SOCIAL-JUSTICE SHARES: AHMADINEJAD’S INITIATIVE

The Ahmadinejad government that came to power in summer 2005, calling itself the “justice-driven administration” under the banner of mehrvarzi (compassion) represents in fact populism of the right rivaling Mussavi’s compassionate socialism of the left. The scheme, dedicated to the cause of the poor and deprived regions of the country, proposed a different direction to accomplish the privatization task. The president himself was widely quoted as having denounced the past actions as corrupt, ineffective, contrary to workers’ interest and tantamount to giving away the ranch. He openly accused the previous two administrations of selling public assets on favorable terms without proper safeguards to friends, relatives and cronies at one-fifth to one-eighth of their true worth-and all on credit. (29) He even vowed to take back properties that were unjustly ceded to a few privileged individuals, calling the transfers null and void. (30) To reverse past injustices, the new president promised to change course and follow the privatization drive through the distribution of what he termed “justice shares” (saham-e edalat).

The scheme, however, was neither original nor highly valued in informed circles. It was rooted in Ayatollah Khomeini’s repeated references to “Islamic justice.” (31) Proposals to transfer shares of SOEs to the people in different forms and under different terms had also been offered by other sources as early as 1996. (32) A published study, entitled Popular Privatization, had already proposed a detailed plan for giving every citizen “stock coupons,” redeemable in cash or exchangeable with shares of SOEs, in order to raise national productivity and spread social justice at the same time. (33) Rafsanjani’s campaign for the presidency in 2005 also promised a nationwide distribution of “stock coupons.” A Tehran Stock Exchange manager had suggested a similar proposal. Based on these varied schemes, the Ahmadinejad plan to distribute ownership was presented to the Majlis in October 2005, with the initial objective of granting stock rights to the lowest-income families. (34) The program encompassed the distribution of shares of all government enterprises and semi-public entities under government jurisdiction. Interestingly, the scheme was presented not as a replacement, but as an adjunct to privatization with a set of other complementary objectives: equitable distribution of wealth combined with steady income for the poor; propagation of the culture of stock ownership; increasing enterprise productivity; changing the public’s negative view of private enterprise; and enhancement of the share of the cooperative sector in the national economy. The Ministry of Welfare and Social Security was given the task of identifying prospective families among the lowest-income recipients in the country. The Ministry of Economy and Finance was to serve as a conduit for the transfer of shares.

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As finally put together, the multi-layered and complex program now involves (1) an initial sale on credit of SOE shares by designated enterprises to the Privatization Organization in 20-year installments; (2) subsequent sales by the PO! to an intermediary agency called the Corporation for Transfer of Justice Shares (CTJS) within the Ministry of Economy and Finance on the same conditions; (3) separate agreements by CTJS with each of the country’s 30 Ostan (region) Justice Shares Cooperative; (4) sale by the Ostan JSC to 337 Shahrestan (province) JSCs; and (5) issuance by the latter of coupons to eligible recipients. (35) In this complicated vertical lineup, individual coupon recipients are shareholders of their Shahrestan cooperative; Shahrestan cooperatives are shareholders of the Ostan holding companies; Ostan holding companies are shareholders of the Transfer Corporation; and the latter holds shares of privatized SOEs on behalf of the government.

Based on various official declarations, the Ahmadinej ad administration intends to transfer to the public 80 percent of the shares of all designated state enterprises, estimated at $115- $120 billion within three years. Previously, an eight-year time horizon had been announced for the entire process. (36) Forty percent of the assets are to be distributed under the justice-shares program, 35 percent offered to public investors through the Tehran Stock Market or sold through auction, and 5 percent earmarked for the workers and managers of the privatizing entities. The state will retain 20 percent of shares. (37) The POI has announced an ambitious program of offering shares of 240 state enterprises up to March 2008. By the end of the period, the public sector’s share of the national economy is to be reduced to 20 percent from the current 65 percent, the private sector’s share will rise from 30 to 55 percent, and the share of the cooperative sector will go up to 25 percent from the present 5 percent. (38)

