A group of 60 Iranian economists Sunday condemned the economic policies of President Mahmoud Ahmadinejad and contradicted recent boasts by Tehran officials who said the Islamic Republic has been successfully weathering the global financial crisis.
In a 30-page letter quoted by several newspapers and state-run television and published on the website of the independent Iranian Labor News Agency, the economists say Iran is in dire economic straits and must drastically change course. The letter also says Ahmadinejad’s “tension-creating” foreign policy has “scared off foreign investment and inflicted heavy damage” on the economy.
“Meager economic growth, widespread jobless rate, chronic and double-digit inflation, crisis in capital markets, government’s expansionary budget, disturbed interaction with the world, inequity and poverty have combined with the global economic downturn to leave undeniably big impacts on exports and imports,” the letter says.
Ahmadinejad immediately blasted back, contending at a seminar on economic development that Iran has been “least affected by this international financial crisis” and urging economists to design “an independent economic system and model based on justice,” according to the official Islamic Republic News Agency.
Iran is locked in a dispute with the West over its drive toward mastering sensitive nuclear technology that it says it needs for energy production but which can also be used to manufacture weapons. Tehran has incurred three rounds of international economic sanctions for refusing to halt the enrichment of uranium ore. Iranian conservatives have dismissed the restrictions on trade as ineffective. But the economists’ letter says sanctions have cost Iran billions of dollars by forcing it to turn to middlemen for imports and exports.
The letter and its publication suggest that Ahmadinejad and his clique face growing discontent among Tehran’s elite political circles ahead of the presidential election in June.
The negative assessment flies in the face of recent bragging about Iran’s economy by religious leaders, some of whom have described the West’s economic downturn as God’s revenge.
But the letter said Iran’s oil-revenue-dependent economy was also hurting and would be further damaged if the price of oil continued to fall. Oil prices have collapsed from a high of $147 a barrel in July to around $60 on worries about declining future demand.
Meanwhile, Iranian government expenditures have ballooned since Ahmadinejad took office in 2005 and launched a series of populist economic policies meant to curry favor with conservative voters.
“With oil prices in free fall . . . the question is to know how the government will finance its traditionally oil-dependent budget,” says the letter, whose signatories included prominent former officials.
Instead of looking rationally at Iran’s economic problems, the letter says, the government has based its view of domestic and international affairs on “extremist idealism” that has put the country on a dangerous path.
“The financial turmoil sweeping the world would not spare any country, and our statesmen should acknowledge this factual reality,” the letter says.
“The Islamic Republic should also make a contribution to resolving the world crisis.”