Structural Patronage in Iran: Implications of Subsidies Reform for Iran and U.S
STRUCTURALCHARLIE January 28, PATRONAGE STRUCTURAL PATRONAGE IN IRAN IMPLICATIONS OF SUBSIDIES REFORM FOR IRAN AND U.S. POLICY CHARLIE SZROM JANUARY 28, 2010 A REPORT BY THE CRITICAL THREATS PROJECT OF THE AMERICAN ENTERPRISE INSTITUTE STRUCTURAL PATRONAGE IN IRAN CHARLIE SZROM January 28, 2010 Contents INTRODUCTION 1 RECENT CONTEXT 2 HISTORY OF IRAN’S SUBSIDIES PROGRAM 3 CURRENT SUBSIDIES AND OUTLINE OF PROPOSED REFORM 5 ECONOMIC EFFECT OF SUBSIDIES REFORM UPON IRAN’S LOWER CLASS 5 REASONS CITED IN SUPPORT OF SUBSIDIES REFORM 6 REASONS NOT STATED IN FAVOR OF REFORM 8 THE EFFECT OF SUBSIDIES REFORM UPON THE ISLAMIC REVOLUTIONARY GURARD CORPS (IRGC) 9 CONCLUSIONS FOR IRAN AND U.S. POLICY 10 APPENDIX: SUPPORTERS AND CRITICS OF SUBSIDIES REFORM 12 NOTES 14 Tables TABLE 1: IRANIAN ENERGY SUBSIDIES, ESTIMATED VALUE AND SHARE OF GDP, SELECTED YEARS 4 TABLE 2: MOTOR GASOLINE BARRELS CONSUMED FOR ROAD TRANSPORT IN IRAN AND ITS NEIGHBORS IN 2007, PER CAPITA 8 www.criticalthreats.org Structural Patronage in Iran: Implications of Subsidies Reform for Iran and U.S. Policy “[The subsidies reform package] is the most important economic bill in the past 30 years.” 1 —Iranian president Mahmoud Ahmadinejad Introduction Key Points s the U.S. Congress considers sanctions against • Although sanctions have hastened subsidies A Iran’s refined petroleum supply, Iran has already reform, the Iranian regime’s desires to seize greater enacted a plan to resist such measures. Tehran has political power, increase the Islamic Revolution- expanded its refineries, sought alternate international ary Guards Corps (IRGC’s) market dominance, gasoline suppliers, and begun an attempt to reduce redistribute income, and lessen budgetary pressure domestic gasoline consumption (this author and others have provided critical motivations for reform.
[Show full text]