Monday, December 25, 2006

A Few Points on Iran’s Election

Last week Iranians went to cast their votes to elect the members of city councils and the members of the House of Experts[1]. The process was anything but doll. Still fresh from their victory in 2005 President Ahmadinegad’s supporters hoped to win the majority of councils nationwide and to dominate Tehran’s council. Since President Ahmadinegad’s rise to power had begun by becoming the mayor of Tehran, he and his supporters also wanted to block the road for potential presidential candidates; including present Mayor: Mr. Ghalibaf, a conservative technocrat who happens to be a former General of Revolutionary Guards and an aviator.

Reformers and Technocrats joined ranks for a come back. Their list included promising names such as Dr. Najafi a MIT graduate and former minister of Higher Education and former vice president and the head of Management and Planning Organization. Ironically he was Kargozaran[2]’s first choice for presidency in 2005; he decided not to run because he did not have the approval of Mosharekat, the main reformer party headed by President Khatami’s brother at the time.

While the conservatives were divided between supporters of Mr. Ahmadinegad and those of Mr. Ghalibaf, the reformers and technocrats become united after 4 years. The results were surprising. In Tehran moderate conservatives won the majority while 4 reformers including Dr. Najafi also were elected. Mr. Ahmadinegad’s supporters won 3 seats becoming a minority. Nationwide voters were divided between reformers and moderate conservatives. One cannot analyze the results in many towns and villages politically, since in many places city councilors are elected based on their local prestige and influence rather than their political conviction.

Women did well too. In provincial capital cities across country women won 43 seats out of a total of 269[3]. In Arak, Urumeye, Ardebil, Zanjan, Shiraz, Qazvin and Hamedan women candidates received the largest number of votes to become their cities' first councilors. In Shiraz the capital of Iran’s rich classic literature and the rest place of its greatest poets a 25 years old female[4] student of architecture has received the largest number of votes. It must be mentioned that in 7 provincial capital cities women have not made it to city councils.

Although many interpreted the outcome as a signal of public dissatisfaction with President Ahmadinegad’s administration, the most important development of December election in Iran is neither ultra-radicals’ failure to secure Tehran’s city council nor reformers success. The most important development of last election is the revival of moderate conservatives and reinstituting their traditional role of a stabilizer. A role that Iran’s moderate conservatives and traditional clergies have always identified themselves with. Many have noticed how Mr. Ghalibaf shared reformers’ concerns about the process of counting the votes and how he was able to act as a moderator between reformers and radical conservatives in administration.

This is not an insignificant achievement at all. Moderate conservatives advocate a market economy and are more pragmatic in dealing with international community than their radical colleagues who consider any deal a compromise of their values. Traditionally their social base has included merchants, small business owners and parts of Iran’s middle class. Polarization of Iran’s domestic policies during President Khatami administration compromised their political position and public identified them with ultra-radicals and radical conservatives. That era is over now. Centrist politics is back in Iran. That is good news indeed.

[1] Knowns as KHOBREGAAN in Iran.
[2] Kargozaran e Sazandegi Iran is the main technocrat party in Iran, advocating privatization of economy and cautious approach to social issues.
[3] Statistics are from Hamshahri Daily published in Tehran, Iran.
[4] Fatimeh Hoshmand.

My Blog in Farsi

It is for my notes on microeconomics in Farsi.

Monday, November 20, 2006

Milton Friedman Passed Away

He was a great economist and recipient of the 1976 Nobel Memorial Prize for economic science. See CATO

" Edward H. Crane, president of the Cato Institute, commented on Dr. Friedman's life and legacy: "Here's a guy who won the Nobel Prize in economics for his work in monetary theory and he was a great Chicagoan, a great empiricist and theoretician of economics. But ultimately, what Milton believed in was human liberty and he took great joy in trying to promote that concept...."

Here are a few of my favorite Milton Friedman's Quotes:

"The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom. "

"Governments never learn. Only people learn. "

"Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property. "

"Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless. "

Wednesday, November 08, 2006

Dallas Historical Election and Spending Well

I am writing from Dallas, where yesterday elections created yet another surprise. Mr. Watkins has become the first African American Attorney General of Dallas country. He has defeated Republican Toby Shook. It is interesting to observe that Mr. Shook campaign has been much better funded than that of Mr. Watkins. As a matter of fact he spent 25 to 1 more than Mr. Watkins whose campaign raised a fraction of money Mr. Shook managed to have. From an economics point of view this is indeed interesting.

If we consider winning in an election the outcome determined by a production function, which is function of capital and labor, the question would be where the marginal gain of raised funds starts to diminish. Campaigns raise money in order to fund their activities in order to have the votes to win, thus the marginal benefit of each dollar raised is the number of votes that it adds to total existing votes. After a certain value of funds being raise the number of votes that an extra dollar brings in declines and diminishing returns begin. This continues until the number of vote stops increasing because of increasing funds and marginal benefit of a raised dollar becomes zero. Thus having access to large funds helps but does not guarantee the results I wonder what is in literature regarding this.

Tuesday, November 07, 2006

Sunday, November 05, 2006

Not Many Hail Privatization

Living in a foreign land as an Iranian obliges one to answer questions asked by curious people and to think about his or her identity as an Iranian and Iran even more. Those who ask questions often do so with innocence of naivety and no matter how awkward the question is one can always appreciate their effort to reach out to understand.

As a student of economics I have been asked several times about the reasons behind under-development of Iran and its economic problems. I often find that the questions are posed by those who already have assumed Iran’s economic problems are caused by its political structure and its ruling elite, like any other inexperienced observer would do.

The inexperienced foreign observer presumes that Iranian public and intellectuals are all for economic development of country. Indeed it is a rational assumption, since he already has assumed Iranian public and intellectuals to be freedom loving peaceful people. Although it might be rational, it is a very wrong and a very unrealistic assumption.

It is wrong to assume that public hail privatization policies or trade open door approaches. It also is very wrong to assume that Iranian intellectuals are supportive of such policies and consider them necessary. In reality such policies have been criticized by the very same presumably freedom loving intellectuals in no uncertain terms. When to these one adds government bureaucrats who are unwilling to let go their grip on industries and manufacturing, one hardly could be surprised by slow progress in privatization in Iran.

If Bureaucrats argue that for the good of people government is the best available candidate for ownership of industries, intellectuals argue that any policy that results in creating an industrialist cast, who could become rich, is against social justice and is an act of robbing nation out of its treasures and resources. Ironically pro-revolution extensive nationalization of industries was planned by Mr. Ezzatollah Sahabi then a liberal member of government and later a famous member of opposition. Not surprisingly he was among the first to criticize President Rafsanjani’s plans to privatize Iran’s public sector.

The truth is that privatization and other economic reform policies in Iran have been advocated by a small group of technocrats and leadership. Such policies have been executed by a leadership working with a reluctant bureaucracy, facing severe criticism from intellectuals. The reality is that in most cases Iran’s intellectuals do not want a free market, do not advocate a free trade policy and do not demand Iran’s inclusion in World Trade Organization.

Tuesday, October 31, 2006


I heard this today:

" In God We Trust, All Others Must Bring Data!"
Given the increasing competition in market, hardly anyone doubt its application.

Friday, October 27, 2006

Taking Sides

There is an interesting article from BBC by their correspondent Frances Harrison, from Tehran. It has a few interesting points. The fact that now everybody requires you to take side in the dispute over Iran’s nuclear program and the very fact that many allow themselves to forget the sufferings and pain Iranians endured during 8 years war with Iraq and since then in developing their country and expanding its infrastructure.

Friday, October 13, 2006

Econometrics Golden Rules

If you are a practitioner like me remember
A Good Econometrician
· Always checks for MISSING Values
· Always checks PROC FREQ and PROC MEANS of generated DATA
· Always asks himself how he can interpret the RESULT
· Always looks for DIAGNOSIS
· Always communicates his finding accurately, no matter the deviation
· Always is eager to back on track, and correct the model
· Never trusts the first output
· Never trusts unchecked numbers!

and he remembers he still could be wrong! welcome to the world of econometrics!