In the current perspective, share distribution is to reach some 21 million of the poorest 30 percent of the population, who will receive a total of 420 trillion rials (about $46 billion) in public-enterprise shares in three phases. In Phase I, the lowest-income 10 percent-an estimated 5.6 million individuals with an income less than 300, 000 rials a month ($32) and currently supported by various welfare schemes, would receive about 27 trillion rials. (39) In Phase II, another estimated 7.4 million rural residents and migrating tribes will be included, receiving 6.5 trillion rials. In Phase Ill, the program will be extended to an estimated 8 million government employees, workers, retired army and security personnel, and civilian retirees-comprising the six lowest deciles of income receivers-who would receive about 10.5 trillion rials. Each member of a designated family of five (maximum) would initially receive 5 million rials worth of justice shares, and eventually 20 million rials. The beneficiaries are to pay for the coupons in 10 to 20 years out of the annual dividends on their shares. According to a special decree by the supreme leader, the lowest 20 percent of income earners are entitled to a 50 percent discount in the purchase price of their shares. Discounts or other benefits are also provided for workers and managers of privatizing firms. There are detailed provisions regarding further transactions in distributed coupons.

The program has, from the start, faced five major challenges to its basic design. As the judiciary chief in a rare public statement has noted, there have been “strong differences of opinion” among the Islamic Republic’s various power centers regarding policies and actions in the implementation of Article 44 and the basic direction by the supreme leader and the Expediency Council (40)-implying some resistance by the enterprises in voluntarily relinquishing their shares. The second hurdle has been the difficulty of identifying a reasonably accurate number of the “poor” in all three phases. Due to a near total absence of income-distribution data in Iran, figures regarding the size and status of the “poor” are both controversial and unreliable, with estimates ranging from zero to 30 percent of the total population. According to the current minister of welfare, “no one” in Iran was under the absolute poverty line. (41) He later admitted that some 9.2 millions of Iran’s total urban and rural population of 70 million are under the absolute or relative poverty line. (42) A Management and Plan Organization official and a Majlis deputy, however, give estimates of 10-12 percent. Two other members of the Majlis welfare committee put the figure at 13 and 20 percent, respectively, while a radical private economist raises the figure to 30 percent. (43)

The third challenge has been the selection of enterprises whose shares are to be transferred. If these entities were in the red and kept alive on public subsidies, transferring their shares would be tantamount to distributing poverty, not plenty. And if they were profitable businesses, the government could lose even more budgeted revenues from their operation and face larger deficits with more dire consequences. Fourth, obtaining an accurate, cost-based pricing of enterprise shares has been a thorny problem, given the companies’ opaque accounting system, the unpunished amounts of annual state subsidies, loans received from state banks on favorable terms, unpaid taxes and other market data. In view of difficulties encountered in pricing the total worth of even a small public enterprise in the earlier privatization exercises-sometimes stretching to several months-share pricing of the current mammoth government entities is likely to entail interminable disagreements among company accountants and POI appraisers. Fifth, the elaborate, complex and ill-defined administrative and bureaucratic processes involved in carrying out various phases of the scheme constitute a new daunting task for the already overwhelmed bureaucracy. Finally, there have been no specific sources of financing officially designated for the elaborate administrative costs of the various agencies involved.

Matching these multiple challenges faced by the program’s supporters is an apparent lack of enthusiastic demands on the part of the public as well as share recipients. (44) This attitude reflects partly the insignificant immediate impact of the program on their daily lives, and it manifests the national financial culture that exhibits a clear preference for tangible wealth such as land, property, gold, jewelry, antiques and even mobile telephones compared to financial assets. (45) The poorer the income group, the less interest is shown in owning financial papers. Emblematic of this phenomenon is the fact that less than 10 percent of the Iranian population’s total possessions is in financial assets, compared to more than 60 percent in advanced countries.

