The Forum for Partners in Iran's Marketplace

June 2020, No. 94


Future of Iranian Economy

Nowadays, Iranian citizens wonder a lot as to what will happen to the economy eventually and whether there is any hope for improvement.

Friedrich August von Hayek, a great economist of the Austrian School says: “The curious task of economics is to demonstrate to men how little they really know what they imagine they can design.”

Government bureaucrats are more or less everywhere implying the promise to make this belief, which is not true and we can build the future through applying appropriate monetary and financial policies and the key to happiness lies in their mighty hands. However, this is not an easy task; other factors, such as people’s trust in such policies, are imperative.

Nowadays, Iranian citizens wonder a lot as to what will happen to the economy eventually and whether there is any hope for improvement. Although as put by senior Iranian journalist Mohammad Qaed forecasts about the future must be assigned to coffee tasseography experts but in fact the Iranians have a right to be concerned. Let’s remember except for a short time after the Joint Comprehensive Plan of Action (JCPOA), in these years the people of Iran have been living in a state of fear and hope; there is no single day we will not hear of serious crises facing the country.

The “current sensitive conditions” have not been dropped from the mouth of Iranian politicians, and they have always urged people not to leave them alone in these difficult conditions. In recent times, even the president of the country has been surprised by a 200% increase in the fuel price. It is not clear, however, whether they have a clear plan for the future; unfortunately, given that the various political groups in the country do not even have a common understanding of the situation and the options ahead, it is very optimistic to expect unanimity and sympathy for the move. But the point is that distrust is not just limited to Iran, maybe in other countries, even the developed ones, the level of trust is not very high.

In a 2016 OECD survey, we read that even in Sweden, Finland and Denmark, the so-called successful examples of efficient world governments, more than half of people do not trust the government! However, the worrying aspect for our country may be that social capital is not in good shape, that is, if elsewhere governments are not trusted, at least there is relative trust and cooperation within the society itself and relations between different social groups are not bad and it partially offsets that shortcoming.

Unfortunately for social capital there is no less catastrophic situation, to put it more precisely, we can refer to the 2019 Legatum Prosperity Index where we ranked 129 out of 167 countries in the social capital component!

Let’s assume, however, that tomorrow all administrative, institutional and value barriers were removed and a comprehensive policy package agreed by various political groups became available; in that case is there hope for improvement? Unfortunately, one has to hesitate in giving a positive response. It is not easy to gain the trust and companionship of people we have simply lost. When news of new corruption comes out every day, without talking to citizens and their intellectual leaders, we want to run a “correct” economic policy overnight and leave all inefficiencies to the current critical situation and state of war it is unlikely to do miracles.

Now that things are not going well, and what we have just said is the expression of a tragedy, so what to do? This writer wants ironically to emphasize the role of politicians, not economists, in assuming that they have a plan in place, except in a space with minimal legitimacy and trust. The job of building trust is going through politics. We are faced with the “crisis of vision” dilemma in the country. Until we can sell a desirable future to the public it will not work. The nuclear deal promoted a vision of a broader relationship with the world and had supporters, but it failed for a thousand reasons. We have no prospects now, and we live in the old-fashioned era, as the old saying goes, it is no small tragedy for a country with thousands of troubles.

Our politicians, of whatever group and sect, should look for and build on such a vision, rather than focusing on diversion; when we talk about the absence of a political project, in reality we have in mind the fact that no one group has an attractive prospect for the majority and does not have the vision to determine the desirable situation and the general direction of the country’s internal and external movement. However, it is unlikely that the future of Iran’s economy will be better resolved unless our main political problem, our relationship with the world’s political and economic powers, is resolved.

 I do not remember even having one country in contemporary history that has experienced steady progress with maximum seizures in foreign relations; Libya, Iraq and North Korea are sad examples of missed opportunities. In politics, if there is no other way, it has to be forged. I recommend to the politicians in the country not to miss a book published last year titled “Kissinger the Negotiator”, to get acquainted with the manner and character of a person who had serious crises in his political life and left them behind unharmed. It will be inspiring!                                 


By: Amir Hossein Khaleghi


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  June 2020
No. 94