Economy, Domestic Economy

Creating a Cordon Sanitaire

Creating a Cordon Sanitaire Creating a Cordon Sanitaire

Outspoken, frank and informed minds have long warned against the threat of rampant corruption that is now damaging the integrity and social fabric of the country. Many have proposed ways to address this miasma and move the economy forward in the best possible manner.

Given the high stakes and what could be lost if the initiative is not taken to beat and defeat corrupt practices, it’s time that those responsible start from somewhere and create the conditions under which the honest are rewarded and the dishonest pay dearly.

Wisdom would have it that paying decent wages, cutting red tape, and ensuring transparency in the income and expenses of state and affiliated organizations would indeed send the right signals to the people waiting for efficient and effective action from the Rouhani administration.

It can be fairly claimed that the government has got the message and is in the process of making a difference and setting the record straight, possibly by creating a cordon sanitaire around the tainted and tarnished. After all, it barely has two and a half years left to prove its uncorrupted credentials and intentions.

This weekend brought another economic salvo from the president whose time and energy, since his inauguration 18 months ago, seems to be concentrated on fixing the limping economic affairs.

“The economy cannot make progress with monopolies from which we must break away.  Our economy is more politics and less economics,” Hassan Rouhani told a major economic conference held to promote sustainable growth and create jobs.

  Not Wasting Time

In his outspoken tone, that has recently become his demeanor when addressing economic challenges and constrictions which are in abundance, Rouhani wasted little precious time in going after the big players who have learnt not to pay taxes despite making huge profits in their business ventures.

They must pay tax; he said addressing himself to the business/industrial behemoths involved in everything from importing needles to expensive machinery, equipment, cars, commodities and home appliances for the nation of 80 million. Without naming any foundation, organization or state company, Rouhani said the status quo in which selected firms and individuals evade taxes cannot and will not be tolerated.

Going a step further in his declared war on rent-seeking, rampant corruption, and greed, he called for “every and all information to be made available to the people without exception.”

“At any given moment and whenever they desire, the people must have access to all the facts, figures and information about economic plans and projects. Had there been transparency, today we would not have this corruption and rent-seeking that has spread everywhere.”

At another seminar last week to help promote accountability, transparency, openness and fight corruption, the president said “private enterprise is crucial for economic growth and prosperity, but this sector cannot compete against rampant corruption.”

For that matter, this is not the first or last time that the president and his men seek to rectify past, or may be present, errors that have imposed colossal costs on the economy and its future viability.

The seemingly unending corruption plague continues to undermine growth and development in many countries, including Iran.

  Multiple Aspects

The president’s remarks highlight the plight of the private sector which has been hit by corruption and market monopolies. This week the local media talked to businesses to explore the multiple aspects of corruption and how it affects the private sector.

Referring to the lack of financial transparency as an obstacle to economic growth and development, the head of Iran’s Furniture Exporters and Producers Union, Hassan Ahmadian blamed graft, fraud and greed for the decline of the private sector.

“Corruption and embezzlement drain the country’s wealth forcing banks to tighten their lending rules. With limited bank support, manufacturing costs rise only to further hurt production and exports. Unable to survive in the highly competitive and risky markets, many manufacturers were forced out of business in the past couple of years,” he said.

Pointing to the great harm inflicted on private enterprise, a member of Iran’s home appliances association, Farhad Rahnama wonders why “the judiciary has yet not done anything of significance to take on this monstrosity, which should have been nipped it in the bud long ago.”

Another businessman, preferring to remain anonymous pointed to stringent customs regulations which he believes, despite the government’s visible effort to regulate, “pave the way for corruption in the absence of efficient administrative instruments.”

While some resort to corruption and bribery to evade taxes and to clear their goods from customs, the honest and law-abiding businesses bear the brunt of heavy losses for each day that their goods are in the customs warehouses, which at times can extend for months, he rued.