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Esfandyar Batmanghelidj
1. There is a misunderstanding about Iran's decision to cut fuel subsidies. The move is not a knee-jerk reaction to sanctions pressure on the government budget. What Rouhani announced was what the IMF advised in its 2018 Article IV consultations. It's solid fiscal policy.
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
2. The IMF estimated that fuel subsidies cost 1.6% of Iran's GDP in 2017/2018. It is a really inefficient means to support the welfare of ordinary Iranians--cash transfers are much better. By lowering the subsidy, Rouhani is creating fiscal space to expand cash transfers.
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
3. Seeing regime change advocates share videos of fuel protests is wonderfully ironic if you consider that any new government in Iran would face exactly the same fiscal conundrum now facing the Islamic Republic and would be advised to do exactly what they just did. See here:
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
4. The Rouhani admin could have be been more prudent in communications and the response to the inevitable protests, but the fact is that the protests were *inevitable*. They have little to do with state ideology and everything to do with structural issues of political economy.
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
5. Like most energy producers, the Iranian state has basically subsidized the living standard of its citizens for decades, including under the Shah. While this has helped burnish purchasing power, the subsidies are now a drag on growth.
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
6. The middle class has already been lifted up. They don't need to continue to inefficiently benefit from the cheapest gas in the world. For the poorest citizens, who don't consume gas, cash transfers are a better means to provide for their welfare + support consumption.
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Esfandyar Batmanghelidj Nov 16
Replying to @yarbatman
7. What makes the protests interesting is that they make clear the real challenge of economic development in Iran. Even good policy can beget protests and anger. Put another way, not every protest is evidence of decrepitude in the Islamic Republic. Running a country is hard.
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Esfandyar Batmanghelidj Nov 17
Replying to @yarbatman
8. P.S. I am not defending this move as an austerity measure. I want to see expanded cash transfers + better use of social housing in Iran to protect the economically vulnerable. There is just no logic for Iran—a wealthy country—to have some of the cheapest gasoline in the world.
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kayvan Nov 16
Replying to @yarbatman
This is some of the finest and most precise journalism I have ever seen. I salute you.
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Mohamed Abbas Nov 16
Replying to @yarbatman
I applaud your efforts to present a well researched argument. While I do agree that the Iranian government is repressive, I do think that people have a tendency to exaggerate its weaknesses because it’s what they want to see rather than what is actually happening.
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Alireza Taba Nov 16
Replying to @yarbatman
It would be nice to have your argument in a piece on your site. :-)
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