Iran’s Economy Is Rentiering-Oriented, Rentiers Linked to Regime’s Entities
By Mahmoud Hakamian
While Hassan Rouhani has named the current Persian year ‘the year of development, increased domestic product and higher employment’, the regime is faced with numerous challenges like the United States pulling out of the JCPOA and shortage of financial resources, among others.
But aside from all these, a controversial issue that’s possibly even more important than resolving regime’s super challenges is the government’s economic policy, according to state-run ILNA news agency on May 11, 2018.
Regime’s economic policies so far have only led to increased inequalities and the gap between the rich and poor.
Meanwhile, some of regime’s economic experts believe that the country’s economic inequality is the consequence of a ‘rentiering-oriented market’, which in turn is the result of a ‘marketism based on non-productive commercialization’.
“Like many other countries, marketism dominated Iran’s economic policy. In practice, however, this policy was implemented in an incomplete and inaccurate way,” writes state-run ILNA news agency on May 11, 2018.
“29 years ago during Hashemi Rafsanjani’s presidency, a type of marketism was practically promoted in Iran’s economy: a market economy based on non-productive commercialization. An economic model that, according to many economic experts, led only to increased inequality and social gap, and distribution of a rentiering structure within the country’s economy“, the news agency adds.
“It’s now 30 years that this has been the dominating approach in Iran’s economy.
“The interesting point, however, is that thanks to its rentiering structure, the supporters of this policy are still in power, insisting on pursuing the economic model.
“Many experts believe that over the past 30 years the country’s market-based economic model has been implemented in such a way that it has only promoted a rentiering-oriented market, to which some experts refer as imaginary marketism.”
Comrade economy rather than competitive economy
Farshad Momeni, regime’s economic expert, meanwhile believes that the economic model has driven the country towards ‘comrade economy and commercialization’. (State-run ILNA news agency, May 11, 2018)
It’s clear that the so-called ‘comrade economy’ and ‘market economy based on non-productive commercialization’ has been built on rentiering, which simply means exploiting society’s capacities and resources.
A ‘market economy based on non-productive commercialization’ is basically dependent on excessive imports, importing low quality goods, smuggling and different kinds of economic corruption.
Rentiering is currently dominating all economic and commercial activities in the country, with a group of state officials and affiliates making huge profits thanks to privileges unfairly provided to them.
State entities’ non-transparent economic activities
Gholamali Jafarzadeh-Imenabadi, regime’s MP from Rasht, acknowledges that regime’s economic entities and institutions are non-transparent, saying “the country’s big economic problem, out of which major corruptions arise, is the lack of transparency.”
“There are close to 130 state-owned non-transparent economic entities in the country, including the Central Bank, Money and Credit Council, Postbank, and the Privatization Organization, all of which have violated the law and their activities have not been transparent”, he adds. (State-run Khabaronline website, May 16, 2018)
Economic crimes carried out under the umbrella of a political power
Regime’s Parliament Speaker Ali Larijani acknowledged a few years ago that “such (financial) crimes are carried out under a political power’s umbrella, making it complicated to investigate them.”
“In many cases related to economic crimes, footprints of intelligence and influential figures could be seen”, acknowledges Larijani. (State-run Khabaronline website, January 7, 2013)
Head of the country’s Tea Organization reveals a ‘tea importing mafia group’ that is rooted in some of regime’s organs and entities. (Terrorist Quds force’s Tasnim news agency, February 6, 2018)
Also head of Iran’s Textile Cooperatives Guild has spoken of a total disappearance of Iran’s textile industry due to domination of political issues over economic entities. (State-run ISNA news agency, February 16, 2018)
Many of regime’s political and cultural entities are currently involved in extensive economic activities, taking advantage of their unfair privileges and political and cultural power to gain exclusive economic rights.
These include such entities like Execution of Khomeini’s Orders, the Revolutionary Guards, Mostazafan Foundation, Shahid Foundation, Astan Quds, IRGC-linked Basij Organization, law enforcement forces and dozens others that are linked to political bands and organs within the regime.
Pointing to this same economic and political corruption, state-run Howzeh website writes “economic and political corruption and taking advantage of power to gain wealth or more power has mysteriously and worryingly turned into one of the society’s most important problems.”
The website points to different types of political corruption carried out under the umbrella of ‘abuse of power’, describing them as “rentiering and corruption in government purchases, making deals with domestic and foreign contractors, selling state-owned properties, issuing commercial licenses, issuing judicial orders, and making decisions.”
It could be seen that all such corruptions the regime’s website acknowledges are dependent on rentiering and actually the shadow of it, as a state-run website puts it. “A phenomenon called rentiering has cast its shadow on different parts of the economy. Sometimes the most basic banking or employment procedures could only be done through rentiering and sometimes there’s the news of million-dollar embezzlements and rentiering cases”, writes state-run Sarpush website on January 25, 2018.
Regime economist Mehdi Pazouki meanwhile believes that rentiers are mainly responsible for instability in the currency market as well.
“There are powerful people in the country that have received 100 billion-toman loans from banks, while putting up collaterals that hardly worth one billion. These are the people who bring money into the market and increase demand. They constitute a new class in Iran’s economy. Many of them are unfortunately linked to power structure. The money that has left the banking system is now in the currency market. These issues are catastrophic. The country’s economy has become rentiering-oriented and rentiers are linked to state-owned entities and the banking system. Yet, we unfortunately lack the necessary intention to counter them,” Pazouki says. (State-run Fararou website, February 16, 2018)
With such cases of economic corruption and rentiering, it’s no wonder that Transparency International’s latest Corruption Perceptions Index released in February 2018 puts the Iranian regime in place 130 among 180 countries, up one level compared to last year’s.
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