Domestic Economy

Officials Reappraise Socioeconomic Policy

After the 1979 Islamic Revolution of Iran, almost all strategic economic sectors were nationalized or expropriated for the purpose of redistribution of wealth. That was the mainstay in the 1970s and 1980s, but how do current officials’ view this political
Officials Reappraise  Socioeconomic Policy Officials Reappraise  Socioeconomic Policy

Ezzatollah Sahabi, the late lawmaker and journalist, blamed the dominance of socialism over Iran’s economic climate when the economic and political school of the thought was the order of the day in several Middle Eastern countries and the Soviet Union, Bahman Ahmadi Amouee wrote in his book “Political Economy of the Islamic Republic”.

Sahabi even quoted Ayatollah Mohammad Beheshti, one of the leading figures in the political hierarchy of Iran after the 1979 Islamic Revolution, as saying that “our revolution was reliant on youths who were mostly inclined toward leftism”.

Revolutionaries did not have a precise perception of how to formulate the redistribution of wealth and bring about equality. After the Islamic Revolution, almost all strategic economic sectors were nationalized or expropriated for the purpose of redistribution of wealth. That was the mainstay in the 1970s and 1980s, but how do current officials’ view this political, social and economic development?

The Persian weekly Tejarate-e Farda has compiled the views of Iranian officials over the years on socialism, beginning with Parliament Speaker Ali Larijani who presented shocking figures on Iran’s economic freedom at Iran’s Medical Universities’ Boards of Trustees Conference in late July.

  Shocking Figures

According to Larijani, Iran ranks 22nd out of 22 regional countries and 174th out of 181 countries when it comes to economic freedom.

“Iran comes in 10th among 24 regional countries and 84th among 191 countries in the world, GDP-wise,” he said.

“In terms of share of foreign investment in GDP, Iran ranks 22nd out of 24 countries in the Middle East and 162nd out of 181 countries,” Larijani said, blaming the dominance of socialist public ownership over the past four decades despite the mandates of Article 44 of the Constitution, which divides the economic system into three main sectors: public, cooperative and private sectors.

A major step toward privatization was taken in 2004 when the Expediency Council offered a new interpretation of Article 44 and the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei approved the new interpretation. The article obliged the government to bestow all but those activities included in it, to the public non-state, private and cooperative sectors.

In terms of the government’s ownership of organizations and its obligations toward privatization, the law has provisioned three groups of state-owned enterprises, the government has been prevented from ownership, investment and managerial rights in Group 1 organizations, it is obliged to transfer 80% of the total value of Group 2 organizations to private, cooperative and public nongovernmental organizations, while ownership, investment and managerial affairs of Group 3 organizations is exclusive to the government.

  Botched Privatization

Socialism had put down such deep roots in Iran’s economy that even the private sector did not remain unaffected. They [private sector] have delegated the right of pricing to the government in return for subsidies, said Minister of Roads and Urban Development Abbas Akhoundi at a business breakfast with representatives of the private sector two years ago.

“Iran has never had a market economy; what was advertised as privatization of industries is a joke. If privatization is real in Iran, why do resources get allocated via bureaucracy? Why are there no bankruptcies? Why are large corporations’ hands in government coffers?” he said.

“Since 30-odd years ago, those who were mainly influenced by Marxism argued that “Islam’s economic system is a socialist one”. Such a mindset led to the nationalization of domestic manufacturing companies, factories and banks, which consequently made Iran’s economy bereft of efficiency, innovation and entrepreneurship.”

Former chairman of Tehran Chamber of Commerce, Industries, Mines and Agriculture, Yahya Al-e Es’haq, who is known for his rightist approach, once told the Persian daily Shahrvand that the economic plans of the early years of revolution copied the laws of a communist country.

Slamming the bill on nationalization of foreign commerce in 1982, Mohammad Reza Mahdavi Kani, the late prominent cleric and member of Guardians Council, said, “This bill suggests that anyone willing to export must sell his commodity to the government and it is up to the government to set the price. This is against Islamic rules. It limits people’s ownership. The government should be the supervisor in all issues, right, but it can’t revoke people’s ownership right. This will ruin the economy, industry and trade of the country and pave the way for socialism; whereas Islam is not a socialist system.”

  Soviet Influence

First Vice President Es’haq Jahangiri, who was a leftist figure in the early years of the revolution, says Iranians have been influenced by communism due to the country’s proximity to the Soviet Union.

“We were willing to defend the oppressed and trying to find signs that Islam is the defender of the poor and opposes capitalism. Such a mentality was reflected in all economic policies and constitution of Iran,” he said.

The former MP, who is a staunch advocate of free market today, says as a parliamentarian he even backed a 50% tax on production.

“Post-revolution, no one saw such moves as anti-development. You were not allowed to talk of certain terms, including ‘foreign investment’ or ‘private sector’,” he said.

In his recent comments, Behzad Nabavi, former parliamentarian and minister, said foreign investment was synonymous with dependency on imperialism in the old days.  

As the president of the country, Hassan Rouhani has time and again talked of allowing the private sector to lead the way and backs foreign investment and free market economy.

“Since day one, I have warned against command economy and [believe] that the government must allow economic players to take the initiative,” he said.

Back in June, during a meeting with economic stakeholders, the president renewed his pledge to follow through reform plans to revamp the poorly privatized economy, noting that the government has been committed to handing over the economy to the private sector since taking office in 2013.

He blamed the problems of private sector on his predecessor’s inefficiency and poor management in enforcing Article 44 of the Constitution.

“The Leader of Islamic Revolution has stressed that the economy be effectively handed over to the public. If the policies of Article 44 had been properly implemented, the economy would have been revolutionized,” he said.

Sadeq Zibakalam, a political theorist, told the weekly: “You cannot find a single successful state-run economy after 250 years of socialism. These economies have even failed to provide food for their own people, let alone compete in other markets.”


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