Published information about the justice-shares program so far is sketchy, contradictory and full of ambiguities. Actual share distribution reportedly began in February 2006 among the poorest group in four relatively “deprived” Ostans each of which received 5 million rials ($540). Within a year, a total of 5.6 million individuals reportedly received a total of about 27 trillion rials worth of shares. (46) In defending his privatization record against widespread criticism, President Ahmadinej ad has boasted that, in the previous 15 years, only 35 trillion rials of government shares had been privatized, while his government had thus far distributed more than 26 trillion, and intends to transfer another 60 trillion in the current and coming years. (47)

Assuming that the program succeeds in reaching its primary objective, there is no evidence, or even a reasonable assurance as yet, that other objectives of the program-increasing income, expediting privatization, downsizing the bureaucracy, promoting stock ownership habits, and enhancing enterprise efficiency-might be tackled or even approached. A palpable redistribution of income, the program’s prime objective, can hardly be accomplished with the promised 11-15 percent annual dividend (48) on the initial $50 or even the ultimate $200 distributed shares to a poor family member, half of which has to be paid back annually. Furthermore, there is no guarantee that privatized SOEs will have a double-digit return year after year and pay regular dividends so that the recipients can pay for their shares. (49) Second, expediting the privatization process as the next major goal of the program is also difficult to imagine. (50) In fact, it has been all too clear from the start that the objective of privatization (downsizing the public sector), and the goal of social justice (wealth redistribution), could not be optimized or even accomplished by one stroke, as the minister of economy and finance claimed. (51) Privatization could not be achieved through a justice-shares program that leaves 20 percent ownership (and thus effective management control) in state hands. The program could at best be called partial denationalization rather than privatization. Third, downsizing the government through reduced ownership is equally dubious, given the nightmarish multi-stage structure of the share-distribution program. The Central Headquarters, led by the president and composed of nine ministers, the mammoth Holding Company possessing large shares of 500 SOEs, the 30 Ostan and 337 Shahrestan cooperatives-each with its board of directors, managers, accountants, auditors, inspectors, etc. -would add to the government’s size instead of reducing it. Fourth, enhancing total-factor productivity as another crucial goal of the scheme is also questionable. (52) There are already grave doubts about the technical, managerial and fiduciary ability of the Privatization Organization, the main Holding Corporation, and that of the regional and provincial cooperative societies to perform their fiduciary duties. (53) The only objective of the program that is perhaps within reach, and has been partly achieved, is expanding the share of the cooperatives sector-so far the orphan segment of the national economy. For this reason, the justice-shares program has been dubbed cooperativization rather than privatization. (54)

Furthermore, despite continued statements and repeated assurances, there is great doubt that the program will be able to distribute even the first 5-million-rial tranche of the 20 million rials promised to its 21 million eligible recipients by February 2008. (55) Fully aware of the difficulties involved in altering the recipients’ preference for tangible assets and alerted by the sad experiences of privatization in the former Soviet Union and Eastern Europe, the framers of the justice-shares program have placed a two-year total ban on sale of distributed coupons. They also strongly advise the recipients to hang onto their papers for steady returns and claim that the shares’ value has already gone up in the Tehran Stock Exchange. Nevertheless, there are scattered reports that, in certain shahrestans, the coupons are already being sold in the “informal” market at half their face value. (56) And, notwithstanding the various legal restrictions imposed on the sale of distributed coupons, private analysts believe that a majority of the recipients are likely to bypass those restrictions and create a black market in shares in Iran’s underground economy. Or they may take advantage of several loopholes in the program by selling their shares back to their local cooperatives, making the latter a new, semi-public, large institutional shareholder. In either case, the effect would not only negate the program’s original intent but may entail new hazards for the economy. Many private economists warn about further fueling the already alarming double-digit inflation. (57) Others argue that even those who may hang on to their coupons are likely to increase their consumption, stimulated by the wealth effect. The Iranians’ legendary low propensity to save and the bitter memories of the Tehran Stock Exchange crash in 2004 underscore these pessimistic forecasts.

Altogether a cursory examination of the justice-shares program so far is sufficient to indicate that the scheme is an ad hoc populist program-poorly conceived, inadequately prepared and highly complex-with insufficient prior cost-benefit analyses or calculations of its socioeconomic consequences. (58) For these reasons, even during the first phase of implementation, it has undergone repeated changes in its major provisions and continues to do so. (59) A great deal more data is needed to predict the ultimate success of the scheme.

