Oil Revenue Produces Irresponsibility

No, dear Globe and Mail reader, this post is not about Alberta. So get lost!

It’s about Iran’s President Mahmoud Ahmadi-Nejad, who said in a speech yesterday that Israel should be “wiped off the map.” Iran’s nuclear ambitions are well known and its capabilities slightly less well known.

Dan Drezner asks whether he’s crazy. Maybe, maybe not. More to the point, Drezner links to this article outlining how much Ahmadi-Nejad worries the Iranian business community.

FP reports Iran’s business community has been very critical of the PM’s economic and foreign policies that has resulted in a lot of capital leaving the country:

The Tehran Stock Exchange (TSE) has dropped 20 per cent since the election, with the Tehran price index (Tepix) closing on Monday at 10,014, perilously close to the psychological 10,000 mark level. Yesterday the exchange was closed for a public holiday.
…
Iran’s media have been rife with reports of capital flight, especially to the UAE, where thousands of Iranian companies have subsidiaries.

Iran’s business community has limited power, however, because 60% of the government’s income comes from oil. The high price of oil enables the government basically to undermine the conditions necessary for a stable economy (and political society).

Irresponsibility remains a possibility for any society with large oil revenues. But there’s a difference between there being a possibility even commonplace, and it being government policy.