“…It was $70-a-barrel oil followed by $10-a-barrel oil that killed the Soviet Union. It was (Professor Mau continued) the sharp rise in oil prices in the 1970s, due to the Arab oil embargo and the Iranian revolution, that deluded the Kremlin into propping up inefficient industries by overextending economic subsidies at home, into postponing real economic reforms and into invading Afghanistan abroad–and then it was the collapse of prices in the 1980s and early 1990s that brought down the overextended, petrified empire.”
“There is al obvious parallel between the Soviet Union at the height of its oil folly and today’s Iran, argues Mau. If we were now able to ring the price of oil down sharply, the ayatollahs would face the same impossible choices that the Soviet leadership faced and that led to the collapse of Communism.
In 2005 Iran’s government earned $44.6 billion from oil experts and spent $25 billion on subsidies–four husing, jobs, food, and 34-cent-a-gallon gasoline–to buy off interest groups”
Hot, Flat and Crowded, page 108
Tom Friedman
