ANALYSIS

Part I

When I was growing up in Iran, getting sick was a risky event, you better get well on your own or the options weren’t pleasant. It was Milk of Magnesia, caster oil or die. By the time we got to stage two, things were very serious and Mother was scrambling. She even took me to a local doctor, half a block from our house and paid three toomans from her food budget to help me with my intense stomach pain and fever.

I was taken inside the doctor's examining room, it looked anything but. He did have an examining table, now that I think about it; it was a stretcher from a morgue. He picked me up and put me on it, grabbed one side of me cheek pulled my head up and looked in my eyes with his headlight. He checked the glands on each side of my throat. For a moment I thought he was trying to choke me. One of my short legs jerked unintentionally and kicked him square on his mid-section. He gave me a dirty look and put one hand on my chest and slammed me on the table, flat.

By then it was apparent there was something bad going on between him and me. He tried to pull up my shirt to examine my stomach, but he did not communicate that, and I wouldn’t allow anyone pull out my shirt from inside of my pants. I grabbed him by both wrists, my nails gouged on his skin, when he pulled, I came up sitting. I calmly looked at his face, as though I was asking, what next? He then realized he was over his head with this little fat boy. He let go of my shirt and explained what he wants to do.

After he clarified his intention, I allowed him to check my belly. He tabbed on it a few times. My belly was tight and thumping like a drum. Then he told me to get up and sit on the stool. He called my Mother in, reached and picked up an apothecary bottle with narrow neck containing yellow looking oil. He filled up a small bottle and handed it to my Mother. He said “ino behesh bedeh”. My Mother looked at me and I could tell she wasn’t looking forward to this. I had not seen the yellow oil before, did not know the name, and coming from my enemy, it had to be bad. As we were leaving I gave the doctor one dirty look. Thinking, you are in my neighborhood, a rock is coming through your window. You can bet on that!

Part II

My head was heavy and hot, and I felt the pulsation on my temples. My neck aching through my shoulders, and all I wanted to do was to lay down and sleep. Mother wasted no time wanting to give me the yellow liquid. She threw her chador in the nearest room in the vicinity of the yard-steps, it was five of them. Holding the bottle in her hand, she sat on the second step from the top and issued a command for me to come and sit in front of her. Mother was a soft-spoken, gentle, sweet woman, an angel. At the age of six, I had the discretion to recognize not mentioning my respect for the broom stick. For that combination I was all cooperation.

I slowly moved towards the steps with a miserable look on my face. She pointed at the step in front of her, with a stern voice: “Biya beshin”. I stepped in and sat on my execution step with a chill in the air. I felt her legs locked around me. Before I could complain, her left hand crossing over my chest, with my face in her hand like a lemon. She squeezed each side of my cheek with her thumb on one side, other fingers on the opposite side, and the base of her hand pressing down on my jaw. The mouth opened up and the liquid poured in my mouth. The pungent smell and the putrid taste were unbearable. Once again my bad button was pushed. I reacted spontaneously, with one jolt; Mother was dragged through the space, landed on the floor of the yard. She had not realized the last time she did that; I was half the size and weight. I had already swallowed the stuff, but I was more concerned with the catastrophe I had brought on myself, dropping Mother to the ground. I figured this one is going to involve Father. I ran to the other end of the yard and looked back. Mother still was young, healthy and strong. She was already up standing and looking at me with a smile of victory and satisfaction, as though she was telling me, “Got you”.

Part III

Regarding the Islamic Republic's subsidy reforms, one cannot help but to think of it, as castor oil poured down Iranian’s throat out of desperation. This had come up twice before, during Rafsanjani and Khatami, but neither could pull it off, because the hard-liners saw it to be too risky for all concerned. As long as they could pay the bills with minor growth in the economy, why bother? The unknown risk far out-weighed the reward of stability. Things changed to the point that the risk of not doing it, out-weighed the result, i.e. an economic melt-down.

This is a subject of importance because it will have a profound effect on Islamic Republic’s future one way or the other. I am surprised the Iranian media and public have not picked up on this as they have other issues. The reaction has been mild.

With united voice all sources of power within Islamic Republic saw this as the castor oil treatment of choice for the nation and economy. Ahmadinejad labeled it a product of his own ingenuity, named it "Economic Transformation Program". He took a year to work out the logistics and when it was ready he announced it on the evening of December 18, 2010, and effective the next day. The basic format is a simple one, but consequences (good or bad) are going to be big. To begin with, the prices are going to increase on fuel for all vehicles, bread and compressed natural gas immediately. In the next few months, they increased the prices of electricity as well as other energy products and water. Notice, they separated the fuel cost from the cost of electricity to reduce the impact. Those are the two that hit the pocket the hardest.

Bread was doubled in cost (from 20 cents to 40 cents per loaf), Gasoline went up four times for about 12 million cars, gas went up eight times, diesel and other fuel for commercial transportation vehicles jumped nine times. Ahmadinejad shifted the compensation strategy from Income-based, to a flat rate of $40 per household member per month deposited into everyone's special bank account.

