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Iran Inflation Surges on Ahmadinejad Subsidies, Price Controls
On a deserted Tehran street, an ex- geologist named Reza was hawking black-market fuel from the back of a battered van -- for about four times the legal price. ``I'm a free-marketeer,'' said Reza, 48, who asked that his full name not be used for fear of arrest. ``Everything in this country works through fixers,'' he said as he poured gasoline from a 20-liter jerry can into a car, using a plastic water bottle as a funnel. ``That's because of government mismanagement.'' Iran, the world's fourth-largest oil producer, is facing gasoline shortages, as well as youth unemployment of 21 percent and U.S. economic sanctions. President Mahmoud Ahmadinejad has responded by imposing gasoline rationing, boosting subsidies and raising government spending, sending inflation to its highest annual pace in eight years. With oil at a record $104 a barrel, his approach may be affordable for now. That may change, though: Crude-oil prices are forecast to fall 20 percent from current levels by the end of the year. ``They are hemorrhaging money,'' said Michael Rubin, an Iran analyst at the American Enterprise Institute in Washington. ``As long as oil prices are high, the Iranians will grab on to that lifeline rather than pursue the structural changes they need. If oil prices go down further, there will be a real crisis.'' 2008 will be an interesting year. Posted by: Phil_B 2008-03-06 |
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