Ahmadinejad is bad at economics too

On Friday, I had lunch with Abbas Milani. He reinforced the impression that Larry Diamond had given me about the internal dynamics in Iran. As Milani pointed out, a country where the price of gold is rocketing up is hardly one where those with money are confident about future stability.

Ahmadinejad’s economic policies are totally wacky. He has reduced interest rates to below the level of inflation. Unsurprisingly, the governor of the central bank wasn’t too keen on this. So, Ahmadienjad just took away that power from him. It is estimated that there has been capital flight of between $50 to $200 billion over the last four months. All of these economic problems and the fact that Iran has to import gasoline suggest, to my mind, that a blockade might be the overlooked option here.