To contradict those who argue there is one single will in Iran one only needs to follow the news of soccer in this land of footballers. It is the most popular sport in Iran with fans from all ranks of society, all walks of life and both genders, with female fans still banned from attending the games in the stadiums and yet they go disguised as boys or behind the fences to see their favorite teams play. Its popularity is so widespread that even President goes to national team’s exercises and all of its affairs are followed very closely by most enthusiastic of fans. And may be it is because of that, its confederation IRIFF, the players and the coaches have gained a certain space of maneuverability.
While the world of soccer is watching Euro Cup 2008 Iran’s national team is going through qualification for the World Cup. After much debate Ali Daee, former team captain and Asia's best player in 2000, has become team's manager and coach. The other potential candidate Afshin Qotbi was put aside, although he led his team, Persepolis, to become the champion of Iranian league. Like any other coach Ali Daee prefers some players to the others. It is not a secret that he does not like Ali Karimi, Asia’s Best Player in 2004 and one of Iran’s most celebrated footballer.
Karimi was banned from playing in the national team after he made numerous criticisms towards the IRIFF. And obviously Ali Daee did not feel obliged to include him in the team. Figures such as Iranian President Mahmoud Ahmadinejad and Hassan Khomeini, the grandson of the founder of Islamic Republic intervened to have him reinstated. Although IRIFF officially has pardoned him, the coach of national team does not feel obliged to field him yet. Something odd in a country where people are supposed at least to seem that they follow the official lead.
It is interesting to notice that soccer is the first place where President Ahmadinejad found his opponents to be too formidable. Last year after a long and politically charged debate as to who should lead IRIFF he had to ask Mr. AliAbadi the chairman of Iran’s Sports Organization to step down as a candidate. FIFA had threatened to boycott Iranian teams from international competition if the government would not have withdrawn its candidate from the election for the IRIFF chairmanship, which is considered an NGO. The prospect of having Iranian teams banned from international fields proved to be too terrifying even for the current cabinet.
Looking at this example one is obliged to think that may be popular support and interest is what plans to achieve sustainable economic development lack in order to succeed in Iran.
Where soccer teams succeed to divert policies that hurt their chances to attend international competitions, Iran’s industrialists and economists fail to convince politicians of the benefits of globalization and free competition. Where national team coach exercises a free hand in choosing his players and is chosen by an NGO, Iran’s manufacturing sector is mainly run by the government appointees and its private sector has to yield to the government’s influence and interfrence from time to time. The contrast could not have been greater. May be after all what development lacks in Iran is some soccer fans!
Saturday, June 14, 2008
Wednesday, June 04, 2008
Rumor has it
Several Iranian news outlets reported yesterday that it is a strong possibility that Mr. Mazaheri, head of Central Bank of Iran, is going to be replaced by Vice President Parviz Davoudi. Should this change take place it will be the first time that a senior member of government, second only to President, trades his office for the seal of Central Bank. It would also signal Mr. Ahmadinejad’s persistence in pursuing his economic policies and projects, such as merging major public banks, despite all the criticism and objections from all parts of political spectrum in Iran.
Mr. Mazaheri has made it clear that he would not lower interest rates and he would not agree to government’s plan to merge banks. Despite the pressure from the government it seems he has been successful so far to protect banking system in Iran. Many observers believe that the first of the new Majlis is to save the economy. It is most likely that the new Majlis would not remain silent in this matter. Replacing the head of Central Bank would not be as easy as some might have thought.
Mr. Mazaheri has made it clear that he would not lower interest rates and he would not agree to government’s plan to merge banks. Despite the pressure from the government it seems he has been successful so far to protect banking system in Iran. Many observers believe that the first of the new Majlis is to save the economy. It is most likely that the new Majlis would not remain silent in this matter. Replacing the head of Central Bank would not be as easy as some might have thought.
Monday, May 26, 2008
Saving or Dismantling an Economy?
It is not a secret that President Ahmadinejad does not like the banks. He does not believe in them and considers them and their functions as a threat to himself and a barrier to combat unemployment and to increase production. There is no surprise that his acting minister of economic affairs has introduced a decree to disband all major banks and to replace them with zero interest rate saving funds. These funds can lend money only according to regulations set by the government. Iran’s private banks continue to exist but only as investors. Public banks would stop offering long-term saving accounts, and be banned from offering any service or account with an interest rate.
The government has thought of taking this step although Iran’s supreme leader has approved of privatizing publicly owned banks in Iran by re-interpreting Article 44 of the constitution and although privatization is the focus of currently in place 5 years development plan. This would stop the shares of at least 3 Iranian banks to be offered through Tehran Stock Exchange to the private investors and would send terrifying shockwaves through Iran’s economy. Although this project is nowhere close to implementation, it has horrified many of experts and technocrats in Iran.
