Subscribe for 17¢ / day

TEHRAN - While Iran may be politically isolated, it's finding that there is no escaping the effects of the current global economic crisis.

Like other oil-producing states in the Middle East, Iran is linked to global markets via pipelines and supertankers. When energy prices fall as sharply as they have in recent months, Tehran's economy is plunged into a tailspin.

Even recent OPEC-sanctioned cuts in production have done little to stabilize oil prices.

In August, the International Monetary Fund warned that Iran could face a serious budgetary shortfall if oil prices slid below $75 a barrel.

Oil is currently trading at under $50 a barrel.

"We have to face it - we are now involved in the global economic crisis, and we are feeling the pain on ourselves, too," said Asadollah Asgar-Oladi, who chairs the Confederation of Iran Exporters. "So we need to face up to it and try to get out of it."

And it's not just Iranian oil exporters who are suffering. The worldwide economic slowdown means that there are fewer customers for other goods that Iran produces.

Exports stall, decline

"Many exporters have run into problems selling their goods, to the extent that buyers are not in a position to accept items even if the sale has already been concluded, or else deliveries are not paid for," Asgar-Oladi said. "Export figures for the past nine months indicate that in contrast to previous years, the growth in exports has halted … and given the current global environment, the trend is on a rapid downwards slope."

All this amounts to a dramatic reverse in fortunes for Iran's leaders, who had pinned the country's economic future on the ever-rising price of oil. After all, it was President Mahmoud Ahmadinejad who last year predicted that oil prices would hit $200 a barrel.

With presidential elections scheduled for later this year, all eyes are now on Ahmadinejad to see how he handles the economic crisis.

President in denial

So far, denial appears to be his preferred method of coping. As recently as November, the president said he would still be able to run the country if the price of oil falls to $5 a barrel.

Others have their doubts.

"I think our friends in government have made a mistake in their analysis," commented Mohammad Baqir Nobakht, a former member of parliament and close associate of former Iranian president Akbar Hashemi Rafsanjani. "They believe that to boost morale and keep people's spirits up, they have to deny reality.

"But this will only backfire. When the reality is so evident, yet what people hear runs contrary to this, they will simply lose trust in government predictions," he said.

Arash Hassan-Nia is a reporter in Tehran who writes for Mianeh, a project of the Institute for War & Peace Reporting. Web site: www.iwpr.net.

0
0
0
0
0