Iran struggles even with its oil wealth

Washington Post:

Faced with rapid inflation and growing international concern about his country's nuclear ambitions, Iranian President Mahmoud Ahmadinejad is relying on huge increases in oil and gas revenue to insulate his government from internal and external pressures.

Some of the same Western countries taking steps to compel Iran to stop uranium enrichment are also the biggest consumers of its oil and gas. The European Union said last week that it would freeze the assets of Bank Melli, Iran's largest, in keeping with U.N. sanctions. The E.U. is also the leading global consumer of Iranian oil and gas.

Oil wealth, which funds 60 percent of the national budget, has allowed Iran's government to exercise its power to cut interest rates and ignore warnings from the country's Central Bank that overspending will worsen inflation.

Iran earned $80 billion from oil and gas sales in the fiscal year that ended March 20, up from $35 billion three years ago. But the increasing oil revenue is causing a widening gap between rich and poor, as some businesspeople prosper while inflation eats away at consumers' purchasing power. These developments jeopardize Ahmadinejad's populist appeal and could hurt his campaign for reelection in 2009.

Since 2005, when Ahmadinejad came to power, the annual rate of inflation has risen from 12.1 percent to 19.2 percent, according to Central Bank figures. The rate reached 25.2 percent in May, the bank said.

Ahmadinejad has long tussled with economic officials, who say the government has lacked expertise. Indeed, Central Bank governor Tahmasb Mazaheri has straightforward advice for Iran's leaders: "They should decrease the budget deficit, limit spending money and refrain from using oil revenues."

...

Fat chance. Iran's leaders are not very smart and on top of that they think they are on dome divinely inspired mission. They are wasting their money on foolish ventures in Central and South America that are sucking cash that could have been used to help the Iranian people. They are also wasting money on a nuclear program that is already causing them pain.

The time table of the Nicaraguan dam, 2012, fits the CIA's estimate of when they will have a nuclear bomb. I don't think it is a coincidence.

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