The Iranian Evolution: A Shift in Tehran and the National Mood

It has been almost eight months since Iranian President Hassan Rouhani took the helm of the Islamic Republic’s executive branch. By all accounts, after several unexpected twists and turns, political machinations, and a convergence of myriad domestic and international factors that made his victory possible, the national mood in Iran is calmer than ever before. There is hope that, at least, a degree of competency –lacking during the latter years of Mahmoud Ahmadinejad’s presidency – is returning to state affairs.

I was in Iran for three months last fall. In general, most people I encountered were closely following the historic diplomacy between Iran and the P5+1, which eventually led to the Joint Plan of Action on the Iranian nuclear program. Aside from the significant impact this deal will potentially have on Iran’s economy, the public display of cordial relations between the United States and Iran, which broke decades-old taboos at a startling pace, was itself the stuff of history.

By contrast, I found that the level of interest in the intricacies of domestic Iranian politics had dropped significantly since the last time I visited the country seven years ago. Many people I met were pleased with the election results and what they saw as a national decision to redirect the country away from impending disaster. These people were busy picking up the pieces of their own lives in the midst of an uncertain environment, in which runaway inflation and unemployment or underemployment among the younger generation, was harming almost everyone’s sense of security.

Even many of those who had voted against Rouhani or not voted at all were ready for a new “era of moderation,” a common catchphrase used by the new president. In post-revolutionary Iran, naming each two-term presidency as an “era” distinct from its predecessors has been one of the most consistent patterns in presidential politics. After two terms of Ahmadinejad’s dolat-e edalat mehvar (justice-hinged government), many in Iran seemed relieved by Rouhani’s pivot toward dolat-e e’tedal (government of moderation).

A Desire for Change, Not Upheaval

In our conversations, people I met expressed significantly varied motivations for voting (72.7 percent of about 50.5 million eligible voters went to the polls in June 2013). Some voted because they always did. Others voted out of fear, either worried about Syria-like instability if the Iranian political system failed to fashion a smooth transition from one presidential administration to another, or wary of yet another eight years of Ahmadinejad-like leadership.

Most, however, voted for change as they had in the past after every two-term presidency (each Iranian president has won second term elections). Although Rouhani is an establishment insider, he represented a break from Ahmadinejad, who was identified with erratic decision-making and more than the usual amount of cronyism and corruption standard in the Islamic Republic.

Transparency International’s 2013 Corruption Perceptions Index, which was widely reported on in the country, confirmed perceptions about increased corruption during Ahmadinejad’s presidency. Iran ranked 144 out of 177 countries, next to Nigeria and Ukraine. This was a significant drop from 2005 when it ranked 88 out of 158 countries, next to India and Tanzania. Iran’s ranking on the Index has steadily deteriorated since Ahmadinejad first took office in mid-2005.

While there should be no mistaking the popular desire for change, unlike the 1997 -2004 period, when reformists took over the presidency and Sixth Parliament, there were no boisterous calls for political reform or overhaul before or after last year’s presidential elections. Conscious fears of eliciting another vicious counter-reaction from conservative and reactionary centers of power, which helped bring Ahmadinejad to power, may have had something to do with this relative calm, or appearance of calm.

Nevertheless, subtle yet significant shifts in the country’s social-make may also be responsible for this change in approach.

With significant drops in the rate of population growth – which currently stands at a mere1.29 percent – the Iranian electorate is older than ever before, its median age now above 28 in comparison to about 20 in the late 1990s. Technically, Iran’s population is not yet “mature” – the mid-30s are usually considered the benchmark for maturity – but given persistently low birth rates (despite recent government attempts at reversing this trend), things are quickly moving in that direction. Past failures to bring about change (like the student protests of 1999 and the uprising following the disputed presidential elections in June 2009) are part of this fast-maturing population’sreflective repertoire.

Other factors are also at play. According to the World Bank, Iran is an upper income country, and is ranked 75 out of 187 by the International Monetary Fund (IMF) in terms of purchasing power per capita, just below Turkey and slightly above Brazil and South Africa. This income status may have some bearing on popular demands, which seem far more focused on improving government services and reducing corruption than changing or reformulating institutional power in the country.

It is no accident that in many middle income countries –such as Brazil– the demand for security and a better future focuses on reducing corruption and increasing accountability, rather than instituting wholesale revolution.

In Iran, economic instability coupled with several years of stagflation truly rattled a large part of the population. Many who directly benefitted from the economic largesse of the early Ahmadinejad era were also shaken, as the relative stability of Iranian markets suddenly began to see alarming fluctuations, especially in terms of food prices, on a daily basis.

These anxieties have subsided somewhat as rapid price increases have slowed down in recent months. Most people do not know (or do not care) that the drop in inflation rates had already begun a few months before Rouhani came to office. Still, the current tranquility may yet again be replaced by hostility and frustration if the economy fails to continue improving or poor fiscal management leads to another disastrous downturn. For now, however, the government’s slogan of “moderation and prudence” and the country’s mood are in synchrony.

