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Iran's faltering economy dominates the Islamic Republic's domestic debate

Iran’s Faltering Economy



While the international community focuses upon Iran's nuclear program, Iran's faltering economy dominates the Islamic Republic's domestic debate. In his 2005 election campaign, President Mahmoud Ahmadinejad famously promised to bring Iran's "oil [money] to the table of every Iranian."

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Oil prices may have more than tripled to over $130, but few Iranians see benefit. Across the Iranian political spectrum, officials and even the president's former allies have blamed Ahmadinejad's policies for runaway inflation and shortages of basic commodities. Outgoing Finance Minister Davoud Danesh-Jafari, acknowledged Iranians' frustration as he stepped down in May 2008, "In economics, a government is not judged by its intentions." As Ahmadinejad increases subsidies and spending, inflation has become Iran's chief domestic issue. While the government acknowledges an inflation rate of 18 percent, parliamentarians and central bank officials say the real rate is closer to 25 or 30 percent. Inflation has hit certain commodities hard. This past winter, bread prices increased between 200 and 700 percent across northern Iran. To alleviate prices, the government shipped bread from Tehran to the northern prices, sparking shortages and bread lines in Tehran. As a brutal winter dumped record snow across northern Iran, the Revolutionary Guards deployed to northern Iran to counter potential unrest amidst gasoline, kerosene, and electricity shortages. Inflation continues. According to the National Bank, rice prices rose 90 percent this spring. The price of other basic foodstuffs has increased 30 percent. On May 19, the head of the Butcher's Guild complained that declining purchasing power was undercutting the public's ability to eat meat, once a staple of Iranian cooking.

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