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In Iran, Inflation Could Threaten Regime

Iranian President Mahmoud Ahmadinejad continues to face protests at home and the possibility of international sanctions abroad, but the biggest threat to his rule is something more banal: inflation. Iran's official inflation rate has now reached 13.5 percent, but the actual rate could be twice as high. And it looks likely to get worse. Come spring, the government plans to stop subsidizing basic goods and will instead give cash directly to poor families. That plan, as well as Ahmadinejad's push to give out more loans, will expand the cash supply and likely drive inflation higher still. Efforts to combat rising prices have so far failed. Two weeks ago the Finance Ministry capped daily bank withdrawals at $15,000. According to reports on opposition Web sites, several banks in Tehran and Isfahan were subsequently swamped by desperate customers, and in at least one case police had to be called in. 

Political protesters plan a large rally on Feb. 11, the anniversary of the 1979 revolution. If they're joined by ordinary Iranians fed up with the dismal economy, it may be a case of history repeating itself.

 

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