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Politcal Power in Iran - Article for Essay #1.pdf

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Department
Near Eastern Studies
Course Code
NE STUD 165
Professor
Jaleh Pirnazar

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POLITICAL ECONOMY OF POLITICAL POWER OF
THE ISLAMIC REGIME IN IRAN
By Siavash Abghari*
INTRODUCTION
Democracy as a system of govemment is proclaimed to be superior
to dictatorship. Since the collapse of the system in the Soviet Union and
Eastem European countries, people in all countries are converging on the ideal
of democracy to improve economic performance of their country as well as to
ameliorate the human and civil rights ofthe people. For more than a century,
the people of Iran have stmggled to establish a democratic system of
govemment. The Constitutional Revolution of 1907 in Iran tried to replace
absolute monarchial regime with constitutional monarchy and parliamentary
democracy, but
it
had limited success and a dictatorial monarchy was imposed.
In the early 1950s a conflict emerged between nationalists, led by Prime
Minister Mossaddegh, and monarchists, led by the Shah himself The conflict
concemed the extent of power and control exercised by the Shah and the royal
family in the state's affairs and the nationalization of
oil.
In 1953 Mossaddegh
was removed from power and arrested in an American CIA-engineered coup.
Mossaddegh's overthrow occurred in part because he had nationalized British
property. Iran's long border with the Soviet Union, which had an active
Communist party, was considered to be in great danger of falling to
communism.' With harsh repressive measures, the Shah was reinstalled. Soon,
the Shah, through repression, established an absolute monarchy and controlled
all the affairs ofthe country.^
The popular uprising against the Shah's dictatorship in the late 1970s
led to the Revolution of 1979. Although there were many political
organizations and groups with different ideologies and political orientations
during the revolutionary process, the Islamic clerics gained hegemony and
hijacked
the
ideals of revolution: liberty, justice and democracy; and tumed the
rebellion into an Islamic Revolution. The clerics eliminated other ideologies
and tendencies in the system during the early years of the revolution and
imposed a more repressive Islamic govemment on the people and the country.
The Islamic regime has resulted in great economic and human loss and
suffering since the Revolution of 1979.
•Professor Abghari
is
chair ofthe Department of Business Administration at
Morehouse College, Atlanta, Georgia 30314.
Journal ofThird
World
Studies, Vol. XXIV, No. 1
© 2007 by Association ofThird World Studies, Inc.
247
JOURNAL OF THIRD WORLD STUDIES, SPRING 2007
This paper identifies and defines the political system in Iran without
going through the historical analysis of how
the
regime established
itself.
From
a political economy point of view, the Supreme Leader uses the scarce
economic resources to repress the opposition, buy political loyalty, and
maintain political
power.
This paper uses
a
political power production function
model to establish the conditions under which the Islamic regime in Iran
obtains power and behavior. The paper also shows the process by which the
regime can be deprived of its power and move toward establishing a
democratic system of govemment in Iran, using property rights theory and
human rights theory approaches. These theories are used to compare different
political systems in terms of their capacity to allocate power as well as to
promote economic growth and efficiency.
THE ISLAMIC REGIME IN IRAN
In democratic societies, power is formally delegated to govemments
through free elections. Govemments, in tum, use this power to affect the
economy by regulating industries and providing public goods. Modem
property ri^ts theory allocates capital resources in the economy and human
rights theory allocates political power. Property rights theory indicates that
two conditions are necessary for private bargaining to allocate resources
efficiently:^
1.
Property rights should be well defined; and
2.
Property rights should be transferable at low cost.
Coase's theory implies that resources will be allocated efficiently by
private
bargaining.
These property rights
are the rights to
possess,
use,
develop,
improve,
transfer, consume, deplete, destroy,
sell,
donate,
transform, mortgage,
lease, loan, etc. According to Coase, transferability of property would
maximize the market value of these assets allowing the people to own the
assets that are most valuable to them.
In democratic societies, political systems are based on human rights,
while the capitalist mode of production
is
based on property
rights.
