Iran: Economic Bankruptcy and Escalating Poverty


8-5-07, 2:24 p.m.

In the process of the presidential elections of 2005, Mahmud Ahmadi-Nejad, referring to the increasing privation and poverty, promised to lead the society to social justice and reduce poverty and privation by putting the “oil money on people’s table.” Close to two years after these promises, a look at the critical economic situation of the country only shows that the “oil money” and the national wealth has been put on the tables of the big merchant-capitalists and their dependants and also the high ranking officials in the anti-popular institutes and forces such as the Revolutionary Guard (Sepaah), etc.

Ahmadi-Nejad, amongst all the tensions and squabbles happening in full force in and around the ruling authority, claimed that his government has performed “a miracle in the economy”! In a recent speech, after giving some statistics about the economic issues, he said: “The economists know that this is a miracle. These numbers ... are our honor.”

To clarify the dimensions of the economic miracle of the reactionary government and the fact that the outcome of this “miracle” has filled up whose pockets, it is enough to look at the statistics given in the parliament about the performance of the government. “The volume of imports in the last year of the reform government (Khatami’s government – ending 2005) was $28 billion, 75% of which was investment and intermediate commodities. In the last year, the country had $50 billion worth of imports. The bulk of this amount is consumer goods. The volume of cash flow in February of last year reached twice the similar value in the last year of the reform government...”

Ahmadi-Nejad’s “economic miracle” propaganda was propounded after the very important visit to Iran by a World Bank official. In his meetings the World Bank official gave strict recommendations to the economic policy makers of the government. Naturally, part of Ahmadi-Nejad’s “economic miracle” come from these recommendations!

One of the most fundamental parts or sections of this so called “miracle” is the order related to [and deviating] Article 44 of the Constitution (which deals with nationalization) and its consequences which Ahmadi-Nejad has referred to as the big developments in the life of the Islamic Republic.

According to the government spokesperson, the executive bill for implementation of the policies related to Article 44, and privatization of state institutes and activities, has been ratified by the cabinet. He added: “the executive bill of policies related to the Article 44 is one of the fundamental and important laws of the land which not only deals with the privatization of the government companies but also addresses the economic monopolies and facilitation of competition.”

Also, the Council of Currency and Credit of the Islamic Republic issued an important regulation. According to this regulation, the establishment of the banks with joint Iranian and foreign capital, possession of stocks of the Iranian banks by the foreign investors, rapid privatization of the banks and establishment of the branches of foreign banks in Iran are permitted and legal.

The deputy chair of the Privatization Organization said: “this year the stocks of 240 public companies will be sold... Their [investor’s] presence will be supported by the law...We go towards full privatization with strong steps.”

Another important facet of the “economic miracle” is the emphasis on the privatization of the oil and petrochemical industry, and also the sale of the refineries to the private sector, and giving low interest or interest-free loans to the private sector for buying the power generation plants.

In this regard, the 2007 budget bill that has been passed by the parliament allocates low-interest or interest-free loans to the private sector from the Currency Reserve Funds.

As reported by Iranian newspapers, “Overall, 80% of the power generation plants will be privatized and the government will only keep 20% of the ownership of these plants.”

No doubt that the privatization of the power generation plants is to the detriment of the consumers who will be forced to pay a higher price for power consumption. This experience has been common in most of the countries which have implemented privatization according to the instructions of the IMF.

But, the most interesting part of these miracles is the type or the nature of the private sector that under the support of the Ahmadi-Nejad government is taking over the national wealth.

One of the privatized power plants is in the West Azerbaijan province. Who is the purchaser? Of course the Mostaz`afaan (Deprived) Foundation! His same foundation contracted out the plant projects to some of the companies associated with the Revolutionary Guard. These parasitic foundations and the companies associated with the Revolutionary Guard are those “private sectors” that Ahmadi-Nejad's government has focused its energy to serve.

The basis of the dispute between various sections of the ruling authorities in the political–economic arena are related to these types of issues and the takeover of the huge national wealth.

The deposing of Iran Insurance official by the reactionary government and the positive and negative reactions from the different sections inside and outside the ruling circle, and especially presently the struggles inside the spectrum of forces inside the dominant reaction, are all over nothing but the possession of the national wealth. We shouldn’t be deceived by the superficial slogans of Ahmadi-Nejad and the gangs around him. These gangs are related to various layers of the big trade capitalists; their actions are based on their class interests and don’t stem from any national or democratic motivations. The struggle of Ahmadi-Nejad's government in essence is the struggle of particular layers of big trade capitalists who try to get the upper hand. And this is why they hide their real goals and purposes under the populist slogans.

The big trade bourgeoisie didn’t lose any grounds after the revolution and their huge commodity and financial resources went untouched. This section of Iranian bourgeoisie has been active in foreign as well as domestic trade in the last three decades, and due to this, it has achieved a greater financial, investment and political position. This is the reason why the big trade bourgeoisie and its allies, and also the military, security and middleman gang that Ahmadi-Nejad represents, are after strengthening their position in the ruling circle.

With the deepening of the economic crisis and increased pressure on the people, there is no doubt that we will witness increased social tensions and rising of people’s protest movement. That is why in the recent months, the leaders of the regime have prepared and performed a vast range of suppressive measures from attacking the workers movement to threatening and escalating the pressure over the student and women's movements.

Struggle against the destructive economic policies of the regime is an inseparable part of the struggle against the dominant dictatorial regime and the struggle to bring about freedom and social justice to the country. Countering these destructive policies is only possible by the common effort of all the freedom-loving forces and the active support of the social forces of the country. These forces should enter the arena of struggle against the dominant reaction with a political and struggle plan.

(Abridged from Nameh Mardom, Central Organ of the Tudeh Party of Iran, May 2007)

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