The islamic republic thirty years on
Published on Le MondeDiplo, by Ramine Motamed-Nejad, June 2009.
Since the end of the Iran-Iraq war in 1988 there have been profound changes in the Iranians’ attitude to money, in particular among its ruling class. The moral values that used to predominate, especially religious ones, have lost ground. In a book that came out in 1998, sociologist Faramarz Rafi-Pour (1) attributed this changing relationship principally to the emergence of a minority in Iranian society who weren’t afraid to flaunt their wealth. This attitude was encouraged by the government of President Ali Akbar Hashemi Rafsanjani in the early 1990s, which invited Iranian entrepreneurs who had gone abroad to come home and rebuild their country.
But at the other end of the social scale, the majority of Iranians have been hit by a decade of financial crises, dwindling buying power and increasing money problems. The desire by some to show off their wealth, while others became ever poorer, led Rafi-Pour to conclude that “values based on materialism and wealth have triumphed”.
Giving expression to a desire for wealth was made possible by Rafsanjani’s economic reforms from January 1990, which included the privatisation of state-owned businesses and liberalisation of overseas trade …
… Also, as a result of the loss of value in their assets, the banks have been unable – or unwilling – to keep up debt repayments to the central bank. In the year to September 2008, debts owed to the central bank (and therefore to the state) rose by 106%. Meanwhile, economic output has been adversely affected by unpaid debts racked up by companies, some of which is owed to their own employees.
Privatisation has made the fortunes of some people, but it has also exposed a large proportion of the workforce to unemployment (5) and an ever more precarious financial situation. Numerous owners of privatised businesses deliberately sold off their companies’ assets then filed for bankruptcy, left salaries unpaid or simply sacked their workers. Inflation is again rising sharply: the official figure for 2008 was 25% (though other estimates put it at 50%) and it stood at higher than 60% for the first quarter of 2009.
Since September 2005, faced with the falling purchasing power of the middle classes and the least well-off, the government has focused on credit redistribution to support consumption and provide outlets for business. The lengthy list of different forms of officially guaranteed credit on offer shows the reach of this policy: it includes pensioners, newlyweds, students, home-buyers and farmers.
Over the past 20 years, many Iranians have been plunged into debt with the erosion of their incomes in real terms. The increasing number of people imprisoned for debt is a clear sign of this: there are currently 12,000 debtors behind bars and 20,000 others have gone through the prison system in the last 10 years. These penalties imposed on the least well-off run counter to the egalitarian ideals of the Islamic revolution. And at the same time, the powers-that-be are unable – or unwilling – to recover their debts from the people who do have economic power in Iran. (full text).