Iranians Vent Anger at Rich and Powerful

During the early 1990s many children of Iran’s political elite emerged as young men of means and influence. They were quickly labeled as the aghazadeh—a term used to refer to individuals with royal families. This phenomenon gave further credence to the popular notion that the elite are the ones that unfairly benefit from the theocratic regime. Issues such as unfair distribution of wealth and cronyism have existed since the early days of the Iranian Revolution, but with today's prominence of social media, these realities are witnessed by the masses in a much more ubiquitous fashion. The rich lives of the elite and their statements about their good fortune are plastered all over the Internet, which creates an enduring echo chamber. A recent example is the comments made by Hamid Reza Aref, the son of former Vice President Mohammad Reza Aref that led to the creation of the popular #goodgenes hashtag that protests nepotism and elitism. The young Aref attributed his business success to his "good genes."

The current government in Iran is certainly sensitive to criticism and aware that it cannot remain silent in the face of public outrage. Rouhani has been a constant supporter of plans to fight government corruption and has made it his public mission to combat any exploitive behaviors. However, Rouhani’s administration, similar to any other government, needs to be pressured, monitored, and held accountable by the public. After the controversial appointment of Rouhani’s son-in-law to the head of Iran’s Geological Survey and the intense public criticism that followed, Kambiz Mehdizadeh stepped down from his position. Mehdizadeh's resignation indicates that despite rampant nepotism, when faced with public scrutiny, the government is still forced to respond.

In my comments to The Washington Post, I indicate that the dire economic conditions in Iran have bred extraordinary resentment toward corruption, nepotism, and the aghazadeh-ha who seem immune to the country’s topsy-turvy realities.

Cleaning House in Tehran

I wrote an opinion piece on President Hassan Rouhani’s struggles with Iran’s precarious economy and its rampant corruption for The Majalla. The piece argues that despite real efforts to tackle its problems, Iran’s economy continues to be the biggest challenge for the new administration.

Despite real efforts to tackle its problems, Iran’s flagging economy continues to be the biggest challenge for President Hassan Rouhani’s government. During his 2013 presidential campaign he promised to resolve the country’s numerous financial issues, but seems to have underestimated the enormity of the task. Today, widespread and systemic corruption continues to plague the country’s financial sector, and a volatile currency exchange market threatens mid- to long-term investments.

Rouhani’s government of “prudence and hope” is fast approaching its one-year anniversary, but many of the economic campaign promises remain unfulfilled. During the June 2013 campaign, Rouhani pledged to focus on fundamental and institutional issues—a message applauded by the electorate. His aim was to reintroduce rational economic policy by welcoming back experts sidelined during the tenure of Mahmoud Ahmadinejad, the president’s conservative–populist predecessor. Other ambitious promises included the reduction and, eventually, removal of international sanctions, more effective distribution of cash handouts, better liquidity controls, a reduction of inflation, curbing the currency’s volatility, and fighting corruption. Read more…

The Unveiling of Iran's Resistance Economy

On February 19, Iran’s Supreme Leader, Ali Khamenei, called on the three branches of the government to implement the general policies of a decree, dubbed as the resistance economy. The plan encourages indigenous development of new technologies and calls for an increase in oil and gas strategic reserves.

The plan also encourages greater privatization and increased exports of goods and services through administrative reform as well as foreign investment for export purposes.

Some analysts believe that the timing of the decree suggests that the Leader is not optimistic towards the outcome of the ongoing talks, so he is attempting to reduce the country’s vulnerability to external sanctions that may last for the foreseeable future.

Another probability is that Khamenei is hedging his bets. If Rouhani fails to deliver on his promise of easing sanctions through diplomacy or fails to implement his ambitious domestic economic plan, then the Supreme Leader could scuttle the nuclear talks and rely on the resistance economy.

Regardless of the alternate motives behind the decree, the main focus of the plan seems to be on building the country’s domestic capacity, which has been one of the long-term goals of the Islamic Republic.

The full text of the Supreme Leader’s letter and the decree, which you may find below, is well worth a read.

In the Name of Allah, the Compassionate, the Merciful

If an Islamic Iran that has abundant spiritual and material resources, a rich and diverse set of talents, a widespread infrastructure, and, most importantly, a committed and proficient manpower that has the determination to advance, subscribes to an indigenous and scientific economic model that projects an Islamic and revolutionary culture, also known as a resistance economy, then not only will every economic problem be overcome, and the enemy, who has waged all-out economic warfare against our great nation, be defeated, but, in a world where risk and dishonesty produces uncontrollable instability in economic, financial, and political matters, we will be able to safeguard our country’s achievements in various fields, continue our progress, fulfill the goals and principles of the constitution and our 30-year visionary plan, and sustain an economy that is reliant on science and technology, is grounded in equality, is endogenous and outward looking, is dynamic and enhancing, and that will be based on an inspiring and objective Islamic economic system.

At the present, we have made the necessary considerations and consultations with the regime’s expediency council so that the policies of a resistance economy, that builds on and continues past policies outlined in Article 44 of the constitution, can strategically move towards fulfilling the excellent objectives that have been mentioned.

