Thursday, June 28, 2007

Ahmadinejad in Trouble

Large riots have erupted in Iran to protest against cuts in subsidies of gasoline (or petrol as the British call it). Despite soaring income from oil, the Iranian government has had economic troubles, not least because of soaring costs of gas subsidies. Iran has littler refining capacity and so they have to export their oil to countries with refining capacity and then import the gasoline. And gasoline consumption has soared in recent years because of the low price and because of a growing population.

For financial reasons, the Iranian government has now decided to ration the amount of subsidized gasoline. But this has proven very unpopular among Iranian motorists who in many cases have started to riot in protest. Of course, an even better way of reducing the budget deficit -not likely to cause much discontent among ordinary Iranians- would have been to cut off funds to Hezbollah, Hamas and other terrorist groups that they fund now. And to really improve the economy, they would have to do away with Islamic dogma forbidding for example interest rates. But none of these measures are likely as long as the Mullahs remain in power.


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