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Payvand's Iran News ...

10/23/00
Reformation is the antidote of extortion and invisible powers

An Interview with Seid Mehdi Sahraian, economist

Source: Hambastegi

Q: In your recent stirring interview with one of the newspapers you said: "Our economy will collapse in 2002." How did you arrive at such conclusion and what are the indications?

A: It is quite sad that our national economy is so intensely politicized. During the past two years, our economy has turned into an "outgrowth of politics" and the country's interests -- which is in fact our national interest -- has been sacrificed for political tendencies.

An independent academic economist when studying one of the economic problems of the country offers his conclusions without expressing any political inclinations. Usually no academic economist makes his scientific anticipations for the future sound absolute. They use terms such as "it appears", "according to this or that study" …unless faced with some specific trend repeated several time in the past that has definitely shown the failure of its tactics and now again is going to be adopted by the government. Then according to the past experiences, the economist would warn the authorities.

Scientific surveys particularly in the field of economics are always connected to some "past relations" or "future relations" of any proposed hypothesis and that necessitates the use of term such as "ifs" when presenting the corresponding hypothesis and diagnosis.

The anticipation of complete collapse of economy of Iran within the next few years first expressed in the work "productionism" and then in that interview, was presented in the same way, that is based on the conditions of relevant factors now in effect in an unsuitable way in the economic life of the country. The most obvious evidence is the continuation of political tensions that have considerably affected our economy and the process of productive investment, and thus the rate of private investment in this area is now almost negative and many other evidences that can be recounted from the sphere of production.

It is evident that no plant ever grows on a burnt land and no new opportunities for employment would arise. Our economy that is largely dependent on the oil incomes is quite vulnerable. In addition it has suffering from lack of investment for the past two decades and has appealed to organized smuggling of commodities -- both in import and export-- in an unprecedented way. Extortion is rooted in monopolism and other limitations and constraints confronting production, whose limited sources are wasted in unscientific and "every day approach" of an incompetent management system. Now there is this question that would this great population of unemployed young people not act as a threatening army for the country's economy and social basis of the society.

Q: But you have implied that Mr. Khatami is responsible for the economic collapse and disorders?

A: Well this is that element of politicizing that is now imposed on our economy. The audience for economic warnings is not only the government, but also the whole organ of rulership and even the whole spectrum of consumers. Every one of the members of the society with his/her adopted 'economic behavior' affects the collapse or growth of the national economy. In the same way that the economy of a country such as Japan is the product of collective endeavor of the whole society. Surely, the share of the government and high rank management of the country ruling over our economic planning system would be much greater in the blooming or decline of the production.

Q: I still do not get my answer, is Mr. Khatami responsible for all the present economic problems?

A: It is not that easy to issue a verdict here, as the economic condition of our country has many intricacies. In other non-despotic countries, when a member of higher management system of the country is failing in his plans, he would resign for the sake of national interests of his country to let other more competent individuals to take over. But this is not true about our country. It is now 22 years that the highest management system of the country is in the hands a small number of people who are generally related. When reformist Mr. Khatami came to power, all these managers remained in their positions. During the past two decades there were at least three economic approaches: 'state centralization', 'modificationism', and 'social democratic reformation' controlling economic policies of the country. In all three presidential terms, the higher rank managers were either maintained in their previous positions or just exchanged their posts and despite the fact that the country's economic plans originating from their way of thinking, approach and functions, have been a real failure, but none of them -- using their political influence-- did not give up their positions.

In other words, during the past two decades the large scale management of the country has been monopolized. The director of Central Bank who has won the title of the hero of decreasing the value rate of our national money is still sitting on his seat and continues his work despite the increasing protests of people and other ministries. The same is true about many other of our ministries.

At the beginning it was anticipated that Mr. Khatami would appoint fresh managers with different reformist thinking systems. Then it appeared that the President has no power over changing the managers and had no other alternative than to accept the existing divisions. On the one hand, when the subject of abolition of tax exemptions of major founds and monopolies and their special advantages culminated, it became clear that the president is not allowed to take such measures and the government has no control over these founds and their economic activities.