Economy has proved to be a challenge no one in the government thought it could be. When President Ahmadinejad despite experts’ arguments and his former minister’s of economic affairs counsel decided to lower interest rates even further no one expected the governor of Central Bank of Iran Mr. Mazaheri to hold his ground. He disinclined to communicate President’s orders to the banks and objected this decision in strongest terms. It is now rumored that his days are numbered. It also is rumored that he has told the President that he would not resign his post.
The debate does not end here. Dr. Tavakoli a prominent conservative and member of parliament and the chair of its research institute told reporters that 46% of short run projects that government has put in place to fight unemployment do not exist. Dr. Jahromi, the minister of labor and architect of President Ahmadinejad’s economic policies denied this report and called it misinformation. It seems except for a few close associates few admire government's economic stand.
In the meantime inflation causes the prices to increase even higher, the prices have reached new heights in real estate market and consumers are squeezed even more in groceries and super markets. One wonders if disbanding the banks would have the effect government expects it to have, or it would intensify the crisis the economy is facing now.
The government has thought of taking this step although Iran’s supreme leader has approved of privatizing publicly owned banks in Iran by re-interpreting Article 44 of the constitution and although privatization is the focus of currently in place 5 years development plan. This would stop the shares of at least 3 Iranian banks to be offered through Tehran Stock Exchange to the private investors and would send terrifying shockwaves through Iran’s economy. Although this project is nowhere close to implementation, it has horrified many of experts and technocrats in Iran.
Economy has proved to be a challenge no one in the government thought it could be. When President Ahmadinejad despite experts’ arguments and his former minister’s of economic affairs counsel decided to lower interest rates even further no one expected the governor of Central Bank of Iran Mr. Mazaheri to hold his ground. He disinclined to communicate President’s orders to the banks and objected this decision in strongest terms. It is now rumored that his days are numbered. It also is rumored that he has told the President that he would not resign his post.
The debate does not end here. Dr. Tavakoli a prominent conservative and member of parliament and the chair of its research institute told reporters that 46% of short run projects that government has put in place to fight unemployment do not exist. Dr. Jahromi, the minister of labor and architect of President Ahmadinejad’s economic policies denied this report and called it misinformation. It seems except for a few close associates few admire government's economic stand.
In the meantime inflation causes the prices to increase even higher, the prices have reached new heights in real estate market and consumers are squeezed even more in groceries and super markets. One wonders if disbanding the banks would have the effect government expects it to have, or it would intensify the crisis the economy is facing now.
Saturday, May 24, 2008
Thursday, May 08, 2008
It is First of May!
Walking down the streets of Tehran in 80’s and early 90’s one would have seen the old fading revolutionary slogans: “Long Live 11th of Ordibehensht (First of May) the Workers’ day! Long Live the Workers! Down With Capitalism!” Using the 11th of Ordibehesht from Iranian calendar, some older ones date to early years of revolutions would have been read: “Long Live the First of May! The Day of Proletariat! Dawn with Capitalist Imperialism!”
These were testimonials to the leftist inclinations of early revolutionaries. Except for a few merchants of Bazar and some of the traditionally religion few felt obliged to advocate the ownership rights or a free market. Advocating capitalism was almost a crime and an intellectual suicide. Justice was the word of the day.
In following the message of justice Iran adopted one of the costliest labor codes in the region. It makes it impossible to fire a worker; so many bankrupt firms continue to keep their labor force failing to pay their salaries. Many entrepreneurs prefer to hire illegal workers from Afghanistan and neighboring countries instead of hiring Iranian workers, to avoid dealing with the labor code. Ignoring the necessities of market and profitability of production has become a norm in approaching the labor issues in Iran.
Today the questions of efficiency, productivity and the issue of unpaid employment are all valid and legitimate topics for the discussions on Iranian economy. However many instead of looking into the causes of events, still concern themselves with short-term remedies and the events. Certainly it is tragic when a worker is not paid, and there are reports of factories where workers have not been paid for several months, but many of these firms have been bankrupt for several years now and they need to adjust the number of their employees. The restrictions set by the labor code prevent the entrepreneurs from maneuvers that would save their businesses. No sales and no revenues are translated into no income, but few observe that.
It is the first of May again. May be it is time for Iranian workers to demand freedom of choice, instead of an ambiguous justice and protections that doom the future of their employment and make it an unpaid one.
These were testimonials to the leftist inclinations of early revolutionaries. Except for a few merchants of Bazar and some of the traditionally religion few felt obliged to advocate the ownership rights or a free market. Advocating capitalism was almost a crime and an intellectual suicide. Justice was the word of the day.
