Cash Flow Jihad Bites

Iran's promised largess to Hizballah is causing unrest in Iran.

The early risers in my neighborhood arrived at the local bakery one recent morning to find the doors locked and the stone oven cold. They milled about for a while and then began speculating about why the bakery should mysteriously be shut. Before long, they settled on an explanation: the Iranian government had sent all the country's flour to Lebanon. Since the war in Lebanon ended last month, Iranians have become convinced that their government is spending outrageous sums on Lebanon's Shi'ites to shore up support for Iran's longtime client Hizballah. The rumors grow more outlandish every day: the Lebanese are receiving free SUVs or plasma televisions. As shop owner Behjat Karimi, 47, put it, "What else of ours are they going to give away next?"

There is a Bidding War going on in Lebanon to buy the loyalty of the Lebanese Shia. So far the Iranians seem to be outbid. However, that has not stopped the speculation of the Iranian people on the subject.

a general sense of suspicion still hangs in the air, and Tehran probably can't ignore it. To the outside world, the Iranian government projects an image of national resolve as it defies U.N. Security Council demands to stop enriching uranium. But the regime's ability to withstand international pressure may depend on how forgiving Iranians are about the sluggish economy. The rate of inflation is at least 19%, and unemployment has edged up to 15%. At a press conference last week, President Mahmoud Ahmadinejad fended off criticism of his economic program by swinging attention to foreign policy and calling for a debate with President George W. Bush. Some former Iranian officials and other analysts speculate that Ahmadinejad is stoking the nuclear crisis with the West in part to divert attention from the economy. "This is the first government in years to make big economic promises to people," says a close associate of Ahmadinejad's with knowledge of his government's thinking. "If it fails to deliver, it will be a catastrophe not just for this administration but for the entire regime."

What kind of promises has the Iranian government made? Essentially that the Iranian people can be better off without working due to socialism financed by oil revenues. It is not working. I discussed how a similar program is not working in Venezeula about a week ago.

Nightly news broadcasts that Iranians watch on their illegal satellite dishes show Hizballah doling out thick stacks of cash to displaced Shi'ites, courtesy of Iran. Because President Ahmadinejad enjoys pandering to public sentiment in the Arab world, the flow of Iranian resources to Lebanon is no secret. But this spending on a faraway Arab community infuriates Iranians and revives an ugly Persian chauvinism that considers Arabs uncultured and backward.

No wonder Iran is trying to destroy satellite dishes while it destroys Iran's economy which is discussed at that link also.

There was another famomous Germansocialist who some think started a major war around 66 years ago to cover up economic failure. Could the Iranian regime who hero worship that German be tempted to try the same thing? Possibly.

For now, the Establishment doesn't seem threatened by people's grievances. But moderates are worried that a serious confrontation with the U.S., possibly involving military strikes, would provoke a legitimacy crisis for the regime. All of which suggests that Iran may defy the West over its nuclear program for as long as it can manage, and adapt at the last minute to avoid a military clash. Until then, even the threat of sanctions could prove useful by offering Iran's President an external source of blame for the nation's economic problems.

Iranians seem resigned to the likelihood that with tensions rising, the situation at home is likely to get worse.

As to sanctions, the Italians say: "why wait?"

I do not think the problems are going to get easier for the Iranian government. In the end all military power is based on economic power. Oil prices are falling.

Links to some of my previous Cash Flow Jihad articles can be found here.

H/T Sandmonkey