Sunday, October 08, 2006

Temporarily OUT

I am out until Thanksgiving. Too busy and i have one final step to make :) the last mile

Saturday, October 07, 2006

Another Paper in Industrial Organization

When I started this blog I decided not to share personal things. However this is an exception. My first paper in industrial organization with my advisor John Heywood is accepted for publication and now is in press. It is titled: “Mixed Oligopoly in a Single International Market.” Here is its abstract:

It departs from previous literature by considering a mixed oligopoly with two countries each with public and private firms competing in a single market. This differs from the traditional framework of examining a single domestic market in which foreign and domestic firms compete and is motivated, in part, by international airline markets but serves to characterize many markets. The resulting equilibrium emphasizes that the strategic interaction of the two public firms usually serves to reduce welfare. Thus, the usual reason to imagine a public firm in a mixed oligopoly, to enhance welfare, is lost when such firms compete in the interest of their respective countries.

For me the most interesting finding of this paper is the fact that countries sometimes are locked in a prisoners’ dilemma regarding privatization. Should they choose to do so unilaterally in regional markets they would suffer a decline in social welfare. This explains the reluctance of several governments to carry on liberalization policies when public firms act as trade strategical instruments.

Paper is forthcoming in Australian Economic Papers.

Thursday, October 05, 2006

Do Not Even Think About it!

If the phrase “very bad idea” would have only one application, it would be partition of Iraq. Even thinking of partition has catastrophic consequences. It provides political parties involved with a new set of motivations to not cooperate with federalism plan and to seek vigorous cleansing programs of their own, if existence of such programs could be acknowledged, to guarantee a strong hand to negotiate a larger slice of land.

This would threaten Iraq’s neighbors. Iran would seek means and instruments to protect its western borders and to guarantee its territorial integrity. Turkey would pursue a vigorous policy in its southeastern provinces. The Arab nations, already suspicious of the true reasons of invading Iraq, would accept the word of conspiracy theorists as facts and realities. The resulting psychological atmosphere would doom any effort to democratize the political process in Arab countries. Radical groups’ popularity would rise to new levels unheard of.

Should it happen the worst nightmare of Middle East would materialize. There would be two land locked states deprived of economic means to develop on their own. One would become the perfect environment for Al Qaedeh to grow; the other would be accessible only through air. A third one would have access to sea, but depends for water supply on its northern neighbor. Iran and Turkey would have to pay military bills, which have no contribution whatsoever to regional stability or their own prosperity.

There would not be an easy solution for Baghdad where millions of Shiites, Sunnis and Kurds live whose significance is only second to that of Mecca. A partition would have to destroy Baghdad, that Arab nations and Islamic world would neither forgive nor forget.

Economically partition of Iraq would ruin any chance of sustainable growth in the region. Iraq is a potential market for growing economies of Turkey and Iran, where a private sector is coming to age and venturing markets to stay on its own feet independent from government. It has the potential to revive tourism in the region to open the way toward an intense commercial competition. Iraq and Iran together can muster a population of 100 million blessed with the most highly educated work force in the region. Their economic corporation would ignite a path of economic growth that reduces the incentives for violence and shrinks the support for violent insurgency.

Partition of Iraq might be attractive to some seeking a shortcut solution and to those who in instability of this country seek security for others, but it would be a disaster to the region and a true betrayal of the cause of democracy. It is regrettable to remember how the windows of opportunities were missed, how “axis of evil” alienated Iran and how administration assumptions had been totally wrong. But it would be more regrettable if this administration even considers a partition plan. One would think this administration has more than its fair share of mistakes, it is time it has its fair share of solutions; real ones and not that of colonial 19 century British minds.

Wednesday, October 04, 2006

Interesting to know

There is a joke among graduate students and faculty members that the difference between being in ‘hell’ and ‘heaven’ is nothing but publishing. Those in heaven get published while residents of hell don’t. Being cited is a blessing above being published. A pleasure not experienced by many.

So it is amazing to know that D.R. Cox (1972) paper is among top 100 most cited scientific papers, since time of its publication thirty odd years ago. His paper is on Partial Maximum Likelihood and is most application in survival analysis. To those who study economics reading it is a most. The mathematics of it is most admirable. Particularly when one remembers the growing applications of survival analysis and proportional hazard modeling in industry.

David Cox is knighted and he is addressed as Sir David Cox.

Facts Facts Facts

Click on the titel to read Washington Post report.

Thursday, September 28, 2006

A New Development

Click on the title. After months of debate Majlis passed a law that Iranian women's children of foriegn nationals can apply for citizenship. I think this is a step forward.

Write more later, too busy at work.

Interesting From Guardian,,1882500,00.html

Monday, September 25, 2006

Proxy Talks: Iran - USA

David Ignatius has invited Iranian bloggers to comment on Iran and USA proxy talks, and the signaling games between two countries. The issue has been addressed by several think tanks and the links are on David’s webpage. The reports are most informative about how Iran’s issue has been perceived in Washington DC and at Capitol Hill. Reading them for an Iranian is a great experience of the image that political strategists have in their mind.

We are in the post Iraq occupation, post name-calling, post Lebanon 34 days war. Now the violence in Iraq is escalating. The situation in Afghanistan seems fragile and Pakistan is letting Taliban go and is not happy with Kabul. Lebanon war demonstrated the limits of air strikes. Iran enjoys a sort of high peak in regional influence, suffers from economic problems and needs to secure alternative energy resources to sell more oil to address them.

Reading the reports it seems that no one has any clear idea about how political decisions are made in Iran. Far from being a dictatorship, Iran is a great example of a crude democracy. There are several groups and circles that influence the political decision making process in Iran. These groups oppose or support policies and options they find harmful or profitable. They also use foreign policies issues to make their point in a domestic issue. Their dynamics demands close attention.

Second many forget that Iran and USA have mutual interests. Iran needs a calm neighborhood to flourish economically and to open its borders to the regional trade much needed for its economy. USA desires a safe Iraq and a stabilized Afghanistan and secure flow of oil from region. Iran also does not share anything ideologically with either Taliban or Al-Qaedeh. Both proved to be most dangerous for Iran’s homeland security in the past.

It is a fact that the decision making circles vary in power and influence in Iran, They do not necessarily share the same interests. But they all have one thing in common. Most of them remember Iran-Iraq war clearly and its lessons. Should Iran be cornered again by the whole world, she must be able to defend herself. Surely readers recall that during 8 years of that war Saddam had the blessings of the White House, the funds of Arab leaders and the largest network of arms suppliers, Iran had to do with domestic products, engineers’ ingenuity and black market.

USA must appreciate those concerns dealing with Iran and address them with sincere guarantees and mutual respect. Yelling like a cop just prevents the other side from stopping and talking. Nobody is making an arrest here.

Although many believe in the “let’s shoot and then shoot some more and then shoot even some more” it is certain a military strike will fail to stop Iran. Any such folly would encourage more radicalism in Iran and would not achieve the psychological effect that makes such an idea appealing to neo cons. Thus this is the situation: Iran and USA are locked in a situation that neither can eliminate the other player and both need each other.

It is regrettable that administration turned down Iran’s 2003 offer, made by then President Khatami, however a grand bargain is not off the table. Iran could use its influence in Iraq and contribute greatly to stability in Afghanistan. Its 75 million strong population and their entrepreneurship abilities could transform this country’s economy to the engine of economic growth for Iraq, Iran and Afghanistan. And thus they would deny terrorism the fertile ground of poverty and frustration. It is the greatest lesson of development in Africa that foreign aids do not build a national economy, regional trade does.

In return USA could face the hard days in Iraq with more confidence, could be sure that even if Pakistan closes its eyes on revival of Taliban Iran would keep fighting them and guarantee the security of Afghanistan western provinces. It also can be sure that Iran would become a potential ally to harness China’s economy and to challenge Russian influence in Central Asia. Iran would prove instrumental in securing peace in Southern Lebanon and this would force Syria into accepting a compromise.

So yes I believe the proxy talks have a chance and I do think it is time that Secretary Rice to engage in direct talk with Iran. Anything less would imply the absence of sincerity and lack of resolution for a peaceful outcome. USA has already left too much to others. If this is needed to be done then somebody need to do it. Let’s not forget how well Nixon aced in his foreign policy with China. Iran could be a similar success if diplomacy is given a serious chance.

Thursday, September 21, 2006

The First Day of the First Grade & The War

In the life of a child there are times she learns about sounds, he opens his eyes and discovers a new world to start a new era. None of these occasions is as important as the first day of the first grade for many. It is a day that many depart from home to discover classrooms, to meet friends, to learn to write to read and to become part of another society: school.

There are many sounds one learns on this day; screams, school’s principle voice, teacher’s voice, the sound of hundred students talking to each other, the sound of children playing soccer and ….

