New roads, wastewater treatment plants and sports centers were launched, paid for by the government, and when the government couldn't afford it, from yet more bank loans. Banks are facing a reported $8.8 billion in bad loans.
Meanwhile, imports have doubled, to $50 billion a year. And the oil stabilization fund, which had accumulated $9 billion in unanticipated oil revenue as a hedge for the future, is forecast by some to be tapped out by the end of next month.
Voter response has been swift: When Iranians went to the polls for December's municipal council elections, Ahmadinejad's party took a beating.
"That is a devastating defeat for the president. And this is unprecedented in Iran, that after a year and a half in office a president's party is defeated like this," said a former government official, who spoke on condition of anonymity. "This voice has to be heard now by the government."
The international conflict over the country's nuclear program has only compounded the economic problems.
U.N. sanctions targeting Iran's nuclear and missile programs will probably have little effect on the public. But a separate banking embargo being pushed by the Bush administration means Iranian businessmen must pay much more to import goods.
"The only solution we have now is to deal with Chinese companies, because the Chinese are more flexible," said Amir Saqaei, an engineer in the oil and gas industry who is developing an oil project in the western region of Cheshmakhosh. However, he said, the Chinese goods are of poor quality.
Not all of the government's troubles have been economic. Writers have complained of a near-halt to the publishing of novels. Foreign books such as William Faulkner's "As I Lay Dying" have been banned, and several newspapers have been closed.
In December, crackdowns on student associations and repression of activists prompted students at Tehran's Amir Kabir University to heckle the president during an appearance there. Chanting "Death to the dictator" and carrying a banner reading "Fascist Ahmadinejad," the crowd sent a shoe sailing toward the president as he stood at the podium.
A large number of parliamentary deputies signed letters this year demanding answers from the president on the nuclear issue and the economy. But new, strong language from Washington starting in January that hinted at the possibility of a military strike quickly took the wind out of their sails.
Independent legislator Akbar Alami, who had circulated a letter, said he stopped getting signatures almost immediately.
If Iranians perceive a foreign threat, he said, "they don't pay attention anymore to differences, and the problem they have between parties and governments doesn't matter anymore."
To the contrary, said former central bank governor Mohammad Hossain Adeli, it mobilizes the Iranians and ratchets up the conflict.
"The foreign pressure is counterproductive and radicalizes the domestic environment," he said. "And then this radicalization results in more confrontational positions on the part of Iran."
kim.murphy@latimes.com
