The meeting the president and his economic team held last Thursday with a group of economists who had criticized his government’s economic policies in an open letter four weeks ago will hopefully be of some benefit to the Iranian economy.

The fact that the president agreed to sit and listen patiently to the views of the dissenting economists is praiseworthy since similar warnings in the past were wrongly described as politically motivated by some people who consider themselves aligned with the government. As the economists have said, the current government has inherited some structural economic problems and thus nobody expects it to perform an overnight miracle. However, now that the global economy is experiencing high growth and Iran is benefiting from this boom through high oil prices, it is regrettable that the Iranian economy is lagging behind other developing countries in the region. Mahmud Ahmadinejad won the 2005 presidential election on campaign promises that he would work to establish social justice and fight economic corruption. At the beginning of his presidency, when he introduced Farhad Rahbar as the new director of the Management and Planning Organization (MPO), which was recently split into two organizations, he uttered the now famous words: “People should not be crushed under the wheels of development.” The president’s statement was a veiled reference to the economic austerity model, which necessitates freeing up prices and moving toward a market-based economy, a policy that his predecessors’ administrations pursued to some degree in regard to some commodities and services after the 1980-1988 Iran-Iraq war. There is no doubt that the president is sincere and serious about wanting to raise the standard of living of the less privileged socioeconomic strata. However, the economic policies adopted to reach that noble goal have had the opposite result, fuelling inflation to the detriment of the poor masses and to the benefit of the rich. Experts say the major problem is the fact that the government, flush with cash from high oil prices, has been injecting the oil revenues into the market in order to boost the economy and increase the purchasing power of citizens, especially the working class. The government withdrew $35.3 billion from the Foreign Exchange Reserve Fund in Iranian calendar year 1384 (March 2005-March 2006) and $45 billion in 1385 (March 2006-March 2007) and is expected to withdrew yet another $45 billion in the current year (ends March 19, 2008). In a similar letter in June 2006, economists warned about the inflationary consequences of such monetary policies, but, unfortunately, those warnings were not heeded and finally the economists’ predictions came true. Even some pro-administration parliamentarians who are economic experts have warned about the consequences of withdrawing so much money from the reserve fund, but nevertheless, each time the government has asked for money, the Majlis has authorized the lavish spending. The president, who himself is a former university professor, is expected to value the views of experts more than a head of state without such an academic background. Clearly, no administration should ever deprive itself of the views of experts, especially for the implementation of economic and monetary policies