It was 26 years ago and I was one of those faces with wondering eyes looking at my new treasure; a light brown bag of some leather like substance, pens, pencils, crayons, notebooks and books. Across Iran that day thousands were rejoicing and wondering around theses items as they were jewels of ancient kings, thinking of the day they would become pupils. The sound we discovered that day was unlike any we had expected.

“Alert, Alert, This the Red Alert for Aerial Attack go to the Shelters, seek shelters.”
“Tavajoh, Tavajoh, Alamati ke hamknoon mishenavid Agir ghermez ya alamat khatar e hamelye havaayi ast, be panahgaah beravid.”

Saddam was invading Iran, dozens of cities were bombarded, and Iraqi army in three task forces crossed the international border. Iran was in a state of chaos, armed forces suspected by revolutionary leaders were disorganized, their officers under arrest, suspicion, or suspension.

But country rallied. Iran was under attack, there isn’t any more persuasive argument than that for Iranians. Air Force retaliated, Army set up defenses around cities and re-organized its divisions, and volunteers filled the ranks of Basij & IRGC. They charged Iraqi positions in frontal attacks unheard of since World War I. For the first time in 150 years Iranians pushed the aggressor out of their territory. They shed blood, tears and sweat to do so.

Saddam announced that it was going to be a quick victory. War lasted for 8 years. It transformed Iranian society and left scores of villages and towns in ruins. Thousands perished defending Iran; their number varies from 300’000 to 1’000’000. Thousands more wounded and maimed. World silently watched Iraq used chemical weapons against Iranian 18-years-old soldiers. Hundreds died, hundreds more were left to suffer for years to come. Many still suffer from their wounds.

War also shaped Iran’s psychic and emphasized the fact that no one in the world cares about the fate of an Iranian individual; civilian or military. No one opposed Saddam’s aggression; no Arab leader condemned his use of chemical weapons. In fact many helped him. That fall a smiling King Hussein of Jordan fired a canon toward Iran. Egyptian pilots flied for Iraqi Air Force.

Iranians found themselves to be alone and isolated, in a way that a tyrant was actually allowed to commit any crimes against them without fear of international punishment or opposition. They still remember that lesson.

The war also changed the Middle East forever; Saddam used his military machine against Kuwait, a former ally, and created such a threat that was to be faced by the largest international coalition since the Second World War. Today Iraq is in danger of civil war as a consequence of that act of aggression in 1980. For Iraqis war never ended since that day.

We first graders of 1980 did not know that day, but the world outside our homes changed forever and so did our homes and families. Some lost a father or a brother. 8 years later war was all we knew, its noises too familiar. Peace had became a forgotten dream. Today I hope and pray no other first grader anywhere in the world has ever to discover the sound of this beast, the first day he or she explores the world outside. Today I pray for the souls of those who died and for the sufferings of those who survived. Today let's remember them.

First Days of Schools in Iran

Today 1'200'000 Iranian children started the First grade
Photos :

BestBuy and New Competition

According to NY Times Flat-Panel TV sales have helped the company during its second quarter. The robust demand for Flat-Panel TV is considered to be “the engine of growth” for this company. Today Wall Street Journal has reported the prospects of Flat-Panel TV profitability are not as bright as before anymore, since Home Depot has started to offer the item in its stores.

From an industrial organization point of view, this is very interesting. The concept of entering market is usually taught as a new business entering into market, so the number of firms increases. However entering market apparently is a wider concept and it includes offering new services and products by existing firms as well. Still one can argue the number of suppliers of that product increases without a change in total number of firms present in the market.

Regarding Flat-Panel TV the number of stores increases, however there is no new business in the market. What would happen to follow up technical services and warranty? Would the existing companies keep offering them? Or there would be new entry into the market?

The increasing competition among Flat-Panel TV suppliers promise a declining price, however declining price could mean decline in the marginal gains of warranty services so I wonder if a Flat-Panel TV still comes with a great technical support.

Tuesday, September 19, 2006

Iranian Surprise

It is interesting to compare pre-revolution days to post-revolution ones. Many westerns consider pre-revolution a time of freedom for women. However it must be noticed that their participation in Iranian universities never matched that of men in those days. It is ironic to notice that how much the number of Iranian female students and their presence in academic circles have increased during last years.

The causes of this drastic difference are many and I won't be surprised if one discovers after revolution many traditional families feel that they can send their daughters to universities without being worried about influence of a strange culture.

The lesson is that at the end of the day, there are the people who initiate lasting and real changes. The surface of things says little about the reality of events.

A seemingly modern society had defined very traditional roles for women, which even its small elite seemed to follow and to believe in. A seemingly traditional society has defined and accepted very progressive roles for women in several places such as universities and work places. That is the surprise of Iran and Islamic Republic of Iran.

Fars Agency Photos from Venezuela

President Ahmadinegad's visit to Venezuela. For other photos click on the label. These photos are from FARS News Agency, one of Iran's 4 official news agency, who supposedly has conservative interests.
President Ahmadinegad called Venezuela "Iran's strategic partner." Both President Chavez and he emphasized that their alliance is NOT anti-American.

Monday, September 18, 2006

Sunday, September 17, 2006

Documentaries on Economy

The debate over social security, the collapse of Enron, the rising cost of living, the mounting feelings of insecurity and the shift in American life style have encouraged a new series of documentaries about economy. Among them, one can mention: Wal-Mart: The High Cost of Low Price, The Corporation and Enron: The Smartest Guy in The Room.

Most of these movies are produced by people whom one consider leftist or liberal minded. And they approached their subjects with such motivations. Both “The Corporation” and “Enron..” are attacking the profit seeking behavior of executives and corporations. Such a motive is very natural from an economist’s point of view. To imagine that a corporation wants to maximize people welfare is neither realistic nor pragmatic.

“Wal-Mart…” also approaches its agenda emotionally. It portrays destroyed communities and destructed businesses as well as hungry workers. It covers the incentives that Wal-Mart receives to open a new business, however it does not address the causes of such events. The movie does not pay attention to correlation between Wal-Mart and other businesses or the political motives of local governments to grant such incentives.

Make no mistake I do not deny the negative externalities of Wal-Mart activities or the tragic consequences of Enron collapse. They do exist and they should be prevented if we desire a healthy social order. However to address such issues emotions must motivate thorough investigation to identify the causes and legal black holes.

It is interesting to notice that all these movies ignore to address the information distribution, and how vast resources of corporations allow them to skew information distribution in the market in their own favor. All movies are silent about legal mechanism that allowed Enron executives to deceive shareholders and employees to the last minute.

There will be more questions and the increase in individuals’ dependence on their own resources for every aspect of their lives: from health insurance to retirement pension will motivate individuals to ask questions. There will be more tragic events if the causes and the mechanism of past ones go unnoticed and remain unanalyzed.

There is no doubt the lifestyle is changing, small businesses are closing, more than ever big corporations are ready to dominate all aspects of economic life and put an end to free markets where firms could not determine the outcomes. To save the day, one must think and analyze the motives, the events, the market mechanism using economics theories. This has been neglected for too long.

Friday, September 15, 2006

Farewell Oriana

Today I woke up to a fresh breeze of autumn, shining sun, blue sky and the promise of a new day, a better time. Glancing through news there was one headline “Oriana Fallaci passed away age 77”.

What is life? Once somewhere I read: “life is like a plate, you need to fill it very well otherwise it means nothing” The book was Nothing, and so be it by Oriana Fallaci. She filled her own plate with so many different things.

“Nothing and so be it” became the way many of my generation, young Iranians growing up in time of war with Iraq, see Vietnam conflict. I read her other works; her interviews and her other novel If Sun Dies. There was something eye-catching about her a sense of self righteousness; an audacious approach to subjects.

In her interview with history she asked Shah of Iran why her book was collected from bookstore when Nixon was visiting Tehran. May be she failed to see how her work had become a powerful element in leftist mindset of Iran’s and Middle East intellectual society in 70's. Her aggressive questions[1] and her somehow arrogant writing style endeared her to many, who did not have a way to question their rulers.

…But there was another Fallaci too, a Fallaci who wrote The Force of Reason and The Rage and The Pride. The gifted journalist she was, she took her readers on an emotional journey to portray an Islam unfamiliar to many Muslims. A true traditionalist European she was, she shared with her audience her dismay witnessing the changes in Europe’s demography and the increase in Muslim immigrants population. Her language as colorful as ever portrayed Muslims as people who “multiply like rats”. Many consider this an outright racism. The storm was inevitable, the courts, the articles, the controversy that followed.