IRAN’S PRIVATIZATION PARADOX

By a consensus of both domestic and foreign observers, the Islamic Republic’s 18-year privatization attempt has not been a success. The new scheme under the Guidelines also faces a multitude of challenges. As already mentioned, during the nearly two decades of privatization efforts, the public sector, if anything, has continued to expand several times faster than the privatized segment. The share of the national budget in GDP has nearly doubled; private savings and investments in relation to GDP have remained the same; and national-factor productivity has actually declined. (60) The number of major SOEs listed in the comprehensive annual budgets (excluding their subsidiaries) has reached more than 500 from less than 270 in 1989, and their share of total public expenditure has risen to 73 percent from about 53 percent. (61) More significantly still, after nearly two years since the Guidelines proclamation, which the supreme leader termed “an economic revolution,” (62) not much interest has been shown by the private sector in the newly opened fields. While the constitutional “interpretation” of Article 44 was at the time hailed as the key to large-scale privatization, subsequent developments significantly tempered the initial euphoria. In the nearly two years since the first proclamation, no more than 10 percent of projected privatization revenues in the 2005 and 2006 national budgets actually materialized. This setback was so keenly felt that the supreme leader, in an unusual gesture, publicly chastised the government for the slow pace of privatization. (63) As it turned out, however, the process had encountered another major obstacle. An ad-hoc Majlis committee, established to watch and expedite the privatization process, ultimately came to the conclusion that the main reason for the shortfall was the fact that the implementation of the Guidelines still required special enabling legislation from the Majlis. Without a specific parliamentary authorization, the privatizing agencies could not be found negligent in their transfer delays, and courts were not able to sanction the legality of transferred assets. (64) According to a Privatization Organization official, despite repeated advertisements in newspapers, no offer has been received from the private sector for some of the public enterprises put up for sale. (65)

Although the Islamic Republic’s current domestic and international political climate, the real or imaginary winds of war with the United States or Israel, a shortage of domestic private capital and the paucity of foreign direct investments are often cited as the main causes of the economic malaise, the underlying cause may, in fact, lie in a more fundamental paradox. To be sure, under the Ahmadinejad government, which is accused of having “a clear anti-bourgeoisie policy aimed at paralyzing big investments by the private sector” (66) and giving conflicting signals regarding government policy, (67) the climate for liberalization, marketization and privatization has palpably deteriorated. Ahmadinejad’s own quasi-dictatorial interventions in various domestic economic arenas-goods, capital, labor and trade-have also actually intensified. Such various factors as his objection to streamlining energy prices, mandatory increases in workers’ paychecks, the mandated lowering of interest rates, compulsory earmarking of bank credits for the government’s favored but questionable projects, (68) forced changes in private banks’ management, the arbitrary raising and lowering of tariffs on scores of items, threatening to take back the questionably transferred enterprises, the granting of lucrative contracts to certain special entities on a no-bid basis, (69) the haphazard allocation of oil money to hundreds of small and questionable projects demanded by welcoming crowds during the president’s travels around the country, and allegations of government interference in the election of the Iran Chamber of Commerce president. (70) have all been pointed out as inimical to long-term domestic private investment. (71) A longer and more specific list of challenges to the implementation of the Guidelines is presented by private-sector leaders and high government officials. (72)

A belligerent stance by the president on the nuclear-proliferation issue and a clumsy and needlessly hostile position towards Washington and Tel Aviv have also resulted in a reluctance by foreign oil companies to invest in Iran; and de facto sanctions by European and other foreign financial and credit institutions under pressure from Washington have virtually shut off badly needed foreign direct investment. (73) After President Ahmadinejad’s repeated statements that the UN and American sanctions have had no adverse effects on the economy or his nuclear policies and that Iran was unfazed by the prospect of further sanctions, the oil minister recently admitted that sanctions are hurting the oil industry. (74) The Tehran Stock Exchange’s lackluster performance during the current administration and its recent erratic receptions to the initial public offering of four giant state steel, aluminum and copper enterprises, coupled with widespread reports about Iranian capital flight to Dubai, seem to confirm the political uncertainty hanging over the economy. (75) To help the private sector finance its purchases of privatized shares, the government has decided to turn one of its state banks into a cooperatives bank with an additional 3.500 billion rials in capital, and has ordered other state banks to set aside 15 trillion rials in credit for large buyers of state enterprises in return for a 30 percent down payment in cash. (76) It remains to be seen how these marginal measures may deal with the problem.

