Monday, July 19, 2010

While we've been distracted by the ever-changing world around us and lost interest in Iran after sanctions were passed by Congress, life has rolled on in Tehran.  But it has not rolled smoothly.  Yesterday marked a crucial turning point in domestic relations, as merchants in the capital ended a 12-day strike

Now why is this important?  No, it's not the result of U.S. sanctions and is certainly no reason to declare a victory.  And no, these strikes really are not similar to the mass protests and strikes of 1979 that brought down the Shah - the government is in no immediate danger of collapsing.  But this strike is crucially important as an indicator that economic conditions in Iran continue to deteriorate and that the general populace has thus far been unswayed by the "Blame America" rhetoric from the regime.

Under the mismanagement of President Ahmadinejad, the Iranian economy has cratered.  He spun profits from record-high oil prices into vast subsidy programs to bulwark domestic support, but when oil prices dropped those programs became massive government expenditures with no revenue backing.  Not only did he miss an opportunity to expand and diversify Iran's economy, Ahmadinejad's fiscal cluelessness has now burdened the state with more debt than it can handle.  The solution: higher taxes, which led directly to the recent strike.

Again, the regime is not in imminent danger.  But these strikes illustrate the cost of financial imprudence, and without an economic turnaround even blatant vote-stealing won't keep the current government afloat.

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