No one was more puzzled than her own audience in Islamic world, where she was liked as a courageous journalist and a great writer. For many she became a prophet of decline.

Today Oriana is gone… Today let's not think of her as the author of The Force of Reason but as that courageous reporter who wrote from the trenches of Vietnam, who gave us a glimpse into an unknown world. Many remember her as that woman who ventured the world of powerful ones and asked those questions they did not expect to hear or answer. And As the strong will woman she was.

After all life is about doing the right thing and not about being right. Oriana was an idol from an era when being right was more important than doing the right thing. Then she did the right thing that makes her life remarkable. She was wrong about Islam that is understandable. She was furious about changes in Europe because she was a hardcore European, a great one in the truest sense of the word. That also is understandable.

In one of her last interviews she commented “their reactions show that I am right.”
You were wrong, Oriana, but we still love you, rest in peace.

[1] Henry Kissinger wrote after being interviewed by her that the interview was "the single most disastrous conversation I have ever had with any member of the press".

Thursday, September 14, 2006

Tuesday, September 12, 2006

Interesting Article About New Publications on Iran

Columbia Journalism Review Web site has posted a new article by Bill Berkley regarding
the new publications by the new generations of Iranian-born and Farsi speaking authors.
The article is valuable because of the summary it provides of books and manuscripts by different authors. However one could disagree with Professor Berkley on many points
regarding his evaluation.

To read the article click on the title

Fortune's Article on Iran Auto Industry

very informative one, just click on the title.

Sunday, September 10, 2006

An Increase in Automobile Prices in Iran

BBC Persian service has reported an increase in automobile prices in Iran. I have checked the dailies such as Shargh, Sarmayeh and Rooz, I could not find similar reports, so following speculation is challengeable by contradicting evidence

In following an import substitution strategy and to boost national pride Iran has established domestic manufacturing lines to assemble automobile. Iran National Automobile Manufacturing Group known as Iran Khodro is the largest of these companies. There are also other firms such as SAIPA, started as a Renault manufacturer and others. Seeking to establish a self sufficient car manufacturing industry Iranian government banned importing foreign made cars for almost a decade; even now tariffs to import foreign manufactured cars are staggering.

In this monopoly situation purchasing a car became a rather difficult process. Queues were made of customers and the right to purchase a care at factory price became a market commodity as well. Interestingly an active market for used cars was developed as well, however hardly one can notice a depreciation of nominal price for cars during last decades. Although this increasing trend was contributed to the inflation and general increase in price index, one should notice demand for cars in Iran was not and is not purely based on utility maximization behavior.

The very low gas prices in Iran and ingenuity of local mechanics[1] keep the maintenance cost of automobile relatively low. On the other hand the real value of money keeps declining because of ever present inflationary conditions. In the absence of higher than zero real interest rates from banking system, households save in any form of durable products available to them: hard currency, golden coins[2], real estate and cars. One also must mention the increasing role of Stock Exchange Market an increase in household savings in the form of bonds and shares; however that has proved a risky endeavor in the long run[3].

It could be argued that Iranian household has learned to diversify its saving portfolio in order to reduce its risk. It also could be argued that demand for cars also is determined by the risk factor.

According to BBC the price of Samand a domestic product has increased from 10’800’000 Tomans[4] to 11’800’000, Price of Peugeot Pars from 16’900’000 to 17’800’000 Tomans. The increase in the case of Peugeot 206 is 400’000 Tomans for its different types. The price of Pride, the most popular car in country, has increased from 6’850’000 Tomans to 7’150’000 Tomans. These show an increase of 4% to almost 10% for the price of different makes and models in market.

Some speculate that the increase in automobile prices is initiated by decrease in the quantity supplied, which is because of lack of parts and Iran Khodro exports. However if the increase is universal for all models and makes, one might conclude that the increase in automobile prices could be caused by a shift in the demand.

It is certain now that government would not implement rationing of car gases to reduce the fuel imports. Thus might demand has increased because of cost of maintenance has remained low. However I would like to argue that the gas price would not be lower than before and the contribution of this policy to increase in demand should not be exaggerated.

The question is that if market demand for cars has increased because of decrease in rate of returns of stocks and an increase in the risk factors? A few months ago there was an increase in the price of gold in the market, which was controlled by increase in the supply of gold by the Central Bank of Iran. Could this be the second wave of increase of demand to save in the form of durable products excited by an increased risk factor and public expectation of a higher inflation rate?

Coming months would answer that.
[1] They actually fix the parts instead of ordering a substitute, thus one pays for labor and not the part.
[2] Traditionally Iranians are fond of golden coins and up to day it is a measurement of value, a memorable gift and a way of saving. As a gift it is more of a gift card whose real purchasing power
[3] The reaction of Tehran Stock Exchange to the last year presidential election results in major losses by middle class shareholders.
[4] Currently 1 USD is 920 Tomans in Tehran’s Bazaar, however one might argue that an exchange rate based on Purchasing Power Parity should be implemented. Thus I keep the prices at local level.

Saturday, September 09, 2006

Khatami Under Fire from Both Sides

Former president of Iran who is now the symbol of a failed reform movement arrived in the United States. His arrival sparked a new row of political bickering within both countries. In Iran radicals and ultra radicals condemned the trip in the strongest terms. Fatemeh Rajabi, whose spouse Mr. Elham is government’s spokesman wrote that this trip is an award to Khatami’s American policies, who has become a servant of White House. She demanded him to be defrocked. Her comments were responded by several reformers, conservatives and even radical daily Kayhan.

In the United States many neo conservatives took upon themselves to criticized State Department, to attack Mr.Khatami and even some compared him with Goebbels Nazi propaganda minister. Governor of Massachusetts openly announced that he would deny him state protection during his visit to Harvard. Many warned the public of not paying attention to Mr. Khatami’s propaganda.

Interestingly Mr. Khatami remained the icon of moderation during his visit. He asked for the United States to preserve its presence in Iraq until peace is restored. Repeated Iran’s position that a Two States solution is acceptable and If Palestinians make peace so would Iran. He asked American Muslims to be exemplary citizens and try to climb up the ladder of education and social progress. He condemned the terrorist attacks of 9-11 in the most severe terms, which USA could not expect form its so called allied Arab leaders to do. He condemned terrorism saying:

We, Muslims, should condemn this atrocity even more strongly. Terrorism, which means killing civilians in whatever name or title, lacks morality, and nobody who lacks such principle will go to heaven. Those who kill others and commit acts of terror, if they identify themselves with Islam, they are lying."

It must be noticed that moderates in both Iran and USA welcome these comments; while radicals and neo-cons condemned them. After all it seems Iran’s radicals are in agreement with their American counterparts.

One can’t help ask: Isn’t this the message America wants to transmit to millions of middle easterns?

And if it is then why American foreign policy and some American politicians are after silencing moderate forces such Mr. Khatami, who might not be a great success but is telling a forgotten truth.

Tuesday, September 05, 2006

Economics & Caribbean Pirates Rules

I admit that I was not a big fan of Johnny Depp until the first part of Caribbean Pirates. Among so many remarkable lines of this movie one what I like most as an economist is this:

The only rules that really matter are these: what a man can do and what a man can't do. For instance, you can accept that your father was a pirate and a good man or you can't. But pirate is in your blood, boy, so you'll have to square with that some day. And me, for example, I can let you drown, but I can't bring this ship into Tortuga all by me onesies, savvy? So, can you sail under the command of a pirate, or can you not?”

Economics has so many different notions for “what a man can do and what a man can’t do” Production Possibility Frontier, Budget Line, Production Function, Iso Costs and etc. showing Mr and Mrs Customer's resources or market prices what they can do and what they can't do.

Their decisions are based on both what-they-can-do and what-they-can't-do. And What-they- can't-do ones constitute their opportunity cost.

In its very nature these are the only rules that really matter, because economics tries to find a solution to our unbounded demands given or limited resources. So we all can reach Tortuga.

Sunday, September 03, 2006

Diminishing Marginal Returns in History

Those who study or teach economics are familiar with the concept of diminishing marginal returns. It is a simple concept, when you are investing in an enterprise the contribution of your dollars to production starts to decline after a certain point. An extra dollar contribution to production is less than the last dollar you have already spent. Surprisingly it seems this concept also applies to implementing force.

