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Bringing down Iran’s regime…it’s their economy stupid!

[additional-authors]
December 15, 2008

For the past several years, critics of this blog have discounted my suggestions that the Achilles heel of Iran’s current fundamentalist Islamic regime is its poor economy. Yet the recent events of the past few weeks with oil hovering at around $40 a barrel (and Iran’s lower-quality crude selling even cheaper) have proven that the Iranian government can potentially be brought down through peaceful economic means.

This past Thursday the Bush administration ratcheted up the financial pressure on Iran by revoking an exemption that gave Iranian banks access to the U.S. financial system, but it stopped short of blacklisting the Islamic Republic’s central bank. The move against Iran’s banks puts additional financial pressure on Iran’s economy that is already hurting because of oil prices that have dropped by $100 a barrel since this past July—a move that has substantially reduced the regime’s revenue lifeline. Iran’s dependence on oil money is staggering. Oil funds 60 percent of the government budget, economists say, supporting billions in public subsidies of goods such as gasoline, sugar and bread. A research center affiliated with Iran’s parliament reported last week that the government depends on oil to remain at $80 a barrel in order to keep its accounts balanced. Iran’s oil income has dropped from $300 million to $100 million a day, and if oil prices stay in the $30-$40 a barrel range, the country could see more than $70 billion in expected funds evaporate—and with it a significant chunk of Iran’s gross domestic product. Some economist have said that the Iranian President Ahmadinejad’s massive domestic spending projects has fueled more inflation and waste. Likewise Ahmadinejad’s foolish decision to convert Iran’s foreign exchange reserves from dollars to euros to evade sanctions earlier this year has cost the country as much as $5 billion as the dollar has strengthened. The regime has also poured billions of dollars over the past 29 years into funding external terrorist organizations such as Hamas, Islamic Jihad, Hezbollah and other Shiite militias in Iraq—a decision that has been quite costly for the country. None of this bad economic news comes at a good time when Iran’s inflation and unemployment are currently in double digits as well as widespread strikes that have crippled some industries in the country.

Undoubtedly if the Iranian regime can’t pay its bills and can’t pay government workers, then the entire country may come to a screeching halt! The regime’s days will be numbered if its economy continues in the current path and in the end it maybe be unable to continue its lofty goals to acquire nuclear weapons. So it seems that while U.S. and U.N. sanctions may be ineffective in bringing an end to the government in Tehran, squeezing the regime through low oil prices and other financial means may be the ultimate key to destroying this growing cancer in the Middle East. Perhaps the next U.S. administration’s officials should pay attention to using their economic means of bringing down Iran’s government before empowering the regime through negotiations and financial rewards. Now that the Iranian government is on the ropes, we cannot afford to give it time to get back on its feet, but instead we must deliver some knock out economic punches.

No doubt the people of Iran are suffering now and will continue to suffer while the regime’s economy is in shambles, but this may be a sacrifice they will have to endure short term if they would like to see regime change in their country. On a sad note over the past 10 years countless news outlets in Persian language media outside of Iran have reported stories of many average Iranians in Iran selling their kidneys on the open market to make ends met and even some women desperate for funds that they have gotten involved with prostitution. The current government in Iran run by Islamic clerics does not really give a damn about the suffering of the Iranian people as long as they can fill their own pockets with oil revenues. But with empty pockets the regime’s ayatollahs will not be able to hold onto power for very long.

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