.

Friday, October 10, 2008

The good news

Ma'an News (Arabic) is reporting that Hamas leader Ismail Haniyeh said that the current financial crisis is proof that God is punishing America for its support of Israel.

He might have his own economic problems sooner than he thinks, though.

According to an article in the Gulf Times last month, Iran needs the price of crude oil to be above $90 a barrel to avoid running the country at a deficit:
“Iran’s break-even price is $ 90 a barrel, and that is a big issue in Iran right now,” Khan said.

“If prices dip below $ 90 a barrel, and we have seen it touch $ 89 earlier this week, then they would have to tighten their public expenditure policy, and probably cut subsidies, which would be an issue for the government there – the public would not be content,” he said.

Iraq has the highest break-even price in the region, according to the IMF figures. The war-torn country needs prices above $ 110 a barrel to balance its books.
The price of crude traded at below $80 in London today.

Which means that Hamas' main source of income is in danger of drying up.

The BBC mentions:
"The direct impact of this financial crisis in the United States for the Iranian people, could actually be more than for the American people, because of the oil price, and our dependency on oil income," explained Saeed Leylaz, one of Iran's most outspoken and independent-minded economists

"If the oil price for Iranian oil will be $75 to $80 a barrel, we will lose $50bn US dollars (a year) and that means we are losing between $700 and $800 per head."

Not to mention that Iran's economy has been shaky to begin with. As a result of dropping oil revenues, Ahmadinejad tried to impose a 3% sales tax - and merchants responded by going on strike yesterday, causing him to back down. Inflation in Iran is at nearly a 30% rate officially, the unemployment rate of working-age Iranians is believed to be 20%, and Iran's economy has not grown per capita since the revolution in 1979.

So Haniyeh might want to think twice before gloating over the West's financial problems. He might have worse ones very soon.