Economy, Domestic Economy

Self-Assertive Government

Self-Assertive GovernmentSelf-Assertive Government

Historical review of government performance in Iran affirms that abundant oil revenues caused the administrations to become wasteful when it comes to productivity and self-assertive when it comes to effectiveness of services. With a closer look at daily life in Iran we can find several examples and signs of the government’s self-assertiveness. In every aspects of life, the government is the private sector’s biggest and most serious competitor.

An outstanding example of this argument is visible around Jordan Street (one of the most expensive business areas in north Tehran) in a district called Abbas-Abad hills.  Driving northward in Jordan, you can see several new buildings. The architecture is quite different from that in other streets of the city. These buildings belong to state-owned companies or administrative organizations and have been under construction for years and under supervision of several governments.

One of the several buildings is the headquarters of Iran Railway Company. The big expensive building is actually more than 10 kilometers away from the nearest train station – the infrastructures it is expected to manage. However, it seems this basic critique does not matter to government decision makers, as the only thing that concerns them is the convenience of government employees (by giving a high priority to high-ranked officials).

Experts believe the best place for developing governmental buildings would be Tehran city center. This could give the administration the opportunity to reconstruct the dilapidated buildings there. Experts and officials have on many occasions warned the government about the dire need to do something about the dilapidated structures in Tehran city center.

Another example is the issue recently raised by the Supreme Audit Court (SAC). Several days ago SAC published a report about Central Bank of Iran’s (CBI) violation of Standard Operation Procedures (SOP). The report alleged that the CBI transferred money from the National Development Fund of Iran (NDFI) to the government’s accounts (government’s current budget accounts) on March 17th 2014 and then transferred it back in mid April.

The amount of the transferred money is quite outstanding: 4.1 billion dollars, which is as high as the government’s capital budget in the ongoing fiscal year. The CBI denied any violation of SOPs in a statement made right after the news went viral.

  Analysts believe that the government faced a deficit right before start of the New Year. It was counting on Iranian oil company “NICO” to pay its debt but due to international banking sanctions the NICO failed to do so. Hence it ordered the CBI to withdraw money from NDFI. The government, as usual, picked the easiest solution for solving its problem by spending oil revenue to cover its expenditures.  

The CBI, of course, has a different story to tell. A fellow journalist explained CBI’s reasoning for us: “The 4.1 billion dollars did not belong to National Development Fund; it was just an accounting mistake by a central bank employee.”

There is a Persian saying that best explains this situation: “Making excuse to cover a mistake is worse than the mistake itself.”  

Even if we accept the CBI’s excuse, an immediate understanding would be that government employees are so incapable of doing their tasks that they can make massive accounting mistakes worth billions of dollars. Such a mistake occurred at a very tough time in the nation’s history as Iranian people are suffering from recession, increasing prices of basic goods on a daily base, limited international cooperation among others.

Analysts believe that while working in the private sector is tied to daily challenges such as lower wages and job insecurity, government employees are enjoying competitive wages and long-term job contracts. These are the reasons why government employees do not feel like improving their performance. If the government employees were not so self-assertive then we might count on them to show more responsibility when it comes to national interests.