Economic (In)Competence

Running an efficient economy has never been the Islamic Republic’s forte. For the first eight years of its existence, the country fought a war of attrition against a Western-backed Iraq. During this period, the Iranian government understandably and necessarily relied on an ideology of self-sacrifice and austerity for the sake of its “Sacred Defense” .

Ever since then, Iran has largely become a welfare state for the poor and rich alike. While a whole slew of social welfare programs, subsidies, and retirement systems have long supported the poor and middle classes, with each new president, a new coterie of moneyed gentry and business interests have emerged and benefitted from profitable policies and powerful contacts.

In comparison to the austerity and sacrifice of the war years, Iranians have generally seen their lives tangibly improve over the past several decades, as demonstrated by significant improvements in health, education, housing, and access to electricity and clean water. These achievements happened despite relatively low oil prices and revenues during the 1990s and first few years of the 2000s.

Nevertheless, the limits of this expanding welfare state were already evident during the presidency of Mohammed Khatami. The reformist president tried to gradually institute a yearly increase in the price of subsidized gasoline only to be thwarted by the conservative-controlled Seventh Parliament, which was worried about popular opinion and potential civil unrest in response to the move.

The task of massively overhauling the subsidy system – which gobbles up at least 25 percent of Iran’s yearly GDP – landed on Ahmadinejad’s desk during his second term. By that time, however, the high price of oil (close to $140 per barrel), misguided policies, and lack of fiscal restraint (or acumen) combined with cash handouts, and government-sponsored affordable housing, made runaway inflation inevitable. The draconian U.S.-led sanctions regime, particularly its chokehold on banking and trade institutions, which descended on the country with full force in early 2012, –hurt more than it should have because of the fiscal extravagance Ahmadinejad had fostered.

Not everything was squandered, though. Hundreds of billions of dollars that came to Iran during the high oil price years did help fund public goods, although it was not always evenly distributed. It is hard to deny that, during Ahmadinejad’s administration, the pattern of improved government services and increased amenities continued, if not accelerated, making life substantively easier and more pleasant for many Iranians. Whether a result of enduring institutions or strategically applied funding, efficiency and customer service improved in both the public and private sectors.

In the unwieldy city of Tehran, for instance, there are now parks with exercise facilities in almost every neighborhood. Public transportation is decent (and still very cheap). Previously onerous tasks, like paying utility bills or getting a driver’s license, can now be done online or through the many satellite government offices or private companies throughout the ever-expanding metropolis, which have been contracted to absorb the bureaucratic burden. Beyond improved amenities, however, the money that flowed into the country also had many negative consequences, fueling rampant consumerism and staggering levels automobile pollution, among other things. During Ahmadinejad’s presidency, construction was king. Once sleepy villages near the Caspian Sea now boast their own shopping malls..

While countless capital projects were successfully completed, half-built high rises and abandoned scaffolding still dot the skyline. Some unfinished affordable housing developments built in the Tehran exurbs lack necessary plumbing, electricity, and adequate roads necessary to turn them into functioning townships. Ironically, the ugliest incomplete structure can be found right in the middle of the holy city of Qom. With no plans for completion, the lonely columns of a monorail fantasy have been left standing in the median strip leading to the Hazrat Massoumeh Shrine. Money will probably have to be spent to bring the structure down.

For now, Ahmadinejad’s legacy is encapsulated in these thousands of unfinished projects, which started during the euphoria of high oil prices and were left hanging in the midst of a management and sanctions-inspired fiscal crisis with significant consequences for the unemployment rate. According to the latest official figures, 17.3 percent of young men between the ages of 15 and 29, and a whopping 41.7 percent of women in the same age group, are unemployed.

The former president’s legacy is also represented by the thousands of people his administration hired all to staff government positions at every level. In March 2014, Mahmoud Askari-Azad, who heads the Rouhani administrsation’s management development and human resources division, announced that the government now has approximately 4.7 million people on its payroll (Iran’s labor force stands at approximately 27.7 million), including over 1.8 million civilian and military retirees. Even more striking is the bloating evident across divisions and bureaus in various ministries and state organizations, which have increased in size by 167 percent since 2005. The number of operational and administrative managers throughout the country has risen to over 440,000 individuals. According to Askari-Azad, during the past eight years, government personnel and administrative expenditures have increased from 67 to 88 percent of the general budget. As he observed, something needs to be done before the entire budget is swallowed up by these costs.

Hope for the Rouhani Administration

It is because of these lingering challenges that the Iranian public has put so much faith in the new administration – a pragmatic and connected President Rouhani with a team of experienced technocrats and competent managers – to turn things around and bring some order to the perceived chaos and reckless use of resources, which have characterized the past few years.

Counterintuitively, hope for the future rests again in the hands of the old guard. A shift in focus from a desire for wholesale change to incremental policy changes and institutional adjustments is palpable.

The revolution in Iran is over. It is time now for an Iranian evolution.

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