Dark Star

With presidential elections 10 months away and sanctions hurting, this is the last thing Ahmadinejad needs. High oil prices have been like a morphine injection which has kept the sick Iranian economy alive. Despite oil and gas income for this year jumping to $81 billion, representing a whopping 31% increase from last year, Iranian people have seen no improvement in their economic welfare. If anything, the situation is getting worse. Inflation has reached the post-revolution record level of 27%. To make matters worse, the government of Ahmadinejad is coming up with new ways to reduce subsidies which Iran’s citizens receive. First it introduced its controversial petrol-rationing scheme in June 2007. This scheme failed miserably in its plans to reduce traffic and pollution.

Now the Ahmadinejad government wants to reduce government subsidies paid to Iranian families for their gas and electricity bill as well. The first part of this plan, which many Iranians find very annoying, involves each family filling out forms from the government, in which they have to declare their income and assets. Many rich people are openly saying that they are cheating, because declaring a high income could translate into a serious fall in the subsidies received. Others are withdrawing money from the banks in order to hide it from the government inspector’s prying eyes, thus leading to a fall in savings levels.