Saturday, April 19, 2008


During his visit to the holy city of Qom on the 16th April, President Ahmadinejad[1] delivered a very telling speech. In relation to this speech, there are two possibilities. First, he is actually lying and is trying to use this opportunity as a scapegoat for the failure of his government in the past two and half year. Alternatively, he is telling the truth. Whatever the fact, one could only say: Pity on the Islamic Republic of Iran [IRI] which would soon celebrate its 30th birthday. If the President is so openly lying, it is bad, and if he is telling the truth, it is even ten times worse. Given the summary that the President has given of the economy, it is neither an Islamic economy nor a capitalist system of any description. It is a real example of a system that could only be described as a mafianomics, an economic system at the peril of various mafia-type gangs.
Like most of his recent speeches, he covered so many different and even unrelated issues, but my main concern is that section of the speech which tries to explain the reasons for his failure to achieve justice and a just economic structure. There is one point that I wish to mention in passing. The President believes that the IRI has a dual mission to fulfil. One is to build itself and the other, is “to reform the world”. Given what he says about the situation in the country, the world can rest assured that the IRI would not be able to “reform the world”.
In explaining the underlying reasons for the failure of his government to reduce inequality and create a more just society, Ahmadinejad refers to 5 or 6 factors. In his view, these factors explain this failure and are the “roots of discriminations and class difference”. Let me mention in passing that the class structure of Iranian society has little to do with what he says here. Societies based on the private ownership of the basic means of production are class based and no amount of “reform” would have any serious impact on this aspect. However, the first factor in his list is “licenses and monopolies” enjoyed by some who “were and still are granted these privileges to accumulate massive wealth”. In my view, the admission of the existence of such a situation after nearly thirty years of total control is simply disgraceful. The immediate question must be why nothing has been done to stop it so that a few could not enrich themselves at the expense of the rest of society. It becomes an interesting issue if we also consider that in the past two and half years, the Grand Ayatollah Khamene-ii, the Guardian of the State, on many occasions has very strongly supported the President. The Guardian Council, which played a very destructive role during the eight years of Khatami’s presidency, has supported fully the current government too. Majlis- the Iranian Parliament- went out of his way, some say even against the Constitution, to help the government. The question, hence remains, how then, these groups have been allowed to abuse these privileges for personal enrichment for so long?
The second culprit in Ahmadinejad’s list is the National Custom organisation, according to this speech members of these gangs “penetrated this organisation and pass whatever laws and regulations that they like”. There is no doubt, that these could not be ordinary Iranian citizens, but once again the question is why there is no more information about these “gangs”? He then gives an interesting example and refers to the consumption of cigarettes in Iran, partly produced at home and partly imported from abroad. The President confessed that there is a large smuggling taking place too and his hands are tied to combat them. But he does not give any further information. Nevertheless, he adds that if his government tries to impose custom duties on the imported cigarettes, those who are involved resort to smuggling, and if there were to be no duties, the market would be flooded by imported brands. He then tells the story of his government’s attempt to liberalise the importation of cigarettes into Iran so that any one who is within the law and pays the necessary duties could import them. Interestingly he adds that “someone seemingly a good soul” approached the government seeking permission to import but “a male who is still employed in one of the government’s centres” contact this “good soul” and ask him for “$5 billion” advances to be “allowed to import cigarettes” into the county and went on to say that” unless this sum is paid, you would not be able to import cigarettes. The good soul did not pay”. It is clear that the President has detailed information about the case, but, is not making it publicly available. He goes on to say that even a high official of the government has been threatened by the same male for agreeing to permit others to import cigarettes into the country. What is a confusing puzzle here is the underlying reasons for the impotence of Ahmadinejad’s government to deal with such a clear case of rent seeking behaviour. This point becomes particularly significant if we look at the record of the same government in its dealing with the students, or workers or for that matter woman’s activists in Iran. It seems that the same impotent government faces no restrictions and impotence in arresting, imprisoning and even torturing these activists. The President does not explain why such a brutal act of rent seeking and lawlessness is tolerated by his government. The question begging an answer is why the appropriate authorities were not issued with the necessary warrant to arrest these law beakers and rent seekers? His audience ask him for more revelation, but the President declines and just adds “I have given you his details, just wait for a day or two and see who makes a lot of noises, you would know him”. Why the President instead of being frank with the people of Iran offers a riddle, is not clear to me. The next factor in President’s list is the National State Registry Office which is infiltrated by these “gang members” too. He then reports on one of his conversations with Danesh-Jafari- the Minister for Economic Affairs- about two factories producing the same items and have similar sale revenue but continues” one paid 300 million tomans in tax and another only 3 million tomans” and adds that “ the tax system is being abused by these gang members”.
Ahmadinejad then turns to the banking sector and calls them “agents for injustice” in Iran. Given the massive privatisation programme that the IRI has- following the decree by Khamene-ee in relation to article 44 of the Constitution- it seems a very strange position to take. Among other things, he says “when the bank collected all the deposits, could they disperse them in the way they like! This is discriminatory” and should be stopped. It could be predicted at this stage that if this is the view of the IRI on the banking sector, the capitalists should be really stupid to come forward to buy these banks. Let us remind ourselves that not long ago, the government against the advice of the Central Bank and the Credit and Money Committee, reduced the interest rate- below the inflation rate- and now, the President seems to be indicating further restrictions on the activities of these banks. To cut a long story short, not only interest rate is below the inflation rate by decree, he wants to decide who should be given loans and credits and who should be refused these facilities. As soon as the Credit and Money Committee made its opposition to a forced decline in the interest rate public, the President abolished the Committee altogether. Now in this speech, the President blamed the banking sector for the housing bubble that has been raging in the country by saying that “ certain people” were given enormous amount of credit by the banks which were subsequently used to buy lands and other real estates in order to ”milk the public”. He apologised to the people of Iran and said “I regret to report to you that during the past year, some of the government’s organisations failed in their duties and that corrupt gang succeeded in their endeavour”. In talking about “domestic conspirators” he refers to a “speculator” who was given a 100 billion tomans loan in order to buy houses, flats and lands. In my view, what the President is doing in this speech is not providing information for the public at large for their benefit, but, rather to use these scattered quaisi-information as a scapegoat not to accept any responsibility in having made a bad situation a lot worse. It is clear to me when Ahmadinejad says in this speech that “some people inside the country in conformity with our enemy, tried to break the backbone of this government by sabotage” then, there would be little room for anyone to try to point a finger at his government’s mismanagement of these affairs. In addition to the abolishment of the Credit and Money Committee, Ahmadinejad’s government also abolished the former “Plan and Budget Organisation” not to mention his stated rather crazy views about the basic economic principles. The domestic conspirators are accused to have tried to “create a situation in which inflation would be 70 or 80%”, and then, praises his own government for preventing this to happen, and even claims that his anti- inflationary policy was a “success”! Given this assessment as given by the President, it is clear that there is no room to examine these policies as the major causes of rising inflation in the country which is putting massive pressure on the budget of the households across the land. To convince his audience that what he says about these conspiracies is true, he reveals a little about another meeting in which “it was said that we would break the backbone of this government and would knock him [Ahmadinejad] out. He can do whatever likes, but we control two major institutions, the banks and the oil industry” and then turn to the audience and said “you know who do I have in mind”.
It is not clear to me that if the oil industry is not actually controlled by the government, then, what is left of this mostly unproductive perto capitalist economy of Iran?
In relation to the housing crisis in the country, the President reports that the situation was so bad that the Ministry of Information was given the task of discovering any potential plots and conspiracies and then adds “the Information Minister reported that some banks have given about 1500 billion tomans [more than $1.6 billion] to certain individuals. When the government decided to make a move against them, there were so many hands coming out to support them. When we instructed the Central Bank to monitor the laws on loans, some agents resisted”. I must admit, I am totally lost and do not know what to say. It reveals an incredible degree of impotence by a government that wishes to “reform the world”!
Having said that, I have to conclude that when I put my Iranian hat on and like them becomes a conspiracy worshiper, I believe that there is something else in the subtext and things should not be as simple as the President tries to make them. I can not help it, but it reminds me of the Godfather film and I tend to think that the dispute is over the loot. In my judgement, Ahmadinejad’s approach to these “mafia gangs” in Iran, as he put them, looks more like a cry for asking a bigger share of the loot, rather than being against mafianomics. My main reason for accusing the President of being himself part of the plot is that in the past two and half years, on several occasions, he has given this “ half cooked” stories about mafia gangs in Iran without being transparent or taking any effective actions against them. If you ask me why he is not brutally frank with the people, my answer is simply, he might be afraid of retaliation. If he exposes these gang members in full, what happens, if they try to expose the other gangs too!
Time would tell.
[1] An extended exert of this speech in Farsi could be read in his official cite at

