The announcement over the weekend by Iranian President Mahmoud Ahmadinejad of drastic cuts in subsidies for fuel and food would seem to be good news for those hoping the regime in Tehran will feel pain from being squeezed by sanctions. Such a big and risky move in the direction of austerity must be the result of some kind of pain. It is not likely the product of an intellectual revelation among Iranian decision-makers that abiding by the Washington Consensus would be good for Iran. There is no more reason than before to believe, however, that western postures toward Iran that are overwhelmingly about pain and pressure and far less about positive alternatives will induce the regime to do a similar about-face on matters of foreign concern such as Iran's nuclear program. Iranian decision-makers still have good reason to believe that the West and the United States in particular is more interested in overthrowing their regime than in building a better relationship with it.
For those in the West who really do hold out hope that this Iranian regime will fall, the cuts in subsidies also would seem to be good news. This is just the sort of measure that, one might expect, would stir the huddled masses of Iran to rise up against their oppressors. Cuts in consumer subsidies have historically been one of the most politically volatile and sensitive steps a government can take, especially in the Middle East. “Bread riots” have been the nightmare of many a ruler, and the fear of them has led many regimes to continue the economic distortions and burdens of subsidies. Iran itself experienced disturbances when the current system of gasoline rationing was introduced in 2007. And the subsidy cuts that Ahmadinejad announced are huge. The price of rationed gasoline jumped 400 percent, for example, and the price of rationed diesel fuel even more.
Given all this, probably the most remarkable aspect of this story so far is that there have not been any riots. Apart from a rush to the petrol stations immediately after Ahmadinejad's speech, in an effort to top off tanks before the new prices went into effect, Iranians seem to be going about their daily lives without visible change. “So far” is an important qualifier, and caveats must be added. The subsidy cuts are being phased in over about ten days, so the full effect has not yet been felt. Security forces made shows of force in the streets to deter any demonstrations of displeasure. There may have been a further deterrent effect from reports that political behavior will be a criterion in how the regime hands out the cash payments it has promised to cushion the blow to consumers of lessened subsidies.
Even with the caveats, the non-response in the streets strongly suggests that Iran is not in a pre-revolutionary situation. It is not even in a pre-velvet- or color-revolutionary situation. Revolutionary behavior is inherently unpredictable, but the experience of the past three days is a significant data point in favor of the proposition that Iran's huddled masses likely will stay huddled for the time being. Moreover, if the regime can get over the hump of cutting subsidies so suddenly and substantially, the improvement in Iranian public finances will ease the squeeze, even with continued sanctions.
Observers in the West can and should express their sympathy and support for the Iranian public, which does not enjoy anything close to full political liberties. They also should watch carefully the continued tussles among elements jockeying for power in Tehran. But it would be delusional to believe that dealing fully with this distasteful regime is not necessary because it will not be around for long.