It is necessary that the country’s forces proceed in a timely manner to prepare the required laws and plans that will allow the people, and those active in the economy, to take part in this holy jihad so that the divine season for the great nation of Iran’s economic epic, like it’s political epic, can take place for the world to see. We ask the almighty god to give everyone success in this important matter.

Sayyid Ali Khamenei
19 February 2014

Policies of Resistance Economy

To provide dynamic growth, improve the indicators of a resistance economy, and to achieve the goals of the visionary 30-year plan, the policies of a resistance economy with a jihadi, flexible, opportunistic, productive, endogenous, and forward and outward looking approach are as follows:

1. Provide the conditions and opportunities, financial resources, and human and scientific investments in the country to expand and develop entrepreneurship. Expand cooperation between different social actors in the economy by facilitating and promoting collective collaboration; and emphasizing a rise in income for mid- and lower-income populations.

2. Pioneer a knowledge-based economy by implementing a general scientific plan in an innovative systematic manner for the nation in order to promote the nation’s international standing and increase the level of production and manufacturing of goods and knowledge-based services to become the leading regional knowledge-based economy.

3. Prioritize efficiency by strengthening productivity factors, empowering the work force, nurturing competitiveness between provinces, and taking advantage of the capacity and potential of the country’s diverse geography.

4. Utilizing the potential of applying subsidies to increase production and employment, to drastically decrease energy consumption, and improving the indicators of social equality.

5. Improve Total Factor Productivity based on the empowerment of domestic human resources through improving skills education, creativity, and entrepreneurship.

6. Increasing domestic production levels of basic institutions and goods, particularly in imported items; prioritizing the production of goods and strategic services; diversifying the source of supply for basic goods that are imported, with the intention of decreasing reliance are particular countries.

7. Establishing food and medicine security; creating a strategic reserve with an emphasis on increasing the quality and quantity of raw goods and materials.

8. Managing consumption with an emphasis on applying general policies that reform the consumption model and promote the consumption of domestic goods, along with plans to improve the quality and competitiveness of domestically produced goods.

9. Comprehensive reform of the country’s financial system with the intention of responding to the country’s financial requirements; the creation of stability in the country’s finances; pioneering the creation of a real financial sector.

10. All-out targeted support for the production of domestic goods and services, at levels proportional to value-added services that have a positive net-revenue, by way of:

• Simplifying regulations and expanding incentives;
• Expanding foreign services and necessary transportation and infrastructure.
• Encouraging foreign direct investment for exports.
• Adjusting national production according to export demands; creating new markets; diversification of economic ties with other countries, in particular with regional ones.
• Utilization of barter trade systems to simplify exchanges in line with demands.
• Creating stability in the process and regulation of exports, with the intention of expanding Iran’s share of target markets.

11. Expanding free-trade zones and the country’s unique economic activities with the intention of acquiring advanced technologies, and simplifying and expanding production, exporting goods and services, securing export demand and financial resources from abroad.

12.  Increasing the power of resistance and decreasing the country’s vulnerability by:

• Expanding strategic links and cooperation and consultation with regional and international countries, with a focus on neighboring countries.
• Utilization of diplomacy to safeguard economic interests and objectives.
• Utilizing the capabilities of international and regional structures and organizations.

13.  Addressing income vulnerabilities resulting from exporting oil and gas by:

• Choosing strategic customers
• Diversifying methods of sale
• Partnering with the private sector for sales
• Increasing gas exports
• Increasing electricity exports
• Increasing petrochemical exports
• Increasing exports of petroleum products

14.  Increasing the country’s strategic oil and gas reserves with the intention of effecting the international oil and gas markets; emphasizing the safeguarding and expansion of oil and gas production capabilities, particularly in shared fields.

15. Increasing added value by completing the value chain in the oil and gas industries; expanding the production of goods that yield optimal returns (according to an energy intensity index); increasing the export of electricity, petrochemical, and petroleum products, with a focus on conserving resources.

16.  Economizing social expenditures with a focus on fundamentally evolving its foundations, rationalizing the size of government, and disbanding duplicate or unnecessary agencies and departments.

17.  Reforming the government’s system for structuring wages, and increasing tax revenues.

18.  Increasing annual contributions to the National Development Fund from oil and gas exports until it no longer relies on the oil budget.

19.  Encouraging a transparent and healthy economy; preventing an environment that allows for corrupt actions in monetary, commercial, and currency matters.

20.  Nurturing a jihadi culture that brings value, creates wealth, and increases efficiency; promotes entrepreneurship and investments; generates employment opportunities; and that promotes the resistance economy among prominent actors in this field.

21. Explaining the dimensions of a resistance economy and shaping its discussion, particularly in academia and the media; and transforming this into an inclusive and popular national discussion.

22.  The government is obligated to fulfill the general policies of a resistance economy in a synchronized manner that mobilizes the dynamic capabilities of the country; the measures below shall be customary:

• Identifying and utilizing scientific, technical, and economic capacities to achieve appropriate measures.
• Observing sanctions, and increasing the cost to the enemy.
• Managing domestic and international economic risks by responding intelligently, actively, and in a timely manner to them.

23. Transparently and effectively distributing in, setting prices for, and updating the methods for administering the market.

24. Increasing standard coverage and the promotion of domestic products.