The cost of Raisi’s generosity is paid by the people
According to Iran Gate, Ebrahim Raisi promised to build 4 million housing units, while many experts not only deemed such a promise impossible to fulfill but also did not consider its implementation beneficial for the country’s economy under the current conditions.
Recent reports on the progress of the 4 million housing project in the thirteenth government indicate that this promise has remained dormant at the initial stages.
Raisi’s generosity at the expense of the poor
The main challenge for the government in implementing the 4 million housing project, named the National Housing Movement, is the issue of financing. Experts are aware that financing is a key element in executing such projects by governments.
If the main source of financing for government projects is not defined and clear, even if the project is cost-effective, it can lead to disaster, a disaster that the poor and low-income classes of society will suffer from more than any other group.
Perhaps it would be better to present the issue differently. According to the 1401 budget, the thirteenth government is facing a structural deficit of over one trillion tomans this year. Every novice economics student knows that a budget deficit in rentier and oil-dependent governments like Iran’s means an increase in liquidity and ultimately exacerbation of inflation.
Now, looking at the 480 trillion toman deficit of the government in 1400 and comparing it with the aforementioned 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 spikes in the second half of the year.
The same applies to financing 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 certainly exacerbate the destructive inflation currently plaguing Iran’s economy, inflation that recently hit a historic 54% and added another badge of honor to Ebrahim Raisi’s chest.
In other words, if the thirteenth government plans to provide the necessary resources for its unreasonable and unprofessional project by borrowing from the Central Bank, essentially from the people’s pocket, it is indeed reaching deep into the pockets of the deprived, whom it claims to support, a claim that has deafened the heavens.
Land provision, a perpetual problem
Rostam Ghasemi, the Minister of Roads and Urban Development in Ebrahim Raisi’s government, presented a report last week indicating obstacles in the execution of the 4 million housing project. One of the points raised by experts during last year’s presidential election was the issue of providing suitable and desirable land.
At that time, despite experts’ warnings, Ebrahim Raisi and his advisors insisted on the feasibility of the 4 million housing plan, considering the issue of land provision as a solvable problem.
When the current government officials defended this plan during Raisi’s election campaign, they were repeatedly referred to the unprofessional and incorrect location selection experience of the Mehr Housing Project. However, after Ebrahim Raisi’s government took office, it became apparent that the thirteenth government officials have placed significant reliance on utilizing government lands.
However, the statements made last week by the Minister of Roads and Urban Development in Ebrahim Raisi’s government confirmed the correctness of expert warnings during the 1400 elections, as Rostam Ghasemi reported only 4% of the demands from government agencies for land provision for the mentioned project have been met.
In fact, one of the main obstacles to executing this plan is the government itself, because the desirable lands held by various agencies are part of government property and belong to the Iranian nation, and it is not easy to lay hands on any part of it at the whim of the authorities.
On the other hand, it is unclear what pattern or criteria exist for selecting these lands. When the Mehr Housing Project was initiated, the ninth government made similar claims to those we now hear from the thirteenth cabinet.
But ultimately, applicants witnessed the construction of townships under the name of Mehr Housing in remote locations far from established urban centers, locations devoid of any basic living facilities, and even after more than a decade, many of these so-called cities still face serious challenges.
From building townships on active fault lines to the lack of facilities such as electricity, clean water, educational centers, transportation, and security are among the problems that residents of Mehr Housing townships still face today.
Now it seems that the thirteenth government, due to the lack of cooperation from various institutions for providing desirable land, is proceeding to build in remote areas. We must not forget that the experience of Mehr Housing exacerbated the unfortunate phenomenon of suburbanization, a phenomenon that had serious cultural, economic, and even security consequences.
Now we must wait and see if Ebrahim Raisi’s government has a magic wand up its sleeve to eliminate the mentioned problems or if it will continue its pattern of uncalculated and so-called jihadist actions, causing Iranian citizens to face even more serious issues than ever before.
Reviving the JCPOA, the only glimmer of hope for tenants
Of course, some believe that the private sector or assistance from foreign companies for executing this project could be a solution. However, a look at construction statistics in the country indicates a lack of interest and enthusiasm from the private sector to invest in affordable housing construction.
In fact, inflationary spikes have caused goods like housing and even cars to exit the realm of consumer goods and become investment goods. Therefore, developers capable of entering large projects have no interest in building affordable or consumer housing and instead initiate luxury and expensive projects, which are favored by high-income deciles and are generally vacant due to the society’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. In addition to 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 for the government but to accept it.
Given these circumstances, it seems the only glimmer of hope that tenants holding onto Raisi’s slogans can have is the revival of the JCPOA, as only in this case can we hope for foreign companies to bring their investments into the country. On the other hand, 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 rationality of such an action, looking at the playing field, one can say that the JCPOA is the only salvation for the government in the eyes of the waiting public watching the government’s promises unfold.