So briefly, we can conclude that about %50--60 of production is outside the sovereignty and control of the government and the president. On the other hand there is an extensive and very powerful network of financial market actively working parallel to the banking system of the country. According to official statistics of 1999 an amount of 28000 milliard toumans and $4 milliard has been circulating in this network (while the governments share for the same year had been 26000 milliard toumans). This has nearly paralyzed the government and its protests against the illegal activity of financial companies of this network has all been in vain.

Mr. Namazi, minister of economy has said that in the higher economic council of the country I have only one vote, but I am responsible for the consequences of the council's decisions. During the past 2 decades over 30 economic planning councils and about 22 trade planning councils have been created in the country that are working and deciding in parallel to the government. When Mr. Khatami took over the power none of these councils accepted the scientific necessities of the new conditions and they did not concede their powers to the president. On the contrary, they started to resist against reformations.

Now with such a disordered economic structure and large scale management system of economic decisions, can we make Mr. Khatami responsible for the present economic instability of the country?

Q: With such a situation we should accept that Khatami could not achieve any economic accomplishments.

A: This is how it seems, but the reality is something else. Khatami has achieved promising economic accomplishments, but these accomplishments have not been achieved in a harmonious system of decision-making and planning, but have almost been completely dependent on the president's personal ingenuity.

Q: Why do you say inharmonious system? Are not the ministers under the president's power?

A: This is how it seems again. But it is heard that the president has not been that free in choosing his own high rank managers. Look at their configuration. They are the same old all--life ministers and managers. It is been heard that they resist against the president's orders.

You see all independent economists agree that the scene of the economic activities of the country-- in an unwritten hidden agreement -- has been divided between a few powerful groups. These influential, but invisible groups resist wholeheartedly against any kind of reformation and use different tricks -aimed at nullification of any reform attempts. Today, the most important difficulty is smuggling commodities and also extortion.

In addition, Mr. Khatami has been facing many unexpected economic events, too, such as the vacillations in the price of oil in the world market.

Q: So what should we do? How can we liberate our national economy -- that belongs to all people -- from the hands of these influential extortists? Can the parliament play a role here?

A: The assessment of the research committee shows that the 6th parliament is in general an intelligent one. So it is natural that now people have their trust on it. Simultaneously there are powerful groups that intend to draw the parliament to every day routine works and control its potential power in economic reformations. One of their tricks is to disgrace the MPs and so they are active in making rumors and scandals in this respect. In other words, they would make their best to represent them as some extortists too.

Q: Don't you think that the fight against extortists and these powerful invisible economic groups should be of priority?

A: The way to fight against the ominous phenomenon of extortion and invisible division of economic interests among a few groups lies largely in the establishment of scientific mechanisms, and not in intensifying punishment. Economy, in contrast to what many authorities think is a very complicated subject. Taking any provoking measure -- positive or negative-- in one economic sector can spread to other economic sectors like a wave and stagnate or activate those parts too. Application of penalization, punishment, arrest and imprisonment, whipping and as such would not only help, but would only aggravate the situation and would result in a crisis. That is why the presidents is avoiding the application of these traditional measures.

The fatal antidote of extortion and destruction of the power of the invisible economic monopolies, is to continue reformation. By removing the existing obstacles on the way of production and export, facilitating the conditions and the grounds for capital investment in the productive economic activities, will help to fill the existing abysses between demand and production -- in other words, supply and demand -- which are the best ground for the growth of extortion. By promoting trade and industrial activities, the grounds for commodity smuggle and the monopoly of the state and different founds will be removed and gradually instead of relationships, market mechanism will start to rule over the system of demand and supply. Then the extortists have to face equal conditions… and this is a kind of activity that only the parliament is capable of. By accelerating the approval of economic reformation bills, it can push the conditions ruling the economic relations toward equilibrium. As it was mentioned before, Mr. Khatami is unable to start this movement, as on hand the government rules over only %30 - 50 of production, and on the other hand, the high rank managers are not all the president men to help him with the reformations.

-- Translated for payvand.com by Roya Monajem, royamonajem@gmail.com



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