By Nader Habibi
I arrived in Iran for a short visit on December 17, 2010. On the
evening of December 18 President Ahmadinejad held a TV interview and announced
that after a long delay the removal of price subsidies on 16 goods would begin
that evening. Finally it was here and although the media had talked about
adjustment of prices for several months it still came as a shock to many
Iranians. Needless to say the announcement and its consequences immediately
became the main topic of conversation for majority of Iranians. At least this
was the case among the relatives and friends that I met during the next few
bread bakery in Tehran
As part of the reform program, all subsidies are being phased out
As an economist I always believed and continue to believe that
the replacement of wasteful price subsidies with direct income assistance for
the low income families is a good policy for Iran. Yet everywhere that I spoke
to people I heard mostly negative comments and strong criticism. On a few
occasions that I rode the public bus or shared a taxi with other passengers I
heard negative comments from strangers.
So strong were the negative reactions of the people towards
the rising prices of gasoline and few other necessities that I did not dare to
say anything positive about these policies. To say that the current government
(and for some the entire Islamic regime) has lost its legitimacy for many
Iranians, is not an exaggeration. You can feel the frustration and resentment of
these people in informal conversations. One of the unfortunate consequences of
this disconnect between the people and the government is the widespread distrust
of government policies. Many people in Iran refuse to evaluate each government
policy on the basis of its own merits. Instead they tend to view all government
policies with skepticism and pessimism.
One of the main reasons for removal of fuel and food price
subsidies is to reduce their heavy budgetary burden. Elimination of subsidies
will help reduce the budget deficit and free up a large amount of government
funds for other expenditures. Yet many Iranians remain skeptical about how the
government will use the money that it will save by removing them. There is a
widespread suspicion that monthly income subsidies (yaraneh), that are being
offered by the government to all citizens as a substitute for price subsidies,
will not be enough and will be stopped after a few months. Some people feel that
a large portion of these subsidy savings will be used for foreign policy
adventures in Lebanon or Palestine. Some also fear that government might use
political (loyalty) criteria for distribution of direct income subsidies to
further solidify its political power. (This view was expressed by Fariborz Rais
Dana, an economist and government critic in Tehran, on December 18th during an
interview with BBC-Farsi. He was arrested a few hours after this interview.)
Another even more important benefit of eliminating the
subsidies is that current low prices of fuel, natural gas and electricity have
resulted in massive waste and high per capital consumption of these resources.
Iran's domestic consumption of oil and natural gas is rising at such a high rate
that if unchecked it will absorb all the oil and gas production within a few
years and not much will be left for export. Yet unfortunately, very few people
are willing to acknowledge that increasing the price of these essential products
will encourage the consumers to use them more efficiently and hence will be good
for the society.
These are only a few examples of how political frustrations
with the current regime have affected the public opinion about government's
economic policies. It is as if people refuse to believe that the government is
willing or capable of introducing any beneficial policies.
This widespread negative public reaction in Iran is a specific
case of a more general phenomena in the interactions of people and policy makers
in non-democratic regimes that lack electoral/popular legitimacy. How should
citizens respond when a non-democratic government tries to introduce a social or
economic policy that will benefit the society? Should they judge each policy
based on its own merits and regardless of the overall legitimacy of the policy
Or, should they offer a blanket rejection of all policies that
are implemented by an unpopular government in order to intensify the public
discontent and increase the likelihood of political change?
This latter option will amount to strategic rejection of
social and economic policy. This question becomes even more significant when
posed to political activists and reform leaders that can influence the public
opinion more than others.
In my opinion citizens of any country must separate the
questions of public policy from the issues of government legitimacy. They must
judge every issue by its own merits through an impartial evaluation of its costs
and benefits for the society. There is no doubt that when a policy is successful
in meeting public needs, the government will use this success to legitimize its
rule and gain popularity. The risk of such a political manipulation, however,
should not be used as an excuse by some people for deliberate rejection and
possible derailing of a good policy.
Unfortunately this separation is easier said than done and
strategic rejection of good policies for sake of political gains is common in
many countries and under various political regimes. The rapid increases in
electricity consumption during the few years before the Islamic Revolution
resulted in frequent power shortages in Iran. The Shah responded in 1977 by
introducing a daylight savings program (by setting the clocks ahead by one hour
from April to September).
The clerics and Islamic opponents of the regime launched a
negative campaign against this policy and accused the government of trying to
interfere with people's Islamic faith and prayer times. The public resentment
toward Shah's regime was so strong that majority of people readily accepted this
view rather than the government's economic rationale for the daylight savings
program. Immediately after the Islamic revolution the daylight savings program
was abolished as a hateful symbol of the Pahlavi regime's animosity with Islam.
After a few months, however, the worsening electricity shortages forced
Ayatollah Khomeini to reintroduce the daylight savings program in 1979.
Strategic rejection of the current subsidy reform program by
opposition intellectuals in Iran (and expatriate Iranian community through
satellite TV programs) can produce a poisoned environment against these reforms
which are painful by nature. Such a campaign can increase the risk of
spontaneous public riots and mass protests against this program. Fear of such a
reaction might ultimately force the government to water down or stop the
implementation of these reforms. Yet these activists must ask themselves whether
derailing the current reform initiative will be in the long-term interest of the
Iranian people or not. They must make a choice between destructive criticism and
constructive criticism of these reforms.
The events of the last two years and the public response to
the outcome of 2009 presidential election have clearly demonstrated the desire
of Iranian people for political reform and fair elections. A constructive and
unbiased approach to government policies, however, does not necessarily hurt the
cause of political reform as some political activists might fear. This fear is
rooted in the mistaken belief that support for a government policy is equivalent
to accepting the government's political legitimacy. These are two different
issues and an activist can simultaneously support a specific program and
criticize another aspect of a ruling political regime.
With regard to the government's economic policies some
activists might also fear that if the government is successful in improving
people's economic conditions they might lose interest in political reform. There
is however, no evidence that economic success of a country under a
non-democratic government will delay that country's progress toward democracy
and political reform.
Several developing countries have taken their greatest leaps
toward democracy after making considerable progress in economic reform and
enjoying sustained economic growth for one or two decades. South Korea, Taiwan,
Indonesia, and Chile are a few cases in point. In these countries the economic
and educational advancements increased the public desire for democracy and equal
political rights. These developments forced the ruling governments to open up
the political space.
To conclude, the attitude of some Iranians toward the current
subsidy reform program suffers from a negative bias that is rooted in political
discontent. This bias is unjustified and should be replaced with constructive
criticism of the policy, its specific components and how it is implemented. It
is already clear that the implementation of the program has many weaknesses and
requires significant adjustment along the way. Constructive criticism will make
a valuable contribution at this stage. Blind rejection of government policies,
on the other hand, does not serve the public interest and it does not help the
cause of political reform either.
About the author: Nader Habibi
teaches economics in Brandeis University near Boston.
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