What benefits has the resistance economy brought to the people?
What benefits has the resistance economy brought to the people?
More than a decade has passed since the leader of the Islamic Republic announced the resistance economy policies to counter Western powers’ sanctions. Some connected economic experts say that the outcome of Ayatollah Khamenei’s resistance economy for Iranian citizens after 11 years has been nothing but a deeper imbalance between income and expenses, a widening class gap, an unbelievable surge in foreign exchange rates, and a fall in the national currency’s value.
Every government has tried to improve the dire economic situation by following the leader of the Islamic Republic’s directives. Ebrahim Raisi wanted to, as he put it, ‘surgically’ reform Iran’s economy, but Abdolnasser Hemmati, his defeated electoral rival who had criticized Raisi’s economic policies, became the Minister of Economy in the fourteenth government and stated that Iran’s economy faces dangerous paths with limited choices. According to him, one of these paths was the policy of unifying the currency rate, which has now put the Minister of Economy’s name on the impeachment list of the twelfth parliament, a parliament dominated by conservatives.
Mehdi Ghodsi, an economic expert at the Vienna Institute for International Economic Studies, discusses the issue of sanctions and government revenues, stating that when the government is in need and cannot cover its expenses, it manipulates the exchange rate and devalues the rial to compensate for its budget deficit. Mr. Ghodsi believes that the government institution in the Islamic Republic compensates its expenses through inflation, which it views as a form of tax. This economic expert refers to 16th and 17th-century France, where the government funded its expenses through heavy taxation, ultimately leading to the French Revolution.
Mehdi Ghodsi views the leader of the Islamic Republic’s comments on the endogenous and outward-looking nature of the resistance economy as entering a cycle that other examples like Cuba, Venezuela, and even Syria before political regime changes have entered, managing to preserve their economic systems and labeling it as a resistance economy. Abdolreza Ahmadi, an international economics expert, considers the issue of sanctions in South America as a secondary discussion. He points to the changes in Argentina brought about by the country’s president, Javier Milei, and believes that the increase in Argentina’s national currency value is evidence of a market-based and free economy approach.
According to this expert, the discourse of ’57 led Iran into a wrong path called a state economy, eliminating private ownership. Mr. Ahmadi also attributes the surge in the dollar’s price, aside from the imbalance in Iran’s imports and exports, to domestic inflation and the lack of foreign reserves. This expert, referring to a listener’s message about the moral collapse of Iranian society, says that when the concept of homeland is systematically destroyed at the top of governance, national interests for those at the bottom give way to personal and group interests to save themselves, leading to the addition of corrupt holding companies to each other.
Mehdi Ghodsi believes that the root of Iran’s economic problems lies in the constitution and the powers of the Supreme Leader, saying they wanted to bring oil to the people’s homes and thought they could easily do so with subsidized prices. Mr. Ghodsi compares the cost of gasoline in Iran and Europe, saying a European pays about 1.5 euros per liter of gasoline, while this price with government subsidies for Iranians is two cents, a practice that will not last long.
Nonetheless, Mr. Ghodsi believes that there have been bright economic periods in the Islamic Republic, citing the presidency of Mohammad Khatami, during which employment and unemployment rates significantly improved. However, this period did not continue due to the intervention of the leader of the Islamic Republic. In contrast, Abdolreza Ahmadi believes that where there is a state approach to the economy, even when opportunities are given to the people, semi-governmental entities come and engage in rent-seeking.
Mehdi Ghodsi, discussing Iran’s economy exiting a balanced path, says that Ali Khamenei’s extreme policies, implemented since Mahmoud Ahmadinejad’s era, have increased sanction pressures to the extent that imports and exports have become costly for Iran. He cites the Persian Gulf countries as examples, believing that despite not being democratic, they have taken the right approach towards other countries and superpowers. However, in Iran, the political system’s stubbornness and the autocracy of those at the top have come at the expense of the people’s lives and economy.
Abdolreza Ahmadi considers the authoritarianism in Saudi Arabia and the United Arab Emirates to be of a patriotic kind and says this type of governance does not work in Afghanistan because the political foundation is not oriented towards the homeland. This former business journalist at the Atlas Economic Research Foundation emphasizes the exclusionary view of the Islamic Republic towards human resources and believes this view has led to institutions like Astan Quds monopolizing the market in discussions such as knowledge-based enterprises, forcing individuals to rely on semi-governmental entities to establish startups.
Mehdi Ghodsi analyzes this concept within the framework of a benevolent dictator, stating that in such a society, the dictator provides services to society to increase his power, thereby introducing intermittent shocks to society and guiding it towards development. However, according to Mr. Ghodsi, there is no guarantee that the benevolent dictator’s successors will not change course in the opposite direction. This expert believes that in a governance model where one person is responsible, the likelihood of irresponsibility increases, causing his power over society to change in response to an external or internal shock, provoking society.
However, Abdolreza Ahmadi believes that authoritarian monarchies in the region have yielded better results for their citizens than republics. He says American political philosopher Fukuyama presents a simple reason for this in the state-building section, stating that if you want society to grow, you must have a political system where all individuals find their identity within that system. Amid the conflicts over the impeachment of the Minister of Economy of the fourteenth government, due to the government’s currency policies, Abdolreza Ahmadi considers Abdolnasser Hemmati part of the current problems in Iran’s economy.