In following the message of justice Iran adopted one of the costliest labor codes in the region. It makes it impossible to fire a worker; so many bankrupt firms continue to keep their labor force failing to pay their salaries. Many entrepreneurs prefer to hire illegal workers from Afghanistan and neighboring countries instead of hiring Iranian workers, to avoid dealing with the labor code. Ignoring the necessities of market and profitability of production has become a norm in approaching the labor issues in Iran.
Today the questions of efficiency, productivity and the issue of unpaid employment are all valid and legitimate topics for the discussions on Iranian economy. However many instead of looking into the causes of events, still concern themselves with short-term remedies and the events. Certainly it is tragic when a worker is not paid, and there are reports of factories where workers have not been paid for several months, but many of these firms have been bankrupt for several years now and they need to adjust the number of their employees. The restrictions set by the labor code prevent the entrepreneurs from maneuvers that would save their businesses. No sales and no revenues are translated into no income, but few observe that.
It is the first of May again. May be it is time for Iranian workers to demand freedom of choice, instead of an ambiguous justice and protections that doom the future of their employment and make it an unpaid one.
Wednesday, April 30, 2008
So It Rumbles
The problem these days with writing on Iranian economy is the number of subjects to write and not the lack of a topic of interest. The most noticeable event was the change of the guard in the ministry of Economic Affairs. Dr. Danesh Jafari, whose immediate departure had been a topic of rumors in capital, left his office not so quietly. In his farewell address he gave an account of internal conflict over the economic policies in Iranian government.
He highlighted the lack of belief in the principle concepts of economics theory, the lack of trust in experienced individuals and the lack of belief in the 4th development plan as the road map of development in Iran. He told his audience: “the government does not consider the 4th development plan as an obliging document and yet it has not introduced a substitution.”
He mentioned the friction between the government and other bodies and organizations. He also criticized those who do not know much about economics and economic affairs and create crisis through misinformation. He offered a history of these events, such as accusing the managers of insurance companies of fraud, accusing an unknown high official of accepting bribes to grant license to import cigars, accusing tax services of being unfair and some other incidents.
He particularly named Dr. Jahromi the minister of Labor as someone who opposed his line of policies by saying: “Whatever we did to persuade this dear friend of ours, Dr. Jahromi, that publishing money does not create jobs, was unsuccessful.” His account was the headlines of Iranian papers the day after and forced the Vice President to deliver a speech to defend the government’s economic policies right there and then.
Dr. Jahromi is already a known name in policy making circles. To many he is the main leader of those who advocate a further reduction of interest rate and oppose the policies advised by the economists in the Central Bank of Iran and Economic Affairs Ministry. He already made that well known by writing an open letter to the President criticizing the monetary package suggested by the Central Bank to control inflation accusing it of hurting production.
In his letter Dr. Jahromi wrote: “In last year private banks by using the agreed upon rate of return charged much higher rates than what government approved.” He recommended: “There must be investment companies to prevent banks from investing directly.” He highlighted the policy regarding banking sector by saying that it is a matter of policy to limit the banks to banking services and to prevent them from investing. His reason for such an approach is Iranian banks “natural” desire to invest in service sector where a short term profit is available and their reluctance to invest in long term projects.
Dr. Danesh Jafari departure is assumed a victory for Dr. Jahromi and his supporters in the cabinet. However many experts continue to warn against the government’s economic policies. Many say that adopting such policies would increase an already high inflation even more. In response President Ahmadinegad in a recent speech in Qom accused those with special interests in banks, customs and monopolies to conspire against the government causing the inflation.
The rising housing prices, the global food crisis and the forecasted drought and above all rising inflation that according to the Central Bank continues to rise all draw a challenging picture for Iranian economy. And the critiques of the government have wasted no time in blaming government policies. However at the end of the day the issue is not one of the policy but of believing in economics as a science. As many economists point out readily: “The prevailing opinion is that of engineers and not that of economists in policy making in Iran.”
He highlighted the lack of belief in the principle concepts of economics theory, the lack of trust in experienced individuals and the lack of belief in the 4th development plan as the road map of development in Iran. He told his audience: “the government does not consider the 4th development plan as an obliging document and yet it has not introduced a substitution.”
He mentioned the friction between the government and other bodies and organizations. He also criticized those who do not know much about economics and economic affairs and create crisis through misinformation. He offered a history of these events, such as accusing the managers of insurance companies of fraud, accusing an unknown high official of accepting bribes to grant license to import cigars, accusing tax services of being unfair and some other incidents.
He particularly named Dr. Jahromi the minister of Labor as someone who opposed his line of policies by saying: “Whatever we did to persuade this dear friend of ours, Dr. Jahromi, that publishing money does not create jobs, was unsuccessful.” His account was the headlines of Iranian papers the day after and forced the Vice President to deliver a speech to defend the government’s economic policies right there and then.
