Monday, March 13, 2006

Why Iran Can’t Use Oil as Weapon

National Union For Democracy In Iran:
President AhmadiNejad’s budget proposal to the Iranian parliament has widened the rift between the office of the president and the parliament. There are two sources of dispute.

1) The budget is unusually higher than the previous years without specifying the purpose of many items on the budget. And 2) the president has allocated a separate budget for his office to be used at his own discretion. This is against the existing Iranian laws and has no precedent.

The parliament has finally approved a $6 Billion for the office of the President which is separate from the national budget. READ MORE

The insiders point to the fact that the nuclear crisis is heating up and that the regime feels more isolated in the international arena. Thus, AhmadiNejad is trying to increase government spending to secure the “support of the people.” Of course, the high price of oil allows him to be generous. In all of his domestic trips so far, he has been accompanied by his cabinet and they approve large development projects on the spot.

The problem is that once these projects are approved by his cabinet, the funding goes to the rent seeking local religious leaders and not to the appropriate government agencies. This will only result in the rapid increase of corruption and will further diminish the regime’s legitimacy. It will also increase the dependency of the regime on the cash flow from oil to secure “popular support.” The regime is wholly dependent on the export of oil. Thus, not only they can not afford to use oil as a weapon, but in fact, any boycott of the Iranian oil will put unbearable pressure on the Islamic regime.

The Islamic regime is only playing the game of war of nerves with the West.