0948 GMT January 17, 2022
I think the most important challenge facing the Islamic Republic in its fifth decade is privatization. To put it into context, it’s worth noting that the relations between and within the state and society can only secure prosperity and political democracy if the distribution of socioeconomic resources and political power is widespread.
Thus, the concentration of political power and socioeconomic resources can only prevent the establishment of a thriving national development and political democracy.
Good governance demands an effective public-private partnership in the service of the populace. Neither the government nor the market can be left alone to its vices. If properly regulated, privatization can be an effective tool in the efficient management of national resources and economic development. The state can relegate some responsibilities to the private sector in the production and distribution of commodities and services.
The private sector can also partner with state agencies and universities in the development of homegrown technology, research and development, innovation, and a knowledge-based economy. The presence of cooperatives in the national economic scheme is beneficial in the distribution of the necessities of life to the low and lower-middle classes.
The cooperatives in Iran can complement and not compete with the private sector. The inefficiencies inherent in the organization and function of coops should be weighed against its practical function as a cushion for the less fortunate in society and a significant source of legitimacy for the state’s structural and ideological foundation.
Iranian economy suffers from serious mismanagement. Political and family gaps still play a significant role in all levers of power. The weak presence of visible legal and institutional mechanisms to effectively prevent the concentration of power in the hands of a few needs be addressed for it can constitute a serious threat to the legitimacy of any state.
The running of a modern and effective state necessitates complete transparency and accountability. First, there is the dire absence of independent political parties with a well-defined party platform, ideological clarity, and discipline. Instead, personalities loosely place themselves in the reformist-conservative spectrum to vie for power. This has created an atmosphere of chaos and confusion over who stands for what, with rampant accusations and counteraccusations, but without legal and political repercussions! Personal attacks and finger-pointing in the absence of party affiliation and discipline are common, and in terms of legal and institutional support for the innocent accused of wrongdoing, much is left to be desired.
Second, the inadequate law enforcement to protect political and commercial institutions from abuses of power allows for corruption. Corruption is antithetical to effective governance, and rampant corruption can swiftly downgrade popular support for the state.
Third, the decades-old sanctions have been detrimental to Iran’s economy and have helped delay privatization, when state security and national sovereignty are paramount. The security-cautious approach of the state in the face of severe external pressure has meant the creation of a ‘three-tiered foreign exchange rate,’ widespread speculative behavior in the currency market, lower industrial and commodity investment, heavy government borrowing, a multilayered and confusing monetary policy, expansionary money policy and rampant liquidity, little foreign investment, and the overall government domination of the economy.
True privatization in such an environment is nearly impossible. So, the central problem with Iran’s economy and its mismanagement is political, both in terms of internal weak legal, institutional, and administrative framework and the external sanctions and hostility.
* Ali Abootalebi is a professor of political sciences at the University of Wisconsin-Eau Claire.