The Crooked Wall of Privatization in Iran

Radio Farda - The process of privatization in Iran is facing increasing criticism, including from senior economic officials in the country. Fahimeh Khodr Heydari asked Fereydoun Khavand about the state of privatization and the related criticisms: Fereydoun Khavand: The process of privatization in Iran began in the early 1990s and has always been emphasized as one of the most strategic levers for the country's development over the past twenty-some years. However, today, after all this time of directives, commands, conferences, and articles about this process, a very large portion of academic and expert circles in Iran, even senior government officials from the head of the Privatization Organization to the Minister of Roads and Urban Development, have concluded that nothing has been done in this area and that everything must be started almost from scratch. Of course, the criticism of how this process has been implemented is not new, but the need for a real private sector has never been as urgent as it is today. The government in Iran has become increasingly bloated, heavy, costly, and inefficient, and its financial resources, which mainly relied on oil, have sharply decreased. The only locomotive that can get the ailing Iranian economy moving is the private sector. However, with the failure of the privatization process, Iran's private sector is too weak to play its economic role, create jobs, export goods, and provide the necessary foreign currency for the country. What criticisms are most frequently directed at the privatization process? One of the staunchest critics of the privatization process as it has been carried out in Iran is Abbas Akhoundi, the Minister of Roads and Urban Development, who recently described this process as malformed. Privatization, meaning the transfer of state enterprises to the private sector, according to Mr. Akhoundi, has become distorted and has not achieved its main goal of creating efficiency and competition in the economy. The reason for this failure is clear. Ali Tayebnia, the Minister of Economic Affairs and Finance, states that only three percent of the transfers have been made to a real private sector. The rest of the transfers have been ownership shifts from government to government or quasi-government, and the formation of companies known as 'privately-owned' that are a mixture of private and state. According to the head of the Import Commission of the Iran Chamber of Commerce, of the $100 billion of so-called privatization, $92 billion has been transferred to quasi-government companies. In this situation, what should be done? The first condition is to end the monopolistic and uncompetitive situation in the Iranian economy. Based on the assessment of the Heritage Foundation, Iran has the least free economy among fifteen countries surveyed in the Middle East and North Africa. As long as the conditions for free business, free from the power of monopolies and foundations, are not created, privatization will go nowhere.