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Iran's Economy Runs Out of Steam

[Forbes] Michael Rubin - Ahmadinejad has run Iran's economy into the ground as the Islamic Republic reverts to a Soviet-style command economy. On Oct. 11, the Central Bank reported inflation above 30%. Non-oil sector production is stagnant. Purchasing power has plummeted. Factories may remain open but many do not pay workers. On Oct. 2, tire factory workers staged a protest in front of the Ministry of Labor seeking six months' unpaid wages. In recent weeks, wildcat strikes have occurred in Tehran, Isfahan, Qazvin and Sanandaj. Ahmadinejad's arbitrary decree lowering interest rates to single digits, no-interest banking, and inflation have led wealthy Iranians to pour money into real estate. Housing costs have skyrocketed; Tehran real estate prices rival New York's. The average Iranian family now pays 60% of its income for rent, while the Ministry of Housing estimates 1.5 million Iranians are homeless. Iran's strategic challenge and nuclear ambitions will be the most immediate foreign policy challenge facing the new administration. The National Iranian American Council, Tehran's de facto lobby in Washington, urges a relaxation of sanctions. So too does the Council on Foreign Relations. Condoleezza Rice offers a defiant Tehran financial incentives. Such strategies are wrong. Throwing an economic lifeline to a terror-sponsoring regime dedicated to the acquisition of nuclear weapons capability would be nothing short of diplomatic malpractice. The writer is a resident scholar at the American Enterprise Institute.
2008-10-29 01:00:00
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