Even in the absence of the current obstacles, however, an effective and measurable privatization drive remains an elusive goal due to the influence of a seemingly insoluble systemic paradox. On the one hand, there is no doubt that Iran’s current economic woes-high unemployment, virulent inflation, low factor productivity, slow growth, low levels of domestic savings and foreign direct investment, and relatively high but unprofitable public outlays-cannot be remedied without the creation and promotion of a strong private sector. (77) Privatization is not an option but a necessity. On the other hand, there are certain indisputable indications that neither the institutional nor the ideological underpinning of the Islamic regime would allow such a transformation. (78)

Institutionally, privatization is a daunting, if not impossible, task in an oil exporting country like Iran, where (a) the mainstay of the economy-oil reserves and revenues-is a government monopoly; (b) petroleum-export incomes are too large and far beyond government needs to finance and maintain the basic infrastructure and provide public goods; (c) oil revenues are not directly distributed among citizens as in Alaska; and (d) oil windfalls are not placed in a “lock box,” to be invested abroad and drawn upon only during oil shortfalls and other emergencies as in Kuwait or Norway. (79) In the absence of these four conditions, extra oil income received by the government would invariably be invested in new public enterprises and would always exceed the simultaneous privatization of existing ones. In Iran’s case, additional factors are also at play. Even in the most successful implementation of the current privatization program, 20 percent of the ownership of privatized enterprises is to be retained by the government, another 40-45 percent of shares will also remain in state hands because the managers of privatized enterprises and the leadership of cooperatives will still be appointed by the ministries of finance, industry, commerce, cooperatives, and others. As a result, meaningful privatization would probably never be achieved since the Islamic Republic’s sub-par performance lies not in public ownership but in poor management. (80)

Ideologically, too, privatization is anathema to the Islamic Republic’s political fabric and essence. True privatization requires, first, a clear legal recognition of private ownership rights with solemn guarantees regarding the impossibility of expropriation without due compensation. Second, it calls for the sanctity and security of contracts, business transparency, a modernized and private banking system, removal of inhibiting regulations, wage/ price decontrol, trade liberalization and a market-friendly labor code. Third, it requires a modern business and commercial law with proper safeguards against monopoly, unfair trade practices, and deceitful advertising strengthened by special provisions against stock fraud, price manipulation and insider information deals. Finally, the need is for an independent, honest, accessible non-political and business-savvy judiciary.

None of these conditions exists in the highly regulated, rent-oriented, corruption-gripped, and non-transparent Islamic Republic. In fact, a recent report details the prevalence of preferential import licenses, access to interest free or cheap credit for well-connected groups, guaranteed market shares for favored religious centers, and other such discriminatory practices. (81) Furthermore, there is no doubt that such a firmly institutionalized and powerful private sector would inevitably cause the growth of competing political-power centers: private manufacturing associations, business roundtables, labor unions, an independent press, civic groups and political parties. All such developments would be an existential threat to the supremacy of the velayat-e-faqih, the Supreme Leadership. The resolve to get the government out of economic ownership and management is thus as fragile as the regime’s confidence in its own survival.

For these reasons, privatization has remained a process based on mutual reluctance. That is, in addition to the economic, political, financial and managerial opposition on the part of government agencies to offer their enterprises for sale, there has been a significant lack of interest by the public. The lack of enthusiasm on the demand side may be traced to the yet unchanged structure of the Iranian economy-the prevailing anti-business environment, continued price controls, trade restrictions and protection, unfair and misplaced public subsidies, a crippling labor law, absence of incentives for foreign investments, inadequate money and capital markets, a significant lowering of Iran’s ranking by Transparency International, and the earlier botched privatization efforts. (82) In the candid opinion of a government official, other factors such as dependence of state entities on subsidies (particularly on energy), lack of transparency in investment opportunities, voluminous and ever-changing government regulations, and other inhospitable conditions constitute further barriers to private-sector demand. (83) As a prospective private investor told a recent industrial conference in Tehran, private businesses will obviously be reluctant to invest in the country or even to bid for government shares under present conditions, where they still have to observe government price ceilings while their wage bill and other costs are increasing, the commerce ministry raises and lowers tariffs at will and permits or restricts exports without notice, and the central bank keeps the exchange rate unchanged despite continued high inflation. (84)

END OF AN ERA?