Thursday, April 10, 2008

Cry for help!

I wonder if you could help! I have always had difficulties in understanding Mr Ahmadinejad’s speeches and now reached a painful point that I think he may not be making these speeches in farsi a language that I love and cherish. Have a look at two versions of his latest speech, and please give a summary of it in farsi or in English so that I could also understand him. Whatever sources you use, the economic situation in the country is getting out of control, and as a cosmetic surgery, his government leaked out that Danesh Jafari- the minister for economic affairs- would be replaced. And yet, in his speeches lately, Ahmadinejad says nothing about these issues. We also know that cash subsidies are to replace the current system and it is reported that cash would be paid into banking accounts of the citizens, initially everyone and then gradually, the middle and high income citizens would be eliminated and this is what seems to be his “grand plan” for the economy! I am aware that some of my Iranian colleagues have already started discussing cash versus non-cash subsidies and came out in favour of cash subsidies. I am too old and too tired to get into this type of discussion. My point, however, is simple, a policy that can not be implemented is not good or bad, it simply does not exist. The institutions and the infrastructure- not to mention the necessary political and social will- for an effective and fair distribution of cash subsidies are not there and hence, this policy like an unwanted foetus in a diseased womb would be terminated, and the body- the economy- would be bleeding for many more years to come. Let me return to my initial point, if anyone understand Mr Ahmadinejad’s speeches, please help me to understand them too.