Democracy
makes power transferable just as capitalism makes the ownership of capital
assets transferable. The economic advantage ofthe election in a democracy is
that it allows transfer of power at a relatively low cost. In dictatorial systems,
which do not allow free and fair elections, the way to transfer power and
dismiss the regime
is
by costly means such as revolutions, insurrections, coups,
or wars (e.g., the invasion ofthe Iraq to remove Saddam Hussein from power).
Compared to these costly means, democratic elections based on inalienable
human rights provide a formal and consensual procedure to decide on the
248
Siavash Abghari/Political Economy of Political Power ofthe Islamic Regime in Iran
allocation of political power. In a democracy, a govemment derives its
legitimacy from the people and thus is the only regime that makes it possible
for the mled to dismiss a given govemment without bloodshed. Because the
costs of transferring power are low, it is at least possible that power will flow
into the hands where it is most valuable." In a functioning democratic system,
the election mechanism consists ofthe following:
1.
There is a contest for the principal positions of political
power and voters decide on a winner. This free election
legitimizes the transfer of power
to
the winning group as the
representative ofthe people;
2.
The election is competitive; except for criminals, no one is
barred from entry into politics;
3.
Elections take place on the basis of inalienable human
rights.
Individuals have the absolute and unconditional
freedom to
express,
organize, vote and participate in politics
in any way without fear of reprisal from any individual or
group;
4.
There is the presence of an independent j udiciary to protect
human rights of the people. Politicians and govemment
officials are constrained in their actions by the mle of law,
so that no individual or group in govemment can take
reprisal against any citizen or group;
5.
Citizens are protected from political terror and unjustified
imprisonment; and
6. A free and accessible press exists as a means by which
people can express their dissatisfaction with public policies.
None ofthe above conditions for free and democratic elections exists
in the Islamic Republic of Iran. The constitutional law ofthe Islamic Republic
defines the system of govemment as Islamic. Believing in God and submission
to Him is the mle, and the laws ofthe country must represent God's will, thus
fatalism. Khomeini, afler the Revolution of 1979, argued that religious judges
have the "same authority" as the prophet, and disobedience to the religious
judges
was
disobedience to God.' Political stmcture in Iran concentrates power
in the hands of
one
person, the Supreme religious leader. Articles 4-5 ofthe
Iranian Constitution indicate that
all
civil, criminal,
financial,
cultural, political,
249

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Description
POLITICAL ECONOMY OF POLITICAL POWER OF THE ISLAMIC REGIME IN IRAN By Siavash Abghari* INTRODUCTION Democracy as a system of govemment is proclaimed to be superior to dictatorship. Since the collapse of the system in the Soviet Union and Eastem European countries, people inall countries areconverging onthe ideal of democracy to improve economic performance of their country as well as to ameliorate the human and civil rights ofthe people. For more than a century, the people of Iran have stmggled to establish a democratic system of govemment. The Constitutional Revolution of 1907 in Iran tried to replace absolute monarchial regime with constitutional monarchy and parliamentary democracy, but ithad limited successandadictatorial monarchy was imposed. In the early 1950s a conflict emerged between nationalists, led by Prime Minister Mossaddegh, and monarchists, led by the Shah himself The conflict concemed the extent ofpower and control exercised bythe Shah and the royal family inthe state's affairs and the nationalization ofoil. In 1953 Mossaddegh was removed from power and arrested in an American CIA-engineered coup. Mossaddegh's overthrow occurred inpart because he had nationalized British property. Iran's long border with the Soviet Union, which had an active Communist party, was considered to be in great danger of falling to communism.' With harsh repressive measures,the Shah wasreinstalled. Soon, the Shah,through repression, established anabsolute monarchy and controlled all the affairs ofthe country.