Pourzal: Iran's Capitalists Like Mousavi

Iran's Business Elite, Too, Is a "Dissident"
by Rostam Pourzal

With mass rallies for government accountability dominating the news from Iran since June 12, Western audiences are missing the underlying controversy that polarizes the country's electorate. We hear much about the boastful social conservatism of president Ahmadinejad, whose contested re-election on June 12 fueled days of bloody protests led by his moderate challengers. But the battle is also about welfare reform and private property rights in an economy that has been state-dominated since the Islamic Republic was established thirty years ago. Whether Iran's national oil revenue should now be directed away from grassroots priorities emerged as a major election issue this year. All of Ahmadinejad's three challengers promised to promote investor-friendly policies if elected.

The opposition insists that Ahmadinejad unfairly buys voter loyalty with consumer subsidies, low interest loans, and similar "handouts." The president has especially enraged the managerial class with his wildly popular monthly rallies in the provinces, where he orders funding on the spot for the infrastructure needs of common folks. A special flashpoint is the pace of a long-anticipated privatization and deregulation drive that was officially launched a year ago but was not embraced by the Ahmadinejad administration.

Among the four approved hopefuls that ran for president recently, Ahmadinejad is the least enthusiastic about the neo-liberal reforms demanded by Iran's corporate interests. Several of his advisors and cabinet ministers and even a Central Bank's director general have stepped down or been dismissed after challenging the president's "unscientific" intervention in markets. At least one of them, former economic affairs minister Davood Danesh Jafari, campaigned for a rival candidate this spring.

Not surprisingly, Iran's business journals invariably promote Ahmadinejad's challengers. They regularly deride his welfare-state initiatives as "fiscal irresponsibility" and lash out in Cold War language at his close ties to left-leaning Latin American leaders. They demand that Iran align itself instead with the "international community" in order to benefit from globalization.

As they clamor for "meritocracy" and "performance" to overtake affirmative action programs, it is not uncommon for Iranian business columnists to quote the Washington-based Heritage Foundation -- of Ronald Reagan lineage -- which ranks Iran almost last among nations in its Index of Economic Freedom. In a similar vein, articles that lament how Ahmadinejad has brought back the "irresponsible anti-capitalist climate" of the early years of the Revolution appear in Iran's opposition literature about as often as conservative Western media condemn the 60s' "hippie generation" for permissiveness.

Ahmadinejad's leading ballot-box rival, Mir Hossein Mousavi, is allied with Iran's most influential "free market" advocate, former president Hashemi Rafsanjani. His was the face next to Mousavi's on the candidate's billboard advertisements this campaign season. Rafsanjani is best known for his "structural adjustment" program that met popular resentment and resistance from 1989 to1997. Since he was defeated by Ahmadinejad in the presidential elections of 2004, Rafsanjani has led a public crusade against the winner's zeal for social spending, which he characterizes as Gadaparvari, or dependency promotion.

The powerful state Expediency Council, which Rafsanjani heads, led a reinterpretation of Article 44 of Iran's constitution that last June mandated a downsizing of the government in favor of private investors and contractors. The sale of state-owned industries is advancing faster than ever, and the introduction of private banking was followed late last year by the opening of the first foreign bank branch. A comprehensive intellectual property protection law is finally in effect and legal restrictions on foreign investors are being relaxed in order to circumvent UN-imposed trade sanctions. Yet Rafsanjani's powerful allies complain bitterly in public that Ahmadinejad loyalists in the bureaucracy impede progress towards the competitive economy envisioned in the new law. This year Mousavi adopted Rafsanjani's 2004 campaign pledge to institute "an economic revolution" in which improved efficiency would result from deregulation.

Mohsen Rezaie, a former top military commander who dropped out of the race in 2004 and ran against Ahmadinejad again this year, is the Expediency's Council's secretary and a confidant of Rafsanjani. Rezaie's recent campaign boldly touted him as the "Architect of a New Economy" in which Ahmadinejad's two most cherished initiatives (which Rezaie ridiculed as "Komonisti") would be abandoned. Under one of the programs, named Sahaam-e Edaalat, millions of largely low-income households have received bundled shares of profitable state-owned industries at half-price. The cost of the discounted shares is deducted over time from the small investors' dividend incomes. Ahmadinejad boasts about this as his favorite kind of privatization. Ahmadinejad's year-old Maskan-e Mehr initiative, under which hundreds of thousands of first-time home buyers are offered 99-year leases on state-owned land and affordable loans to build modest apartments, was also targeted for termination by candidate Rezaie.

The other investors' delight among Ahmadinejad's rivals is former speaker of the parliament, Mehdi Karroubi, who ran for president in 2004 and again this year. The center piece of Karroubi's economic platform this year consisted of suggested first steps towards de-nationalization of Iran's oil industry. The scheme was devised by the candidate's chief economic advisor, a self-described Milton Friedman devotee named Masoud Nili. It envisioned the formation of a non-government entity that would take control of all domestic refining and distribution of oil and make every citizen 18 years or older a shareholder. Karroubi's other top advisor, Abbas Abdi, a fervent promoter of trickle-down economics, often refers to the proposition as "empowering the people." They neglect to mention how, over time, better endowed Iranian (and eventually non-Iranian) investors could acquire large blocks of the proposed oil shares from low-income citizens and form Iranian equivalents of unaccountable Western oil giants.

Iran's state budget (including tens of billions of dollars annually for popular subsidies and services) relies far more on oil revenue than on taxation. Thus, to advocate removing oil from state control is, in the Iranian context, equivalent to the right-wing "citizen empowerment" protests this year in the US by tax day "tea party" tricksters. More generally, like the resentments that Ronald Reagan exploited and galvanized against the civil rights gains in this country, the backlash now energizing Iran's opposition candidates is in part a reaction to the attention the government showers on less fortunate Iranians.

In short, Iran's fiscal-conservative candidates are disputing the re-election of a social-conservative president. Which conservatism is worse? Should the Western progressive community side with the libertarian candidates? The answer may not be as straightforward as our mainstream media pretend it is. Instead of granting the opposition our unconditional support, we must demand that the movement shed its corporate bedfellows and isolate Ahmadinejad by championing the cause of underprivileged Iranians.

Rostam Pourzal is a Washington, DC-based political analyst specializing in the politics of human rights.