History is full of such examples, when large forces failed while small ones succeeded. When Napoleon invaded Russia with 600’000 soldiers many thought the large number of his army guaranteed the victorious result. The history recorded the outcome differently.

The reality is that the amount of force a government applies does not influence the outcome completely. It does so partially or at best with decreasing rate of return. There are several other factors.

Although the technological advances have made military machines magnificent and the armaments most lethal, it seems that these also have their limits and their point of declining marginal returns.

The Economist recent article on air power could be read with this microeconomic concept in mind.

Khatami in USA

Reported by BBC:

Saturday, September 02, 2006

A Tragedy and Revisiting A Policy

Another tragedy in Iran has happened; yesterday ISNA reported that a TU 154 M caught fire after hitting a stair in Mashhad International Airport at north east of Iran. From its 148 passengers 29 were killed and 43 are injured according to the reports. This has been the 10th lethal accident in Iran aviation since 2000 and the fifth crash of a Russian aircraft operating civilian routes in Iran.

Because of US imposed sanctions Iran cannot acquire parts for its aging fleet of Boeings, including B 707, B 727, B 737 and B 747 operated most by Iran Air and Aseman two public airlines in Iran. The sanctions also discourage any Iranian private airline from acquiring western built aircrafts. The only aircrafts available to Iranians are Russian built Tupolovs, Antonovs and YAKs as well as second hand aircrafts offered by other airlines, such as Turkish Airline. These have already flied thousands of flight hours and their original owners are eager to sell them to acquire new top of the line aircrafts. Under these circumstances Russian aircrafts are attractive because of their availability and technical supports provided by Russian manufacturers and providers. This has mixed consequences for Iran’s domestic commercial aviation industry, which has seen many changes in the last decade.

During 1990’s Iran aviation industry began a fundamental change. During 1980’s it was dominated by government and constitutionally, according to Article 44, it was a government’s monopoly. However the expansion of free zones of Kish and Qeshm islands and an increase in the local demand for air services at provinces far from Tehran encouraged many semi public organizations to start airlines of their own. This resulted in a surge of the number of airlines in Iran. Although mostly owned by the official and public sector organizations or semi public ones these new airlines began their operations to produce profits. Subsidizing two officially public airlines, Aseman and Iran Air, heavily Iran Civil Aviation Administration treated these second cousins as strangers and unwelcome rivals. Most recently truly private airlines became operational whose relations with public sector are that of a regulator and a private company and not that of an owner and its property.

During these years Iran also carried an ambitious program to construct new airports in several cities and provincial centers across the country. In designing new facilities the local population’s demand and the profitability of aviation operations played little role. Public sector built some very fine airports capable of handling large wingspan aircraft in some small cities and provincial centers. This boosted country’s infrastructure to a new level and made the potentials ahead of private aviation far more promising than before. However private airlines lack the aircraft suitable for these local markets and operating at these airports mostly are not profitable.

Meanwhile Iran’s domestic customers welcome the new Russian additions by mixed feelings. On one hand the expanded fleet and competition kept airfares relatively low, in most cases the increase in prices was forced upon private airlines by government decision to increase the price of aircraft fuel, whose soul provider in Iran is government. On the other hand many miss the comfort of new Boeings nostalgically. The Persian Gulf Countries Airlines also set a very high standard, inaccessible by many in the world. Benefiting from several government subsidies and considered a justifiable expense to attract tourism, most region’s public airlines fly some of the finest aircrafts available in the world market.

During past years Iranian airlines efforts to purchase new aircrafts have been blocked on several occasions because of US imposed sanctions and on some because of lack of financing because of sanctions. To a neutral observer it seems that sanctions targeting Iran’s commercial aviation industry does not take into account several facts. First the nature of Iran’s aviation industry has changed permanently. Its civilian sector has transformed from a dominantly public domain to a private one. Government would soon privatize the last two public airlines in Iran, thus domestic aviation will be a purely private business in coming years.

Second these sanctions do not take into account the growing population of Iran and available infrastructure. With a population of 75 million and a very well placed network of domestic airports Iran domestic aviation industry is the only one in the Middle East region that could be profitable on its own. Unlike Persian Gulf countries domestic traffic supersedes international one in Iran and the number of domestic flights is growing. Thus Iranian airlines would compete at domestic markets with companies who use similar aircrafts. Sanctions hurt their chances in the region but not in the country. Not allowing investments in this market and blocking sale of aircrafts are hurting American businesses more than Iranian ones. By endangering civilian lives the existing sanctions also are hurting American image among Iranians more than anything else.

Thus here we are. United States government hoping to press Iranian government into compromise has put in place sanctions against an industry that is not a primary concern of Iranian government. In doing so it has endangered Iranian civilians’ lives and has denied itself a 75 million strong market. Iranians may nag about Russian aircrafts but no one has any doubt that lack of alternative aircrafts is because of Washington DC reluctance to accept uselessness of this policy rather than Iran’s unwillingness to allow its private entrepreneurs to operate them. One wonders how many more deaths Washington needs to re-think its sanctions; because this one is not even working.

Summary of Aircraft Accidents since 2000 in Iran[1]

Date Aircraft Casualty
September 2006 TU-154 M / Russian -29 killed
December 2005 Falcon Jet /French -12 killed
December 2005 C 130 /American -106 killed
April 2005 B 707 /American -2 killed
November 2004 Fokker 50 / Dutch -50 killed
February 2003 Ilyushin/ Russian -276 killed
December 2002 Antonov /Russian -46 killed
February 2002 TU 154-M/Russian -119 killed
May 2001 YAK 40 -29 killed
February 2000 Air Crash -6 killed

[1] From ISNA (Iran Students News Agency)

Wednesday, August 30, 2006

Two Men of Forgotten Qualities: Khatami & Carter

Mr. Khatami former president of Islamic Republic of Iran, whose election marked emerge of reform movement in Iran; will enter United States as a private individual tomorrow. He is accompanied by family members and staff members and is due to speak in National Cathedral at Washington DC. Washington Post reports that former President Carter has agreed to host Iran’s former president.

It is ironic to notice that President Carter carrier came to an end partially because of Islamic Revolution and hostage crisis, however President Khatami’s career began because of Islamic Revolution, otherwise he would have remained the quiet and intelligent head of Hamburg Islamic Center in Germany. The two could smile at this irony.

Little is known about the trip except for President Khatami scheduled talks in Washington DC and Chicago and his visit to Thomas Jeferson’s house at Monticello. However the diplomatic significance of President Khatami’s visit is lost on no one. Since his departure from office he has been acting as an unofficial envoy. In his recent visit to Japan he was engaged in negotiations with Japanese officials.

President Carter also is not unfamiliar with such functions. He has been doing the same thing since his departure from office. His role during Clinton administration and his activities as an observer of free elections at different countries across the globe are well known. Certainly two have much to discuss and both are credible enough to transfer and to correspond messages intended by Tehran and Washington. An unofficial way of offering & discussing unofficially what cannot be offered or discussed officially.

On the side the trip would spark some demonstration by opposition, human rights groups and Iranians in exile. Some usually attack any figure that comes from Iran, some attacked any official or former official of Islamic Republic and some want to use this opportunity to transmit their own agenda through public media. There will be some angry faces on TV, mudding the water and harming a peaceful mission.

Certainly one can criticize President Khatami and his time in the office. But one also must remember the very fact his failures were not because of his lack of qualities and decency. He initiated Dialogue of Civilization ideas and took firms steps to bring back Iran into global community. He did welcome relations with USA and tried his best to jump over the high wall of “distrust” between two countries. There is no doubt that he is a good man. There also is no doubt that he is most suited for the role of an ambassador of peace.

Today President Khatami and President Carter represent qualities of American and Iranian identities that are forgotten amidst war against terrorism and nuclear discussions. One is an adherent advocate of human rights and a hospitable Georgian, the other an advocate of peace and diplomacy. Their meeting is historic because who they are and what they represent, being in or out of office is irrelevant. The two certainly have a lot to talk about.

Tuesday, August 29, 2006

Social Evolution in Iran: Fate of an Economist

Had you been an economist in Iran 40 years ago and been fired by government, you would have been considered a leftist. Nobody would have noticed your departure. Had you been fired 30 years ago you would have been a graduate of an American university and would have been considered a capitalist agent. Still you would not have been missed. 20 years ago, people would have been surprised to see an economist still employed at a government position. But anyhow it would have gone unnoticed, had you been dismissed. 10 years ago… well 10 years ago nobody would have fired you, had you been an economist in first place.

