From 'Greek Tragedy' to 'Iranian Tragedy'

In mid-July 2015, within hours, two very important international agreements topped the news: the 'Joint Comprehensive Plan of Action' (JCPOA) between Iran and the group known as the 'P5+1', signed in Vienna, and the 'Financial Rescue Plan for Greece', accepted by the leaders of Eurozone countries in Brussels. The first document marks the end of the nuclear file of the Islamic Republic of Iran, which has created one of the most exhausting marathons in the history of contemporary diplomacy. The second document claims to find a way to end the foreign debt crisis of Greece, which has plunged the Eurozone into its most painful crisis. Iranians hope that the implementation of the JCPOA can, at least in the medium and long term, end a significant part of their economic and international difficulties. Greeks are looking forward to the final approval of the 'Financial Rescue Plan' by the parliaments of Eurozone countries, hoping to emerge from the dark tunnel of a crushing and humiliating crisis in the coming years. At first glance, searching for commonalities between the problems of a European country deeply in debt and a Middle Eastern country under heavy economic sanctions may not seem logical. However, if we take a closer look at the current difficulties faced by Iran and Greece, we will see that some of them have more or less similar roots. In fact, these two ancient countries, instead of utilizing their winning cards, turned opportunities into threats and, in addition, resorted to 'populism', placing a heavy burden on their peoples. The victims of the 'Dutch disease' in Iran and Greece are, in their own ways, victims of 'easy money'. Iran has enjoyed a plethora of oil revenues for decades, and its economic structures have been shaped around these revenues. Greece, too, has become addicted to financial aid from the European Economic Community (later known as the European Union) over the past thirty-five years, and after joining the Eurozone, without being adequately prepared for this membership, it exploited this 'rent position' to secure artificial welfare. In fact, both countries are victims of a phenomenon that economists call 'Dutch disease'. Here, we use the term 'Dutch disease' in its broad sense for all economies that, for various reasons, gain access to 'easy revenues' and, through mismanagement, turn 'gold' into 'calamity'. In this case, we can say that both Iran and Greece, from two completely different sources, became intoxicated by such revenues and pursued misguided paths. However, if we limit ourselves to the narrow and original meaning of 'Dutch disease', this term only applies to economies that suffer from fundamental anomalies due to abundant revenues from the production and export of raw materials, or, in other words, fall victim to the 'resource curse'. This economic disease, as its name suggests, was first studied and identified in the Netherlands. In the 1960s, the economy of this country faced disarray due to abundant revenues from the production and export of gas, the most important of which were rising inflation and declining competitiveness of export goods. Since then, with the identification of the economic roots of these disorders, the term 'Dutch disease' has been applied to economies that lose their dynamism due to the improper use of abundant revenues obtained from the export of natural resources, resembling addicts who can only stand on their feet with drug injections. Countries with oil and gas reserves are particularly susceptible to 'Dutch disease' due to the heavy weight of revenues from the export of these two commodities. It suffices to look at a range of oil-exporting countries, from Iran and Algeria to Nigeria and Venezuela, and even Russia. However, there are other countries that, due to their completely different economic and political environments, have turned 'black gold' into one of the effective levers for enhancing their economies. The United States, the United Kingdom, and Norway fall into this category. In oil-dependent countries, revenues from oil exports increasingly become the main source of government income, sidelining other sources, especially taxes. Simultaneously, the reckless injection of oil dollars into the economic arteries leads to a sharp increase in liquidity and a surge in inflationary tensions. Moreover, the heavy weight of oil dollars raises the value of the national currency against other currencies, reducing the competitiveness of their export goods by making them more expensive, increasing imports, and preventing the diversification of foreign trade. The concept of 'Dutch disease', if used in the broadest sense, is not limited to the effects of revenues from raw materials, especially oil and gas. Experience has shown that the influx of massive foreign aid into a country and the sudden injection of large amounts of currency into its economic arteries can also lead to serious disruptions. Afghanistan after the fall of the Taliban faced this phenomenon due to the presence of a large number of military and non-governmental organizations in the country. Here, we emphasize the example of Iran, whose 'Dutch disease' originated from oil, and Greece, which fell victim to the same disease without having oil or other raw materials. First, Iran is one of the major victims of 'Dutch disease' caused by oil exports. This disease struck the country's economy in 1973 following the first oil shock that drastically increased Iran's oil export revenues, and it has continued to have a heavy and pervasive presence in Iranian society to this day, forty-two years later. Between 1963 and 1973, before the surge in oil revenues, Iran's economy experienced its most dynamic and healthiest period of contemporary life, with an average growth rate of eight percent per year and an annual inflation rate of below four percent. However, when, in the span of a year from 1973 to 1974, Iran's annual oil revenue suddenly jumped from about eight billion dollars to twenty-one billion dollars (which was a legendary wealth based on the purchasing power of the dollar at that time), many economic balances were disrupted. To understand the depth of the disaster caused by this event, it suffices to refer to an introduction written by Dr. Alinaghi Alikhani, Iran's Minister of Economy in the second half of the 1970s, on the notes of Asadollah Alam. The shock from the surge in oil dollars, with