Iran’s Uprising—A Case of Patrimonial Corruption

Vafai John

Iran’s Uprising—A Case of Patrimonial Corruption Part 2

Iran’s corruption is more structural and ideologically oriented than the one resulting from nepotism or individual petty corruption. The grievances expressed by the ordinary Iranians on the streets of various towns, reflect the structural corruption that have resulted in a grave disparity in distribution of resources for the ordinary people. Because of the structural and patrimonial corruption, mismanagement, and preferential treatment of its citizens, Iran’s economic growth after the nuclear deal has benefited only the well-connected few. The demonstrations took place primarily in towns other than Tehran, and the demonstrators were not solely students demanding change on government’s policies concerning basic human rights and political freedoms. The demonstrators have been asking for an affordable price of groceries.

The decision-making in Iran requiring financial expenditures is not limited to issues related to policymaking within Iran. It could permeate, and at times influence, Iran’s major foreign policy issues— including the ones the country faces in the Middle East. For example, after the ISIS terrorists’ defeat in Syria, Iran is preparing to co-operate in Syria militarily and financially with the European community. That is, Iran will participate in post-war reconstruction of Syria. Russia’s representative to the European Union, Vladimer Chizhov, has reportedly urged that not only the EU but also “Iran should contribute to the postwar reconstruction of Syria.” Iran’s participation in reconstruction of Syria will provide another enormous income opportunity for the Islamic Republic’s extra-constitutional institutions and “charity-based” companies to engage in vastly profitable reconstruction activities of Syria. However, the benefits are not going to be seen or felt by those who demonstrated in various towns of Iran, lamenting on the steep rise in price of basic goods.

In addition to the economic deprivations derived from structural corruption, there exist individuals in Iran that because of their special influence, clerical command, and bureaucratic power, have been able to engage in various acts resulting in unjust enrichment for themselves and their cronies. One example of this category of individuals is Ayatollah Sadegh Amoli Larijani, the head of Iran’s judicial branch of the government. Ayatollah Larijani has amassed a considerable amount of wealth because of his position in Iran’s judiciary. Ayatollah Larijani, his brothers, Ali Larijani, (Speaker of the House) President Rohani, (plus ten other individuals) are the members of the powerful Supreme National Security Council of Islamic Republic of Iran. On 23 May 2012, Ayatollah Larijani was put into sanction list of the European Union. However, President Obama did not follow suit. Finally, in January 2018 President Trump, joined the European Union and sanctioned Ayatollah Larijani for allegedly human rights abuses and involvement in punishing demonstrators who, in various occasions, participated in anti-government rallies, protesting throughout the country.

The position of Iran, in terms of the country’s structural corruption, can be explained by the annual research study, conducted by the German-based Transparency International, specializing in measurement of the degree of corruption prevailing in different countries of the world. Of 176 countries examined by the Transparency International in 2016, Iran’s position was 131 — at the same level as: Ukraine, Kazakhstan, and Nepal.

Iran’s corruption is more structural and ideologically oriented than the one resulting from nepotism or individual petty corruption. Corruption in Iran has dominated the economy to the point that in the spring of 2001, the Supreme Leader, Ayatollah Khamenei, issued a decree, famously known in Iran as “The Eight Point Executive Decree of the Supreme Leader.” This Executive Order contained eight articles addressing the public officials’ duties concerning combating public corruption. This decree ordered the officials “to adopt a policy with respect to destroying the financial and economic roots of corruption by the actions of the executive and judicial powers of the country.” This decree has not changed the pattern of the entitlements, of the pseudo-charity organizations, nor the scheme of the distribution of resources in Iran. In final analysis, Iran’s social upheaval, to borrow a term from Yale Law School Professor Susan Rose Ackerman, echoes the “patrimonial corruption” in that country.

