Teaching Comparative Government and Politics

Monday, March 24, 2014

Is there a political solution?

Broadly speaking any solution will have to be political. But, can the politicians in Iran come up with a solution that is not revolutionary? Can the politically involved religious leaders come up with a solution that maintains their power?

In Iran, Hopes Fade for Surge in the Economy

Suffering in an economy dragged down by years of mismanagement and the effects of international sanctions, Iran’s increasingly impoverished middle class voted in huge numbers last summer for President Hassan Rouhani, who promised to reignite growth by restoring ties with the rest of the world.

Rouhani

But more than six months after Mr. Rouhani took office, hopes of a quick economic recovery are fading…

Although Mr. Rouhani has managed to stabilize the national currency, halt inflation and forge a temporary nuclear deal that provides some relief from sanctions, delivering on his promises of economic growth has proved far more difficult…. Now, with a lack of petrodollars and declining tax revenues, Mr. Rouhani has little option but to take steps that in the short-run will only increase the pain for the voters who put him into office.

With the start of the Iranian new year, on Friday, the government will begin phasing out subsidies on energy, the start of a process that will send the prices of gasoline and electricity, and other utilities, soaring by nearly 90 percent, economists say.

The shortage of funds is also forcing the government to wind down a system of $12 monthly payments to nearly 60 million Iranians…

Iran’s stock market, which rode high on optimism injected by the new government and the temporary nuclear deal, has been in decline, losing 14 percent since its peak in December. The national currency, the rial, after months of stability, has dropped about 4 percent against the dollar…

[T]he markets are losing faith in the government’s ability to get the economy going. “We are once again witnessing investors taking their money out of stocks and instead speculating on gold and foreign currency,” one stock market expert, Hamid Mirmouni, told the Fararu website recently. “The government continues to waste time and money, investors are losing hope.”…

Even those close to the Rouhani administration are saying they are hoping for a “miracle” to avoid the political damage from the cuts…

Iran’s supreme leader, Ayatollah Ali Khamenei, echoed such worries in a speech Tuesday to dozens of the country’s most influential leaders, politicians, clerics and military commanders. He urged the government to pay attention to the poor, calling for social justice, meaning an equal distribution of wealth…

One Tehran-based analyst, who spoke on the condition of anonymity to discuss the economic problems openly, said that over the past decades many different governments had tried to fix the economy, but all had found it politically difficult, if not impossible.

“Many of our problems are systemic,” he said. “There is no real solution other than muddling on.”…

Khamenei says only a strong Iran can avoid ‘oppression’

Iran’s supreme leader Ayatollah Ali Khamenei said Friday that only a strong nation could avoid being oppressed by foreign powers, as he called for economic and cultural independence...

Khamenei

Hopes for an economic recovery were rekindled after President Hassan Rouhani took office in August with a promise to repair relations with the world. In November he clinched an interim nuclear deal with world powers that brought modest sanctions relief.

But Khamenei, who has the final say on the nuclear issue, said Iran should not pin its hopes on “when the enemy will lift the sanctions,” alluding to nuclear talks with world powers aimed at reaching an ambitious final accord by July 20...

Khamenei, who has backed the nuclear talks but expressed skepticism over Western intentions, called for greater economic self-reliance through boosting productivity and pursuing a buy-Iran campaign under the title “economy of resistance.”

Khamenei added that culture is “even more important than the economy.”

“It is the air you breathe. If it is clean it has one effect, and another if it is dirty,” said Khamenei, who has long warned of a so-called soft war by the West against Iran’s Islamic ideals and values.

“The focus of the enemy is on the culture more than anything else,” Khamenei said.