Hassan Rouhani's Economic Program and 'Red Lines'

The program of the twelfth government, ahead of the presidential elections, was published by Hassan Rouhani under the title 'Again Iran' in 255 pages and 10 sections. In this text, the second clause of the first section is about 'economic issues,' and the entire second section is dedicated to 'economic planning and employment development.' Additionally, some other sections of the text also address topics that have economic dimensions (environmental issues, especially water) or are directly and indirectly related to the economy (foreign policy). In the introduction to the 'twelfth government program,' Hassan Rouhani summarizes the failure of Iranians in the economic sphere as follows: 'We need a technological, innovative economy that is compatible with environmental standards, but unfortunately, in the past century, we have not been able to achieve such an accomplishment. We have made progress in many areas, but honestly, we are still far from reaching the status of a regional economic power and an effective economy on a global scale.' According to the authors of this program, the Iranian economy has faced the challenge of low growth rates accompanied by significant fluctuations over the past three decades and suffers from two major constraints: first, it is 'exogenous' (relying on oil revenues and government dominance), and second, it is 'endogenous' (unable to export competitive goods to global markets and its production apparatus only focuses inward). In an 'exogenous' and 'endogenous' economy, it is impossible to achieve high, sustainable, and job-creating growth. The solution is to implement a series of structural reforms to achieve an 'endogenous' and 'exogenous' economy. However, until this long-term goal is reached, immediate difficulties must be addressed, from poverty and unemployment to the financial deficit of pension funds, the decline in the quality and quantity of public services, and regional inequalities... The goal of the 'twelfth government program' is to propose practical and short-term solutions to alleviate difficulties and create the groundwork for structural reforms to achieve long-term goals. The economic section of the 'twelfth government program' addresses the dire situation of Iran in the last years of Mahmoud Ahmadinejad's presidency and emphasizes the achievements of Hassan Rouhani's government in overcoming recession and inflation. Many pages in this section are dedicated to the 'economic reform program in the second half of the 1390s' and 'programs for job creation and reducing unemployment.' To what extent can the 'twelfth government program' be described as successful economically? Among the six presidential candidates, only Hassan Rouhani has taken his audience seriously and presented them with a coherent and comprehensive economic program. The program correctly identifies several fundamental constraints of the Iranian economy, and the proposed solutions are realistic in many cases. This text is a summary of what the technocracy of the Islamic Republic has achieved after nearly four decades of trial and error, and studying it is very useful for all those interested in Iranian economic issues and development literature. However, the producers of the 'twelfth government program' have, out of necessity, avoided addressing a series of fundamental issues that are crucial for getting the Iranian economy out of its current constraints or have only made passing references to them. In other words, the 'red lines' that have been defined by the 'system' in the Islamic Republic in both obvious and hidden ways, but understandable to all, have been respected in this text. Here, we mention two cases: First, a very significant part of the Iranian economy is monopolized by institutions that, according to Hassan Rouhani, are 'beyond the circle of accountability.' Everyone knows that in Iran, hundreds of production, commercial, and financial units operate under the control of religious and military foundations, and the government has no oversight over them. What share do the large financial empires belonging to various institutions, from the Astan Quds and the Mostazafan Foundation to the Khatam al-Anbiya Headquarters of the IRGC, have in Iran's gross domestic product, and what impact do they have on the macroeconomic data of Iran (inflation rate, unemployment rate, foreign trade...)? Nevertheless, the producers of the 'twelfth government program' have, out of necessity, avoided addressing a series of fundamental issues that are crucial for getting the Iranian economy out of its current constraints or have only made passing references to them. In other words, the 'red lines' that have been defined by the 'system' in the Islamic Republic in both obvious and hidden ways, but understandable to all, have been respected in this text. In the introduction to the 'twelfth government program,' Hassan Rouhani, referring to these institutions, writes: 'Economic foundations, companies belonging to religious institutions, and agencies belonging to non-governmental public institutions are not accountable for their actions, and some even do not pay taxes. Achieving development and solving many problems requires accountability from everyone before the law.' What is the solution? What should be done with this 'gray area' of the Iranian economy, whose real dimensions no one knows? Who benefits from these vast financial empires at the expense of plundering their compatriots? These questions, which are repeated among the people, are one of the main sources of distrust in the government, which is also mentioned in the 'twelfth government program': 'Social studies show that the level of public trust among people in each other, trust in official institutions, and trust in the political system has been seriously disrupted and diminished.' Nevertheless, the program does not provide a specific proposal to end this significant anomaly, which escapes the realm of government policymaking, disrupts Iran's economic balances, and is a source of widespread corruption. Second, another important issue that has not been adequately addressed in the 'twelfth government program' is the role of foreign policy in the economic sphere. One of the factors contributing to the economic decline of Iran in the post-Islamic Revolution era has been the tension in the country's foreign relations, which peaked during the sanctions related to the Islamic Republic's nuclear file. In this program, it is stated that 'in 1392, the country was on the brink of financial bankruptcy, and if oil exports had reached zero, the government would have faced serious problems in managing the country's current affairs and meeting the basic needs of the people (such as paying employees' salaries and providing essential goods). At the same time, the inflation rate would have increased unprecedentedly and alarmingly, and the value of the national currency would have collapsed by more than four times or more in a short period. If such conditions prevailed in the country, there would have been no need for a military attack from the enemy; rather, the country would have collapsed from within.' What is stated in this text is an example of the impact of foreign policy on Iran's economy. The issue is that foreign policy is not under the control of the government, and its main lines, especially in very sensitive strategic areas, are determined by the 'Leader's Office.' The 'twelfth government program' also refers to the 'lack of complete authority of the government and the Ministry of Foreign Affairs in foreign policy' in its ninth section. So what is the solution? Can the current foreign policy, which is based on 'Death to America' and 'Death to Israel' and pursues its specific goals in Syria, Iraq, Lebanon, and Yemen, achieve 'interaction with the outside' and attract foreign investment and move towards establishing an 'endogenous-exogenous economy'? Is it expected that in the second term of Hassan Rouhani's presidency, decision-making regarding foreign policy will be transferred from the 'Leader's Office' to the government and the Ministry of Foreign Affairs? These questions cannot be avoided. In Iran, as in all countries of the world, tension in foreign policy can undermine even the best economic policy, no matter how brilliantly it is designed.