Things have changed since then. When recently Dr. Mohammad Tabibian, a graduate of Duke University and a former deputy of Iran’s Management and Planning Organization[1] (MPO) and former head of its Macroeconomic Planning Office was retired, Shargh newspaper allocated two full pages in two issues to letters and articles by his colleagues and students, written to remember his services and to criticize administration decision to let him go. Society did take notice of the fact that an economist who had dedicated 30 years of his life to serve Iran was dismissed.

This is a remarkable evolution in a society where being dismissed used to mean the end of one’s social life and career. Many who observe and follow Iran’s domestic affairs are surprised to see how many things have changed during last three decades. The changes are not limited to covering news about individuals such as Dr. Tabibian. The changes are everywhere, in education, female participation, fertility rate, social sciences development, private sector and etc. And unlike Pahlavi era these are not some cosmetic changes in the appearance of the society. The very fabric of Iran’s society has changed and it still is evolving. It is sad to see that many politicians and state men on both sides of Atlantic do not appreciate this fact and still treat Iran the way colonists of 19th century did.

[1] Formerly known as Budget and Planning Organization or BPO.

Monday, August 28, 2006

Privatization in Iran: FORWARD!

Although the media have been most generous covering Iran’s nuclear programs, for many who follows country’s developments closely the most significant news in past months has been the decree to privatize public sector enterprises. Although privatization process in Iran started roughly 16 years ago during the first term of President Rafsanjani in office, government still has monopoly rights in several economic sectors according to constitution.

Drafted in a time when socialist and Marxist sentiments were at their peak, Article 44 of Iran’s constitution states:
“The economy of the Islamic Republic of Iran is to consist of three sectors: state, cooperative, and private, and is to be based on systematic and sound planning. The state sector is to include all large-scale and mother industries, foreign trade, major minerals, banking, insurance, power generation, dams and large-scale irrigation networks, radio and television, post, telegraph and telephone services, aviation, shipping, roads, railroads and the like; all these will be publicly owned and administered by the State. The cooperative sector is to include cooperative companies and enterprises concerned with production and distribution, in urban and rural areas, in accordance with Islamic criteria. The private sector consists of those activities concerned with agriculture, animal husbandry, industry, trade, and services that supplement the economic activities of the state and cooperative sectors. Ownership in each of these three sectors is protected by the laws of the Islamic Republic, in so far as this ownership is in conformity with the other articles of this chapter, does not go beyond the bounds of Islamic law, contributes to the economic growth and progress of the country, and does not harm society. The [precise] scope of each of these sectors, as well as the regulations and conditions governing their operation, will be specified by law.”

Thus constitution puts government in charge of foreign trade, heavy industry, steel manufacturing, banking, insurance, telecommunication, aviation, shipping and almost every significant economic activity.

In the past this article provided those who opposed privatization of Iran’s economy with a magnificent line of defense to halt any proposals to privatize heavy industries or government enterprises as unconstitutional. The law and its tradition were so strong in Iran’s bureaucracy that the first private airlines in early 1990’s were established by semi public organizations and free zone administration organizations. It also must be noticed that any administration was able to shut down any private enterprises using this article, should their activities be in the fields identified by this article. On several occasions government officials used Article 44 to dominate the markets and corporations. There has been no doubt in Iran and among Iranian economists that any serious attempt to establish a competitive market in Iran and to expand private sector in country has to address the barriers raised by Article 44.

Thus it was most welcome news when on July 2nd, it was announced that Supreme Leader, Ayatollah Khamenei, has used his power to order government to transfer up to 80% of total shares of its enterprises to the people. According to IRNA, Iran News Agency, the executive order has been issued according to Iran’s 2020 Economy Vision. Supreme Leader also has expressed that this measure would help Iran to meet WTO requirements. The executive order applied to all public enterprises but for Iran National Oil Company, a few banks and some hi tech firms. It also calls for transferring defense related industry to individuals, approved by the Commander-in-chief, a role Ayatollah Khamenei has in his capacity as supreme leader.

No doubt this has been a large step in Iran’s development process. Should government transfers 80% of total share in these corporations, its role will become of a regulator and not an owner. It also must be noticed that management and leadership of these companies would be determined by shareholders. Certainly government officials would seek to influence these choices, but their power to do this would be declining, given the increasing role of Iran’s private banks in financing domestic firms.

To avoid transferring these enterprises to government officials and their appointed managers, this executive order allows only 5% of total shares to be transferred to staff and management. This also would prevent government from dumping failed and bankrupt operations to private sector and retaining profitable ones. However one cannot undermine the potential of networking and networks in Iran to deviate such measures from fulfilling their objectives.

Surprisingly it seems this measure has been welcome by only economists and technocrats. Iran’s intellectual and media, still dominantly left in their economic perspectives, have paid little attention to this order and some ever recklessly have criticized it. But there is no doubt that Article 44 Executive Order has opened the gates toward a more active presence of private sector and has limited government role. In midst of all nuclear debate, there couldn’t be a more obvious signal that Iran and her leadership are ready for business. A country that goes for privatization cannot possibly be anything else but a tough negotiator. All in business are.

Thursday, August 24, 2006

No Comments

I have no comments, but read others comments. (click no comments!)

A Photo From Tehran

Check the link. It shows Jewish ceremony in Yousef Abad Synagogue in Tehran. Iran has the largest Jewish population in the Middle East after Israel.

Tuesday, August 22, 2006

Quote of Day

Enough politics, It is great to have economics to think in constructive terms. Here is quote of the day I borrowed from a friend. Professor Prescott said once:
Progress! Do not Regress.

well i for one need regressions to make my progress!

Iran Offers to Negotiate Immidiately

ISNA, IRNA, Mehr and BBC Persian reported that Dr. Ali Larijani, Iran's principle negotiator in talks regarding nuclear program, has presented ambassadors of Germany, French, United Kingdom, Russia, China and Switzerland, who represents the United States interests in Iran, with Iran’s answer to the package offered by EU.

It is reported that the answer emphasizes on Iran’s right to enrich Uranium, however it offers several solutions and compromises to start a new phase in this negotiations. Iran has announced that negotiations could begin tomorrow regarding this matter. Dr. Larijani has emphasized that he wants to avoid any accusation that Iran wants to buy time. He added that government's approach has been to consider the package very positively. And Iran has answered as was announced by August 22.

Although no details is known at the moment, but Iran’s readiness to start talks as early as tomorrow indicates that country is determined to receive enough assurances as soon as possible. However one could not help noticing the tone of injured pride. While Iranian president has announced a deadline and package apparently did not have a deadline at the beginning, the developments in Security Council have not helped moderates stand in Iran. It seems the issue for Iran still is the trust. And it seems in this round she feels rightous since she has done as she announced.

At moment it seems that moderates are sincerely making an effort to get the negotiations to a point where a peaceful solution becomes plausible. Enrichment would be the key issue, over which Iranians are ready to accomodate the others, however accomodating is very different from surrendering. They would not let this look like a surrender. It does not mean accomodation would be a lesser thing in concept or context. Let's hope peace be preserved.

What Would Be the Answer?

There is suspense in the air. What is the answer? Positive out of question, negative may be. All predict it to be a conditional positive. However that will not be good enough for the White House and they will continue to force everyone to join them in a path that leads to destructive confrontation. What is the pre-condition to the talks could be achieved by negotiations, but there is no patience for that on this side of the table…. Sometimes I think that it would serve western diplomacy very well, if its diplomats spend an apprenticeship in Tehran Bazaar. One needs to be patient to get the first condition going.

Monday, August 21, 2006

An Article Regarding Deporting 80 Iranian Professionals

It also is interesting, since Mr. Memarian shares his own experience. It makes an interesting reading.

A Strange Coincidence

There are some ironic events in history. Shaban Ja'fari known as Shaban the Brainless, who was the major mob leader and organizer in 1953 coup died on the anniversary of that event 2 days ago in California. Two years ago he said his story to Homa Sarshar, and denied doing things most people saw him doing in the coup.
He lived a privileged life before Islamic Revolution and after that became a hunted man. He left the country and lived in exile in Turkey, Israel, England and eventually he came to the United States. His years in exile were years of loneliness, isolation and poverty. Timing of his death couldn’t be more ironic, he died on the day he made himself infamous for rest of his life.

