Iran?s central bank has seen three governors on Mahmoud Ahmadinejad?s previous watch. Why? Take the second of this browbeaten bunch, Tahmasb Mazaheri, who warned last year that the policy of low interest rates could cause hyperinflation. Populist as this policy was, the president was in no mood to heed Mazaheri?s warnings and the governor got the boot soon.
?I pray to God that I will never know about economics,? Ahmadinejad famously said once. Those prayers have not gone unanswered, argued his opponents through the recent presidential debates. While Ahmadinejad raised graph after graph showing that his term had seen growth accelerate, unemployment decline and inflation fall, one outraged opponent Mehdi Karroubi slammed back: ?Do you think I came from the desert, and that I don?t know anything about figures??
Inflation, for example, was 14% as Ahmadinejad said only when measured year-on-year, but around 24% on shorter trend?that?s central bank data and real numbers may be higher. Others pointed out that unemployment had risen to 17% from 10.5% four years ago.
An unfriendly US hasn?t helped any. When major European banks stopped doing business with the Iranians, they had to turn to second- and third-tier banks in Europe, the Middle East, and Asia?at exorbitant rates.
Sitting on top of the world?s second-largest gas reserves but being totally obdurate over the nuclear issue, they had to see upgradation commitments fade away, and unhappily import about 40% of their gasoline. Of course oil and gas also account for over 80% of government revenue, so last year?s price fall was particularly painful. Industrial investment, construction, foreign reserves?everything took a hit.
But while the going was good, Ahmadinejad increased both pensions and government workers? wages, gave away low-interest loans to many voting blocks including young married couples, paid out both direct cash payments and subsidies to rural and urban poor, and so on. One presidential candidate complained that Ahmadinejad had focused on distributing wealth, when creating it would have done the country more good.
