In Washington and European capitals, top New Year priorities on Iran may be Tehran’s nuclear program, and the next round of talks in Istanbul in late January.
But for Iran’s leadership, 2011 promises to be a year of significant domestic challenges, as President Mahmoud Ahmadinejad presides over a precipitous series of subsidy cuts, imposed on an inefficient economy already under strain from a host of sanctions.
Undergirding the turmoil in the Islamic Republic are questions of legitimacy that remain unresolved since the contested June 2009 presidential elections, which brought millions of Iranians into the streets in sometimes deadly protests of fraud. Economic reform
The most important challenge in Tehran in 2011 will be economic reform.
After decades of expensive subsidies that drained the treasury of anywhere between $30 billion to $100 billion per year, Tehran’s cold-turkey withdrawal of subsidies on gasoline, fuel, and bread – which last week quadrupled the price of gas overnight and made diesel prices skyrocket much higher – is an “extremely drastic” measure, says Farideh Farhi, an Iran specialist at the University of Hawaii.
Indeed, the changes amount to the most serious economic retooling since the 1979 Islamic revolution, which toppled the pro-West Shah but created an oil-driven welfare system that provided cheap utilities and services. While there have been few reports of unrest so far, taking away such subsi… >>>