The cost of Raisi’s generosity is borne by the people
According to Iran Gate, Ebrahim Raisi promised to build 4 million housing units, even though many experts not only deemed such a promise unattainable, but also considered its implementation under current conditions to be detrimental to the country’s economy.
Recent reports on the progress of the 4 million housing project under the thirteenth government indicate that this promise has stalled at the initial stages.
Raisi’s generosity from the pockets of the poor
The main challenge for the government in implementing the 4 million housing plan, dubbed the National Housing Movement, is the issue of financing. Experts are aware that financing is a crucial element in the execution of such government projects.
If the primary sources of financing for government projects are not defined and established, even if the project is cost-effective, it can lead to disaster—a disaster that will hit the poor and low-income groups harder than any others.
Perhaps it would be better to present the issue differently. According to the 2022 budget, the thirteenth government is facing a structural deficit of over one trillion tomans this year. Any novice economics student knows that a budget deficit in rentier and oil-dependent governments like Iran means an increase in liquidity and, ultimately, exacerbation of inflation.
Now, looking at the 480 trillion toman deficit of the government in 2021 and comparing it with the previously mentioned figure shows how the growth of liquidity will proceed this year.
In simpler terms, if the budget deficit this year is not financed from non-inflationary sources, it will certainly lead to more severe inflationary surges in the second half of the year.
The same applies to the financing of heavy projects like the construction of 4 million housing units by the government.
That is, if the thirteenth government plans to finance the necessary resources through printing money and expanding the monetary base, it will undoubtedly exacerbate the devastating inflation currently plaguing Iran’s economy—an inflation that recently hit a historic record of 54%, adding another badge of honor to Ebrahim Raisi’s chest.
In other words, if the thirteenth government plans to finance its unreasonable and unscientific project by borrowing from the Central Bank, essentially from the people’s pockets, it is, in fact, reaching deep into the pockets of the deprived, whom it claims to support.
Land provision: a perpetual problem
Last week, Rostam Ghasemi, the Minister of Roads and Urban Development of Ebrahim Raisi’s government, presented a report indicating obstacles in the implementation of the 4 million housing project. One of the issues experts raised during last year’s presidential election was the provision of suitable and quality land.
However, at that time, despite experts’ warnings, Ebrahim Raisi and his advisors insisted on the feasibility of the 4 million housing plan, considering the land provision issue as solvable.
When current government officials defended this plan during Raisi’s election campaign, they were repeatedly referred to the unscientific and incorrect site selection experience of the Mehr Housing Project. But after Ebrahim Raisi’s government took office, it became clear that the thirteenth government officials were counting heavily on utilizing state lands.
However, last week’s statements by the Minister of Roads and Urban Development of Ebrahim Raisi’s government confirmed the correctness of expert warnings during the 2020 election period, as Rostam Ghasemi reported only 4% of land demands being met by government agencies for the project.
In fact, it can be said that one of the main obstacles to implementing this plan is the government itself, as the quality lands held by various agencies are part of state assets and belong to the Iranian nation, and it is not easy to simply allocate any part of it at the will of the authorities.
Moreover, it is unclear what model or criteria were used for selecting these lands. When the Mehr Housing Project was launched, the ninth government made similar claims to those we hear now from the thirteenth cabinet.
But ultimately, applicants witnessed the construction of settlements under the name of Mehr Housing in remote locations, far from established urban centers—locations lacking basic living facilities, and even after more than a decade, many of these so-called cities still face serious challenges.
From building settlements on active fault lines to the lack of facilities such as electricity, clean water, educational centers, transportation, and security are among the problems residents of Mehr Housing settlements still face today.
Now it seems the thirteenth government, due to the lack of cooperation from various institutions in providing quality land, may resort to construction in remote areas. We must not forget that the Mehr Housing experience exacerbated the unfortunate phenomenon of slum dwelling—a phenomenon with serious cultural, economic, and even security consequences.
Now we must wait and see if the Ebrahim Raisi government has a magic wand up its sleeve to eliminate the mentioned problems, or if it will continue its reckless and so-called jihadist actions, causing Iranian citizens more serious problems than ever before.
Reviving the JCPOA: the only glimmer of hope for tenants
Of course, some believe that involving the private sector or seeking help from foreign companies to execute this project could be helpful. However, a look at the statistics of construction in the country shows a lack of interest and enthusiasm from the private sector to invest in affordable housing construction.
In fact, inflationary surges have made goods like housing and even cars shift from being consumer goods to investment goods. For this reason, mass builders capable of entering large projects have no interest in building affordable or consumer housing. Instead, they initiate luxury and expensive projects that appeal to the higher income brackets and are generally left vacant due to the community’s inability to afford these luxury units.
The situation for foreign companies, even the Chinese, is clear: as long as banking and insurance sanctions remain, no foreign company will risk investing in Iran. Besides sanctions, the issue of the Islamic Republic of Iran’s non-acceptance of the FATF is also a concern—a discussion that limits banking transactions even if sanctions are lifted, leaving no option but for the government to comply.
Given these circumstances, it seems the only glimmer of hope for tenants clinging to Raisi’s slogans is the revival of the JCPOA, as only then can we hope for foreign companies to bring their capital into the country. Meanwhile, the government can access its blocked resources, which can be used as a non-inflationary source for this project.
Although there are many doubts about the correctness and wisdom of such an action, looking at the playing field, one can say the JCPOA is the only lifeline for the government in the eyes of the expectant public awaiting the fulfillment of the government’s promises.