^ The popular uprisingagainst the Shah's dictatorship inthe late 1970s led to the Revolution of 1979. Although there were many political organizations and groups with different ideologies and political orientations during the revolutionary process, the Islamic clerics gained hegemony and hijacked the idealsofrevolution: liberty,justice anddemocracy; andtumed the rebellion into an Islamic Revolution. The clerics eliminated other ideologies and tendencies in the system during the early years of the revolution and imposed a more repressive Islamic govemment on the people and the country. The Islamic regime has resulted in great economic and human loss and suffering since the Revolution of 1979. •Professor Abghari is chair ofthe Department ofBusiness Administration at Morehouse College, Atlanta, Georgia 30314. Journal ofThird WorldStudies, Vol. XXIV, No. 1 © 2007 by Association ofThird World Studies, Inc. 247 JOURNAL OF THIRD WORLD STUDIES, SPRING 2007 This paper identifies and defines the political system in Iran without goingthrough thehistorical analysis ofhowtheregime established itself. From a political economy point of view, the Supreme Leader uses the scarce economic resources to repress the opposition, buy political loyalty, and maintainpoliticalpower. Thispaper usesapolitical powerproduction function model to establish the conditions under which the Islamic regime in Iran obtains power and behavior. The paper also shows the process by which the regime can be deprived of its power and move toward establishing a democratic system of govemment in Iran, using property rights theory and human rightstheory approaches. These theories are used to compare different political systems in terms of their capacity to allocate power as well as to promote economic growth and efficiency. THE ISLAMIC REGIME IN IRAN In democratic societies, power is formally delegated to govemments through free elections. Govemments, in tum, use this power to affect the economy by regulating industries and providing public goods. Modem property ri^ts theory allocates capital resources in the economy and human rights theory allocates political power. Property rights theory indicates that two conditions are necessary for private bargaining to allocate resources efficiently:^ 1. Property rights should be well defined; and 2. Property rights should be transferable at low cost. Coase's theory implies that resources will be allocated efficiently by privatebargaining.Theseproperty rightsaretherightstopossess,use,develop, improve,transfer, consume,deplete,destroy,sell,donate,transform, mortgage, lease, loan, etc. According to Coase, transferability of property would maximize the market value of these assets allowing the people to own the assets that are most valuable to them. In democratic societies, political systems are based on human rights, whilethecapitalist mode ofproduction is based onproperty rights. Democracy makes power transferable just as capitalism makes the ownership of capital assets transferable. The economic advantage ofthe election in a democracy is that it allows transfer of power at a relatively low cost. In dictatorial systems, which do not allow free and fair elections, the way to transfer power and dismisstheregime isbycostlymeanssuch asrevolutions, insurrections,coups, orwars(e.g.,the invasion ofthe Iraq toremove Saddam Hussein from power). Compared to these costly means, democratic elections based on inalienable human rights provide a formal and consensual procedure to decide on the 248 Siavash Abghari/Political Economy of Political Power ofthe Islamic Regime in Iran allocation of political power. In a democracy, a govemment derives its legitimacy from the people and thus is the only regime that makes it possible for the mled to dismiss a given govemment without bloodshed. Because the costs of transferring power are low, it is at least possible that power will flow into the hands where it is most valuable." In a functioning democratic system, the election mechanism consists ofthe following: 1. There is a contest for the principal positions of political power and voters decide on a winner. This free election legitimizes the transfer ofpowerto thewinning group asthe representative ofthe people; 2. The election is competitive; except for criminals, no one is barred from entry into politics; 3. Elections take place on the basis of inalienable human rights. Individuals have the absolute and unconditional freedom toexpress,organize,voteandparticipate inpolitics in any way without fear of reprisal from any individual or group; 4. There isthe presence of an independentjudiciary to protect human rights of the people. Politicians and govemment officials are constrained in their actions by the mle of law, so that no individual or group in govemment can take reprisal against any citizen or group; 5. Citizens are protected from political terror and unjustified imprisonment; and 6. A free and accessible press exists as a means by which people can expresstheir dissatisfaction with publicpolicies. None ofthe above conditions for free and democratic elections exists inthe Islamic Republic of Iran. The constitutional law ofthe Islamic Republic defines the system ofgovemment as Islamic. Believing inGod and submission to Him isthe mle, and the laws ofthe country must represent God's will, thus fatalism. Khomeini, afler the Revolution of 1979,argued that religiousjudges have the "same authority" as the prophet, and disobedience to the religious