Saturday, August 19, 2006

All The Shah's Men

This is an excellent book to read about 1953 coup. It includes several interviews and the stand is not biased.

A Day on Our Conscience

August 19th in Iranian calendar is the 28th of Mordad; the fifth month of zodiac calendar and the second month of summer. For last half century this day has its stamp on Iranian conscience and has influenced Iran’s relations with the USA.

At dawn Dr. Mossadeq was prime minister, media were free and some full of insults and personal attacks on the very person of the head of the government. Oil industry had been nationalized and British had left, their embassy was closed. But Iran was under sanctions and Iranian government had failed to secure a deal to restart oil export. Short on cash, unable to import products situation had become desperate. Unfortunately for the world trapped in the Cold War game, Iran had become a danger zone, where Russians were able to make a move southward. British diplomacy had concentrated so skillfully on this issue that none cared or dared to ask them of the millions that they had lost during oil nationalization.

In the USA Truman was gone Eisenhower was the new President. The decent and noble soldier wanted to go ahead by granting a $10 million aid to Mossadeq, however Dulles brothers thought differently. Looking at the world with black and white glasses of McCarthyism and fresh with Eastern European experience they did not have time for passionate liberals in countries rich with oil neighboring USSR. They willingly accepted British approach and the way the issue was marketed. In their eyes this was not a nationalist liberal who constitutionally was elected by an elected parliament and to save the country from poverty had canceled the most unfair concession Iran had done giving away millions of its oil wealth. In their eyes this was the preface to a red coup. No one cared to remember Iran's fame for its conservative clergies and traditional people. The choice America made on that hot day of summer 1953 formed the Middle East we have today.

CIA agent Kermit Roosevelt and USA military attaché bribed whoever could be bribed and recruited General Zahedi, nominated to step in as prime minister. He received his Firman from Shah. The first attempted failed, Zahedi went to hiding and Shah did what he was best at it: he ran away piloting his own aircraft. Hadn’t been for Kermit Roosevelt’s efforts history would have been different. A second putsch was organized, mob attacked Prime Minister’s house, chief of staff of armed forces, who was loyal to government, was arrested in his office. Nobody could organize a resistance, the columns rushing to defend prime minister were diverted. Mossadeq was left alone to fight it with a handful of guards, they fought on. By dusk Mossadeq became a hunted man. Old and alone he escaped to a neighbor house and surrendered himself to Zahedi. The man who was the symbol of a democratic Iran and nationalized oil industry without shading one drop of blood stood trial and went to live under house arrest until his death.

Many judged that day by remembering how Mossadeq fans disappeared from streets by noon and anti Mossadeq mobs ruled the street in the afternoon. Many Iranians use that day to blame Iranians for lack of unity. All blame USA for ruining the only chance Iran had to become an independent liberal democracy. There is no doubt 28th of Mordad paved the way for Shah to become the absolute ruler of Iran. Many realized this ironic fact too late, General Zahedi the leader of coup was sent into exile 2 years later himself, when he was appointed ambassador to Switzerland. Iran became a "one man" show.

Coup sealed the fate of Shah as well, since that day a growing number started to see him as an American puppet, the legitimacy he had in days before coup was all lost in 25 years. In the absence of a functioning democracy, true election and political parties nobody dared to warn him of the days ahead. He was surprised by spreading social unrests of 1978 followed by Islamic Revolution.

1953 also holds on to Iranian mind with a mixture of anger, regret, guilt and hopelessness, Iranians neither forget nor forgive 28th of Mordad. Why should they? Democracies are not achieved by try and error and there are not many opportunities to achieve them. Iran had its chance in 1953. When that was lost, Middle East of today became a certainty.

Today lessons of 1953 are more than ever necessary. The developing countries realties are quite different from the image a few elites in London and Washington try to sell to the world. The dynamics of domestic politics is as delicate as any developed one and any short run solution could be followed by dramatic long run consequences, as we witness in Iraq today. Democratic governments do not say or do what others want to hear. They say and do as the people they represent want them to do and to say. That is not always pleasant or desired but it is better than shaky lies that dictators say and believe. The most important lesson of that day still is the same: do not mess with nations, they intend to have a very very long memory.

Thursday, August 17, 2006

Publishing in Economics

In graduate school the difference between hell and heaven is not much. Those who are in hell suffer as well as those who are in heaven. The difference is that people who are in heaven get published. When one publishes a paper, it is equivalent to several drafting and re-drafting, editing and testing. Then one can submit to journals. Then waiting begins. Usually lucky ones get a revise and resubmit which means they need to go an extra mile to please the referee or to meet the standards. The unlucky ones are rejected and they need to repeat the process somewhere else.
There are a number of journals that a graduate student does not expect to get published there; those are for faculty with years of experience and a number of publications in their record. However there are a number of decent journals where graduate students and doctoral candidates publish. No matter where one publishes, it is an enormous joy to see it in print. Here is a link to an interesting paper regarding ranking of academic journals and institutions in economics. Enjoy!

Wednesday, August 16, 2006

Q&A Regardin SUTA Gatherings

Dr. Hojabri has sent out a mass email to all SUTA members answering some general questions regarding 2006 reunion. The deportation of dozens of individuals who were granted visas to attend this event in Santa Clara was widely covered by BBC, Iranian Media, different radio stations and Bloggers. Iranian government also expressed its dissatisfaction to Switzerland embassy in Tehran. Dr. Hojabri has kindly permitted me to share his email. here it is:

Q. Why the Reunion 2006 was held in US?
A. SUTA’s Reunions are for all members and not for members in a specific country. In the last two Reunions many members living in US were not able to attend the Reunions because they had visa problems too! Graduate students and young professional members with F, J and H visas were not able to travel outside US, because for reentering they had to apply for new visa. For this reason it was natural for SUTA, as a California based organization, to have another Reunion in California.

Q. Didn't SUTA know that traveling to US is very costly for members in Iran?
A. Yes, but the same is true for members living in US to travel, e.g., to Europe. Apparently cost was not a decisive issue, as during the first two weeks of registration more than 300 registered to participate in the Reunion 2006 from Iran.

Q. Did SUTA promise to get visa for participants?
A. No, from the starts we told the members that USA is different from Canada and Germany. While we had the cooperation of the Canadian and German embassies for Reunion 2002 and 2004, we had no contact or promise of cooperation from the State Department or the US consulates, although we had written to them and informed them of our gathering in Santa Clara. We said that we would only provide the participants with an invitation letter to apply for visa. We were naturally very pleased when we saw that the consulates accepted more than 150 visa applications from our participants.

Q. Were participants from Iran detained because they were coming to SUTA’s gathering?
A. The concern of US security agencies about Reunion 2006 was not because of SUTA, but because of participation of large number of members from Iran. But according to the Bylaws, membership in SUTA is open to all associates of Sharif (Aryamehr) University of Technology and we SUTA cannot function in any other way.

Q. Didn't SUTA expect that US will not allow participation of members from Iran?
A. No, all indications up to the last few days before the Reunion were positive. We don't think that anybody could predict Lebanon war, UN Security Council’s Ultimatum to Iran, and the discovery of terrorists attack in UK, all just a few days before the Reunion 2006!

Q. Why SUTA that was aware of the visa problems, has invited members from Iran to participate in Reunion 2006?
A. We cannot imagine organizing a Reunion without participation of our members in Iran. What would our members say if we had excluded members in Iran from Reunion 2006?

Q. Can the US Government be sued for physical pains, psychological stress and financial loss of the deported participants?
A. Lawyers advising us on this issue believe that the deported participants have to initiate any action, but the chances of success are not great. The security laws passed recently give the Federal Government free hand to bar any visitors, and at anytime, from entering US for national security reasons. Such a law suite will be very expensive and takes a long time. The Iranian Government has also recommended that the deported participants file suite in Iranian courts.

