Iran is a country awash with oil, yet its people riot because there is not enough petrol. This simple fact is a vivid demonstration of the deep economic malaise that forms Iran's Achilles heel.

Scarcely any other country is as fabulously endowed with natural resources. Iran possesses 130 billion barrels of proven oil reserves - more than anywhere else in the world save for Saudi Arabia. It also has an abundance of natural gas and a long coastline from which these commodities can be exported.

At present, Iran produces 4.3 million barrels of oil every day. This may sound impressive - but it could turn out another million if its drilling rigs and pipelines were not falling to pieces. The inescapable truth is that Iran is lamentably failing to exploit its own natural wealth.

The Supreme Leader, Ayatollah Ali Khamenei, is keenly aware of this. But he faces an acute dilemma. Recovery is only possible if Iran allows Western trade and investment. The vital oil sector will never reach full potential without Western money.

Yet while Iran pursues its nuclear programme, it will remain isolated, devoid of Western investment. It will also be vulnerable to outside pressure. In extremis, the United States and its allies could strangle Iran's economy by imposing a blockade in the Gulf and halting the flow of imported petrol.

But if Ayatollah Khamenei were to sacrifice the nuclear programme in exchange for investment, his troubles would not end.

With economic freedom, Iranians would demand political freedom as well. If so, the Islamic regime would follow the Soviet Union into history. So Ayatollah Khamenei will risk the future of his revolutionary regime whichever course he chooses. The stakes could not be higher.