judgeswasdisobedience toGod.' Political stmcture inIranconcentratespower in the hands of one person, the Supreme religious leader. Articles 4-5 ofthe IranianConstitution indicatethatallcivil, criminal,financial,cultural,political, 249 JOURNAL OF THIRD WORLD STUDIES, SPRING 2007 administrative, and military laws and regulations must be based on Islamic principles.Accordingtoarticle 57 ofthe Constitution, the Supreme Leader has the authority over legislative, executive, and judicial branches of the govemment. He determines and controls the principal policies ofthe Islamic republic, is the commander in chief of the armed forces, declares war and peace, he appoints chief justices, appoints and removes members of the Guardian Council, appoints the heads of TV and Radio organizations, appointsjoint chiefs of^staff, appoints the Commander of The Revolutionary Guard, appoints the Commander of the Army and Police, and he may remove the president from office. Moreover, in the Islamic Republic, the state owns and monopolizes power over heavy industries, foreign trade, all minerals, banking,insurance,electricpower,radioandTV,postal services,and railroads in the country.* The private sector in Iran is crowded out and plays an insignificant role in the economy. Friedrich and Brzezinski define totalitarianism (in effect dictatorial) as a political system with these characteristics: a coercive ideology, a country led by a single person, a terrorist police force, the monopoly of mass communications, the monopoly of armaments, and state control of the economy. The Islamic regime in Iran possesses all ofthe characteristics ofthe dictatorial regime, which has fried to dominate every sphere of life of individuals in the country. In the following sections, an attempt is made to analyze the process of producing and maintaining political power by the regime,and howthe democratic opposition may usethis analysis to disarm the Islamic regime of its political power and move toward establishing a democratic govemment in the country. POLITICAL POWER PRODUCTION FUNCTION MODEL As previously mentioned, the political system of govemance in Iran is authoritarian and dictatorial. The regime uses loyalty and repressive instruments in its political power production function to build and maintain political power. To repress and eliminate political opposition, the regime allocates economic resources to produce and implement repressive laws, monitor the activities of individuals, and punish the offenders. Also, in order tocreate anenvironment offear andterror, theregime's agentsattimeskidnap, torture, kill, assassinate and hang the suspected opposition. Furthermore, the regime buys support from individuals by creating and distributing political rents. The rent seekers subsequently become loyal supporters ofthe regime. The resources that are used bythe regime to repress the population and create loyal supporters arewasteful expenditures that represent deadweight losstothe society. 250 Siavash Abghari/Political Economy of Political Power ofthe Islamic Regime in Iran A political power production fiinction can be developed that shows the relationship between repression (R) and loyalty (L) as factor inputs and political power (P) as output. The interrelationships between repression and loyalty are very complex,thustheir levelspsychologically affect, aswellas the organizational strength of the opposition, intemational diplomacy, and toleranceofthe Westem democracies.Moreover,the levelofrepression affects the supply of loyalty. A production function in economics is used to develop the following political power production fiinction equation toexplore possible interrelations between the two inputs, loyalty and repression in producing political power by the dictatorial regime:' (1) P= f(L, R),where P stands for political power, L represent loyalty and R is repression. Where PL> 0, PR> 0, PLR> 0, PLL< 0, PRR< 0 PL>0, PR>0 are marginal products of loyalty and repression as factor inputs which are positive, meaning the use of additional units of these factors will have a positive impact on political power production. PLR> 0 is a marginal product of loyalty and repression, using additional units of them jointly in political power production, which is positive. PLL<0 and PRR<0 are marginal products of successive use of loyalty and repression factors alone, which are negative. This indicates that continued use of any instrument of loyalty or repression alone leadstoa lawofdiminishing retums inproduction of political power. Therefore, as the regime increases the level of repression, it must buy loyalty by distributing more political rent among the supporters in order to make the repression more effective. Also, it should be indicated that, with an increased level of repression, people in the opposition increasingly hate the regime, and when hate increases, the autocratic Supreme Leader loses loyalty because the risk of being associated with the autocratic