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Yes, Iran Can Be Stopped

The Iranian regime can't live without its oil money.

10:15 AM, Feb 1, 2007 • By DANIEL DORON
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IRAN'S NUCLEAR PROJECT can probably be stopped by significantly cutting its oil income. A meaningful decline in this main source of Iran's income would force its leadership to choose between butter and guns. This is a critical choice; the ayatollahs cannot hope to maintain their hold on power if they cannot feed the tens of millions of destitute citizens now kept afloat with immense welfare outlays. As long as high oil prices and exports provide them with enough income to finance both their costly welfare program and their ambitious, expensive nuclear project, they can and will do both. If reduced means compel a choice, the survival instinct will force them to choose rice rather than enriched uranium.

So why has so little been done to reduce Iran's oil income? Military and diplomatic experts in the West have not yet considered the full extent of Iran's economic vulnerability. Like the Kremlinologists of yore, whose chief efforts were directed at avoiding a nuclear conflagration between the Soviet Union and the West, those dealing with Iran have become totally enmeshed in diplomatic moves to head off Tehran's nuclear ambitions, ignoring the less obvious but more crucial economic processes that underlie Iran's power. Very few Kremlinologist predicted the implosion of the powerful Soviet empire, an implosion that had far more to do with economics than with diplomatic efforts at containment. The same may be happening now with regards to Iran.

THE IRANIAN ECONOMY IS IN SHAMBLES. In an effort to please their lower-class supporters in the wake of the revolution, the ayatollahs slapped price controls on agricultural products. Within several years this resulted in the devastation of what was once a prosperous agricultural sector. Millions of farmers had to leave their farms and move to shanty towns near major urban centers. There they were fed by Islamic charities financed by the confiscated assets of the shah. Charity was allocated by family size. This encouraged higher birth rates and caused a population explosion, more than doubling Iran's population and putting further strain on its welfare system.

Mismanagement and corruption, which are endemic to dictatorial regimes, further increased inflation and unemployment, leaving millions of those inhabiting the politically volatile shanty towns barely able to keep their heads above water. Should a cut in oil income force the government to cut back on its welfare subsidies, it will risk a massive revolt--this time not by disgruntled students, who can be marginalized and brutally suppressed, but by the very Islamic masses that have been supporting the revolution as long as it secured their livelihood and lifted their morale with the promises of a victorious jihad.

If not for ever-higher income from oil, Iran's inefficient and corrupt economy would have collapsed long ago. But with Western complicity, the Iranians have cleverly managed to increase their income. By inflaming the Arab-Israeli conflict and supporting terrorism, they also foment tension that leads to higher oil prices. Their investment in Hezbollah, you might say, has really paid off.

EVEN A PARTIALLY SUCCESSFUL effort to reduce Iran's income from oil could have great impact, because there are already signs of breakdown in the Iranian economy. In a January 10 Jerusalem Post piece, "Ahmadinejad's Reign Threatened by Soaring Housing Prices," Meir Javedanfar, an independent analyst, is quoted to the effect that 800,000 new families are formed in Iran annually but only around 450,000 housing units are constructed. Prices of apartments in some parts of Tehran have increased by 3,000 percent since 1990. There were 2 million applicants for 30,000 housing loans offered by the government. "The main reason people voted for Ahmadinejad," Javedanfar concludes, "was because of internal problems such as corruption, inflation, housing and unemployment. . . . Unless he confronts these issues, in the next elections his position would be in danger."

Recently, 150 lawmakers, at the core of the Iranian establishment, signed a letter criticizing Ahmadinejad "for policies that led to a surge in inflation." These lawmakers linked their criticism of economic policy to a misguided nuclear policy that may provoke serious international sanctions. A group of powerful businessmen, known as the Islamic Coalition Party has also called for moderation in the country's nuclear policies to prevent further damage to the economy

A Western-induced cut in oil income can greatly accelerate such political pressures. How could a cut in Iran's oil income be achieved? The U.S. government could of course try to use its enormous clout to bring pressure on firms that trade with Iran or facilitate its financial transactions. It could also put pressure on the Iranian currency. Admittedly such steps are complicated and may not be sufficient. But why not try?