Iran feels the squeeze as oil prices drop

by Kal El on December 11, 2008 · Comments

While times are tough for everyone, it is rather comical to hear that everyone’s favorite (Pin)head of state, Mahmoud I’mADamnNutJob is finally admitting that the Iranian economy is in shambles. It couldn’t possibly be a compound result of sanctions directed at Iran over their pursuit of nuclear weapons, could it?

Iranian President Mahmoud Ahmadinejad has acknowledged publicly for the first time that declining oil prices are damaging the country’s fragile economy and will force his government to make painful spending cuts, state media reported Wednesday. Mahmoud Ahmadinejad
Just last month he was boasting that even if the price of oil sank to $5 a barrel, Iran’s economy would be fine. Now, the Iranian leader said his government has no choice but to trim spending and generous subsidies and raise taxes.

Wednesday’s report by the official IRNA news agency quoted Ahmadinejad as saying the government budget for the next year would have to be readjusted to base it on an oil price of around $30 a barrel. Only a month ago, officials in the president’s office said they planned to base the budget on $50-$60 a barrel.

“Suppose we plan to base next year’s budget on $30 per barrel of oil; we have to leave a major part of our projects behind. But we are obliged to set it on $30-$35 since we do not decide the price of oil on the global market,” the news agency quoted the Iranian leader as saying. “Because of the world recession, oil prices will be declining for some time,” he was quoted as saying.
Ahmadinejad asserted, however, that his administration had the power to control the damage and that it would continue direct payments to the poor.

To manage the country in a better way, applying taxes to low-priced energy is the best” solution and would prevent the waste of resources, Ahmadinejad said. However, Ahmadinejad said Iran’s foreign currency reserves are healthy and currently topped $23 billion.

I am a bit surprised, that there was no fingerpointing at Israel, or the great satan (as he calls the US), since we all know that any financial problem in the muslim world is the fault of them joos, not the sheikhs who hoard the money the oil wells bring in…

Original article.

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  • Snake_Oil_Baron
    When I say they don't have enough money to buy gas I meant for the whole of next year - I didn't mean to imply that they are flat broke right now.
  • Snake_Oil_Baron
    "the Iranian economy is in shambles. It couldn’t possibly be a compound result of sanctions directed at Iran over their pursuit of nuclear weapons, could it?"

    Certainly that is part of it. But from what I have heard a major problem was that when oil was high, his administration assumed it would stay high long term and started spending from the rainy day fund that most resource based economies pay into for times when their resource prices tank. They went through the funds like drunken sailors; spending on groups trying to destabilize Iraq, Afghanistan and rearming Hezbollah. Now, as prices fall they seem not to have enough money to buy gasoline for the nation which is why they are ending or scaling back the gas subsidy. Being unable to maintain the artificially low gas prices feeds the trend towards even higher inflation.

    The Iranian government desperately needs to instill more fear of the state in it's people and demonstrate more external threats to keep people from revolting against them. This is why they are trying to stir up trouble with Egypt and Saudi Arabia - calling on the people of those nations to overthrow their governments and hoping that they can receive some saber rattles from those countries in return to show the Iranian people how dangerous it would be if they changed regimes. Iran's current system needs two things to stay in power: high oil revenue and fear. It is running low on the former and the latter is not an inexhaustible resource.
  • Good enough, I hope it squeezes him and his country to death. Pay back time. In the land of milk and honey, Ha Ha Iran is the land of soured milk & is no honey.
    gagwithspoon

    LMAO
  • Painful spending cuts he says, I'm sure the terrorists training camps will maintain more than adequate funding.
  • Let 'em pound sand and eat dates.
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