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June 29, 2007

Tightening the screws on Iran

Thomas Lifson
As the gasoline riots continue in Tehran (and who knows where else in Iran?), popular discontent with the mullahs' regime increases as economic hardships multiply. Kenneth Timmerman, writing in Front Page Magazine, discusses both the economic roots of unrest and the prospects for heightening it.

Among several interesting bits of information is the role of HSBC Bank (one of the world's biggest, a British institution that grew out of the Hong Kong and Shanghai Banking Corporation) as a key link in Iran's ability to do financial business with the rest of the world.
Working quietly behind the scenes, the Bush administration has won agreement from bankers in Dubai to stop clearing Iranian government financial transactions. Because Dubai has become the economic lifeline connecting Iran to the outside world, this has been a major blow to the regime.

Just last week, sources in London told me, the British government agreed to a U.S. request to put pressure on the HSBC bank to stop clearing Iranian government financial transactions as well. Since HSBC handles approximately 50% of Tehran's remaining international business, this is an additional heavy blow.
One fascinating aspect to this report is that a Saudi investor, Maan Abdulwahed Al-Sanea, reportedly the second richest man in the Kingdom, has purchased a $6.5 billion stake in HSBC. The Wahhabi rulers of Saudi perceive a mortal threat from the Shiite rulers of Iran, and may well be "encouraging" HSBC and the UK to make life difficult for the Iranians as a means of removing the mullahs from power.

Equally interesting is the role of Dubai, both as a financial and transportation center connecting the Middle East to the world, and as a shining example of what modernity can bring to the Islamic world. Timmerman writes:
When Iranians travel to Dubai, they are humiliated. They fly out of Mehrebad airport in Tehran, which was constructed some 45 years ago, and land in a modern, state-of-the-art fantasy-world in Dubai. To make the insult even more grating, unlike their native land, Dubai has no oil.  No oil, and yet they are so rich!

The only reason Dubai is prosperous and Iran remains mired in poverty comes down to effective leadership - and the lack of it. And Iranians can see this every time they travel to the UAE.

I am uncertain how many Iranians are able to travel to Dubai, but no doubt its skyscrapers, tourist attractions, and other baubles of a modern economy are highly visible in the media throughout the Middle East. If we are to avoid a catastrophic religious war, we need to not only encourage Muslims to see the benefits of a free economy (including banks which charge interest) based on religious tolerance. Emirates, the large and rapidly growing airline of Dubai, is reported to offer Kosher meals when passengers request them. While it may not be a democracy or a perfectly free and tolerant society, Dubai does stand as a model for the rest of the Arab and Islamic worlds to reckon with.

The religious fanatics who rule Iran are not typical of the general population, which, like people everywhere, want to get on with their lives and put food on the table every night. Before the Shah was overthrown, inflation made life very tough for the majority. As Timmerman notes, inflation has returned, and a few wealthy Iranians p[rosper while most have a difficult time making ends meet. Ahmedinejad's clumsy attempt to control the economy are almost guaranteed to make matters worse, for he has a religious basis for shunning sound economic thinking.

Hat tip: Ed Lasky

Posted at 11:27 AM | Email |

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