Iran: Elite's gleam against backdrop of poverty
    Analysis by Shereshvskiy

    ANALYTICS  07 June 2023 - 17:41

    Mikhail Shereshevskiy

    When it comes to Iran, which is going through difficult times of dictatorship, one often remembers those who lead the Islamic Republic, suppress protests and execute their participants. The Iranian ruling elite is sometimes portrayed as sullen religious fanatics solely concerned with power preservation. They allegedly only dream of the arrival of a hidden imam, of the advent of messianic times of universe reformation. This could have been late Ayatollah Ruhollah Khomeini. There are such people today, too, but it is impossible to make a major mistake when discussing Iran's current leaders.

    Professor Hussein Raghfar, a well-known Iranian economist, stated in 1921 that it was critical to understand who was impeding economic reforms in Iran and why. He also said that the most significant obstacle is the existence of an "oligarchic class that has a presence and influence in the power structure".

    The website of the Iranian opposition - Iran News Wire - recently published a curious report entitled "An unbelievable rise of Iran’s affluent class: A consequence of corruption". According to this report, the rule of religious authorities, as well as the military from the IRGC (Islamic Revolutionary Guard Corps) and nepotism have created a sick economy based on overconsumption and corruption.

    Here it is necessary to clarify - it is not only and not even so much about the fact that officials take bribes. All large companies in Iran, private and public, belong to persons connected with the authorities; first of all, we need to talk about family ties. The whole mass of the super-rich and simply rich people exists thanks to huge state subsidies and state orders, financial flows from the treasury, which are pulled apart by officials and owners or top management of enterprises. The most important source of funds for the ruling elite is the distribution of oil revenues.

    The system is based on a principle that significantly hinders the development of the Iranian industry itself and its modernisation. The authors of the article, who remained anonymous, point out that the years from 2005 to 2013 and from 2018 to 2020 were the best periods for the wealthy or elite class in Iran. In the period from 2005 to 2013, the country was led by a government led by President Mahmoud Ahmadinejad. Oil prices reached their highest level in eight years, resulting in $700 billion in oil exports entering the Iranian economy. However, these funds were not invested in strengthening industry - the foundation of the country's economy. On the contrary, petrodollars were distributed within the ruling elite. They were appropriated by a network of officials and related persons and used to further enrich the Iranian ruling elite (sometimes economists call such systems "petrodictatures").

    During Ahmadinejad's presidency, more than $511 billion worth of foreign goods were imported into the country. This figure is equivalent to half of the total value of imports in the entire history of the Islamic Republic of Iran. Thus, the higher the oil revenues, the more the ruling elite and their associated networks of parasitic appropriation of income import goods, undermining Iranian industry capabilities, ruining local producers or preventing them from growing.

    The ruling elite of Iran is a large bourgeoisie (if we follow the definitions of Marx), closely connected with the state. But what is especially important is that these groupings are oriented towards consumption and against production. Here, however, a certain adjustment is necessary. In recent years, the Iranian leadership has been betting on import substitution, which is due to the US sanctions that hit the country in 2018. However, the money allocated by the state for the development of industry, the agricultural sector and infrastructure is largely stolen. Nevertheless, a certain number of new jobs are being created.

    An economy riddled with corruption, nepotism and largely based on oil rents, where big business is run by someone's incompetent and thieving relatives, is an economy based on overconsumption and imports, which hinders the development of its own industry, leads to an increase in poverty and inequality. The industrial working class, small businesses, small and medium-sized companies, individual entrepreneurs, pensioners - everyone is tired of the corrupt elite’s rule and the disasters that it brings. Growing poverty, which covers at least half of the population, and inflation of at least 50 per cent (these are official data, whereas in reality, the increase in high prices can be much higher) are products of the country's ailing economy, as well as the growth of incomes of the ruling elite.

    At the same time, the researchers draw attention to another negative aspect of the rule of the current leadership of Iran. They point out that the lifestyle of the ruling class has a strong negative impact on public culture. This lifestyle is associated with conspicuous ostentatious consumption. Young rich people, often the children of officials, purchase the latest foreign models of cars or mobile phones. Their way of existence is gradually becoming the main social value. All other classes of society, or at least a significant part of them, are trying to imitate this inappropriate behaviour, but they do not have enough funds. The inability to lead such a lifestyle generates psychological pressure and depression.

    Thus, the majority of the ruling class are not fanatics at all. It is ready to kill opponents not so much because they are dissidents or non-believers, but, above all, because the protesters threaten the luxury of the ruling class - a luxury inextricably linked with its state power. Behind the front sign of the Islamic Republic hides a system inside which swarming luxury parasites, accustomed to super profits.


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