leader will become more likely. Thus, to maintain support and loyalty the leader has to reward supporterswithmorepolitical rent. In otherwords, thesupportersarerewarded for the additional risk. It should be indicated that this buying of loyalty by the regime and rent seeking behavior ofthe individuals have led to wide spread cormption in the country. Moreover, to maximize power over the people, the Islamicregime uses instruments ofmasscontrol, such asbanningthe free press and using state-owned mass media to manipulate the public opinion. The supply of loyalty to the autocratic leader will also depend on other variables. For example, citizens, political groups, and political factions supply loyalty because they expect to receive in retum some portions of the political gains from the exchange. This rent to suppliers of loyalty can be represented as a "price" received per unit of loyalty supplied (Lp). Also, the supply of loyalty 251 JOURNAL OF THIRD WORLD STUDIES, SPRING 2007 dependsontheeconomicperformance ofthe regime (PE). Improved economic performance increases the regime's legitimacy, which means that the regime has more financial resources at its disposal to repress the opposition, as well as to buy more loyalty. The supply of loyalty function can be written as: (2) L» = f(LpR,PE) Where, L" represents supply of loyalty, Lp is price of loyalty, R represents repression, and PE represents Economic Performance. Given the economic performance (PE), the autocratic leader would choose combinations of R (Repression) and L(Loyalty) to maximize political power or maintain the hold on power subject to the consfraint posed by the supplyofloyalty. TheLagrangian function for themaximization ofthe political power production function, equation (1), subject to the supply of loyalty function expressed by equation (2),can then be written as equation (3) below: (3) Max P = f (L, R) + A. [L'- f (Lp, R, PE)] Maximization ofthe constrained politicalpowerproduction function, equation (3), is accomplished by setting the partial derivatives of the Lagrangian function taken with respect to independent variables, equal to zero, and then solving the resultant system of equations. The solution simply is: (4) PR PL=5R dL Equation (4) showsthat ifthe supply of loyalty is the only constraint, the slope ofthe supply curve dR dL must be equal to slope of iso-power line PR/PL at the optimum point. Iso-power, derived from iso, meaning "equal" and power meaning "political power," denotes a curve that represents all the different combinations of inputs; in this case, repression and loyalty, when combined, produce a specified political power. The slope ofthe tangent to a point on an - iso-power istherateatwhich repression (R)mustbe substituted for loyalty (L) in order to maintain the corresponding political power level. The shape ofthe iso-powerrevealsagreatdealaboutthesubstitutability ofthe input factors, that is, the ability to substitute one input for another in the political power production processes. In other words, repression and loyalty can be traded for each other while holding the political power constant. One implication of this model is that in the authoritarian Islamic regime, repression is carried to the point that, at the margin, an increase in repression reduces the supply of loyalty.Thus,more repression increasesthe level offear amongthepeople and atthe same time makesthem despise the regime even more. As the level of hate 252 Siavash Abghari/Political Economy ofPoliticai Power ofthe Islamic Regime in Iran increases this makes the population more resistant, which in tum increases the repression requirement to keep the population in line. More fear bythe people lowers the repression requirement for maintaining power.* Arational dictator will never use a combination of repression and loyalty, as it results in a negative contribution for one ofthe inputs at the margin in the production of political power. APPLICATION OF THE MODEL IN THE ISLAMIC REPUBLIC OF IRAN The autocratic Supreme Religious Leader astherepresentative ofthe Allah's sovereignty on the earth uses repression and loyalty instruments to maximize political power over the population. For producing and maintaining thepoliticalpoweroverthepopulation, theregimerepressestheopposition and buys political loyalty from supporters. From a political economy view point, the central and basic question isnot the maximum political power obtained by the Supreme Leader, but the importance ofthe nature ofthe constraints and limiting factors in political power production. From the Supreme Leader's point of view, the most important factor isthe loyalty ofthe population. What constrains the Supreme Leader in the maximization of power is the economic resources under his control. The regime, in order to produce and maintain political power, represses the opposition and buys political loyalty byusingup economic resources. In Iran, oil and gas, other minerals, and large industries