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Is Iran a paper tiger ? - -

By Editorial

A Paper Tiger?

Iran may be facing a steep economic decline.

Monday, January 1, 2007

ONE OF THE premises of the debates over how to handle Iran -- a premise shared by the administration and its critics alike -- is that the Islamic republic is a power in ascension. The Iraq war has eliminated its major regional rival. Shiite co-religionists with Iranian backing are vying for power in Iraq and Lebanon. Oil prices are high, the United States is distracted, the Russians are helpful, and the Europeans are pushovers. This, everyone seems to agree, is Iran's moment. But what if the notion that Iran is operating from a position of strength turned out to be a false premise?

That's the question posed by a fascinating and provocative new study of the Iranian oil industry published by a scholar named Roger Stern. An economic geographer at Johns Hopkins University, Mr. Stern contends that the Iranian oil industry is actually in something of a death spiral. Iran has been missing its OPEC quota of late, and while high oil prices have masked the decline by keeping revenue up, production has been declining. Higher domestic energy demand in Iran combined with difficulty in attracting foreign investment and other economic problems, he argues, make a rapid decline in oil exports likely -- ending in the "extinction" of Iranian oil exports in 2014-15. If anything such as this is true, a huge component of the Iranian puzzle is being systematically overlooked.



    
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