Iran's bumbling ‘China model’
Now that they’ve had their bloody crackdown, the next step for Iran’s mullahs is economic reform. That, after all, is the “China model” they’ve been talking about in Tehran for years. If we give the people a taste of the good life, it will take their minds off political freedom and we’ll get to keep our authoritarian regime. The problem is, there is very little evidence that Ayatollah Ali Khamenei and Mahmoud Ahmadinejad have any clue how to reform and open up their economy the way Beijing’s mandarins did after 1989. Or that they want to even try.
Ahmadinejad, in fact, did the opposite during his first term, embracing socialism and a blinkered populism that devastated the Iranian economy. He strong-armed the Central Bank into driving down interest rates artificially, risking hyperinflation; shifted back to a command economy by slowing privatization; and misused much of the nation’s $60 to $70 billion windfall oil revenues, doing little to ease unemployment. Ahmadinejad’s policies hurt “a lot more than the international sanctions,” which are generally seen as a nuisance that merely drives up the cost of doing business, Saeed Shirkavand, a Tehran University economist, told me in 2007. Shirkavand was one of 59 economists who signed an open letter to Ahmadinejad criticizing his policies back then.
While many Iranians recognized that Ahmadinejad has deepened their country's international isolation with his outrageous and unnecessary comments on Israel and the Holocaust, most of the criticism of him focuses on his mishandling of the domestic economy. Hence, if as expected the protests are silenced with force, the discontent isn’t going away. Ahmadinejad’s base is Iran’s poor, but they’ve been as hard-hit by inflation and the tail-off in oil revenues. Now that Khamenei has shown he has clay feet spiritually, and his confederate Ahmadinejad has stumbled economically, it’s hard to see how the China model works for these guys much longer.
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Michael Hirsh covers international affairs for NEWSWEEK reporting on a range of topics from Homeland Security to postwar Iraq. He co-authored the November 3, 2003 cover story, "Bush's $87 Billion Mess," about the Iraq reconstruction plan. The issue was one of three that won the 2004 National Magazine Award for General Excellence.
Hirsh writes a column on Newsweek.com entitled "The World from Washington" focusing on foreign policy issues and serves as Washington Web Editor for Newsweek. He also edited NEWSWEEK's "Issues 2007" special issue, which explores all facets and issues of globalization.
Hirsh was the magazine's Foreign Editor from January 2001 to January 2002, and helped guide Newsweek's award-winning coverage of the September 11 attacks and the war on terror. Before that he was a Senior Editor/Chief Diplomatic Correspondent in the Washington bureau, writing about foreign affairs and international economics. Hirsh was also managing editor for the Newsweek International special issue "ISSUES 2001," the second in a series of three annual reviews of the global economy in the new century.
From September 1998 to December 1999, as Diplomatic Correspondent, Hirsh covered foreign policy, the State Department and the Treasury. He moved to the Washington D.C. bureau in May 1997, previously serving as a senior editor of Newsweek International, covering the same beat.
Prior to joining NEWSWEEK in October 1994 as a New York-based senior writer, Hirsh served as the Tokyo-based Asia Bureau Chief for Institutional Investor from 1992 to 1994. Previously, he was a correspondent for the Associated Press in Tokyo and a National Editor in New York.
Hirsh was co-winner of the 2002 Ed Cunningham Award for best magazine reporting from abroad for Newsweek's terror coverage and contributed to the team of Newsweek reporters who earned the magazine the prestigious 2002 National Magazine Award for General Excellence, also for the magazine's coverage of the war on terror. Hirsh also won a Deadline Club Award in 1997 for investigative reporting on his expose of the IRS's abusive practices, and was one of five finalists for a 1994 Gerald Loeb Award for Distinguished Business and Financial Journalism for his article, "China's Financial Revolutionaries." It profiled the new generation of mainland Chinese businessmen who are striving to build a capitalist financial system from scratch. Hirsh is the author of the nonfiction book "At War with Ourselves" (Oxford University Press, 2003) which explores America's foreign policy and its global role.
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