Analysis

For starters, the government made it illegal for producers, service providers and manufacturers to increase their prices to the extent of covering their higher cost. For a manufacturer, outside of labor costs, the cost of utilities and transportation are two of the highest expenses. If these items are costing four times higher on each, then how can the producer realize any profit margin to operate? True, they have been told to hang in there, they will receive help soon, but when and how much, no one knows. This applies practically to all affected by this reform.

Next, the price freeze applies only to goods produced domestically. Again to cushion the increased cost of living, the government has flooded the market with cheap foreign imports. They do not have to comply with any price control. As a result China is having a hay-day, while Iranian businessmen are scrambling to survive. The net result of this is obviously, many marginal tradesmen are going out of business, resulting in more unemployment. The wheels of the economy move slowly, therefore this effect is going to be long and painful. The youth is going to be affected the most by lack of jobs, and they are the ones in the forefront of opposition to the government which has failed to take advantage of Iran’s bounty of resources to develop the country and create jobs.

Now let’s look at the other side of the coin. There was a time when the concept of wealth distribution was a good one. The simplest way of doing it was to subsidize things people used on a daily basis, such as bread, milk, gasoline and electricity. The subsidy prices were set to a level as low as the cost of extraction. This is possible when energy prices were very low. But oil prices skyrocketed to as high as $150 a barrel in 2008, and now it's around $120. It is no longer possible to retain the subsidies.

Considering economic fundamentals, such low prices on energy has created increased demand and wasteful use. A good example of that is the air pollution in Tehran, when on some days, one cannot see those beautiful mountains. The removal of subsidies will reduce demand for energy (gasoline and electricity); therefore more of it will be available for sale at market prices, leading to more revenue. What do you do with this revenue? If all goes as planned, they are going to return 50% back to the public, 30% to businesses and encouraging them to invest in energy efficient technology, and the government keeps the remaining 20%. Economic development is the goal in final analysis.

At this time Iran’s economy is the 17th largest in the world, sanctions or no sanctions. Iran has very little foreign debt, less than 7% of its Gross Domestic Products. The energy reserves from hydrocarbon (oil) are estimated at $10 trillion. This estimate was done when oil sold for $75 per barrel. Natural gas reserves amount to 3.5-4.5 trillion cubic meters. With economic downturn worldwide, Iran had a modest 1-2% growth. This low growth is mostly attributed to limited integration into the global financial market and sanctions. It makes one wonder, what it would have been like if Iran had fully integrated into the world financial market and no sanctions. Inflation is down from 30% two years ago to 10% as of September 2009. Low inflation provides the best opportunity to implement the subsidy reform, lessening the burden of higher prices.

If the Iranian economy is to grow, there must be revenue to invest. The only way increase revenue is to have more energy available for sale. You would not have the additional needed product if the majority of energy products are consumed domestically. Thus, under present economic conditions of higher oil prices, and the magnitude of subsidies (some years as high as $50 billion), the question was not about the wisdom of reform, how to implement it with minimal adverse impact on the public and businesses.

Conclusion

Reform is supposed to eliminate the present economic distortion due to price differential between domestic consumption and market value. It is to increase export to generate higher revenue, and redistribute revenues to the people and expand the economy. In reality no one knows how this is going to pan out. If it does achieve the expected goals, we will see a new Iran economically, and hopefully politically, as well. Keep your eyes on Ahmadinejad; he is pulling the country away and out of the clutches of mullahs. He is walking on thin ice, but if anyone can do it, it's him.

Castor oil in the U.S. now days is much purified. It is tasteless, almost odorless, and clear, with a slight yellowish color. Before it was a crude with an unbearable taste and smell. It is too acidic as a laxative, causing cramps and discomfort. The therapeutic effects, questionable for purposes used then, is now accepted in compounding with other drug formulations. (I am a Pharmacist).

Now the rest of the castor oil story. We were playing at the edge of a large puddle of water in the middle of our street, created by rain the night before. One of the kids called my name in a warning tone. I looked up, two policemen were walking toward us. I stood up facing them. They walked straight toward me. From my posture it was clear who the leader of this bunch was. He asked me if any big boys live on the street. All of a sudden it flashed in my head to point to the two big boys from the next street who bullied us around. “No," I answered “but there are two a block over. Are you going to arrest them?” The policemen busted laughing. “What is your name?” I told them my name. Then he said “You are Haj Ahmad’s son?” I answered "Yes." Again he said “I went school with your brother, where is he?” I told him all about it. I saw his partner looking me over and sizing me up. They conferred with one another and left. They figured us little guys couldn’t have thrown a bunch of rocks through a second-story window of an office building. For me, a sigh of relief and a sense of pride that I had killed two birds with one stone.

Mother has gone now. After the revolution, our home was demolished and replaced by multi-story apartments. The only thing remaining is the street plaque bearing my father’s name.