Air Traffic Delays and Customer Willingness to Pay

(I love economcis and the fact any event could be observed from different points. This is a summary of research i found interesting regarding air traffic delays, their economic impact and demand consequences. )
Air traffic delays are both a major source of passengers’ complaints and a topic of discussion for authors of different disciplines studying the aviation industry. They also cost airlines dearly; it is predicted that by 2010 the cost of air traffic delays would reach $7.8 billion in the United States (Kostink, Gaier, Long 2000).
Morrison and Winston (1989) estimate the effect of flight delays on airline demand; they discover that an increase in the length of delays reduces passenger’s willingness to pay.
The question of service quality and competition is not new; Spence (1975 and 1976) studied the effect of competition on service quality and established the relationship between competition in market and service quality. Mayer and Sinai (2003), Mazzeo (2003) and Rupp, Ownes, Plumly (2003) studied the relationship between service quality and competition in airline markets, considering air traffic delays a signal of service quality. While Mayer and Sinai find that delays are longer in more competitive markets, Mazzeo and Rupp et al conclude the opposite. Suzuki (2000) found out that market shares are positively correlated with on-time airline performance, thus an airline with too many air traffic delays is less likely to retain its market share.
Januszewski (2004) also studied the relationship between air traffic delays and airfare pricing taking into account the level of competition present in the market. He estimated the price responses to longer flight delays in competitive and non-competitive markets. He found out that the prices fall sharply in competitive markets but not in non-competitive markets. He also pointed out that although air traffic delays affect the demand for air travel as well as its costs, he has observed no reduction in the number of flights on a route when flight delays increase. He suggests that each minute delay reduces the willingness to pay by $2.92. These findings are consistent with those of Borenstein (1990 and 1992) which highlight the market power and competitive advantage that can result from airport dominance. Borenstien work on the relationship of market structure and pricing behavior is remarkable. He adds the delays to market power an airline exercises in its hub.

Wednesday, August 09, 2006

A Very Good Article

This is an article regarding Reading Lolita
The writer is the Hagop Kevorkian Professor of Iranian Studies and Comparative Literature at Columbia University in New York. I just found it controversial and I share it to show that there are some other points of view. Personally I like the book, although I won't be generalizing Azar Nafisi's experience to the whole society.

Sunday, August 06, 2006

First Cloning in the Middle East

Iranian researchers at the University of Isfahan have carried out the cloning of a sheep. The newborn lamb lived only for 5 minutes. However there is no doubt that this is a first time in the Middle East region that local researchers have performed cloning. The research center in Isfahan will continue its activities in this regard according to Dr. Montazeri the director of the center. The project was initiated by Dr. Ashtiani who passed away before seeing its results.

An Alumni Gathering and Realties of a Policy

For Iranians Sharif University of Technology (SUTA) is Iran’s MIT. The university ranked first in many fields particularly communication, electronics, mathematics, physics and mechanics. It is the first choice of many but only a few can enroll. Out of a few hundred thousands high school graduates with mathematics and physics diplomas only 600 are qualified to enroll in its departments each year. The school annual advertisement in daily papers warns the new freshmen of the school high standards and advises them not to choose this school if they lack sufficient background in mathematics and physics. No wonder its students receive admissions from almost any school in the world, more than once they came first in the qualification exams at Stanford University.

Today school alumni in Iran include several thousands of professionals and businessmen who are the finest in their trade. Most run their own firms and constitute the core of Iran’s small hi-tech private sector. Its large alumni outside Iran include several academicians and researchers as well as highly skilled engineers. For last few years its alumni have been more active in organizing reunion and creating a bridge between Iran’s most renowned academic center and outside world. This year the fourth annual gathering of this sort took place in Santa Clara, CA.

Expecting a turn out from Iran, board of directors of SUTA Alumni went through hideous paperwork with State Department and its Consulates. They advised their members to apply for their visas ahead of time. All applicants went through security check and other necessary procedures. At the end 150 of the alumni and faculty members received visas to attend the gatherings. Many also came from Europe and other states to attend this reunion of so many friends and classmates. The generations who silently try to build a better Iran were coming together. But the outcome of all those careful preparations and paperwork came to nothing. Several of attendees denied entry upon their arrivals and informed that their visas were revoked. Some put in detention over night to board a later return flight. The bridge broke again. The authorities chose to be silent.

Despite their tight lip "no comments" policy, One couldn’t help remembering what they said in their interviews and comments before. It is an officially announced policy of this administration to expand cultural and academic ties with Iranians, with real people of Iran, with democracy lover people of Iran. It does not get more real than an engineer, who has worked, studied and started his/her own business in Iran. And in reality he or she is deported when he or she participates in exactly that cultural exchange announced by administration, but organized by some root grass NGO. The truth is no where else a larger discrepancy could be observed between announced policies and exercised ones than the treatment Iranians receive. So would it be too much to ask the officials to kindly stop telling American public that they support cultural ties, academic relationships and want to connect to real people of Iran? The reality couldn’t be more different.

100 Years Ago A Romantic Time for Desperate People

They say that Mozafarr-o Din Shah was dying. The old monarch had spent most of his time to come to the throne, compared to his father he was soft. His father Naser-o Din Shah had ruled Iran for 50 years before being assassinated…. much had changed in those years.

When Naser-o Din Shah came to power, Iran had already lost her territories north of Aras River[1] to advancing Russians. These were Armenia, Azerbaijan and Georgia, but still this was a vast empire even by the 19th century standards. Herat[2] was an Iranian city and princes of Herat, Kabul and Qandehar would consider Iranian King their protector. The Khans of Central Asia paid homage to him with taxes. Weak and beaten, Iran was still a threat to Ottoman Empire. Iranians had not lost the air of protectors of peace and faith; there was still a chance for the old days of Safavid glory to return.

“What has happened?” A telegraph from merchants and people of Tabriz[3] asked Mozaffar-o Din Shah. By the time he came to power Herat had been lost, so was Central Asia and so were parts of south east of Iran. Iranians merchants and producers had lost domestic market to Russian and British competitors, who were benefiting from several trade agreements and monopoly rights given (sold is the more accurate word) to them by government. Government rule hardly reached outside Tehran. Everyday a new incident humiliated the nation. Mishandling of popular demands by a brutal chancellor caused a nationwide movement. Iranians demanded ‘Justice’ from their King.

The initial demand clergies' and merchants' initial demand for a judiciary or a ‘House of Justice’, to address people’s concerns, became the nationwide demand for a parliament, a constitution and a government approved by parliament. French educated intellectuals joined clergies and merchants. August 5th 1906 King signed a Firman, a royal decree, to establish a parliament. Iranians called it: Majlis. Since then it has been an inseparable part of Iran’s politics. Although movement reached the initial goals of establishing a parliament and drafting a constitution it failed. There were many reasons for it.

First it was the new king: Mohammad Ali Shah. An old school king, he did not like commoners discussing his orders. His Russian brigade did not waste time to bombard Majlis. A civil war broke out. King lost and escaped to Russian embassy. His brothers leaded rebellions in his name in following years. Russians added to the difficulties by objecting to the government’s appointments and invading Iran. They occupied Tabriz and Mashhad and Northern Province of Gilan. The chaos dragged on, local chieftains raised their own standards in North, West and South. The First World War doomed the fate of constitutional movement.

Iran's neutrality was ignored by both sides. Iran became a battlefield, where Russians fought Ottomans and English hunted down German spies. Government had to evacuate Tehran and so did Majlis. By the time war ended Iranians were tired of 15 years non-stop domestic unrest and civil war. Government was bankrupt and so was the economy. 1920 coup brought to power a new face: a young Iranian Cossack named Reza Khan. In his way to become the absolute ruler of Iran and Reza Shah Pahlavi, he attacked and abolished what was left of constitutional movement: free media and election. Some of its finest leaders were killed or sent to exile. Except for a short revival in post WWII era, previous to CIA backed 1953 coup, Majlis for most its existence during monarchy was an institute with little initiative. The elections did not help Iranians to organize political parties and its predetermined results discouraged any attempt to address the nation’s concerns.

There is no wonder why there is an ongoing discussion about Constitutional Revolution in Iran and many political groups benefit from it in their legitimacy; clergies remind everyone that they initiated it and actually the first blood in it was that of a seminary student. Intellectuals consider it their first achievement. It was the first move in a country ruled for 30 centuries by unquestionable kings and it started by a question: “What has happened to us? Less than 20 years ago Emirs of Bokhara and Samarghand paid taxes to his majesty government, today one can not travel without harassment from Tabriz to Tehran, and people of Khorasan and Gorgan are selling their children for food to Turkmen. The foreigners are more respected in the business and his majesty government is incapacitated of supporting Iranian merchants and goods, we ask you: Your Majesty! what has happened to Iran?[4]

[1] The river which marks Iran’s northwestern frontier.
[2] Today the main city of Western Afghanistan, even now Iran and Iranians play a crucial role in the life of city.
[3] Located in Northwestern of Iran, the city is most identified by its role in constitutional revolution.
[4] Parts of Tabriz telegraph to Tehran.