are state owned. More than 80 percent ofthe economy is under state control. There are also huge economic foundations that are separate and independent from the govemment, with monopoly power under direct control of the Supreme Leader. Therefore, he has access to huge economic resources toplay with and use as it pleases him. From the regime's point of view, the most important and critical factors in its political power are the support and loyalty ofthe people. As long as the regime is supported by the masses, the despotic leader can maintain his political power and control with more repression of the opposition and non- supporters. Iftheregimeenjoys thecontinued and unconditional support ofthe masses, the outcome will be the total suppression and elimination of the opposition. Thishasbeenthe goal ofthe Islamicregime since itsinception -the absolute control over all aspects ofthe individual's life. In earlier years after the revolution, Khomeini had the support ofthe masses due to their religious belief and revolutionary fervor. It was easier for the regime to repress and eliminate opposition, centralize political power, and interfere in the individual's life bythe installation of'Sharia-based Islamic law. Khomeini and his disciples used the hostage crisis to eliminate opposition and consolidate political power and called it the "second revolution."' 253 JOURNAL OF THIRD WORLD STUDIES, SPRING 2007 The second wave of mass elimination of opposition happened in the summer of 1988, after Khomeini accepted the United Nations resolution 598 to end Iran-Iraq war. He took advantage of the domestic and intemational political environment which was created right after ending the war with Iraq, and secretly ordered the mass murder and execution of tens of thousands of political prisoners,just to reestablish his credential. The victims were buried in mass graves in different cities without families and relatives knowing about their loved ones burial sites.'" As people became more aware ofthe nature of Khomeini's Islamic Republic, they resisted the interference in their personal life, and the Iranian society has never been as disgmntled and displeased with its leadership asit istoday.Thus,todaytheregimethat wascreated inthename of Islam has alienated young people from Islam. Theoretically, there is a conflict between maximizing the political power of the regime with total political repression and ignoring the loyalty factor. This will become apparent as the relationship between repression and loyalty isdiscussedbelow. Asmentioned, autocratic mlers usetwo instmments to produce and maintain political power over the population ofthe country. These are: I. Repression: To eliminate political opposition, the Islamic regime designates the opposition's political activity as illegal and represses it. The repression of the opposition requires allocation of economic resources in order to pass repressive laws; establish revolutionary courts, which have been in operation for the last twenty six years since the inception of the regime; build more prisons and secret detention centers; employ special police and sectirity forces; andhire vigilante groups andthugsto attack and kill people. According to a June 2004 report of the Human Rights Watch, the center of the human rights violations is the Islamic regime judiciary, a small group of judges accountable to the Supreme Leader; thisjudiciary has shut down public dissent through torture, indefinite solitary confinement, and denial of basic due process rights to all political prisoners. This report indicates that "The authorities have largely succeeded in their campaign to send a message to the broader public that the costs of voicing peaceful political criticism are unbearably high". The reghne'sjudiciary system ispart ofthe repression apparatus rather than a part of protecting the rights of citizens. The Islamic Republic is the only regime in the world that eliminated theopposition bycallingthem "thecormpt onthe 254 Siavash Abghari/Political Economy ofPoliticai Power ofthe Islamic Regime in Iran earth and the enemy of the God" and by telling them that their elimination is a God given order. The Islamic regime is one of the most repressive in the world today as documented by human rights organizations. According to July 2004 report ofthe Intemational Federation for Human Rights, the Islamic Republic of Iran is ranked 160"' out of 166 countries in term of freedom of expression. 