New Internationalist

The Economy according to Islam

Issue 091

When the Shah left Iran so did billions of dollars - in the pockets of fleeing businessmen. The economy dissolved and the new government had to start from scratch with little but the Koran to guide them. Terry Povery in Tehran gives an eyewitness account of the reconstruction efforts.

Abbas / Gamma
Bani-Sadr - capitalist or socialist? Abbas / Gamma

TRY AS they might no journalist has succeeded in getting the President Bani-Sadr to say whether Iran is to become socialist or capitalist. What counts, they are told, is not state ownership but ensuring that each gets the benefits of his labour. Aside from official policy, the head of steam built up during the revolution by organisations like the workplace councils and Komitehs has often proved too much for those who wished to continue the old order under a new name.

In the factories even newly appointed managers have had to fight it out, sometimes literally, with workers jealous to protect the rights they have won. One of these concessions is often de facto control over the factory - another is a 100 per cent wage increase. Echoes of that struggle continue. Although successive purges have made the workplace councils less independent than before they still retain a powerful leverage over the life of many businesses.

On the land there are village councils. Although not as strong as those in the factories, in many areas they are armed and have simply chased off the landlords. But still there are deep differences of opinion amongst Iran’s leaders as to the true Islamic concept of land ownership - whether God owns it (as the Koran says), or individuals, or the government, or cooperatives.

Abbas / Gamma
Oil worker at the Abadan refinery; production down but wages up. Abbas / Gamma

If the policies are not yet clear, some of the effects are. Tehran’s streets grow stalls like some gardens do weeds. Selling anything from tape-cassettes and kebabs to spare parts for cars, these have spread from the area just around the bazaar to cover several main roads running up into the north of the city. In addition there are the traffic light salesmen - at big junctions as many as a dozen rush up to waiting cars with anything from chewing gum to socket wrenches. Straightforward begging still goes on although some pretend to offer a service in exchange, like wiping the car window. Some city parks, once the playground of the better off, have become venues for great evening crowds to stroll and eat. Lines of caravan style eating houses assemble to cater for them. From time to time the authorities threaten to do away with these stalls, but they know there’s no answer to the question ‘What else shall I do?’ Many of the street salesmen used to be factory workers or university students. With an estimated two to three million jobs lost since the revolution this is one of the few ways they have found to earn a living. There are also a great number of private cars doing illegal taxi work.

‘But what can we do’ shrugs a local official ‘their parents have a car and they have no job…’

In the past, much of Iran’s industry was parasitic, living either on an import monopoly or handouts from the development budget. Some 80 per cent of concerns ran at a loss - today they probably all do. No attempt is being made to restore profitability. With some 85 - 90 per cent nationalised and the government picking up the tab the cold light of economic day is easily kept out. Recent purges by Islamic fundamentalists have further depleted the stock of trained staff. With many of the younger people having political sympathies to the left of the current order there are no ready replacements.

Abbas / Gamma
A job in the Revolutionary Guard is better than no job at all. Abbas / Gamma

The fierce political arguments between the leaders of post-revolutionary Iran touch on all things - industry, agriculture and development policy included. In agriculture the fundamentalists argue that the land must be parcelled out to the smallholders and the landless. But President Bani-Sadr and his men keen to achieve self-sufficiency in food are pushing for increased production at all costs. The two do not sit easily together. Even in the all important oil industry the Minister, Ali Akbar Moinfar, has been attacked by the fundamentalists for sacking ‘only committed Moslems’ rather than leftists. Oil production has dropped as low as 1.7 million barrels per day. Only 750,000 can be sold. And even that may be too pricey due to bad planning in the Ministry and a general faith that there will be buyers no matter what.

The combined effects of the US trade embargo and the EEC’s half-hearted sanctions reduced the country’s export revenue to around $12 billion for the current year. Once this had dawned on the planners they immediately withdrew the budget and began talking of an emergency ‘war economy’ plan based on a much lower oil income.

Yet Iran remains very dependent on its imports. More energy goes into getting round the sanctions than in using the opportunity of a reduction in international trade, as Khomeini has wished, to start on the road to self-sufficiency.

The new budget concentrates on wages rather than development. Nationalisation has made the government payroll grow enormously - it now consumes 90 per cent of current expenditure, some $10 billion per annum. With much of industry now in the hands of the government, management problems are also its problems.

A recent strike by Tehran’s water board employees is a good example of Iran’s troubles. After a budget decision to cut allowances for those earning over $300 per month, lower paid office and manual staff also had their pay packets docked - even though most of them earned less then the ceiling. The outraged workers stormed the HQ of the Water Authority, taking hostage (a common element in many disputes) the Managing Director. They refused to deal with anyone other than the President. After two days of talks the hostage was set free and the allowances were restored.

But the workers had other demands. First the Managing Director should be sacked and secondly his boss, Power Minister Ali Abasspor, should also get the boot. The Power Minister happens to be the son-in-law of Dr. Mohommad Beheshti, the head of the Islamic Republic Party, Bani-Sadr’s fiercest opponent, and a member of the ruling Revolutionary Council. A simple strike, quickly settled, became yet another in the long list of issues to be dealt with only when one of these sides comes out on top. It is far too early to say whether anything original by way of development planning is or will happen in the Islamic Republic - the arguments are still at too lofty a level to get down to such details. But it is clear that with many of the problems of the past unresolved and ‘with the poor always with us’ the pressures for more radical changes are going to grow. Iran may not yet have seen the last of its revolutions.

Terry Povey is Middle East Magazine correspondent in Iran.

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