VZCZCXRO2805
PP RUEHBC RUEHDE RUEHKUK
DE RUEHDIR #0022/01 1021419
ZNY SSSSS ZZH
P 121419Z APR 07
FM IRAN RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0093
INFO RUCNIRA/IRAN COLLECTIVE
RUEHDIR/IRAN RPO DUBAI PRIORITY 0086
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEHAAA/NSC WASHINGTON DC
RUEHDE/AMCONSUL DUBAI PRIORITY 0088
RUEHAD/USDAO ABU DHABI TC
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0052
RUEATRS/DEPT OF TREASURY WASHINGTON DC

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