Iran’s economic policy ‘linked’ to unrest

Wednesday, March 23, 2011
SAMUEL DOVERI VESTERBYE
ISTANBUL - Hürriyet Daily News

This file photo shows Iranian President Mahmoud Ahmadinejad gesturing after addressing MPs during a parliamentary session where he presented the annual budget bill in Tehran on February 20, 2011. AFP photo.
This week’s statement by Iran’s Supreme Leader Ali Khamenei on “Economic Jihad” highlights the regime’s attempts to mask their economic policies in ideological rhetoric, say experts who warn about increased government privatization and subsidy cuts that have angered trade unions and the lower-middle class in recent weeks.

Khamenei’s Nevruz speech last Monday was largely seen as his attempt to explain how the Iranian struggle to reach power and independence from the “enemies abroad” would be accomplished through greater economic focus.

However, as the “jihad,” or struggle, for economic growth is an old policy of the regime, experts note that government rhetoric is masking increasingly unpopular cuts in state-subsidies and rapid privatization.

“Ahmadinejad and Khamenei will focus on populist rhetoric, while working towards unpopular measures like decreasing subsidies and pursuing more privatization,” Anoush Ehteshami, professor and joint director of the ESRC Center for the Advanced Study of the Arab World at the University of Durham told the Hürriyet Daily News. “The use of ‘jihad’ is nothing new, but changes are occurring in an economic sense, where Khamenei is pushing for greater economic liberalism and de-regulation to boost growth and recovery.”

The same religiously charged rhetoric continues as Iran quietly heads towards economic liberalism Although the Iranian regime has long professed their intention of promoting economic growth, the recent Nevruz messages clearly demonstrate a widening gap between rhetoric and practice.

The government’s focus on economic policy has often been overshadowed by western media groups’ focus on rhetoric and inflammatory statements, containing words like “jihad” or “enemies of the state.”

This, in turn, has made sure that new economic reforms and policy lines are overlooked by observers, analysts say, which could have major consequences for Iran and is currently having an impact on domestic unrest.

As comments about “jihad” and “struggles against enemies” attract more viewers, the reality of Iran’s economic policies are that of mass privatization, decreased state intervention in subsidies and more de-regulation.

“Jihad should not be over-interpreted, while usually used in a civilian sense,” Christoph Werner, professor and Iranian specialist at the Center for Near and Middle Eastern Studies at the University of Marburg, told the Daily News. “It is obvious that with the sanctions exerting more pressure on Iran, economic issues have become crucial for the regime's survival. Cutting subsidies and raising the efficiency in the local economy will not allow further delays.”

Other academics have similarly expressed their views about Iran’s new economic policies, which are seen as a slow but steady leap towards market-oriented economics and less state intervention.

“The State Expediency Council adopted a ‘20 year strategic vision’ in 1999 aimed at turning Iran into the strongest economy in western Asia by 2025,” said Dr. Arshin Adib-Moghaddam, senior lecturer at SOAS and author of “A metahistory of the Clash of Civilizations.” “To that end, in 2007, Khamenei supported an amendment of Article 44 of the Iranian Constitution, which stipulates state-centered economic policies. It has since then accelerated a structural drive toward privatization aimed at ceding 80 percent of the shares of large state-owned companies to the public sector.”

Certain examples include the privatization waves in the telecommunication industry and energy sector during the past few years, where extraction is being taken over by semi-autonomous private bodies.

These new moves are increasingly creating unrest domestically, as the lower-middle classes and larger trade unions feel great uncertainty about their economic futures.

“With more focus on reductions in subsidies and private economic prospects, there have been major strikes in many factories across the country with trade unions and lower-middle class workers expressing great concerns,” said Ehteshami. “The problem is that there is very limited backing, as there is no articulated opposition voice.”

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