TWELVER ISN'T WORKING:

Iran's Economic Crisis: Ahmadinejad isn't bringing the oil money "to every dinner table." (AMIR TAHERI, May 9, 2007, Opinion Journal)

Last week tens of thousands of angry workers, forming an illegal umbrella organization, flexed their muscles against President Ahmadinejad on International Labor Day in Tehran and a dozen provincial capitals. Marching through the capital's streets, the workers carried a coffin draped in black with the legend "Workers' Rights" inscribed on it. They shouted "No to slave labor! Yes, to freedom and dignity!"

Mr. Ahmadinejad centered his 2005 presidential campaign on a promise to "bring the country's oil money to every family's dinner table." After the election his position was boosted by a dramatic rise in oil prices, providing him with more than $100 million a day in state revenues. And, yet, all official statistics show that, with inflation running around 18% and unemployment jumping to more than 30%, the average Iranian is worse off than three years ago. Under the previous administration of President Mohammad Khatami, the Islamic Republic scored average annual economic growth rates of around 4%. In a nation that needs to create a million new jobs to cope with its exploding demography, that kind of growth was certainly not enough to point to any Eldorado anytime soon. But it was enough to prevent the economy from sinking. Under President Ahmadinejad, however, the growth rate has dropped to around 3%--and that despite rising oil revenues.

Because it controls the oil revenue, which comes in U.S. dollars, the Islamic state has a vested interest in a weak national currency. (It could get more rials for the same amount of dollars in the domestic market.) Mr. Ahmadinejad has tried to exploit that opportunity by printing an unprecedented quantity of rials. Economists in Tehran speak of "the torrent of worthless rials" that Mr. Ahmadinejad has used to finance his extravagant promises of poverty eradication. The result has been massive flights of capital, mostly into banks in Dubai, Malaysia and Austria. Ayatollah Mahmoud Shahroudi, the Islamic Chief Justice, claims that as much as $300 billion may have left the country since President Ahmadinejad was sworn in.

According to Abbas Abdi, a Tehran researcher and loyal critic of the regime, Iran is experiencing its worst economic crisis since the late 1970s. The effects of this are seen in the slowdown in real-estate prices--the first since 1997, even in Tehran's prime districts. Printing money and spending on a no-tomorrow basis are not the only reasons for the crisis. President Ahmadinejad's entire economic philosophy seems to be designed to do more harm than good.