"As a general rule in Iran, the increase of oil price has disproportional relationship to democratization," said Said Laylaz, a Tehran economist. "The higher the price, the less democratic society. . . . The government has been emboldened to control everything."
High oil prices have also shielded Iran from the effects of sanctions over its nuclear program.
For The Record
Los Angeles Times Saturday, July 19, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Russian official: An article in Thursday's Section A on how some oil-rich nations are feeling empowered to oppose U.S. policies misidentified Grigory Yavlinsky as head of Russia's opposition Yabloko party. Yavlinsky stepped down as party chairman June 21 and was replaced by Sergei Mitrokhin.
"If you took Iran's oil off the market, that would bring the international economy to its knees," Sampson said. "Iran knows that."
In Venezuela, the Central Bank reports that oil revenue for the first quarter of this year was $20 billion, up 60% from the first three months of last year.
Chavez has channeled much of the oil bonanza into programs for the poor. But observers worry that the windfall is encouraging his autocratic tendencies, and that Chavez is using the cash to finance an arms buildup and an anti-U.S. policy initiative.
Others predict that in a country where 70% of economic output is directly related to oil, his economic model will crash if and when prices fall.
Growth is evident everywhere in Venezuela, in shopping malls where consumers snap up clothing, whiskey and electronics, and on streets where traffic jams tell of a 47% increase in car sales last year.
For now, it matters little that production has sharply declined over the last five years because of the flight of home-grown professionals and the foreign firms with expertise in dealing with Venezuela's difficult-to-handle heavy oil.
But some say rising oil prices mask economic troubles to come.
Gustavo Garcia, an economist at a Caracas think tank and graduate school known by its initials, IESA, said growth such as Venezuela's that is based on high oil prices cannot be maintained indefinitely.
"In the medium term, when these prices return to normal levels, the economy will be subject to a traumatic adjustment," he said. "We are repeating cycles of past economic expansions that were based on oil booms that aren't sustainable."
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megan.stack@latimes.com
daragahi@latimes.com
Stack reported from Moscow and Daragahi from Beirut. Times staff writer Chris Kraul in Bogota, Colombia, and special correspondent Ramin Mostaghim in Tehran contributed to this report.
