Why Iran's Green Movement Objects To President's Economic Style
By Charles Recknagel,
The chants of "death to the dictator" have been
temporarily stilled since Iran's Green Movement was muscled off the streets
during the 31st anniversary celebrations of the Islamic Revolution on February
11. But political slogans and charges of stolen presidential elections are just
part of the explosive mix that keeps the Green Movement alive.
His critics accuse President Mahmud Ahmadinejad of ''ignoring the basic
principles of economics.''
Equally important is frustration over Iran's
double-digit unemployment rate and the usually double-digit inflation rate. It
is this frustration that ultimately may be more dangerous for the regime than
The anger over the economy pits Iran's modernists, who believe growth comes with
capital investments and a strong private sector, against President Mahmud
Ahmadinejad's more idiosyncratic vision of economics. That vision puts a
priority on handouts to the impoverished while the state-dominated economy
creates few jobs and survives mostly thanks to Iran's oil income.
The controversy over the president's economic policies is rarely heard outside
Iran, but rages inside the country itself. It can often be heard on the talk
shows of foreign stations broadcasting to Iran in Persian, as both Ahmadinejad's
supporters and opponents weigh in.
One caller to RFE/RL's Radio Farda's weekly "Your
Voice" program recently praised Ahmadinejad profusely. He identified himself as
Mohammad, living in a village "far from Tehran."
Ahmadinejad likes to distribute aid to local people personally.
Mohammad said that when Mohammad Khatami was president from 1997 to 2005, "he
did nothing for us, we had nothing, but since President Ahmadinejad took power
he delivered all kinds of wealth and facilities to our village.
Distributing Alms To The Poor
"The money that comes from oil exports is spent here in our villages. The
government spends these monies to make asphalt roads for our village. We really
see a very good development plan in our country."
Ahmadinejad has made it a hallmark of his presidency to visit some of Iran's
poorest village and directly hand out money for local projects.
During his first term, he successively visited each of Iran's provinces, taking
along his entire cabinet. He met local leaders and approved hundreds of projects
on the spot. Inviting people to submit requests directly to the highest
authority, he and his aides also accepted hundreds of petitions, most of them
reported to be personal pleas for money to buy a house, pay debts, or make a
Ahmadinejad's public tours, which remind critics of Persian shahs and Ottoman
sultans of the past, has helped him put out local fires of discontent and to buy
the loyalty of targeted constituencies. They also have enabled him to claim he
is fulfilling his oft-repeated campaign pledges to "bring the country's oil
wealth to the people's dinner table."
But the president's direct action approach has also attracted much criticism for
its unbridled spontaneity. In 2007, 57 professors of economics from universities
around the Islamic republic signed an open letter accusing Ahmadinejad of
"ignoring the basic principles of economics."
No public tally is kept of how many millions of dollars Ahmadinejad directly
pumps into the economy this way. But the amounts are large enough that they are
widely considered to stoke the inflation rate even as they do almost nothing to
create new jobs or increase productivity.
Lack Of Development
A recurring problem is the fact that the national budget, which is always in
balance when it is approved at the start of a year, invariably ends up in
deficit at year's end due to unaffordable public-welfare expenditures and losses
from state enterprises.
Just as routinely, shortages of funds for the expenditures portion of the state
budget are made up by transferring over money from the development, or
capital-investment portion of the budget. As a result, thousands of development
projects remain unfinished.
All this helped make the economy a major focus of
the 2009 presidential election. During the campaign, some of Ahmadinejad's rival
candidates -- now leaders of the Green Movement -- openly questioned whether the
incumbent had any understanding of economics at all.
Many development projects in Iran lack funding.
According to another
report by ISNA, some statistics put the number of unfinished projects
across Iran at about 50,000.
Another caller to Radio Farda's "Your Voice" raised that same question recently.
Identifying himself as Bahram and a law student at Tehran University, he faulted
Ahmadinejad and his supporters for talking only in terms of local projects, but
almost never about macroeconomic issues.
"Talking about one's performance, it is better to talk in terms of economical
indices, let's not talk like some of Ahmadinejad's advisers who always say, 'We
built roads, we constructed stadiums,' and so on," Bahram said.
