The Islamic Republic of Iran: Reflections on an Emerging Economy

257 Pages·2014·1.505 MB·English

by  Jahangir Amuzegar

The Islamic Republic of Iran
The Islamic Republic of Iran: Reflections on an Emerging Economy provides
an in-depth study of Iran’s post-1979 Revolution economy under the Islamic
Republic, with new material and related journal articles combined in one
volume in a reader-friendly style.
The volume starts with an overview summarizing the development of the
Iranian economy under five successive administrations in five distinct phases.
This is followed by 15 articles providing detailed information which expands
on, and complements, the discussion in the introductory overview. Appro-
priate references on specific topics are made in the overview to each relevant
article, ensuring that the material is easily accessible to the reader.
Topics discussed include public finance, employment, banking, petroleum,
privatization and the exchange rate. Full references are also made to US and
universal economic sanctions and their effects, and to the legacies of the
Khatami and Ahmadinejad administrations.
This versatile title is designed to appeal to a wide readership, including
students, academics, business people, researchers and professionals. Some
readers, interested in a quick review of the subject matter, may simply read
the original text, while others can take the time to read the supplementary
articles and review what is related to the topic of their choosing.
Jahangir Amuzegar, an international economic consultant, received his PhD
in economics from the University of California after studying at the Uni-
versityof Tehran and the Universityof Washington. Hewas Iran’s Ministerof
Commerce in 1962–63, Minister of Finance in 1963 and Ambassador-at-
Large from 1963–79. He was also an executive director of the International
Monetary Fund from 1974-80. Dr Amuzegar’s many publications include
Managing the Oil Wealth: OPEC’s Windfalls and Pitfalls (1999).
Europa Emerging Economies
Editor Robert E. Looney
The Europa Emerging Economies series from Routledge, edited by Robert
E. Looney, examines a wide range of contemporary economic, political,
developmental and social issues as they affect emerging economies throughout
the world. Complementing the Europa Regional Surveys of the World series
and the Handbook of Emerging Economies, which was also edited by Professor
Looney,thevolumes in the Europa Emerging Economies series areavaluable
resource for academics, students, researchers, policy-makers, professionals,
and anyone with an interest in issues regarding emerging economies in the
wider context of current world affairs.
Some of the volumes in the series provide in-depth country studies, while
others examine issues and concepts; all are written or edited by specialists in
theirfield.Volumesintheseriesarenotconstrainedbyanyparticulartemplate,
but may explore economic, political, governance, international relations,
defence, or other issues in order to increase the understanding of emerging
economies and their importance to the world economy.
Robert E. Looney is a Distinguished Professor at the Naval Postgraduate
School, Monterey, USA, who specializes in issues relating to economic
development in the Middle East, East Asia, South Asia and Latin America.
He has published over 20 books and 250 journal articles, and has worked
widely as a consultant to national governments and international agencies.
The Islamic Republic of Iran
fl
Re ections on an emerging economy
Jahangir Amuzegar
AAmmuzuezgeagrar
AmAmuzuezgeagrar
AAmmuzuezgeagrar
Firsteditionpublished2014
byRoutledge
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Summary:“ThistitleprovidesanindepthstudyofIran’spost1979Revolution
economyundertheIslamicRepublic,withnewmaterialandrelatedjournalarticles
combinedunderoneroofinanovelandreaderfriendlystyle.Thevolumestartswith
anoriginaltext,summarizingthedevelopmentoftheIranianeconomyunderfive
successiveadministrations,infivedistinctphases.Followingthisarefifteen
accompanyingarticlesprovidingdetailedinformationthatexpandson,and
compliments,thediscussionintheoriginalmaterial.Appropriatereferencesonspecific
topicsaremadetoeachrelevantarticle,ensuringthematerialiseasilyaccessibletothe
reader.Topicsdiscussedincludepublicfinance,employment,banking,petroleum,
privatization,andtheexchangerate.FullreferencesarealsomadetoUSanduniversal
economicsanctionsandtheireffects,withthelegaciesoftheKhatamiand
Ahmadinejadadministrationsalsocovered.Thisversatiletitleisdesignedtoappealto
avastreadership.Thehurriedbusinessexecutiveorhighgovernmentofficial,interested
inaquickreviewofthesubjectmattermaysimplyreadtheoriginaltextwhilethink
tankresearchers,researchfellowsandstudentscantakethetimetoreadthe
supplementaryarticlesandreviewwhatisrelatedtothetopicoftheirchoosing”--
Providedbypublisher.
Includesbibliographicalreferencesandindex.
ISBN978-1-85743-748-5(hardback)--ISBN978-1-315-75487-1(ebook) 1. Iran--
Economicconditions--1979-1997.2. Iran--Economicconditions--1997-3. Iran--
Economicpolicy. I.Title.
HC475.A6462014
330.955--dc23
2014016189
ISBN978-1-85743-748-5(hbk)
ISBN978-1-31575-487-1(ebk)
TypesetinTimesNewRoman
byTaylor&FrancisBooks
EuropaCommissioningEditor:CathyHartley
EditorialAssistant:LydiadeCruz
Contents
Foreword vii
About the author viii
Acknowledgements ix
A word of caution x
Abbreviations xi
Overview 1
The unforeseen upheaval 1
The anti-monarchy manifesto 3
Velayat-e faqih in theory and practice 4
A partisan assessment 16
An objective evaluation 18
Underlying causes 23
Favourable prospects 27
Articles 29
1 The Iranian economy before and after the revolution 31
2 Islamic fundamentalism in action: the case of Iran 44
3 Iran’s unemployment crisis 58
4 Islamic social justice: Iranian style 66
