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  • Rationing Fuels Discontent In Iran

    Washington Post
    July 1, 2007
    Pg. 18

    Rationing Fuels Discontent In Iran

    Ahmadinejad Tries To Curb Gas Subsidy

    By Ali Akbar Dareini, Associated Press

    TEHRAN, June 30 -- President Mahmoud Ahmadinejad, who swept to power promising that every family would benefit from the nation's oil wealth, now faces growing domestic discontent over newly imposed fuel rationing and skyrocketing consumer prices.

    The anger at home is an unwelcome challenge for a president who also is fending off international criticism over his country's nuclear program.

    Analysts said the fuel rationing, imposed this week, may be an attempt to reduce Iran's dependence on foreign gasoline imports that Western governments could eventually use to pressure Tehran.

    A month after raising gasoline prices by 25 percent, the government began fuel rationing Wednesday, which sparked violence in Tehran. Angry Iranians smashed shop windows and set fire to a dozen gas stations.

    With armed guards protecting gas stations Thursday, calm returned to the capital as motorists lined up to fill their tanks. But many were still seething.

    "Ahmadinejad promised paradise, but his government has made life hell for Iranians," Mohsen Nosrati said as he waited at a gas station in central Tehran.

    Ahmadinejad portrayed himself as a champion of the poor when he swept to power in 2005, pledging to use the country's oil wealth to eradicate poverty and tackle unemployment.

    But joblessness remains high amid surging inflation. The government estimates unemployment at 10 percent, although economists say it could be as high as 30 percent.

    Even before the rationing, Ahmadinejad faced growing criticism -- even from conservatives who once supported him -- for dramatically raising housing and food prices over the past year. Prices for fruits and vegetables have tripled in the past six months, and housing prices have more than doubled since last summer.

    Many fear that the boost in fuel costs will worsen inflation, which the Central Bank says is 14 percent but which economists say is at about 25 percent.

    Conservatives in Iran's parliament, especially those aligned with the national oil company, have long pushed for higher gasoline prices. Still, Ahmadinejad resisted the idea because of his campaign promise to share Iran's oil wealth with the poor.

    This month, about 60 economists wrote to Ahmadinejad blaming rising prices on his mismanagement and flawed economic policies.

    "Ahmadinejad promised to improve our living conditions, but he has brought us misery and poverty," said Hamid Reza Shokouhi, an Iranian analyst.

    Many experts blame the worsening economy on two sets of U.N. sanctions imposed since December in response to Iran's refusal to halt uranium enrichment.

    On Friday, diplomats said the United States and its allies were awaiting an Iranian response to a proposal that would commit the U.N. Security Council to hold off on additional sanctions if Tehran stops further development of its enrichment program.

    Iran says it is developing its nuclear program to generate electricity to meet growing energy needs. But the United States and its allies accuse it of seeking to secretly develop nuclear weapons, a charge Tehran denies.

    The international pressure has made it difficult to tackle one of the country's most significant economic problems -- gasoline subsidies that cost the government billions of dollars a year and encourage high demand.

    Iran is one of the world's biggest oil producers, but it does not have enough refineries, so it must import more than 50 percent of the gasoline consumed domestically. The rationing is part of a government attempt to reduce the $10 billion it spends each year to import fuel that is then sold at below cost to keep prices low.

    The government tried to curb demand and related subsidy expenditures by raising the price of gasoline in May, but the increase was not enough to significantly curb consumption. After the May price increase, gas sells at the equivalent of 38 cents a gallon.

    The rationing system allows private drivers only 26 gallons of fuel a month at the subsidized price. Taxis get 211 gallons a month. Anything more than that will be sold at a higher price yet to be announced.
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

  • #2
    Sir,

    Who here is surprised?

    I see no hands.

    Might be a good opportunity to keep Ahmadinejad's government off balance with a little agitation.

    Regards,

    W.
    Pharoh was pimp but now he is dead. What are you going to do today?

    Comment


    • #3
      cutting the gasoline subsidies is something Iran has needed to do economically for years. Every one knew this would be unpopular. If he is doign this it may be beucase he knows he is a lame duck (wont be re-elected) and so is undertaking some real econimic reforms that will hurt in the short term but keep Iran goin glong term.

      One thing removal of the subsidies gives Iran's goverment alot more cash for weapons and a better strategic gasoline outlook in the event of war.

      Comment


      • #4
        Since I'm economically ignorant, why did Iran waste time/money/resources on "Uranium enrichment" when they couldn't even begin to refine enough petrol for their country?

        Comment


        • #5
          Originally posted by Kansas Bear View Post
          Since I'm economically ignorant, why did Iran waste time/money/resources on "Uranium enrichment" when they couldn't even begin to refine enough petrol for their country?
          Maybe it has something to do with the populist platform that got A-jad elected.

