Washington Times , Tehran, Nov 5, 2008 (excerpts) – When the U.S. stock market plunged and venerable New York investment houses fell, some Iranian leaders said the Bush administration was paying the price for its aggressive, unilateral ways.
As the crisis mushroomed into a worldwide phenomenon, officials here are no longer so smug.
Iran has become increasingly dependent on oil earnings since the 2005 election of President Mahmoud Ahmadinejad. It is the world’s fourth-largest oil producer and second biggest exporter in the Organization of the Petroleum Exporting Countries (OPEC). Since July, however, the price of oil has dropped by half.
The consequences could be serious for a government facing international sanctions because of its rejection of demands that it suspend a nuclear program that it insists is peaceful but some argue could give Iran the ability to make atomic weapons. Economic difficulties could also give the next U.S. administration new leverage to negotiate with Iran.
Mr. Ahmadinejad told reporters when he visited New York in September, “We really do not face serious problems. What you are facing [in the United States] is far harsher than in Iran.”
A clerical supporter of the president, Ayatollah Ahmad Jannati, said last month that the financial meltdown was a “punishment from God” and that Iranians were happy that the U.S. economy is in crisis.
“The unhappier they are, the happier we become,” said the cleric, who heads a council that vets candidates for elected office and supervises voting.
The initial impact of the financial crisis fed into ideology here that predicts the end of capitalism and the failure of liberal democracy as well as communism.
“The school of Marxism has collapsed and the sound of the West’s cracking liberal democracy is now being heard,” Iran’s supreme leader, Ayatollah Ali Khamenei, told a crowd of clerics last month, recalling the fate of the Soviet Union.
“It is the end of capitalism,” Mr. Ahmadinejad said.”The reason for their defeat is that they have forgotten God and piety.”
However, the crisis has led to an apparent recession in the West that has severely depressed demand for oil.
For Mr. Ahmadinejad, the timing could not be worse, since he is seeking a new four-year term next year when he triumphed over Mr. Rafsanjani in 2005, Mr. Ahmadinejad pledged to put Iran’s oil money on the dinner table of ordinary Iranians. While oil was trading at close to $150 a barrel, the populist leader could lay on quite a feast.
Now with prices hovering around $60, the party may be over.
In a clear sign of crisis, the government last month first imposed – and then postponed – a value-added tax on many consumer goods after bazaar merchants in Isfahan and then Tehran shuttered their shops, staging the largest such protest in nearly three decades
The pro-Ahmadinejad newspaper Keyhan criticized the decision to suspend the tax as giving in to “wealthy, leech-like rich people.”
But a shopkeeper in the Tehran bazaar, who asked not to be named to avoid retribution, said that “because of this tax, there is an increase of 10 [percent] to 15 percent in prices, so we want the government to annul the law.”
This year alone, Mr. Ahmadinejad´s government has withdrawn at least $17 billion from the fund. The remaining balance is estimated at only $25 billion.
Critics of the president say he has wasted Iran’s resources at a time when he should have been saving for contingencies and investment in infrastructure.
“Iran’s economy is crisis-stricken, and many experts are worried about the future because the economic crisis in the West is about to reach us,” the reformist newspaper E’temad-e Melli editorialized on Oct. 28. “The price of OPEC crude has drastically fallen. … It is not possible to judge Iran’s economy at the moment because we are in the eye of the storm and faltering. We have lost the last three years when we could have provided a strong cover for the country with the revenues from the high price of oil.”