While the United States and the Russians have fallen out over Iran's nuclear plans, with Secretary of State Hillary Clinton chastising her opposite number Russian Foreign Minister Sergei Lavrov over Moscow building and fueling a nuclear power plant in Iran, it's worth considering the parlous state of the Iranian economy.
The Financial Times reports that Asghar Abolhassani, the deputy economy minister, has confirmed that overdue loans for the banks exceeded $45 billion for the year ending on March 20. The FT says: "That represents a 66% rise since the previous year – and a ninefold increase since Mahmoud Ahmadi-Nejad won the presidency in 2005. He introduced populist economic policies, ordering banks to offer generous loans to the poor at low interest rates. Some reports suggest that 25 per cent of all loans are now overdue, meaning that Iran's financial system is technically bankrupt."
It's not helped by the UN Security Council ratcheting up sanctions. That would only add to Iran's economic woes but they're unlikely to stop the nuclear program, specialists tell Time Magazine.
So what would Iranian leader Mahmoud Ahmadinejad say to the Iranian people now battling to survive? Some would argue that he is effectively saying let them eat yellow cake. The focus on nuclear power is to distract attention away from the dysfunctional economy. Not unlike Samuel Johnson's warning that patriotism is the last refuge of the scoundrel.
But as The Economist says, it looks unsustainable with runaway inflation, corruption, feuds and administrative inertia. "The authorities seem, for the moment, to have recovered their breath. Yet their chutzpah hides weaknesses that may be exposed in due course. Opposition is bubbling away under the surface. Neither the cocky Mr Ahmadinejad nor his country's system of government is secure. "
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