Buying Time in Tehran

Ayatollah Ruhollah Khomeini once famously dismissed an aide worried about inflation by telling him that "this revolution was not about the price of watermelons." Today, Khomeini's successors are finding the high price of watermelons-not to mention of meat, housing, and cars-much harder to ignore. The untold story of postrevolutionary Iran is one of economic decline: the steady, 25-year deterioration of a nation that once boasted a per capita income equivalent to Spain's, pumped six million barrels of oil a day, and nurtured a vibrant middle class. Today, Iran's real per capita income is a third of what it was before the revolution; oil production is two-thirds of the 1979 level, and the middle class is being squeezed by chronically high inflation, widespread UN-and underemployment, and debilitating wage stagnation.

In May 2005, President Mohammad Khatami, who thundered into office in 1997 on a platform of political and social liberalization, will leave his job chastened and largely defeated by his conservative foes. Not only did he fail to achieve political change, he also proved unable to heal the sick economy he inherited or to ward off a looming employment crisis. With its extremely young population-two-thirds of which is under the age of 30-Iran needs to create more than 800,000 jobs a year. So far, the government has failed even to come close to that target. As a result, Iran's young people have grown deeply frustrated and hungry for political change and economic relief-even as they remain unsure of how to achieve them.

The newly resurgent conservatives think they have the answer. Having beaten back the reformers' challenge through bureaucratic infighting, organized violence, the jailing of leading reformers, and election-rigging, the conservatives now want to embark on a program dubbed the "China model" by Iran's media. The idea-which is neither new nor profound nor uniquely Chinese-is to offer economic growth, jobs, and limited social freedom in exchange for continued control of the political sphere. The conservatives are betting that Iran's citizens will be satisfied with consumerism and thus give up their demands for pluralism.