IRANIAN ECONOMIST SAYS BOTH AHMADI-NEJAD AND THE ECONOMY ON

S E C R E T SECTION 01 OF 02 IRAN RPO DUBAI 000022 SIPDIS SIPDIS STATE FOR NEA/IR, LONDON FOR GAYLE, BAKU FOR HAUGEN, BERLIN FOR STATE FOR NEA/IR, LONDON FOR GAYLE, BAKU FOR HAUGEN, BERLIN FOR PAETZOLD E.O. 12958: DECL: 4/12/2017 TAGS: ECON PGOV PREL IR SUBJECT: IRANIAN ECONOMIST SAYS BOTH AHMADI-NEJAD AND THE ECONOMY ON THE DECLINE REF: RPO DUBAI 0015 RPO DUBAI 00000022 001.2 OF 002 CLASSIFIED BY: Jillian Burns, Director, Iran Regional Presence Office - Dubai, Department of State. REASON: 1.4 (d) 1.(S) Summary: According to a contact, President Ahmadi-Nejad's approval rating is at an all time low, his public remarks are - for the first time - completely scripted, and he is not an important policy player. A UAE-based Iranian economist, recently back from Iran, said the capture and subsequent release of 15 British sailors was dismissed by the Iranian people as political maneuvering. Gasoline prices at the pump recently increased per Majles legislation (reftel) - causing a 20% hike in cab fares - but the already printed ration cards (SmartCards) have not been distributed. The Iranian people are convinced that the UN Security Council sanctions will eventually target the oil and gas sector. Even so, he claimed, Iran could sustain its economy under increased international pressure for some time. End Summary. 2.(S) A UAE-based Iranian economist, who had just returned from a trip to Tehran, discussed his views of the current political and economic situation in Iran with IRPoff April 11. The economist made clear that his assessments were based on anecdotal information from conversations in Iran with cab drivers, shopkeepers, and academics, and not scientific research. Ahmadi-Nejad kept in line -------------- 3.(S) The economist claimed that the leadership has President Ahmadi-Nejad on a short leash because if you let him "off his leash" for even a second, he opens his mouth and causes problems. Ahmadi-Nejad is not an important policy player and the current level of frustration and disappointment with President Ahmadi-Nejad - both amongst the people and within the government - is greater than ever before. 4.(S) The source indicated it was believed that Ahmadi-Nejad was "not allowed" to address the UN Security Council prior to its passing of Resolution 1747, as "everyone" knew he would "shoot himself in the foot." Blaming the US for not issuing visas in a timely manner was simply a face-saving measure, and he claimed Iranians did not believe the government's story. The contact said he heard that when Ahmadi-Nejad traveled to Gilan province, he made tactless remarks about the women of the province, referring to a long-standing stereotype about their lack of morals. People are saying that since his inappropriate provincial address, Ahmadi-Nejad is no longer "allowed" to speak freely. When the president announced the release of the British soldiers, Ahmadi-Nejad's remarks were scripted for the first time, according to the economist. British sailors -------------- 5.(S) The Iranian government successfully united its people by appealing to their nationalism in the face of "imperialism" by Britain, but only for a short time, opined the economist. Eventually the Iranian people dismissed the "squabble" over 400 meters of territorial water as political maneuvering and play acting by their government. The Iranian people noticed that the hardliners backed away from their position once the situation escalated "out of their control," the economist asserted. Economic frustration growing -------------- 6.(S) The economist expounded on the ever-growing list of economic woes in Iran. Transportation cost hikes, coupled with a 40% increase in real estate prices, are hitting the Iranian people hard, he said. The economist described the lack of economic vibrancy in Iran, saying businesses, in general, have experienced no growth in the past year. He claimed that the Iranian people are in a holding pattern; they reportedly are focused on survival and no longer even have aspirations to improve their quality of life. He attributed this apathy to the "massive welfare state" created by the Iranian government. 7.(C) He said that gasoline prices at the pump recently increased per Majles legislation from roughly 8 cents to 11 RPO DUBAI 00000022 002.2 OF 002 cents per liter (reftel) - causing a 20% hike in cab fares. However, SmartCards to establish rationing have not been distributed, although they have been printed. 8.(S) Consistent with frequent claims, the economist asserted that as long as Iran can sell its oil and prices stay high, it can support this welfare state. Because the Iranian people know it is widely understood how much oil sales buffer the government from foreign pressure, he said they are convinced that the UNSC sanctions will eventually target the oil and gas sector, despite statements to the contrary. He predicted that in this case, Iran would still be able to subsist, given its domestic agricultural production capabilities and its leaders' "addiction to international isolation." 9.(S) Comment: The economist retains close ties to Iran, and his economic comments have proved credible in the past. His advice to the West to bring about change in Iran, however reflects his pro-Rafsanjani tendencies. He claimed that if the West wanted to see "real" change in Iran, it should drop all sanctions and attempt to fully integrate Iran into the international community. He asserted that the current leaders maintain power by controlling the flow of people and information in and out of the country and greater openness would weaken their control. BURNS