Economic Troubles and the Theocracy

It's no secret Iran has gone through dramatic political turmoil since last year's disputed presidential election. Less well-known is that Iran's economy is in trouble. Unemployment and inflation are high. The currency is shaky and so is the whole banking system. Now, Iran faces a U.S.-led effort at the U.N. Security Council to impose a new round of economic sanctions. NPR's Mike Shuster reports. MIKE SHUSTER: Like much of the information coming from Iran, economic data is hard to trust. But it appears Iran's unemployment rate has reached about 20 percent, actual inflation is probably running higher than that and has been above 20 percent for years. Iran's currency, the rial, is weak - its value propped up by government use of oil revenue. These problems are linked to Iran's extensive use of subsidies, billions of dollars a year to keep basic needs such as electricity, gasoline, bread and other food staples, far below their true market value. Experts say subsidies could eventually bankrupt the Iranian government, and so this year a great debate has emerged over subsidies, says Hossein Askari, an expert on Iran's economy at George Washington University. Professor HOSSEIN ASKARI (International Business Department, The George Washington University): Iran has realized that subsidies are very costly, not the way to develop an economy. But they have, I think, used subsidies because they have seen this as the ... >>>

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