Privatization is now the ruling elite’s declared priority. From the supreme leader to government ministers, agency heads, religious luminaries and security officials, all sing the praises of a large private-sector role. The Privatization Organization persistently announces imminent offers of new enterprises going on the block, covering oil and gas, petrochemicals, telecommunication, steel, aluminum, copper, cement, electrical power, state banks, insurance companies and other state entities. (85) Yet, there are legions of skeptics in and out of the country who still believe that the whole proram is nothing but a clever ploy by the government to raise revenue to cover part of annual budget deficits. In any case, achieving the goal of social justice through a genuine privatization program, including social-justice shares, requires substantial prior changes in the Islamic Republic’s institutional and ideological underpinnings. It is becoming increasingly clear that, if the current schemes are to succeed, economic liberalization, de-monopolization and political democratization must precede them. However, in the frank opinion of the minister of finance, Iran is not yet ready for liberalization, and this ideal would take several more years to materialize. (86) A comprehensive piece of legislation currently submitted for debate to the outgoing Seventh Majlis-designed to allow the legal divestiture of Article 44 enterprises by the government and to provide a more hospitable and secure climate for private-sector expansion-may turn out to be of some help. (87) But the essential privatization paradox still remains to be dealt with.

Notes:

(29) www.radiofarda.com March 7, 2007; and donya-e-eqtesad, March 7, 2007.

(30) For a typical criticism, see his speeches in Arak and Saveh reported in www.emrooz.info, May 18, 2006.

(31) See “Imam’s economic viewpoints,” in www.hamshahri.net, June 2, 2005

(32) For references, see “A Critique of Justice Shares,” http://emruz.info, February 4, 2007.

(33) See “Details of Shares Participation Through Coupons” in donya-e eqtead.com, October 16, 2005.

(34) For details of the initial proposal, see donya e-eqtesad.com, October 28, 2005.

(35) www.hamshahri.net, October 22, 2006.

(36) Statement by the head of the POI in www.hamshahri.net/news, November 26, 2006.

(37) Statement by the finance minister reported in http://jomhourieslami.com, May 1, 2007.

(38) Statement by deputy finance minister in www.donya-e-eqtesad.com, January 8, 2007.

(39) www.donya-e-eqtesad.com, July 3, 2006; and www.hamshahri.net, May 8, 2007.

(40) See www.donya-e-eqtesad.com, April 18, 2007.

(41) See “The Minister’s Claim,” http://emruz.info, March 13, 2007.

(42) See www.iran-emrooz.net, August 12, 2007.

(43) For sources of respective figures, see www.iranmania.com/news, May 15, 2007; http://emruz.info April,29.2007; http://jomhourieslami.com, May 2, 2007; and Guardian, April 30, 2007; Kayhan(London) June 27, 2007.

(44) See the dialogue between the minister of finance and the members of the Tehran Chamber of Commerce, reported in www.donya-e-eqtesad, July 22, 2007.

(45) This attitude resembles the situation during the shah’s time, when peasants showed significant resistance to cede the titles to their newly acquired small pieces of land under the land reform program to an agricultural cooperative in exchange for the cooperatives’ shares.

(46) www.donya-e-eqtesad.com April 22, 2007.

(47) www.donya-e-eqtesad.com, May 19, 2007.

(48) See statement by the head of POI in www.hamshahri.net/news, May 12, 2007.

(49) No dividend has so far been declared or distributed to coupon recipients, and no payment made for their receipts.

(50) For a fuller discussion of the subject, see Islamic Republic of Iran: Managing the Transition to a Market Economy (Washington, D.C: International Monetary Fund, 2007).

(51) www.donya-e-eqtesad.com, March 13, 2006.

(52) For doubts in this regard expressed by the government’s Management and Plan Organization publication, see www.donya-e-eqtesad.com, January 23, 2007.