          My guess is most Iranians at this point have lost any idealistic nuclear-topia idealism and would much rather A-jad fall in line with proven economic policies. Let the market play a bigger role in determining the prices of gas, food, housing, and whatever else is priced by the state.

          The country is sitting on enough oil and natural gas to make Europe wet itself, and A-jad is subsidizing the industries?

          Comment


          • #6
            Originally posted by FibrillatorD View Post
            Maybe it has something to do with the populist platform that got A-jad elected.

            My guess is most Iranians at this point have lost any idealistic nuclear-topia idealism and would much rather A-jad fall in line with proven economic policies. Let the market play a bigger role in determining the prices of gas, food, housing, and whatever else is priced by the state.

            The country is sitting on enough oil and natural gas to make Europe wet itself, and A-jad is subsidizing the industries?
            FD,

            Most (if not all) ME countries with oil subsidize petroleum fuels to gain favor (or looking at it alternatively, to keep discontent to manageable levels) with their populace.

            I doubt that the populace desires these subsidies to go away. We need not look beyond our own borders here in the US to find irrational subsidies (from an economic, not political, perspective) and other irrational economic policies.
            "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

            Comment


            • #7
              Originally posted by Kansas Bear View Post
              Since I'm economically ignorant, why did Iran waste time/money/resources on "Uranium enrichment" when they couldn't even begin to refine enough petrol for their country?
              Petroleum refining capabilities doesn't guarantee the regime from outside threats. Lack of capability hurts the population, not the regime.

              Nukes provide an insurance policy against outside threats.
              "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

              Comment


              • #8
                Originally posted by zraver View Post
                One thing removal of the subsidies gives Iran's goverment alot more cash for weapons and a better strategic gasoline outlook in the event of war.
                I'm not sure if they're stockpiling gas reserves in the event of war, but they definitely are moving towards a war footing.

                Here's a good article from this week's Economist, Iran | Muzzling dissent and moving to a war footing | Economist.com. It didn't show up as being subscription only, but if you can't get it, then PM with your email and I can send it to you.
                "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

                Comment


                • #9
                  Thanks Shek, it let me view it, rationing and crackdown definately point towards Iran gearing for war. Problem is can these measures really establish a solid politcal footing when the whole thing comes crashing down. Iran has to know that the American modus operandi is blowing bridges and other "soft" dual use targets. I don't think the Iranian people will take being reduced to the stone age sititng down.

                  It also offers the US an improved avenue for the "Velvet Revolution". although the "Velvet Revolution itslef gives the Iranian miltiary forces more time to prepare and get up to speed on thier new weapon systems.

                  Comment


                  • #10
                    Originally posted by Shek View Post
                    Petroleum refining capabilities doesn't guarantee the regime from outside threats. Lack of capability hurts the population, not the regime.

                    Nukes provide an insurance policy against outside threats.
                    Sir,

                    Regarding K.B .'s question:

                    Since I'm economically ignorant, why did Iran waste time/money/resources on "Uranium enrichment" when they couldn't even begin to refine enough petrol for their country?
                    From their perspective, there are, AFAIK two phenomenon at work here that affect their decision making on the nuclear angle:

                    1. "The East" cannot provide the appropriate petroleum industry upgrades as "The West" can which impedes production so energy independence that can be developed in house and/or with "Eastern" assistance are prefferable (i.e. nuclear). Too, there is the benefit of a springboard to fission weapons, as you have intimated;

                    2. Oil and gas are more suitable as a commodity for export from Iran with nuclear power to support many domestic energy needs.

                    William
                    Pharoh was pimp but now he is dead. What are you going to do today?

                    Comment


                    • #11
                      Originally posted by Swift Sword View Post
                      Sir,

                      Regarding K.B .'s question:



                      From their perspective, there are, AFAIK two phenomenon at work here that affect their decision making on the nuclear angle:

                      1. "The East" cannot provide the appropriate petroleum industry upgrades as "The West" can which impedes production so energy independence that can be developed in house and/or with "Eastern" assistance are prefferable (i.e. nuclear). Too, there is the benefit of a springboard to fission weapons, as you have intimated;
                      2. Oil and gas are more suitable as a commodity for export from Iran with nuclear power to support many domestic energy needs.

                      William
                      Which is the real reason Iran wants nukes and won't accept forgien fuel with waste return provisions or reactor designs that do not produce easily used fissil material.

                      Comment


                      • #12
                        There is a natural deadline for Iranian regime to obtain nukes, i.e., before they can no longer export oil (based on no re-capitalisation of their oil fields due to sanctions).

                        http://www.worldaffairsboard.com/sta...tml#post361309
                        "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

                        Comment

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