The Wall Street Journal reports on the Iranian government’s response to sanctions:

Mr. Ahmadinejad’s reforms amount to a bold attempt to turn adversity to Iran’s economic, and his own political, advantage. The plunge in domestic energy demand brought about by the price increases has helped Mr. Ahmadinejad soften the impact of international sanctions that specifically targeted Iran’s gasoline imports, economists say. While Iran is OPEC’s third-largest oil exporter, it is forced to import around 40% of its gasoline because of limited refining capabilities. Today, Iran’s leadership can blame the West for any gasoline shortages while saving billions of dollars on import costs to help the government manage the economic sanctions [bold mine-DL].

Still, after seven months, Mr. Ahmadinejad’s reform plan is starting to show signs of cracking. Economists inside Iran say it’s unclear how long the government can sustain the current plan. Iranian businessmen and politicians interviewed in recent weeks stressed that the costs born from the international sanctions and Mr. Ahmadinejad’s reforms are mounting at an alarming rate.

Even poor Iranians say Mr. Ahmadinejad effectively botched the wealth redistribution, since the lump monthly payments haven’t offset higher energy and food prices consumers pay due to the subsidy cuts.

Hossein Askari singled out the focus on gasoline sanctions as one of the main mistakes he believes the U.S. made:

As well, it was a horrible mistake for some prominent U.S. experts to call gasoline sanctions on Iran “the mother of all sanctions.” This pronouncement was just plain silly and counterproductive. The gasoline sanctions allowed Ahmadinejad to do what two of his predecessors were afraid to, namely, dramatically reduce Iran’s gasoline consumption and thus increase the availability of foreign exchange to the regime (in the process receiving accolades from the IMF).

Even though Ahmadinejad’s reforms are taking their toll on the entire population, their impact has been relatively greater on the Iranian middle class:

More than economics, though, factored into Mr. Ahmadinejad’s calculations, Iranian analysts say. Much of the opposition to the president’s 2009 re-election came from Iran’s middle class and merchants, many of whom criticized the president’s populist economic policies and believed his religious views bordered on heretical. It is this segment of the population—which owns the factories and the cars—that is feeling the most pain from the subsidy cuts, argue these analysts, while Mr. Ahmadinejad’s power base, the poor, is in the position to gain [bold mine-DL].

The net effect of sanctions on Iran so far seems to be that Ahmadinejad’s opponents suffer more than his supporters, and the Iranian government is in a position to pin some of the population’s hardships on the governments imposing the sanctions.

The Economist reported on Iran’s “economic jihad” (the name given to the policy by Khamenei) last month:

Not only has it relieved the government of a huge financial burden. It has slashed local energy demand, reducing chronic pollution and leaving more oil for export. It has dramatically raised disposable incomes for the poorest without placing extra burdens on the rich, spreading social equity while boosting consumption and bolstering the banking system. In future, Iran’s subsidy reform may even be seen as a model for top-down social change, not unlike successful schemes pioneered by Mexico and Brazil. But so far Iran’s scheme carries no conditions.