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Tuesday, December 26, 2006 - Page updated at 12:00 AM

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Iran oil industry founders, report says

The Associated Press

WASHINGTON — Iran is suffering a staggering decline in revenue from its oil exports, and income could virtually disappear by 2015 if the trend continues, according to an analysis published Monday in a journal of the National Academy of Sciences.

Iran's economic problems could make the country unstable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern said.

In 2004, Iran's oil profits were 65 percent of the government's revenues.

The country could be destabilized by declining oil exports, hostility to foreign investment to develop oil resources and poor state planning, Stern said.

His analysis supports U.S. and European suspicions that Iran is trying to develop nuclear weapons. But, Stern says, there could be merit to Iran's assertion that it needs nuclear power for civilian purposes "as badly as it claims."

He said oil production is declining and both gas and oil are being sold domestically at highly subsidized rates. At the same time, Iran is neglecting to reinvest in its oil production.

If the United States can "hold its breath" for a few years it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to belay any instinct to take on Iran militarily.

Copyright © 2006 The Seattle Times Company

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