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Oil-Rich Iran Faces a Reckoning

[New York Times] Michael Slackman and Nazila Fathi - As the price of oil roared to ever higher levels in recent years, the leaders of Iran muscled their way onto the world stage, using checkbook diplomacy and, on occasion, intimidation. Now, plummeting oil prices are raising questions about whether Iran can sustain its spending - and its bid to challenge U.S. hegemony. Iran extended its influence across the Middle East, promoted itself as the leader of the Islamic world and used its petrodollars to help defy the West's efforts to block its nuclear program. But such ambitions are harder to finance when oil is at $74.25 a barrel, its closing price Monday in New York, than when it is at $147, its price as recently as three months ago. "The drop in oil prices will make the Iranian regime re-examine its calculations because its political immunity is less," said Mustafa El-Labbad, director of the East Center for Regional and Strategic Studies in Cairo. "Their regional presence and role will shrink." The International Monetary Fund said in August that Iran would face unsustainable deficits should prices for its oil fall to $75 a barrel.
2008-10-22 01:00:00
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