Christopher de Bellaigue: Anniversary blues in Iran
[Christopher de Bellaigue is the correspondent for the Economist in Tehran.]
For most of this decade, as the price of hydrocarbons broke record after record and the big oil exporters watched their revenues soar, Iran seemed capable of riding out all the shocks that international politics, and George W Bush in particular, could throw at it. Bush included the country in his 2002 “axis of evil” speech; he invaded its neighbours to the east and west; and in 2006 the UN security council, pushed by the US and its European allies, imposed sanctions in response to Iran’s nuclear programme.
Yet none of these actions dented the Iranians’ sense of immunity from misfortune. America’s travails in Iraq and Afghanistan ended whatever hopes Bush may have harboured of attacking Iran itself; the Americans were even forced to solicit Iranian co-operation in pacifying both. (Iran helped fitfully). As for sanctions, initially designed to curtail Iran’s purchase of nuclear equipment and its leading personalities’ ability to travel, these seemed a trifle next to the spiralling sums that the Iranians earned from the sale of their oil: $47bn in 2005, $58bn in 2006, $70bn in 2007. Tehran boomed while Baghdad and Kabul suffered, and a new middle class, shedding the old revolutionary austerities, discovered consumerism.
Today, the casual visitor to Tehran may judge that little has changed. The skyline over the northern, affluent end of the city is jagged with steel skeletons, as high-rises go up in place of recently demolished villas. In the bazaar in the centre of Tehran, the hub of Iran’s mercantile economy, it is common to see a porter, dragging his cart through the lanes, wearing a bandage over his nose—testament to the Iranian obsession, by no means confined to the middle class, for aesthetic “improvement.” But all is not as it seems. Work on hundreds of building projects has stopped, others progress at a snail’s pace. Bazaar traders complain of a severe downturn. Even Iran’s legions of plastic surgeons are feeling the pinch.
When the global financial crisis began last year, President Mahmoud Ahmadinejad liked to argue that Iran’s economy would be sheltered by its internal orientation. For all its enthusiastic participation in international trade—Iran is the second biggest oil exporter in Opec and a major importer of foodstuffs, consumer goods and building materials—the country is not fully integrated into the global economic system. Outside the oil and gas industry, Iran attracts negligible foreign investment, and the economy runs on cash transactions, not the personal debt and speculative investment instruments that have brought such grief to the west. But now it is clear even to the government’s supporters that Iran faces acute economic pain. This is the consequence both of Ahmadinejad’s profligate attitude to the oil windfall and his failure to prepare for its inevitable end...
Read entire article at Prospect (UK)
For most of this decade, as the price of hydrocarbons broke record after record and the big oil exporters watched their revenues soar, Iran seemed capable of riding out all the shocks that international politics, and George W Bush in particular, could throw at it. Bush included the country in his 2002 “axis of evil” speech; he invaded its neighbours to the east and west; and in 2006 the UN security council, pushed by the US and its European allies, imposed sanctions in response to Iran’s nuclear programme.
Yet none of these actions dented the Iranians’ sense of immunity from misfortune. America’s travails in Iraq and Afghanistan ended whatever hopes Bush may have harboured of attacking Iran itself; the Americans were even forced to solicit Iranian co-operation in pacifying both. (Iran helped fitfully). As for sanctions, initially designed to curtail Iran’s purchase of nuclear equipment and its leading personalities’ ability to travel, these seemed a trifle next to the spiralling sums that the Iranians earned from the sale of their oil: $47bn in 2005, $58bn in 2006, $70bn in 2007. Tehran boomed while Baghdad and Kabul suffered, and a new middle class, shedding the old revolutionary austerities, discovered consumerism.
Today, the casual visitor to Tehran may judge that little has changed. The skyline over the northern, affluent end of the city is jagged with steel skeletons, as high-rises go up in place of recently demolished villas. In the bazaar in the centre of Tehran, the hub of Iran’s mercantile economy, it is common to see a porter, dragging his cart through the lanes, wearing a bandage over his nose—testament to the Iranian obsession, by no means confined to the middle class, for aesthetic “improvement.” But all is not as it seems. Work on hundreds of building projects has stopped, others progress at a snail’s pace. Bazaar traders complain of a severe downturn. Even Iran’s legions of plastic surgeons are feeling the pinch.
When the global financial crisis began last year, President Mahmoud Ahmadinejad liked to argue that Iran’s economy would be sheltered by its internal orientation. For all its enthusiastic participation in international trade—Iran is the second biggest oil exporter in Opec and a major importer of foodstuffs, consumer goods and building materials—the country is not fully integrated into the global economic system. Outside the oil and gas industry, Iran attracts negligible foreign investment, and the economy runs on cash transactions, not the personal debt and speculative investment instruments that have brought such grief to the west. But now it is clear even to the government’s supporters that Iran faces acute economic pain. This is the consequence both of Ahmadinejad’s profligate attitude to the oil windfall and his failure to prepare for its inevitable end...