Dr. Jahromi is already a known name in policy making circles. To many he is the main leader of those who advocate a further reduction of interest rate and oppose the policies advised by the economists in the Central Bank of Iran and Economic Affairs Ministry. He already made that well known by writing an open letter to the President criticizing the monetary package suggested by the Central Bank to control inflation accusing it of hurting production.
In his letter Dr. Jahromi wrote: “In last year private banks by using the agreed upon rate of return charged much higher rates than what government approved.” He recommended: “There must be investment companies to prevent banks from investing directly.” He highlighted the policy regarding banking sector by saying that it is a matter of policy to limit the banks to banking services and to prevent them from investing. His reason for such an approach is Iranian banks “natural” desire to invest in service sector where a short term profit is available and their reluctance to invest in long term projects.
Dr. Danesh Jafari departure is assumed a victory for Dr. Jahromi and his supporters in the cabinet. However many experts continue to warn against the government’s economic policies. Many say that adopting such policies would increase an already high inflation even more. In response President Ahmadinegad in a recent speech in Qom accused those with special interests in banks, customs and monopolies to conspire against the government causing the inflation.
The rising housing prices, the global food crisis and the forecasted drought and above all rising inflation that according to the Central Bank continues to rise all draw a challenging picture for Iranian economy. And the critiques of the government have wasted no time in blaming government policies. However at the end of the day the issue is not one of the policy but of believing in economics as a science. As many economists point out readily: “The prevailing opinion is that of engineers and not that of economists in policy making in Iran.”
Sunday, April 13, 2008
A Roadside Conversation on Inflation in Iran
Katalaxy blog has a note on its author’s conversation with a cab driver in Tehran that I found very insightful. He wrote:
“I was walking out of Mehrabad Airport in Tehran looking for a lift to Sa’adat Abad[1]. The cab drivers were yelling their fares from 8’000 to 10’000 Thoman[2] , so I passed. Then someone said: Sa’adat Abad 5 Thoman (meaning 5’000 Thoman). It seemed fair and the cheapest. So I stopped and said:
- Two months ago I went this road for 4’000 Thoman, 25% increase in just two months[3]?
He said:
- Two months ago the year was the year of national unity, this year is the year of innovation and invention[4].
He was right, I laughed and got into his car.”
I love this story because it some how outlines how an Iranian consumer adjust his or her attitude toward inflation. Sometimes he or she does it by a smart comment with some reference to political realities or objectives set by authorities.
[1] A neighborhood in northwest of Tehran, mostly recent constructions It was developed rapidly in 1980’s and 1990’s.
[2] One Thoman is 10 Rials, although Rial is official currency people always use Thoman in their dealings, daily shopping and business activities. One Thoman also stands for 1’000 Thoman or 1’000’000 Thoman, depending on where the conversation is happening. (And most recently for 1'000'000 Thoman, this notion is used in real estate market).
[3] Reader surely observes that the increase in fare is as high as 100% for some other cab drivers.
[4] Iranian new year begins with the first day of spring. In New Year day in their official greetings the officials usually call people to concentrate their efforts in achieving a moral objective, last year this objective was Islamic national unity. This year's objective is achieving technological advancement through innovations.
“I was walking out of Mehrabad Airport in Tehran looking for a lift to Sa’adat Abad[1]. The cab drivers were yelling their fares from 8’000 to 10’000 Thoman[2] , so I passed. Then someone said: Sa’adat Abad 5 Thoman (meaning 5’000 Thoman). It seemed fair and the cheapest. So I stopped and said:
- Two months ago I went this road for 4’000 Thoman, 25% increase in just two months[3]?
He said:
- Two months ago the year was the year of national unity, this year is the year of innovation and invention[4].
He was right, I laughed and got into his car.”
I love this story because it some how outlines how an Iranian consumer adjust his or her attitude toward inflation. Sometimes he or she does it by a smart comment with some reference to political realities or objectives set by authorities.
[1] A neighborhood in northwest of Tehran, mostly recent constructions It was developed rapidly in 1980’s and 1990’s.
[2] One Thoman is 10 Rials, although Rial is official currency people always use Thoman in their dealings, daily shopping and business activities. One Thoman also stands for 1’000 Thoman or 1’000’000 Thoman, depending on where the conversation is happening. (And most recently for 1'000'000 Thoman, this notion is used in real estate market).
[3] Reader surely observes that the increase in fare is as high as 100% for some other cab drivers.
[4] Iranian new year begins with the first day of spring. In New Year day in their official greetings the officials usually call people to concentrate their efforts in achieving a moral objective, last year this objective was Islamic national unity. This year's objective is achieving technological advancement through innovations.
Subscribe to:
Posts (Atom)