for inaction. All the warning signs of genocide are present.”
He notes that Ayatollah Khamenei has stated: “There is only one solution to the Middle East problem, namely the annihilation and destruction of the Jewish state,” while President Ahmadinejad has called for Israel to be “wiped off the map.”
“As one involved as minister of justice in Canada in the prosecution of Rwandan genocidal incitement, I can state that the aggregate of precursors on incitement in the Iranian case are more threatening than were those in the Rwandan one,” Mr. Cotler said.
The petition, signed by numerous public figures and international jurists including former Supreme Court judge Louise Arbour and Nobel laureate Elie Wiesel, will be presented to UN Secretary-General Ban Ki-moon.
