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Iran's Political Chaos Could Put Domestic, Foreign Policy on Hold

Monday, May 14, 2012

In the run-up to the next round of negotiations between Iran and the P5+1 group on May 23 in Baghdad, reports have suggested that Tehran is prepared to make substantive concessions on its uranium enrichment program. Political paralysis in Tehran, however, will be an obstacle to reaching any definitive decision, meaning the Baghdad talks could prove as inconclusive as previous ones.

Not that Iran doesn’t need a deal. Crude oil exports are at a 20-year low due to the threat of U.S. financial sanctions on third-party purchasers. Domestic supplies of gasoline are in short supply, too, as rising sanctions prevent augmentation of Iran’s refining capacity. The domestic cost of fuel for automobiles has been rising rapidly and is expected to peak at 70 percent above current levels. Management inefficiencies and sanctions also constrict the flow of technology to enhance other sectors of Iran’s economy, from small electronics manufacturing to heavy construction projects, and have pushed unemployment to more than 25 percent. ...

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