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New Year priorities: Tehran focused on turmoil at home, not nuclear program

While many US and European leaders are focused on curbing Iran's nuclear program in 2011, in Tehran the emphasis is more on domestic challenges such as economic reform.

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“Unfortunately, even if the government wants to allow some inflation, it has to pretend it is not going to allow it, because Iranians have a low tolerance of inflation,” which he says is now at 10 percent but perceived by average Iranians to be 50 percent.

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“People don’t know that food prices globally have increased by 30 percent,” says Salehi-Isfahani. “This is a globalized economy. You can’t just buy your cucumber here as if you are living in an African country; you are living in a neighborhood of very rich people.”

Even if the price of just a few items goes up in Iran, he says, it can “create a panic,” which could prompt the government to cap some prices “in order to calm people.”

Foreign policy challenges

Beyond domestic issues, Iran also has a complicated set of foreign policy challenges in the new year.

“Iran’s first priority in foreign policy should be neighbors and the Islamic world,” the newly appointed foreign minister Ali Akbar Salehi, who has a PhD from the Massachusetts Institute of Technology (MIT) in Cambridge, Mass., said last week at his first official press conference. “In this regard, Saudi Arabia and Turkey have a special position. Iran and Saudi Arabia, as two effective countries in the Islamic world, can resolve many problems together.”

Never mind that US diplomatic cables released by WikiLeaks have quoted the Saudi monarch calling on the Americans to bomb Iran and “cut the head off the snake.”

And of course there also remains Iran’s focus on perennial arch-foe the United States. Washington, in cooperation with European allies, has orchestrated four layers of UN Security Council sanctions against Iran, along with measures that have affected everything from selling jet fuel to Iran’s commercial airliners in Europe to investment from South Korea.

“The question is whether or not there is a possibility for a compromise, and that means on both sides – not just by Iran,” says Farhi. It “makes sense” for Iran to strike a deal now that would still allow domestic uranium enrichment, though on a limited scale and with intrusive inspections and tighter safeguard measures, suggests Farhi.

“Now that the Iranians have declared victory after Geneva [talks in early December] – Iran stood its ground, and that itself was a victory – I think the path has been cleared for some sort of a compromise,” says Farhi.

But any deal would also require a compromise from Washington, which until now has insisted that Iran stop all uranium enrichment – the process to make fuel for nuclear power, that refined to higher levels can also be used to make a weapon.

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