Ahmadinejad Presses His Luck

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Last month, Iranian President Ahmadinejad began phasing out subsidies of fuel and other essential commodities, despite popular outrage from inside and outside the government. Iranians of all social classes are now suffering and workers are going on strike, causing the country’s most intense turmoil since 2009.

Over the next five years, massive government subsidies to the Iranian people will be eliminated. The subsidies accounted for nearly 30 percent of the budget, with a household making $3,600 receiving $4,000 on average in subsidies each year. The Iranian economy is in steep decline and is now suffering extraordinary stress because of international sanctions. In addition, one study found that the regime would have to end exports of oil by 2015 if domestic consumption was not curbed. Luckily for Ahmadinejad, consumption of gasoline has dropped 20 percent since the subsidies were cut.

The economic necessity of cutting the subsidies carries massive risks for the regime. When gasoline rationing was tried in 2007, it resulted in riots that included gas stations and supermarkets being set ablaze. That also happened this time, as reports have come in of gas stations and a mall in Tehran being torched. The regime deployed heavy security and gave over 60 million people about $80 each to help them with the price increases. The government also issued price fixes to prevent inflation, but this is causing even more trouble as the industries try to cope with massively increased expenses, especially in the transportation sector.

The price of gasoline jumped over 60 percent in an instant and the cost of diesel fuel skyrocketed from six cents per gallon to $1.32 per gallon. Thousands of workers have gone on strike because they are forbidden from raising prices above a certain level so they can afford fuel and other necessities. As a result, many trucking and taxi services simply cannot open for business. The number of buses available for public transportation has decreased in places like Qazvin by three-fourths. Taxi drivers taking part in sit-ins and other workers on strike have been arrested to prevent any type of organized strike from taking place. A union of truckers had its officials threatened when they talked of launching a strike.

At the port of Bandar Abbas, hundreds of small vessels and trucks transporting goods have been abandoned. Ferry services have shut down. The case is the same at a truck terminal in Tehran, which now goes mostly unused. Government employees are also hurting as contract workers are laid off. The Education Ministry had to let go 400 workers. A story has come out of Varamin that a school has told students to dress warmer because it is too early in the year to take on the added expense of using its heating system.

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  • Chezwick_Mac

    1) I understand the regime's economic problems are real, but with oil currently nearing $100 a barrel, they certainly have money at their disposal

    2) I've been reading about the imminent collapse of this regime since its inception. Nobody would be happier if the mullahs were toppled, but I'll believe it when I see it

  • aspacia

    The West said Iraq was on the downslide too. Sadam starved the people and stayed in power.

  • ObamaYoMoma

    I’d still prefer to explode an EMP device in the atmosphere above Iran to destroy their electrical grid and their ability to retaliate. Then go in and at the same time we destroy the nuclear installations, also destroy the ruling Mullah regime and the IRGC. Then subsequently the international community could assist them in food and water distribution until they get their electrical grid rebuilt.

    If you believe oil prices are high now, then wait and see how high they will go if they get nukes.

  • jacob

    I don't believe this of the SINISTER MIDGET is pressing his luck.
    As stated, SADDAM HUSSEIN did the same and I don't believe he had a
    repressing apparatus as effective as the one these religious fanatics have.
    But his "Brother" CHAVEZ could solve his fuel problems, if not the new STALIN,
    Comrade PUTIN….
    Which brings me to ask about the nature of the weekly flights of the Iranian airline
    to VENEZUELA and what has been hinted, URANIUM mineral shipped to IRAN …
    Did it occur to this Administration's supergeniuses (not that there was any lack
    of them in previous) that since this violates the sanctions allegedly imposed
    on the SINISTER MIDGET regime, it would be an opportunity to tell "President"
    CHAVEZ to take his oil and shove it, (as he has threatened often, perhaps for
    domestic consuption only) and warning any countries who would buy his oil
    to forget exporting a single nail to the USA and this way, get rid of this enemy

  • Gary from Jersey

    Ryan, is there any connection between cutting Hezbolah's subsidies and the current crisis in Lebanon?

  • USMCSniper

    Hugo Chavez can't bail him out either

  • hijinx60

    Such an unstable regime along with the unrest in Lebanon and Palestine make a very dangerous situation for Israel with it's newly discovered oil and gas reserves.

  • AG

    Some more details in Lester Brown's new book, "WORLD ON
    THE EDGE", (2011) – free to read:
    http://www.earth-policy.org/images/uploads/book_f

    A few excerpts;

    Iran, with a fossil fuel subsidy of $66 billion, is a leader in promoting gasoline use by pricing it at one fifth its market price. Following Iran on the list of countries that heavily subsidize fossil fuel use are Russia, Saudi Arabia, and India.

    In Iran, villages abandoned because of spreading deserts or a lack of water number in the thousands. In the vicinity of Damavand, a small town within an hour’s drive of Tehran, 88 villages have been abandoned.

    Chronically plagued by overgrazing and overplowing, Iraq is now losing irrigation water to its upstream riparian neighbors—Turkey, Syria, and Iran. The reduced river flow—combined with the drying up of marshlands, the deterioration of irrigation infrastructure and the shrinking irrigated area—is drying out Iraq. The Fertile Crescent, the cradle of civilization, may be turning into a dust bowl.

    Water supplies are also tightening in Iran. An estimated one fifth of its 75 million people are being fed with grain produced by overpumping. Iran has the largest food bubble in the region.

    Twenty or more years ago, Pakistan chose to define security largely in military terms. When it should have been investing in reforestation, soil conservation, education, and family planning, it was shortchanging these activities to bolster its military capacity. In 1990, the military budget was 15 times that of education and a staggering 44 times that of health and family planning. As a result, Pakistan is now a poor, overpopulated, environmentally devastated nuclear power where 60 percent of women cannot read and write.

  • http://www.mysapce.com/freddawes1776/ Fred Dawes

    keep a good eye on our boys in our banking system and the Obama boys who will help the mass murdering Iraq and iran its all about money! and if you understand history our boys and our bitchs will help to keep the game going until the USA And its people have disappeared into the third world. its all in the game!

  • http://www.mysapce.com/freddawes1776/ Fred Dawes

    the USA Will send big money to keep this guy in power

  • George

    This SOB with his criminal mullahs have no shame — from cheating in elections, starving their own people, sponsor terrorism in the region, etc.

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