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

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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

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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