ECONOMY-IRAN: Oil Boom May Spell Ahmadinedjad’s Doom

By IPS Correspondents Reprint | | Print |

Saloumeh Peyman

TEHRAN, Jul 7 2005 (IPS) - Like Ahmadinedjad, the president-elect of Iran, Akbar Hashmi was born in Garmsar, a small town on the edge of the desert that lies to the south-east of the capital city. But similarities end there.

” I know his ( Ahmadinedjad’s) family , my brother was his classmate in primary school but now he is called doctor( doctorate in transportation and traffic) and I am a labourer,” said Akbar pausing to unload yet another bag of cocoa for a confectionery.

The families of both men moved to the megapolis on the eve of the 1979 Islamic revolution and the children were together in primary school in the slums of suburban Tehran from where the late Ayatollah Khomeini and his fundamentalist revolution drew support.

Asked why the poor people in the slums supported the revolution Akbar said: ” I don’t know, but, I think they were crazy because I remember they used to enjoy the reasonable welfare that was provided but they hated the mini jupe ( mini skirt popular in pre- revolutionary days).”

”My father and his generation had enough to eat but worried about the free availability of alcoholic drinks – but look at me I am an opium addict,” said Akbar, one of the millions of people who are looking to the new president expectantly to rescue them from back- breaking poverty.

Despite steady earnings from oil exports, Iran has chronic budget deficit problems attributed to poor management and large-scale state subsidies on foodstuffs and petroleum products. The conservative Majlis (parliament) has refused to raise consumer prices ignoring warnings by economists of worsening high inflationary trends.

As the political analyst , Ziaeddin Ehteshami , a supporter of Ahmadindjad writes : ”Ahmadindjad has been elected by 17 million people but he is the president of ( around) 70 million population.”

While the composition of Ahmadindjad’s new cabinet is a matter of conjecture the people who voted him to power are hoping that the new dispensation would immediately attend to their rapidly dwindling purchasing power.

” If the president does not honour his promise of reducing the bank interest to a one-digit figure, within one month of taking office, then I will turn against him,” said Hashmi.

As a skilled worker at the confectionery shop, Hashmi gets a monthly salary of 165,000 Tomans (US 160 dollars) barely enough to support his small family of a wife and an infant.

” My wife and I voted for him both in the first round and also in the run-off . We have been impoverished by the previous governments.”

In his first post-election tours, Ahmadinedjad took care to visit the holy city of Qum , a three-hour drive to the south of Tehran to pay homage to turbaned, high ranking clergymen and receive their blessing but most of his supporters are anti-clergy and concerned with gaining for themselves a better standard of living.

” I voted for him, because he promised to change the management of the country so drastically that within two months of his taking office, we would see the change on our Sofreh ( Farsi word for table cloth ),” Hussein (second name suppressed) a 33-year-old accountant in a private company told IPS.

” I make the equivalent of 350 dollars a month ,which is nothing indeed,” said Hussein adding that on such a small salary he could not afford to get married as he would have liked to.

Official figures released recently say that 20 percent of the Iranian population lives below the poverty line ( for a family of five it is defined as 185,000 Tomans or 200 dollars per month) and reckons that some 1.5 million Iranians suffer some degree of starvation.

” The reason why the revolution failed to fill the gap between haves and have-nots lies in the turbans of the clergymen, metaphorically speaking,” said Hussein.

”The very cloth of the turban has turned into a curtain that separates us from international norms – if Ahmadinedjad doesn’t kick out the corrupted big shots in the oil ministry, as he promised in his pre- election campaign, I will curse him openly,” Hussein said.

But Ahmadinedjad will have to reckon with the Majlis elected in Feb. 2004 for a four-year-term. Even the preceding reformist parliament failed to carry through reforms because these were blocked by the turbaned Council of Guardians.

Ordinary people like Hussein say they hated the reign of the deposed Shah of Iran because of the permissive, western culture it promoted but feel that little has really changed on the culture front anyway.

” I joined the troops of the revolution in the streets to punch the air and call for justice and freedom from the influences of the corrupted, western and vulgar culture but now girls and boys are as promiscuous as before revolution – it seems no body can do anything about it , so I only stick to justice and welfare for the poor ,” said Asgar Sadaat, 57 , a widower with three unemployed grown offspring.

”After August (when Ahmadinedjad is formally sworn-in) I will wait to see improvements in people’s social security such as better and free medical care, higher pensions and more subsidies on staples like rice , wheat , vegetable oil , sugar and cheese,” said Sadaat.

Popular expectations of Ahmadinedjad worry economists and managers who have been calling for skillful management of Iran’s vast oil revenues in favour of lasting poverty alleviation and pointing out that more subsidies is not necessarily the answer.

” It is no surprise that the Tehran Stock Market index nose-dived soon after Ahmadinedjad’s victory . If he repeats the blunder made by a former regime in the early 1970s by injecting oil money into direct subsidies we can expect galloping inflation and then the boom will turn into doom,” said an economist who asked not to be named.

Thanks to soaring prices of oil in the international market, Iran is enjoying unprecedented oil revenues and economists say the best thing to do would be to invest the money in infrastructure and avoid frequent imbalances in supply and demand for consumer items.

”There is risk, in the short run, of widespread disillusionment which can cause instability in our society,” said Fariborz (full name suppressed), a former Marxist who has now become a stockbroker.