dire consequences for Iran's economy and politics, was repeated during the years 2005 to 2013, coinciding with Mahmoud Ahmadinejad's presidency. Future historians will be astonished to examine a period during which about seven hundred billion dollars in oil export revenues were squandered on the most unproductive economic and political projects. In addition to obtaining all this revenue, it created the illusion for the leadership of the Islamic Republic that relying on Iran's underground reserves and oil dollars could allow them to disregard the rules of diplomacy and its requirements without encountering problems. The turn of fate once again showed that this unfounded assessment could lead to catastrophe. Furthermore, the massive influx of revenue created the illusion for the leadership of the Islamic Republic that they could ignore the rules and requirements of diplomacy without facing issues. The turn of fate once again demonstrated that this unfounded assessment could lead to catastrophe. Second, Greece did not have oil but achieved massive and easy revenues from elsewhere. In fact, Greece's 'Dutch disease' stems from the enormous aid it has received since joining the European Economic Community in 1981 until today. To explain, member countries of the European Economic Community (later named the European Union) benefit from various payment mechanisms in the Union, especially within the framework of 'structural credits' and 'common agricultural policy', relative to their wealth and economic capabilities. Greece is among those member countries that have benefited the most from these mechanisms. According to some assessments, Greece's receipts from the European Union were equivalent to four to five percent of the country's GDP each year. Later, when Greece joined the Eurozone in 2001, due to having a strong currency, it was able to access massive financial facilities without hassle and at very low interest rates, which many countries around the world aspire to. Unfortunately, all this aid and facilities were not used for construction and development in Greece but were mainly directed towards expanding bureaucracy, paying relatively high salaries to employees, financing generous pensions, and, of course, widespread corruption. In fact, Greeks lived for many years at a level higher than their capabilities, relying on the efforts of taxpayers from other member countries or benefiting from the rent of a strong currency that did not align with their economy. In other words, the quality of the country's infrastructure, its health and education levels, and the amount of salaries paid to its employees and retirees were all based on the 'illusion of wealth'. Thus, the country dangerously sank into external debts without receiving the necessary warnings. Any other country outside the Eurozone, after receiving some financial facilities from other governments or private banks, would not be able to access new facilities if it found itself in a fragile financial situation. Greece, however, due to having the euro and the guarantee of a powerful institution like the European Central Bank, galloped down the road of debt without facing serious obstacles until the economic realities of 2009 came to light. Eurozone officials, who had carelessly ignored Greece's realities, were horrified to discover that this country was living with a fifteen percent budget deficit. Thus, the Greek people, between 1981 and 2009, for nearly three decades, became addicted to 'easy revenues' and, from this perspective, resembled oil-rich countries that fell victim to 'Dutch disease'. In fact, Greeks, like third-world oil exporters, lived under the 'illusion of wealth' until they realized that the foundations of their welfare were built on sand and lacked durability and sustainability, as they were easily provided from abroad and not used to create a sustainable and diverse economy. The calamity of 'populism' is another common weight seen in both the Iranian and Greek tragedies. Here, without delving into the historical roots of this concept, the various interpretations of it in political science literature, we will only stick to its common usage. From this perspective, the term 'populist' is applied to politicians who, in their relations with the people, instead of considering their rationality, rely on their simplism, instincts, and emotions, seeking simple but unrealistic answers to very complex issues, and think of nothing but becoming beloved among the masses. Hitler's populism identified Jews as the source of evil for both Germany and the world. Historically, whenever the prices of goods, especially food, rise, nothing is easier than blaming merchants for inflation and wasting our time explaining the real reasons for inflation to the people. We also see that today, in many Western European countries, the blame for economic problems, especially unemployment, is placed on immigrants. In the core of the Iranian and Greek tragedies, we must not forget the role of 'populism'. In Iran, Ahmadinejad's populism multiplied the dimensions of the risks that had already weighed on the country. In Greece, the radical left coalition, with its 'populist' discourse, instead of reducing the costs arising from the financial crisis, exacerbated the despair and confusion in the country and ultimately turned its back on all the promises made to the people under conditions heavier than before. The experience of Iran in recent years shows that in many cases even correct slogans (for example, 'nuclear energy is our inalienable right') have been used in the service of 'populist' plans to lead the people astray. Future generations will ponder the mystery of how a nation, instead of exploiting the capacities of the international relations system, fell into a crushing isolation with a demagogic discourse and became trapped in the harshest international sanctions. Abbas Akhoundi, the Minister of Housing and Urban Development in Rouhani's government, writes about the populism of the 'Ahmadinejad era': 'The result of eight years of populist management has led to the point where today we have various organizations and ministries that have disintegrated from within.... The eleventh government came to power at a time when the country was not in a good position in various international and domestic arenas. Our negotiations with the P5+1 had reached a deadlock, and our relations with other countries were at a low point.