Thursday, June 28, 2007

The Coming Collapse of The Iranian Economy

Americans are understandably fed up with the "incompetence" of the Bush administration—though I attribute Bush's failures, not to incompetence, but to his mixed premises: his desire to stand up for liberty against the threat of totalitarian Islam, on the one hand, versus his conventional pragmatism and altruism on the other.

But whatever George Bush's failings, we can take comfort in the fact that they are nothing compared to the failings of our chief enemy in the War on Terrorism: Iranian President Mahmoud Ahmadinejad. Since coming into office on a promise to spread Iran's oil wealth to the masses, Ahmadinejad has instead nearly collapsed the Iranian economy.

Now one of the world's largest producers of oil has begun to ration gasoline—an extraordinarily unpopular decision that has led to rioting in the very same poor neighborhoods where Ahmadinejad claims to have his base of support. See the story linked to below, and also another report at CNN.

This highlights the glaring weak spot of the Iranian regime and points the way for a very effective strategy to further collapse our enemy's economy by blockading its gasoline imports (a strategy recently recommended in USA Today and also hinted at by presidential hopeful Fred Thompson).

Unfortunately, the Bush administration shows few signs of moving against Iran, and now John Bolton is openly criticizing the administration for clinging to diplomacy in dealing with Iran and evading the need to topple the regime.

Still, it is good to have a reminder of how weak our enemy is. Victor Davis Hanson puts it nicely in a somewhat rambling NRO article that is worthwhile just for this one observation: "Theocratic Iran is not exactly as 'empowered' as is generally alleged, but [is] in the greatest crisis of its miserable existence."

"Iran Fuel Rations Spark Anger, Rioting," Reuters via MSNBC, June 27 Angry Iranian motorists lined up for gasoline for hours on Wednesday after the world’s fourth-largest oil exporter imposed fuel rationing, sparking chaotic scenes and the torching of at least two pump stations.

One Iranian news agency, Fars, said 12 gasoline stations were set ablaze in Tehran after the government’s announcement late on Tuesday, but only two could be independently confirmed.

Some drivers had scuffled while waiting to fill up their tanks before the rationing started at midnight. Others openly criticized President Mahmoud Ahmadinejad’s government, which came to power vowing to share out Iran’s oil wealth more fairly.

“We are swimming in oil and all they do is just put pressure on people,” said taxi driver Hasan Mohammadi.

Despite its huge energy reserves, Iran lacks refining capacity and must import about 40 percent of its gasoline….

One fuel station in Pounak, a poorer area of the capital, was set alight while another in eastern Tehran was partially burnt, two of its pumps destroyed by fire, witnesses said….
“I cannot tolerate more economic pressure,” said teacher Hasan Sanjari. “My monthly salary is $300. I have three sons.”…

But he said Iran had no choice but to curb consumption because of the burden on state coffers. All fuel, whether imported or domestically produced, is sold at heavily subsidized prices, encouraging waste and smuggling.

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