Iran Democracy Monitor: No. 85

MALAISE AND DECLINE UNDER AHMADINEJAD
Mahmoud Ahmadinejad's mishandling of the Iranian economy has been the subject of popular discontent within Iran for some time, but the scope of the Iranian president's fiscal bungling is only now becoming known. According to a new report in Saramiya, a reformist newspaper, Ahmadinejad has "irresponsibly and illegally" squandered some $140 billion during his term in office, and systematically depleted a governmental slush fund intended to assist the country's poor. "Contrary to Ahmadinejad's claims, his policies have only increased poverty and hardship; and the financial gaps have widened since he came to power," says the report.

Key social and economic indicators appear to support the report's contention. According to statistics from Iran's Ministry of Welfare and Social Security, approximately a third of the country's 70 million person population now lives under the poverty line. Inflation, currently at over 29 percent, is steadily creeping upward. And the government "is not doing anything" about the country's worsening unemployment and drug problems. (Tel Aviv Yediot Ahronot, December 24, 2008)

THE CHALLENGE FACING OBAMA
In the near future, the incoming administration in Washington could very well be faced with an Israeli preemptive military strike on Iran in an attempt to neutralize the Islamic Republic's nuclear program. That's the warning from former Defense Secretary William Perry, who believes that "Israel will not sit by idle while Iran takes the final steps toward becoming a nuclear power." The Obama administration, Perry believes, "will almost certainly face a serious crisis with Iran," during its first year in office. And how it responds, according to Perry, will serve as the bellwether for more profound regional changes. "If North Korea and Iran cannot be contained, we face the real danger of a cascade of proliferation of nuclear armed-states," Perry recently told a foreign policy conference in Washington. "Indeed, I believe that today we are clearly at the tipping point of nuclear proliferation. And if the world does tip, it will be irreversible and dangerous beyond the imagination of most people." (Tel Aviv Ha'aretz, January 10, 2009)

DULCET TONES FROM THE NEW PRESIDENT...
President-elect Barack Obama is already giving every indication of toeing a softer diplomatic line toward Iran than his predecessor. In an interview with the ABC network's "This Week" program, Mr. Obama reiterated his commitment to a "new approach" toward Iran. The core of this new tack, the president-elect made clear, will be "a new emphasis on respect and a new willingness on being willing to talk." But, Mr. Obama reiterated, the U.S. will have "certain expectations" in any negotiations, including greater transparency and a scaling-down of its nuclear effort and diminished support for terrorist groups such as Hezbollah in Lebanon and Hamas in the Palestinian Territories. (New York Times, January 12, 2009)

...AMID HOPEFUL SIGNS OF ECONOMIC LEVERAGE
In a largely unnoticed move, Reliance Industries, India's largest private company, has opted to cease supplies of refined petroleum to Iran. The move follows pressure from the United States in the form of a letter written by eight Members of Congress to the U.S. Export-Import Bank requesting it suspend all financial assistance to Reliance pending the firm's suspension of business with Iran. "Given the apparent lack of consideration of the relationship between Iran and RIL during the approval of the two loan guarantees packages for RIL, we further urge that you take whatever action necessary to secure an understanding with Reliance that before any undisturbed guarantees are released, Reliance will commit to ceasing its gasoline shipments to Iran," the letter read. The Exim Bank had previously provided Reliance with two loan guarantees, totaling some $900 million. (New Delhi Business Standard, January 7, 2009)

[Editor's Note: The move, experts say, is significant. According to Orde Kittrie of the Foundation for the Defense of Democracies, Reliance represents a major supplier of refined petroleum to the Islamic Republic, and last year provided Iran with approximately ten percent of its monthly gasoline needs. As such, the company's decision to suspend supplies is a much-needed boost to the United States and its allies in their efforts to put serious pressure on Tehran over its nuclear advances.]