A bumpy road for Ahmadinejad

Overconfident about his domestic support and “smooth victory,” Iranian President Mahmoud Ahmadinejad seems to have a hard time seeing through his second term.

What seemed to be an easy victory for Mr. Ahmadinejad turned out to be a formidable challenge, which could lead to the downfall of his government, and/or even more to the collapse of the Islamic Republic. Several factors could cut the life of his government short; only a miscalculation or misstep from the United States or Israel could help him at this point.

Mr. Ahmadinejad has encountered a double-pronged crisis. There was the legitimacy crisis that ensued from the presidential election. The fraudulent election sparked a wave of protests in major cities. Only several days after the election, millions of people took to the streets to challenge the polling results. Mr. Ahmadinejad’s security forces brutally cracked down on the protesters, which only fueled the unrest and exacerbated the crisis.

Despite the regime’s brutality, the self-named “Green Movement” undertook a new strategy of peaceful civil disobedience, resulting in even more frustration for the regime and additional atrocities by it. The legitimacy of the regime is spiraling down as its barbaric behavior toward imprisoned demonstrators and opposition members become public.

The second part of the political crisis for Mr. Ahmadinejad’s administration comes from his own base: the conservative camp. Until 2005, the year that Mr. Ahmadinejad took power, the conservative camp had always appeared united against the moderates.

Over the last four years, the rank and file of the conservative camp would not concur unanimously on Mr. Ahmadinejad’s policies and rhetoric. Over time, fissures within the conservative camp surfaced, which in turn caused a reconfiguration of the conservative elite.

The conservative technocrats, who, unlike Mr. Ahmadinejad, are well-rooted in Iran’s politics, refused to support him prior to June’s election. They see Mr. Ahmadinejad as unruly, egocentric, and unenlightened — a man who, by chance, won the favor of the supreme leader of Iran. This group, which envisions a developed Iran similar to the China or Japan models, believe Mr. Ahmadinejad and his administration’s mismanagement are ruining the economy.

The fissures in the conservative camp widened when Mr. Ahmadinejad appointed a controversial figure, Esfandiar Rahim Mashai, as first vice president. The situation became so critical that Supreme Leader Ayatollah Ali Khamenei had to order him to reconsider his decision. Mr. Ahmadinejad fired the minister of intelligence who expressed concerns over his defiance of the ayatollah’s direct order; a move that caused a chaotic situation only days before his second inauguration.

That act of defiance and its aftermath led to lukewarm support from the conservative members of Parliament on inauguration day and a warning letter signed by 200 members of Parliament one week after the inauguration in which they advised the president on his future choice of colleagues.

The second challenge for Mr. Ahmadinejad is the worsening economic situation. In a country where the government controls most of the economy and the government’s main source of hard currency is oil revenue, any change in the oil market can destabilize the system.

During the first two years of Mr. Ahmadinejad’s presidency, surges in the oil price allowed him to distribute the petrodollars among the low-income families, pensioners, teachers, factory workers and government employees. However, as oil prices now decline, Iran’s foreign currency reserves are drying up.

Government overspending in the last four years expanded the money supply. This happens both as a result of lowered interest rates, which generally spurs investment, and by giving more money to consumers, which makes them feel better off and thus stimulates spending.

Despite low interest rates, thousands of small businesses have closed. After 45 successful years, the auto industry (the country’s most prosperous industry) is facing bankruptcy. The unemployment rate has increased substantially: 1 in 4 four young Iranians are unemployed. “Early retirement policy” that was meant to decrease unemployment doubled the number of pensioners over the last four years, meaning that 2.5 million Iranians now depend on pension funds mainly paid from the national budget.

As a campaign policy, the government gave a raise to some of the civil servants. However, after the election, they announced that the pre-election raise was in error and that the salaries would be readjusted.

Adding to that are high inflation and a huge budget deficit resulting from the drop in oil prices. The dilapidated economy will prove to be the regime’s Achilles’ heel. With the severe political and economic crises on his hands, Mr. Ahmadinejad will not survive for long.

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