Mahmoud Ahmadinejad, Iran’s Charity Economics and the Apocalypse Brigade

Tehran, Iran, 16 June 2009. The world is outraged by Mahmoud Ahmadinejad’s apparently rigged election victory. Recent polling indicates that the results may well be valid, however. Key to understanding what has happened are the ‘Charity’ economics that Ahmadinejad practices. The long term implications mean that military action is more likely, $500 a barrel oil possible and Apocalypse a desired eventuality for powerful extremists in both Iran and Israel.[br]

Tehran, Iran, 16 June 2009. The world is outraged by Mahmoud Ahmadinejad’s apparently rigged election victory. Recent polling indicates that the results may well be valid, however. Key to understanding what has happened are the ‘Charity’ economics that Ahmadinejad practices. The long term implications mean that military action is more likely, $500 a barrel oil possible and Apocalypse a desired eventuality for powerful extremists in both Iran and Israel.[br]

Despite the claims of fraudulent election results, which fit the western narrative of a crazed Iranian President perfectly and which have become de-facto gospel, the truth is probably more nuanced. A rare,

scientifically sampled survey of the Iranian population

was funded by the Rockerfeller Brothers Fund and carried out by an award-winning Farsi (Iranian language) speaking company from a neighbouring country, using internationally recognised random telephone dial techniques with demographic weighting used to estimate overall voter intentions. This survey was carried out between 11-20 May 2009.

The survey found that voters supported Mahmoud Ahmadinejad by a 2-1 margin, slightly more than the final election result. Almost all demographic groups were found to favour President Ahmadinejad over the reformist challenger, former Prime Minister Mir Hossein Mousavi.[br]Key to understanding this complex situation are two groups of pro- and two groups of anti-Ahmadinejad voters. Fascinatingly, the young in the 18-24 year old age group comprised the strongest support of all age groups. Two-thirds of the 70-million plus Iranian nation are under 25 years old so this is a key demographic. Ahmadinejad also won the Azeri ethnic group, despite Mousavi being Azeri himself.

The only two pro-Mousavi groups were university students & graduates, and the rich. This could explain why this group is so visible, since they make up a large section of Tehran society in particular, and also because these two groups are the two most likely to have contact with the west. The notion that the young and the internet were spurring a grassroots revolution was probably overstated, particularly since only a third of Iranians have any kind of access to the internet, much of that restricted to internet cafes.

Populist ‘Charity’ Economics

At a deeper level, the split in attitudes can be explained by an understanding of the impact of economic policies – or lack thereof.
The educated and the high-income end of society can understand that Ahmadinejad’s economic policies are wasting Iran’s oil wealth. His predecessors created sovereign funds designed to give Iran economic stability, for example by making long-term investments and keeping aside ‘rainy day’ money.

Ahmadinejad has plundered those funds to give hand outs poor. At election rallies he has even resorted to distributing free potatoes and cash, while ordering schools and hospitals to be built. He has authorised low interest loans and put 22 million Iranians on national health care.

That helps to explain why most Iranians support and even love him. However these populist ‘charity economics’ policies have a price. The supply of money has led to a 25% inflation rate, according to the Central Bank of Iran.

Meanwhile, there is precious little in the way of investment. The official unemployment rate has grown to from 10.5 per cent to 17 per cent during Ahmadinejad’s tenure.

Iran is the world’s fourth largest oil exporter and has the third largest proven oil reserves. And yet, it is unable to process oil into gasoline, and therefore, somewhat bizarrely, it needs to import most of its gasoline from abroad, further damaging its economy.

While Ahmadinejad is in power, he is likely to continue to pursue populist charity economics policies and not invest in crucial infrastructure projects. He is also likely to continue defying the west, keeping sanctions in place and further damaging the economy.

Even his own administration has many opposed to these policies. He recently sacked the governor of the Central Bank of Iran who wanted to tackle inflation with fiscal tightening. Both conservatives and reformists have complained bitterly about these policies during the election.

 

Where to Now for Iran?

 

 

 

We are in uncharted territory, so nothing is certain. This has been an incredibly open election, which must said that was previously off-limits.

Mousavi has called the results fraudulent, and seems to have international backing for that stance. The Supreme Leader has asked election authorities to investigate, but seems set already that Ahmadinejad should continue.

Mousavi supporters have been rioting, and hundreds of thousands were reported on the streets for an unofficial rally 15 June. They are being met by increasingly aggressive revolutionary gaurds and Baseej militias. At least one protester has been killed already, with many others injured and jailed.

It is likely that there will be a crackdown of some sort, protests will be brought to an end and another generation of youth will have their anger bottled up. If the economy continues to deteriorate the public mood may turn against President Ahmadinejad. According to the same poll earlier cited, most Iranians, including most of his supporters, support greater democracy, more openness in society and improved relations with the west. That suggests that the economy is the swing issue.

For now, though, Ahmadinejad is likely to feel vindicated and continue with his current policies.

Iran, Israel and the Global Economic Recovery

Current opinions on both sides of the nuclear-Iran equation are likely to be both entrenched and embolded.

Rather than an ‘Axis of Evil’, we believe there is an ‘Axis of Apocalypse-Wishers’. The neo-conservative Christian Right believes that the end of days comes with an Apocalyse in the Middle East, setting the stage for the second coming of Christ. They are no longer in power in the US. However extreme Right-Wing Zionists are back in power to in Israel, and they believe in an Apocalypse preceding the coming of the New Jerusalem.

Shi’ites, meanwhile, believe that an Apocalypse precedes the coming of the 12th Mehdi or redeemer. Ahmadinejad has stated that the official policy of Iran is to help pave the way for the coming of the 12th Mehdi, and this is no doubt also the policy of the Supreme Leader and Council of Guardians.

Many in Israel and the US are reported to be secretly relieved that Mousavi did not in fact win the elections. With Mousavi in power they would need to take time to negotiate, and that process could be drawn out, buying more time for Iran’s nuclear program.

As it stands, the path is cleared for Israel to strike Iran. The US may not publicly support that action, in fact it may condemn it, but it will probably provide tacit support. The same is likely of Arab leaders, who are increasingly wary of their belligerent neighbour and its influence on this own Shi’ite populations and on militant groups such as Hezbollah and Hamas.

If Iran is attacked, it is likely to retaliate by targeting ships and oil pipelines in the Persian Gulf. Oil and Gas from Iran, Iraq, Saudi Arabia, Kuwait, the UAE and Qatar all pass through the Gulf – in other words, the majority of exported oil.

Crippling or severely reducing oil exports could send oil to nightmarish $500 a barrel price tag, effectively ending any global economic recovery, and possibly bringing about full-scale war, pleasing the Apocalypse brigade on both sides but horrifying the sane 99 per cent of residents in the region who will be caught in this conflict.

Did we mention that the stakes are high?

Hosni Afleck, EconomyWatch.com