Hassan Rouhani, Iran’s centrist president, last week marked his government’s 100th day in office by releasing a report on the economy. It painted a grim picture, but rather than blame this on international sanctions Mr Rouhani said the populist policies of his predecessor, Mahmoud Ahmadi-Nejad, were largely responsible for the mess.
Mr Ahmadi-Nejad’s government enjoyed a record $600bn in oil revenues during eight years in office – the equivalent of what the country had earned in the century since it first discovered oil.
Despite the boost in income, Mr Rouhani said he inherited an empty treasury, at least $80bn in debt and a combination of high inflation (40 per cent) and economic stagnation (the economy shrank by 5.8 per cent), which was unprecedented in the past 50 years. “The previous government was the wealthiest and most indebted government,” he said.
Many economists are asking how any government can inflict such damage on an economy during an oil boom, with some saying Mr Ahmadi-Nejad’s policies should be taught in economics courses to show how a populist president can turn golden opportunities into disasters. Read more
Tajrish Bazaar in Tehran (Getty)
Whenever there has been talk of bombing Iran’s nuclear programme, the hawks have been urged to “give time for sanctions to work”. This appeal always had a slightly desperate sound since, for the past decade, there has been precious little sign that international pressure was capable of making the Iranian government re-think. But, finally, things may be changing.
Following the EU’s oil sanctions and America’s financial sanctions — as well as the various UN packages — the Iranian economy really seems to be buckling. Yesterday saw angry demonstrations on the streets of Tehran, amidst more or less open infighting among the top leadership. The official inflation rate in Iran is only 23.5 per cent. But this article argues convincingly that Iran is already suffering from hyper-inflation. Read more