Iran's Economy In Shambles And Getting Worse

Color me unsurprised.

For the past five weeks, President Mahmoud Ahmadinejad's Islamic Moral Brigades have been clashing with groups of young Iranians on the streets of Tehran and other major cities over the government's crackdown on "immodest dress." The crackdown is seen by many Iranians as another step toward an even more suffocating social atmosphere in the crisis-stricken country. Both Mr. Ahmadinejad and his mentor, the "Supreme Leader" Ayatollah Ali Khamenei, claim that the way young Iranians dress is the most immediate threat to their Islamist dystopia.

While this may seem like the mullahs trying to crack down on exuberant Iranian youth, what it is is a symptom of a greater problem in Iran: its economy.

Even as oil prices spiked, Iran did not gain as much advantage form those prices as did other oil exporting countries. Iran's oil infrastructure is falling apart and neither Ahmadinejad nor the mullahs seem willing to invest the capital needed to fix things up. Unemployment is high, around 30%, and inflation is almost 20%. To make matters worse, Ahmadinejad appears to be doing everything he can to make sure Iran's economy stays in decline.

The president's favorite catchword is "khodkafa'I" or "self sufficiency." To the horror of most Iranians, especially the millions connected with the bazaars, who regard trade as the noblest of pursuits, Mr. Ahmadinejad insists that the only way Iran can preserve its "Islamic purity" is to reduce dependence on foreign commerce.

Khodkafa'i has had catastrophic results on many sectors of the Iranian industry. Unable to reduce, let alone stop, imports of mass consumer goods (including almost half of the nation's food) controlled by powerful mullahs and Revolutionary Guard commanders, President Ahmadinejad has tightened import rules for a range of raw materials and spare parts needed by factories across the nation. The policy has already all but killed the once-buoyant textile industry, destroying tens of thousands of jobs. It has also affected hundreds of small and medium-size businesses that, in some cases, have been unable to pay their employees for months.

Mr. Ahmadinejad has also used khodkafa'i as an excuse to freeze a number of business deals aimed at preventing the collapse of Iran's aging and semi-derelict oil and gas fields. He has also vetoed foreign participation in building oil refineries, forcing the Islamic Republic to import more than 40% of the refined petroleum products consumed in Iran.

It appears that Ahmadinejad fancies himself an economist. Unfortunately the economic model he's using will only lead to misery, except of course for the ruling class in Iran. Iran is quickly becoming a second rate economic power within the Third World, and that's saying something. Eventually something will have to give and unfortunately when it does a lot of innocent Iranian blood will be spilled.

There are ever more signs appearing that the Iranian people have had just about enough of the theocratic shenanigans of the mullahs. It has stopped short of open rebellion, but it may eventually come to that. All it will take is some spark that will push the Iranian population over the edge and the protests and strikes will quickly become armed rebellion. That day is one that Ahmadinjad and the mullahs fear more than anything else and they will do everything in their power to prevent it. Unfortunately for them the very things they are doing may very well provide that spark that will bring about the very thing they seek to quell.