Saturday, August 25, 2007

“I PRAY to God that I will never know about economics,”~ President Ahmadinejad

Islamic of Republic of Iran is, purely and simply, the theft of billions and billions of oil revenues, aided and abetted by the criminal IRGC/basij forces of the velayate-faghih government at nearly every level of the state-dominated economy.

The redirection of a huge portion of Iranian treasury to the pockets of fat, smelly mullahs, conservatives, reformers, and their corporate army (IRGC, basiji) is conducted with the active support and full power of the supreme leader and almost completely unfettered by supervision, accountability or direction of any kind whatsoever.

The corporate/religious IRGC (IR's Halliburton), the basiji and the clergies have merged into a fascistic religious military industrial complex.

The most notable characteristic of a fascist country is the separation and persecution or denial of equality to a specific segment of the population based upon superficial qualities or belief systems. Simply stated, a fascist government always has one class of citizens that is considered superior (good) to another (bad) based upon race, creed or origin. It is possible to be both a republic and a fascist state.

The preferred class lives in a republic while the oppressed class lives in a fascist state. Fascism promotes legal segregation in housing, national resource, education, health care, other resource allocation and employment. It provides legal justification for persecuting a specific segment of the population and operates behind a two tiered legal system.

These two tiers can be overt as it was within Nazi Germany where Jews, Homosexuals, Catholics, Communists, Clergy and the handicap were held to one set of rules and courts, while the rest of Germany enjoyed different laws.

In Fascism, one segment of society is always considered less desirable, sub-human (women, homosexuals, Bahai, sunnis, kurds, baluchis) or second class.

The IRI is also Reactionary wherein it makes policy based upon current circumstances rather than creating policies to prevent problems; piles lies and misnomers on top of more lies until the truth becomes indistinguishable, revised or forgotten.

In short, Iran is a huge profit center for Khamanei et al and his corporate Army, IRGC. Inc.

The Economist has a special report on the state of economy in Iran (Full- text here)

“I PRAY to God that I will never know about economics,” President Ahmadinejad once said when questioned about apparent contradictions in his economic policy. The Lord appears to have answered his prayer. On his watch, the world oil price has soared from $62 a barrel when he was elected in June 2005 to $72 a barrel in recent weeks. Iran, which has a young, well-educated workforce, along with the world's second-largest reserves of both oil and gas, should be on a roll. Instead the economy is struggling. Is this a weakness the world can use to dissuade Iran from its nuclear ambitions?

Since almost all official economic statistics are suspect, measuring the performance of the economy is hard. But Afshin Molavi, an Iran-watcher at the New America Foundation in Washington, DC, calls slow economic decline “the untold story of the Iranian revolution”. The economy is showing respectable growth of about 5%. But it is recording high and rising unemployment and inflation. The government puts unemployment at around 10% but private economists think it is twice as high—and that many of those with jobs have to take second ones to make ends meet. Mr Ahmadinejad's government claims to have reduced the rate of inflation. In fact it has almost certainly gone up: guesstimates by foreign embassies in Tehran put it as high as 25%. Meanwhile, foreign investment is puny—and falling (see chart 2).


But there are two bigger reasons for Iran's underperformance. One is the lopsided structure of an oil-based economy in which a corruption-riddled public sector dwarfs private business. The other is incompetent economic management, especially by Mr Ahmadinejad.

Oil revenues bring in some 80% of export earnings, but even with a high world oil price the government finds it hard to pay its bills. Tough buy-back terms have deterred foreign investment in the oilfields and hampered production: a quarter of a century after the revolution, Iran is pumping only two-thirds as much oil as before. Meanwhile the government operates a vast, price-distorting system of subsidies for food, energy, housing, bank credit and much else. According to the IMF, energy subsidies alone reached 17.5% of GDP in 2005-06, and total subsidies amounted to 25% of GDP. A Consumer and Producer Protection Organisation keeps price controls on cereals, sugar, baby milk, fertilisers and pharmaceuticals, paper and agricultural machinery. This edifice of subsidies places huge demands on public spending and would collapse if it were not for the oil revenues (see chart 3).
Among the maddest of the subsidies is that on petrol. Even after a recent 25% price hike it is still the cheapest in the world, at 11 American cents a litre. That has encouraged an annual 10% increase in consumption, plus impossible traffic and choking pollution in all of Iran's cities.

Selling petrol so cheaply is hardly an incentive for domestic refiners to raise production, so Iran has to import more than 40% of its petrol and other refined products. Much of this is smuggled back out (allegedly by the Revolutionary Guards) to be sold at a higher price. In short, Iran spends a fortune subsidising cheap petrol not only at home but also for consumers in neighbouring countries, wasting money it could otherwise have spent on increasing its flagging oil production. The government's decision last month to introduce rationing provoked violent disturbances. Since many Iranians use private cars to top up meagre incomes by becoming unofficial taxi-drivers, the consequences of this measure will be widely felt.

The IMF calls Iran's economy “state-dominated”. And how. Revolution and eight years of war have made for vast government. In most sectors state-owned companies or the opaque quasi-state foundations known as bonyads crowd out private businesses. Agriculture, internal trade and distribution are mostly in private hands. Even so, estimates of how much of the economy the government controls range between 65% and 80%...more

No comments: