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If short-term political gain spurred Ahmadinejad and his backers to embrace of the market, they will surely be disappointed. Even at the lower levels approved on March 9, for the subsidy reform plan to be effective, it will require a state apparatus akin to the one he attacked upon entering office in 2005. The professionals who could have taken on the task have quit, been fired or been sidelined. Ahmadinejad may be stuck with a white elephant.

See What Sticks

In the lead-up to the parliamentary vote, it was difficult to predict the outcome of subsidy reform because the details were elusive. Indeed, the plan’s gelatinous form changed shape on a weekly basis as the administration reacted to complaints and criticisms from various sectors. The process was eerily similar to the raising of gasoline prices in 2007, when the government would tease the public with a new price and ration structure to test sentiment and then deny that these details had been determined yet. The eventual enactment of price hikes in the summer of that year, with very little advance warning, resulted in a few hurled Molotov cocktails and an armed guard next to every pump until things settled down. The conflict was actually less than had been expected, but the elimination of price supports for essential goods and services will presumably be a more serious matter.

In 2010, the subsidy reform discussion would have been farcical if it were not so troubling. The governmen... >>>