(53) For an official airing of these ambiguities and doubts, see “Three Unknowns about Justice Shares,” in www.donya-e-eqtesad, January 23, 2007; and a statement by an influential Majlis deputy reported in http:// jomhourieslami.com, June 20, 2007.

(54) http://emruz.info, February 4, 2007.

(55) Statement by deputy minister of finance reported in www.hamshahri.net/news, May 8, 2007.

(56) www.donya-e-eqtesad,com, April 17, 2007.

(57) The World Bank and the Economist Intelligence Unit in their latest reports both predict higher inflation and slower GDP growth of the Iranian economy in the next three years. See www.radiofarda.com, June 2, 2007.

(58) See statement by a member of the Tehran Chamber of Commerce in www.donya-e-eqtesad, July 24, 2007.

(59) For a detailed critique of the program, see http://emruz.info, February 4, 2007, and May 21, 2007.

(60) For details, see Iran Economics, June 2007.

(61) For an evaluation of the privatization program, see Iran Economics, June 2007

(62) www hamshahri.net, January 22, 2007

(63) See www.radiofarda.com, February 19, 2007.

(64) See statement by Elias Naderan, www.donya-e-eqtesad, April 6, 2007.

(65) http://jomhourieslami.com, June 20, 2007

(66) See statement by a former president of the Tehran Chamber of Commerce, Financial Times, May 28, 2007.

(67) http://jomhourieslami.com, June 22, 2007.

(68) For the misuse of bank loans in the “quick return” projects see www.donya-e-eqtesad, June 18, 2007.

(69) For details see the Wall Street Journal, October 14-15, 2006; and Financial Times, March 16, 2007.

(70) www.radiofarda.com, June 13, 2007

(71) See BBC Persian.com, June 12, 2007; www.radiofarda.com, June 13, 2007; and specifically the letter written to President Ahmadinejad by 57 economics professors of various Iranian universities reported in www.iran-emrooz.net, June 11, 2007.

(72) See http://jomhourieslami.com, July 8, 2007; and www.donya-e-eqtesad, July 1, 2007.

(73) www.payvand.com/news, May 12, 2007; and Associated Press, May 24, 2007.

(74) Agence France-Presse, July 4, 2007.

(75) For the warm reception of four attractively-priced and dividend-paying state metal companies see www. donya-e-eqtesad, August 11, 2007. For promises of starting the second and third phases of justice share distribution soon, and the first dividends to be paid on already distributed shares see http://jomhourieslami.com, August 14, 2007.

(76) www.hamshahri.net, June 8, 2007; and www.donya-e-eqtesad, June 8, 2007.

(77) In the candid opinion of the current minister of commerce, “without creating a genuinely competitive climate in the country, privatization would be meaningless.” www.donya-e-eqtesad.com, June 18, 2007.

(78) For more detailed references to some of these factors see “The Third Letter of Economists to Ahmadinejad,” in www iran-emrooz.net, July 15, 2007.

(79) See Jahangir Amuzegar, “Iran’s Oil Stabilization Fund: A Misnomer,” Middle East Economic Survey, November 25, 2005.

(80) For the significance of this factor see “Should state-owned financial institutions be privatized or reformed?” in IMF Survey, May 31, 2004.

(81) See “New Era for Iran’s Private Sector,” in ISN Security Watch, www.isn.ethz.ch/news, June 26, 2007.

(82) See statement by a Management and Plan Organization official in www.donya-e-eqtesad.com, December 9, 2006.

(83) Statement by the head of the POI reported in www.hamshashri.net/news, May 1, 2007

(84) www.donya-e-eqtesad.com, June 22, 2007.

(85) For various lists of state enterprises put up for sale this year see http://jomhourieslami.com, June 23 and 27, 2007, and July, 22, 29, and 31, 2007; and www.hamshahri.net, July 16, 2007.

(86) www.hamshahri.net, July 22, 2007.

(87) For details see www.donya-e-eqtesad.com, August 11, 2007.

By Jahangir Amuzegar

Dr. Amuzegar was finance minister and economic ambassador in Iran’s pre-1979 government.

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