"To evaluate economical issues we should talk according to economic indices, we
need to look at rates of unemployment, inflation, poverty, and prostitution. In
a recent international study, Iran rated 186th for corruption among the
countries in the world. Is that our standing after 32 years of the Islamic
Dismay over Ahmadinejad's disregard for the usual institutional approaches to
economic management is occasionally voiced in Iran's conservative-dominated
Many deputies expressed anger last month when the president presented them a
national budget proposal worth $368 billion but distributed only a handful of
copies on CDs for the parliamentary review process. That appeared to show little
respect for Iran's own procedures of budgetary oversight between the legislative
and executive branches.
Waiting For The Imam
After this year's budget proposal became public, critics were quick to note that
Ahmadinejad had directed substantial amounts of money to projects dear to his
heart. Among them: increasing the funding for hard-line think tanks by 143
percent over last year's level.
The think tanks, 58 in all, are ideological institutes whose goal is to prepare
the country for the imminent return of the Hidden Imam, a revered Shi'ite figure
who went into hiding in the ninth century.
Shi'ite faithful believe the imam's eventual return will inaugurate an era of
perfect governance and peace. But Ahmadinejad has made it a cornerstone of his
presidency to raise popular expectations that the Imam's return is immediate.
That, in turn, say critics, has become a ready excuse for disregarding more
mundane concerns such as expanding the economy sufficient to reduce unemployment
One of the beneficiaries is the Imam Khomeini think tank, run by Ahmadinejad's
spiritual adviser, Ayatollah Mesbah Yazdi. It is to receive $10 million.
Another is the Ayandeh Rooshan Organization, led by Ahmadinejad's
brother-in-law, Sfandiyar Rahim Mashayee, who also is the head of Ahmadinejad's
presidential office. It is to receive $120 million.
By comparison, the amount of money proposed for the Rooyan Institute, a leading
scientific and medical research center, is just $12 million.
Domination Of The State
The Green Movement's anger over Ahmadinejad comes as Iran's economy reels from
three decades of state domination that began with the Islamic Revolution's
hostility to private enterprise. The result is an economy mired in bureaucracy,
vested interests, official corruption, and cost/price distortions.
Jahangir Amuzegar, a minister of finance under
Iran's prerevolution government, estimates that 70 percent of Iran's economy
today is controlled by the central government and parastatal organizations.
Many members of Ahmadinejad's cabinets have had backgrounds in the Revolutionary
Guards, as does he
Reviewing Iran's economy recently in "Middle East Policy" (October 2009), he
writes that "almost all key managers in state-owned enterprises, including oil
and gas, heavy industry, commerce, transport, communications, and charitable
foundations, are government appointees."
"As a result, he concludes, "the lean and struggling private sector, involving
mostly domestic trade and services, does not play a significant role in the
Even when state enterprises are privatized under various efforts to make the
economy more efficient, they still remain controlled by state-tied players, he
"Of an estimated $120 billion in assets owned by state enterprises, some $40
billion have so far been disinvested," Amuzegar notes. "In all cases the
majority ownership and management of the 'privatized' enterprises have remained
in state hands."
One of the most notable of the parastatal players is the Islamic Revolutionary
Guards Corps, which reportedly controls a third of Iran's economy. Its interests
are believed to be actively promoted by Ahmadinejad, who is a former guard
member himself. Currently more than half of the president's cabinet is made up
of ex-guard members.
Have They Had Enough?
Those enterprises that do operate entirely outside the state's orbit do so
against heavy odds, including the high costs of conducting business, widespread
official corruption, arbitrary courts, and uncertainties regarding the state-set
foreign-exchange rate. The World Bank's 2009 international ranking of hospitable
environments placed Iran at a dismal 142nd among 180 countries.
As Ahmadinejad maintains Iran's state-heavy economy and puts out fires with
direct handouts to the poor, he can -- and does -- claim to be true to the
Islamic Revolution's goal of "Islamic social justice."
That doctrine, enshrined in the Islamic republic's constitution has never been
clearly defined but prioritizes the needs of the poor while denigrating the
Western-style capitalism the revolution overturned.
How long Ahmadinejad can hope to use that ideology to keep the Islamic
Revolution vigorous as the economy chronically fails to create enough jobs is an
But the Green Movement has clearly had enough. And it may have as much reason to
believe the poor will eventually join the protest as Ahmadinejad does to hope
RFE/RL's Radio Farda correspondent Mazyar Mokfi contributed to this report
Copyright (c) 2010 RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036. www.rferl.org
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