5 Iran’s 20-year economic perspective: promises and pitfalls 87
6 Iran’s Oil Stabilization Fund: a misnomer 105
7 Khatami’s legacy: dashed hopes 112
8 Sanctioning the Islamic Republic: a new global wave 131
vi Contents
9 Iran: the rial saga 140
10 Iran: the subsidy dilemma 150
11 Ahmadinejad’s legacy 157
12 Nuclear Iran: perils and prospects 167
13 Iran’s oil as ablessing and a curse 191
14 The Islamic Republic of Iran: facts and fiction 206
15 Iran’s economy facing a challenging year 219
Index 227
Foreword
Inthestandardpublishedtextsonthemarket,wheneveradditionalinformation
and awareness are required, the reader is directed by means of footnotes to
the supplementary sources – a process which is distant, cumbersome, and
often out of reach of a typical reader, or beyond the reader’s time and
patience for the search. In an overwhelming number of cases, therefore, the
distant information which is referred to in the footnote is neglected, and the
source is never consulted.
In this volume, the text and additional information are combined in a
simple and accessible manner. Thus, whenever the discussion in the main text
requires further clarification, the material is immediately available to the
reader and does not require a distant and tedious search.
The volume starts with a succinct summary chronicling the post-1979
revolution Iranian economy under five successive Islamic administrations in
five distinct phases. Standing by itself, this summary offers the hurried and
busy reader a thorough account of the economy in the last three-and-a-half
decades.Forthemoreinterestedandleisurelyreaderrelatedpublishedarticles
on the subject provide further information and clarification. Thus, in the
course of the introductory narrative, special references will be made to 15
articlespublishedindifferentUSjournalsonIran’spublicfinances,employment,
banking, petroleum, privatization, exchange rates and imposed sanctions.
This book will be of interest to awide spectrum of readers. The busy busi-
ness executive or high-ranking government official interested in a quick
review of the subject matter may simply read the introductory summary, and
forego the supplementary articles. Researchers at think tanks, and students in
various programmes of Iranian studies, however, may take their time and
review their chosen topic in the related articles.
About the author
Dr Jahangir Amuzegar, an international economic consultant, received his
PhD in economicsfrom the UniversityofCalifornia, USA, after studying law
at the University of Tehran, Iran, and economics at the University of
Washington,USA.HewasIran’sMinisterofCommercein1962–63,Minister
of Finance in 1963 and Ambassador-at-Large from 1963–79. He was also an
executive director of the International Monetary Fund from 1974–80.
Dr Amuzegar has held a number of academic positions, including at the
University of California at Los Angeles, Occidental College, University of
Michigan, Michigan State University, American University and the Johns
Hopkins School of Advanced International Studies. Dr Amuzegar’s many
publications includemorethan100articlespublishedin,amongothers,Foreign
Affairs,Foreign Policy, Middle East Journal, Middle East Policy, Middle East
Economic Survey SAIS Review, Oil and Gas Journal, Washington Quarterly,
PROSPECT and Third World Quarterly. He is also the author of several
books on Iran, its oil and the country’s economic development, including
Iran: Economic Development under Dualistic Conditions (1971), Iran: An
EconomicProfile(1977),ComparativeEconomics(1981),TheDynamicsofthe
Iranian Revolution (1991), Iran’s Economy under the Islamic Republic (1993/
1997) and Managing the Oil Wealth: OPEC’s Windfalls and Pitfalls (I.B.
Tauris, 1999), which was awarded Choice’s Outstanding Academic Title.
Acknowledgements
This book is an attempted response to the frequent urgings of my close
friends and supportive readers to bring together some of my articles on the
Iranianeconomypublishedinthelastfewyearsinasinglevolumeinorderto
produce a more comprehensive picture of economic conditions in the Islamic
Republic of Iran.
Encouraged by such sentiments, this volume starts with a short, original
essay discussing the development of the post-1979 revolution Iranian economy
under five successive Islamic administrations. Standing by itself, the essay
offers the hurried and busy reader an informative and concise account of the
economy in the last three-and-a-half decades. The subsequent 15 selected
publishedarticles, inturn, elaborateand expand the themesand topics covered
in the essay for those with more time and further interest.
Many words of appreciation are due to those who made the publication of
this volume possible. Special gratitude goes to the editors and publisherswho
graciouslypermittedthearticlescontainedwithinthisvolumetobereproduced—
Anne Joyce of Middle East Policy, Dr Saleh Jallad and Walid Khadduri of
theMiddleEastEconomic Survey,andMichaelDunnandJacobPasselofthe
MiddleEastJournal. AtRoutledge,special thanks should gotoCathy Hartley,
Europa Commissioning Editor; Lydia de Cruz, Editorial Assistant; Ruth
Bradley, Production Editor; Alison Phillips, Copyeditor and Alison Neale,
Proofreader, who went out of their way to be co-operative and accommodat-
ing.ZacharyVonoat the Middle East Council and Garbis Kiremidjian at the
Middle East Economic Survey provided invaluable technical support. Susan
Englebreacht painstakingly typed up all the articles from nearly illegible
script onyellow pages.
A final and distinct expression of gratitude is owed to Professor Robert
Looney, who welcomed my initial inquiry, encouraged me to go ahead with
the study, got the publisher interested in the project, and selflessly followed
the task to fruition.
Jahangir Amuzegar