Iran Interview: The State of the Economy (Kaveh Ehsani)

The economy of Iran is in a deep recession, which has only been exacerbated by the recent round of sanctions passed by the United Nations, the European Union and the United States. Aside from more immediate concerns, the Iranian government is also grappling with several deep-rooted problems. First, it is dealing with the burden of a highly politicized, hybrid economic system that combines state, private, and semi-private ownership. The state exerts substantial control over the economy both directly and through semi-private entities such as foundations (bonyads), mutual funds, pension funds and companies linked to military organizations. Estimates vary as to exactly how much of the economy is under state control, partly because the semi-private sector doesn’t operate in a transparent fashion, but it is safe to say that these institutions dominate the economy. Since they are run by politically affiliated appointees, as opposed to managers hired according merit and competence, their activities tend to be highly politicized. Ideally, these institutions should be run according to transparent social and with economic rather than factional political aims, but any major changes will require resolute decisions by a government that is currently not prepared to pay the political cost of unpopular policies.

Click to read more ...