Iranian President Mahmoud Ahmadinejad is in trouble, says The Economist. Citing two of his predictions that spectacularly backfired - that Obama would lose, and that oil would never drop below $100 per barrel - the paper argues that Iran now faces an economic crisis that will weaken the ultraconservative faction Ahmadinejad represents.

Writes the paper’s Middle East correspondent:

Iranian economists have taken to bombarding the president with letters excoriating his policies. In the most recent, 60 academics accuse his administration of “excessive idealism, haste in action… and tension-creating interaction with the outside world”. Iran has underperformed its neighbours in growth, lost competitiveness and failed to tackle high unemployment, the letter says.

Iran faces no danger of imminent collapse. The Tehran stock exchange has fallen by only about 16% since July, compared with 53% for the MSCI Emerging Markets Index. Sanctions have hit foreign investment in oil and gas production, and driven up the cost of doing business, but have yet to create scarcities for ordinary shoppers. Yet rising prices have shortened tempers. An attempt to impose a 3% value-added tax in September prompted bazaar merchants, long seen as an important conservative constituency, to strike for the first time since the 1979 revolution, forcing a government backdown. The introduction of petrol rationing last year, an attempt to curb consumption that is boosted by massive government subsidies, provoked riots.

On top of this, Mr Ahmadinejad faces mounting political trouble. His hardline interior minister, a close associate, was sacked by Iran’s parliament in October after it was revealed that his claimed degree from Oxford University was a fake. Religious conservatives have since attacked another of his loyalists, a deputy responsible for culture and tourism, for violating the sanctity of the Koran by hosting a reception where female entertainers paraded copies of the holy book. Mr Ahmadinejad still appears to have the backing of Iran’s all-powerful supreme leader, Ayatollah Ali Khamenei. Yet some analysts say the ayatollah may come to see the president as a liability in the run-up to next summer’s presidential elections.

Meanwhile, Ahmadinejad has made yet another bold prediction. No, it’s not about Israel’s imminent demise this time. It’s about oil - and it’s not terribly consistent with his earlier attempt at prophecy.

AP reports:

Iranian President Mahmoud Ahmadinejad says Iran’s economy will survive falling oil prices.

Iranian state television has quoted Ahmadinejad as saying the plummeting price of oil “will not cause any remarkable problems” to the economy.

He added in his remarks Sunday that the economy was self-reliant would be fine with an oil price of $5.

International financial institutions estimate Iran needs oil at $90 a barrel to balance its budget and in October Iran said under-$100 a barrel oil would be “unsuitable.”

Oil prices have come down from the record $147 in July to near $50.

Some 80 percent of Iran’s foreign revenue comes from oil export.

So the regime is feeling the squeeze, though I won’t be making any Ahmadinejad-like predictions off the back of that. Good, though, to see British Foreign Secretary David Miliband telling Arab leaders that Iran’s nuclear ambitions are not just an Israeli problem.

PS. Some of you have tried to post comments on this earlier post arguing, in effect, that Hossein Derakhshan has received what was coming to him. While you’re perfectly entitled to question his credibility and to challenge his dubious writings, we take no pleasure in anyone being punished by the Iranian regime - if that is what has happened - and we’re certainly not going to publish that sort of thing here.