Where Iran goes now

PARIS, June 15 (UPI) -- The re-election of Iran's firebrand President Mahmoud Ahmadinejad is grim news for U.S. President Barack Obama. Little now remains of his hopes that diplomacy, respect and the offer of a new start in relations would resolve Tehran's nuclear challenge. With oil above $70 a barrel, Iran can defy even tougher sanctions and short of military action it is not easy to see any way to prevent its development of nuclear capabilities.

And yet in the longer run, the election result is even worse news for Iran. The widespread suspicion of ballot-box fraud and the angry reaction of the re-elected president's opponents on the streets of Tehran cast a shadow of illegitimacy over the new government. The reformist candidate, Mir Hossein Mousavi, described the election as a "dangerous charade" that threatened to bring tyranny to Iran and said he would never surrender.

Many of the country's educated young people, the middle class and the bazaar merchants made their hunger for change very clear in the mass demonstrations for Mousavi last week. They are now on a collision course with their own government. Some will be imprisoned. Many will leave the country if they can. Others will nurse their resentments in more or less sullen opposition. Ahmadinejad's police and the Republican Guard seem destined to make Iran look rather more like a police state in the future.

And the economy under Ahmadinejad is likely to deteriorate yet further, with even the dubious official figures saying that unemployment has risen from 10 percent to 17 percent under his rule. The central bank says inflation is running at 25 percent a year.

During the election campaign, Mousavi's supporters distributed copies of the reformist newspaper "Sarmayeh" citing central bank figures reporting that Iran earned $272 billion in oil and gas revenues during the past four years under Ahmadinejad, compared with $172 billion in the eight years of his predecessor.

"What kind of management is this? Not only did people's livelihoods not improve when oil prices were $140 in comparison to when they were $16, they worsened," commented Tehran's conservative mayor, Mohammad Baqer Qalibaf, a sign that even the president's supporters are not happy.

The tragedy is that Ahmadinejad's mismanagement is wasting the country's brief window of opportunity to build a robust economy before the oil starts to run out after 2030. The country is currently enjoying a youth boom, with high numbers of people over the age of 18 and relatively few elderly dependents. This mix of low dependency and a large population of working age is usually a springboard for growth. This has not happened in Iran because the oil funds have gone into consumption, corruption and nuclear ambitions rather than productive investment. International economic sanctions, which look more and more likely, will hamper the economy yet further.

It gets worse. Thirty years ago, as the shah was being driven into exile and the Islamic Republic was being established, the Total Fertility Rate -- the average number of children born to a woman of childbearing age -- of Iranian women was 6.5. Today, the TFR has collapsed to European levels, falling from 2.2 in 2000 to below 1.7 in 2007, considerably lower than the fertility rate of modern Britain.

The implications for the economic future of Iran are alarming. It will by mid-century have consumed all its oil and will confront the challenge of organizing a society with few people of working age and many pensioners. The implications are also profound for the politics and diplomacy and power games of the Middle East and the Gulf, affecting Iran's dreams of being the regional superpower and the tension between the Sunni and the Shiite wings of Islam.

Still, Ahmadinejad now has four more years in power to push his nuclear researchers into developing a bomb and the missiles to deliver it. Even if Tehran stops short of testing a weapon, the expectation that it will have one is already a key component of Middle Eastern politics. It will hang ominously over the Obama administration and over an understandably nervous Israel, and over Iran's Sunni neighbors across the Gulf.

Already, the policy community in Washington is looking at the prospect it may have to live with an Iranian (or Shiite) bomb. The RAND Corp. has been conducting studies on the prospect of extending the U.S. nuclear umbrella to the Middle East, offering nuclear guarantees to Saudi Arabia and others in the hope that this will dissuade them from developing nuclear weapons of their own.

Whether Ahmadinejad won the elections fair and square is now beside the point, even though his majority in Mousavi's home town of Tabriz appears almost unbelievable. The excitable demagogue with his threats to wipe Israel off the map is back in power for four more years. They will not be pleasant, for Iran, its neighbors, for Israel and for the Obama administration.