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ARTICLE: “Behind Rise of Iran’s President: A Populist Economic Agenda: Ahmadinejad Wins Power Promising Lavish Outlays; Inflation Is a Major Worry; Crunch Time at Biscuit Factory,” by Bill Spindle, Wall Street Journal, 22 June 2006, p. A1.
Really good article on how Ahmadinejad is running more than one race. The nuclear one we know about already, and the strategy of trying to create a non-mullah-based single-party state is another. So those are the military and political ones.
The economic one is no surprise, given his rhetoric and his cash windfall on oil: a populist agenda designed to keep popular support. The man promised to put Iran’s oil earnings on the dinner table of every Iranian, and he’s keeping his promise, basically taking what should be the economic legacy of all that oil and turning it into immediate domestic consumption instead of long-term investment. Billions here and there and it begins to add up.
All of this is a strong turn away from the connectivity-embracing reforms of the late 1990s, which were designed ultimately to gain acceptance into the WTO. Thus Ahmadinejad, focusing on his political agenda, which determines his security agenda, has decided to embrace his inner Chavez (diverting billions from Iran’s Oil Stabilization Fund--essentially a rainy day fund) and eat his nation’s seed corn as fast as possible.
So Iran remains a heavily subsidized minimal-market economy, making its integration into a global competitive landscape all the harder, and that plays nicely into the other two strategies, both of which require high levels of disconnectedness from the world’s rules and networks.
The results of this strategy are predictable: nice growth rates, but at the price of rising inflation and rising unemployment (seen as being as high as 20% in a population that adds millions to the workforce each year because universities are full and 70 percent of the population is under 30).
Ahmadinejad’s strategy reminds me of Gorbachev’s: fix the politics just so before trying to take on the economics. It’s not a bad strategy for us to encourage, because it’s bound to fail.
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