Thursday, 14 June 2012

The Latest from Iran (14 June): Tough Talk Based on Bad Economics

Supreme Leader Addresses MPs, 13 June0500 GMT: Four days before renewed talks with the 5+1 Powers on Tehran's nuclear programme, Iranian leaders are putting out unity and defiance. While the Supreme Leader told Parliament and President to work together for the good of the nation, the Deputy Chairman of the Joint Chiefs of Staff, Brigadier General Masoud Jazayeri, used Syria to show "another blow to the global hegemony in the region, on top of their failures over the recent years".

Jayazeri, condemning the "great psychological operation" of the US against the Assad regime, continued, “The region’s resistance is not a matter that the Islamic Republic can be indifferent about and anyone that commits evil deeds against this red-line of the Islamic Revolution will be dealt with." he said. 

Given the critical situation in Syria and tensions within Iran challenging "unity", can the regime see its assertions as expressions of strength rather than weakness?

One clue came from an unexpected source on Wednesday. Writing in Al-Monitor, US-based Professor Djavad Salehi-Isfahani asked, "The Iranians do not seem to be behaving as if their economic clock is ticking. Are they bluffing or looking at a different set of facts?"

Salehi-Isfahani then offers his own selective presentation of the "facts":

A comparison with Turkey helps show why Iran’s economy has not performed as badly as is generally believed....The government does not see inflation per se as particularly threatening....There is no evidence that inflation affects the lower-income groups, which form the government’s power base, worse than any other. Not everyone can lose, since higher rents or produce prices must accrue to someone....Apart from the fact that sanctions have disrupted Iran’s foreign trade, the foreign-exchange situation of Iran is the envy of the developing world, with virtually no foreign debt and substantial reserves of various currencies and gold.

Salehi-Isfahani concludes:

[The regime has] reason to be confident that with some policy corrections to improve the domestic climate for business, Iran can weather this storm and the economy can coast for quite a while so that the leadership does not have to give in to what it considers unreasonable Western demands — especially with no prospect of a serious rollback in sanctions.

The article can be challenged on numerous grounds on its economic perspective, but for now, it performs a valuable political service: is this indeed the view that Iran's leaders have of their position at home and abroad? If so, any US and European expectations that Tehran will make concessions in Moscow could be far off the mark.

from EA WorldView: EA Iran

Posted via email from lissping