2. Loyalty: The autocratic Supreme leader, by distributing political rent and creating rent opportunity among a portion of the population, buys their loyalty and support. The regime's top officials and bureaucrats consistently focus on theirpolitical survival byalwaysensuringadequate political support from social groups. The dominant strategy they use is material advancement in retum for support and political loyalty. Politicians and bureaucrats have tumed the institutional arrangement ofthe country into instruments for their own, political purposes. This also explains why they oppose changes while maintaining the status quo. Consequently, this has led to widespread cormption and economicmismanagementwhichhasresulted inhighannual inflation, high unemployment, a brain drain and the decline in economic growth and per capita national income." Political rent donors themselves arerent seekers at a higher decision- making level. According to an Economist Intelligence report in early 2002, a cormption case was exposed and Shahram Jazayeri, a 29 year old business man, confessed he had given money to as many as 60 reformist deputies. This included more than $500,000 to the brother ofthe Supreme leader who is a reformist deputy, and to many govemment officials and clerics including the Supreme leader's office and $700,000 toPresident Khatami.Infact, allthe 500 or so mullahs with political positions in the Islamic govemment are stockholders in the same corporations or serve on the board ofthe foundations established by the regime. The govemment, by owning oil, natural gas, other minerals and the major industries, as well as by controlling about 80 percent ofthe economy, is the biggest contractor, buyer and employer. There are several Foundations which are involved in all lines of business and trade that are not accountable to any one but the Supreme Leader. The Foundation for the Dispossessed, for example, controls assets worth $80 billion and is Iran's second biggest corporation after the National Iranian Oil Company. The foundation owns factories, banks, hotels and properties in Iran and foreign countries. It has 255 JOURNAL OF THIRD WORLD STUDIES, SPRING 2007 purchased interest in 80 foreign companies. About 25 percent of banking business inDubai isowned bythis foundation. The foundation never publishes its accounts and reports only to the Supreme Leader. The second largest foundation is Imam Reza Foundation. By some estimates, the foundations under the control of the Supreme Leader control about 70 percent of the national economy outside agriculture and state-owned indusfries.'^ These foundations emerged after the revolution when the Islamic regime seized the assets ofthe Shah's family, the rich people and individuals closely associated with the monarchy. In the early 1990s,the govemment launched a privatization program of some ofthe state-owned enterprises. Often this has meant the transfer of ownership to these foundations, to politicians and mullahs and their family members and associates who actively campaign for the regime." Senior clergies and close associates, including Supreme Leader and former president Rafsanjani, are the major stockholders of more than 100 companies. The foreign trade isamonopoly ofthe govermnent, andthe regime isgrantingtrade licenses to infiuential people in govemment and their associates as political rent. Trade with much of Asia, specially Japan and China, and many ofthe foreign investment deals in Iranian oil and gas are under Rafsanjani's control. In September 2003, it was revealed by Dagens Naeringsliv, Norway's daily newspaper, that Stat Oil,Norway's state-owned Oil Company, had given 15.5 million-dollar to Rafsanjani's son for obtaining an oil contract in Iran. The regime not only uses financial resources of the country to buy loyalty domestically, it also gives special discounts in oil exports to foreign politicians and friends to buy their support in intemational diplomacy. The regime, by granting economic concessions to Russia, China and European countries, is obtaining intemational support and legitimacy to advance its political agenda. The Islamic regime has developed anetwork of loyalty inthe country that isestimated tobe about 2million people.These supporters areoffered low interest loans to buy houses and set up businesses, priority in obtaining business licenses, admission to the universities, and pilgrimage to Mecca and other shrines. There are about 20,000 theology students in seminaries that receive stipendsfromtheregime.Theregime very often paysthe loyalists' cost ofhospitalization, weddings and vacations at state-owned resorts. Moreover, the regime is buying loyalty through a network of mosques and 400 Friday prayer leaders throughout the country.'" Now that the price of oil in the intemational market has risen to about $60 per barrel, the regime h^s more financial resourcestobuymore loyaltybyprovidingmore subsidieswhichgive way to the loyal supporters mentioned above. Consequently, we may observe a new wave of repression in the country. 256 Siavash Abghari/Political Economy of Political Power ofthe Islamic Regime in Iran Iranhasemergedfromtheeraof Westem imperialism asarenter state and the Islamic regime uses the state stmcture, including the parliament, to adapt and implement policies that are decided bya small group of mullahs and their advisors insecrecy, without beingheld accountable to thepeop
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