The grievances expressed by the ordinary Iranians on the streets of various towns, reflect the structural corruption that have resulted in a grave disparity in distribution of resources for the ordinary people. A central element of the nuclear deal that was agreed by, now professor of Yale University, John Kerry, was to unfreeze $100 billion into revival of Iran’s economy. It has not worked. Most of that money has vanished into the ideological institutions and commercial structures as explained earlier. As Professor Arang Keshavarzian, of New York University, has indicated, in Iran “[c]compounding the handle on the Mafia is rooted in military and security power centers, the conspicuous consumption of honest scrupulous speculators, and the structures of international sanctions. The large commercial groups have generated a class of profiteers, often collaborating with partners in Dubai, Turkey and beyond”. That is why the demonstrations took place primarily in towns other than Tehran. The demonstrators were not solely students demanding change on government’s policies concerning basic human rights and political freedoms. The demonstrators have been asking for an affordable price of groceries. Approximately three years after Iran entered the nuclear deal with the 5+1 countries, its economy grew by 7 percent in 2016. However, because of the structural and patrimonial corruption, mismanagement, and preferential treatment of its citizens, Iran’s economic growth after the nuclear deal has benefited only the well-connected few. These are the reasons for the highly alert, broadly educated, but economically disadvantaged people, marching on the streets in various towns in Iran—that have been protesting the steep rise on the price of eggs.

Considering the above note, the fundamental question is “what is the reasonable projection of the future for the Islamic Republic of Iran”? To answer this question, we must review, albeit briefly, the ideological roots of the current Iranian government.

Long before Iran’s Revolution of 1979, Ayatollah Rohollah Khomeini, the founding father of the Islamic Republic of Iran, had advocated a puritan Islamic structure of government for Iran. In his book, Kashfol-Asrar (The Revelation of the Unknown), published in 1942, Khomeini, advocated a “governing system for Iran, composed of a just ruler, and a legislative body formed by clergies that are just and experts on the principles emanated from God.” The law should originate from God (through Mohammed) and there is an order for all things in the world, no matter how minute they may be.

The core structure of the present Islamic Government in Iran is, to a large degree, reflection of such ideology, and is composed of the following powers:

First, the ideological control of the legislative process. Under the Iranian constitution, there is a 12-member powerful legislative ombudsman called the Council of Guardians (COG). The members of the COG are appointed by the Supreme Leader and the Supreme Council to the Judiciary. By the constitutional mandate, the Council of Guardians is established “for the purpose of safeguarding the principles of Islam and the Constitution.” The Council of Guardians has the absolute power of “judicial review”. That is, the COG has the power to declare the law of the land null and void, if such law is inconsistent with the Islamic rules or with the constitution. Further, the National Assembly (the legislative body) has no legal authority without the presence of the Council of Guardians.

Second, control of the Judiciary. Under the Iranian Constitution (Article 162), the Chief Justice of the Supreme Court shall be an Islamic clergyman appointed by the Leader (no confirmation is required).

Third, the president must be elected from among statesmen of political and religious distinction. He must be “a pious believer in and faithful to the principles of the Islamic Republic of Iran and in the official religion of the country.”

According to the Constitution, the executive, the legislative, and the judicial powers, shall be “functioning under the absolute supervision and the leadership of the mandate of the affairs”. These three elements are the core forces that are locked into a structure where the benefits of material growth accrue, albeit disproportionately, to the core. The guardian of the interest of the core is the Islamic Revolutionary Corps (IRGC). This body has a constitutional mandate to preserve the ideological structure of the government. Under Article 150 of the Islamic Constitution of Iran, “the Islamic Revolutionary Corps …. shall remain active so that it would continue its role as the guardian of the Revolution and of the fruits of its victory.”

The IRGC is vested with the role of maintaining the country’s ideological mandate as well as its own economic interests. This juxtaposition—the co-existence of the extra-constitutional entities with the traditional governmental bureaucracies — has made Iran one of the most labyrinthine countries in the world.

In his remarkable essay, “The Second Image Reversed: the International Sources of Domestic Politics” (International Organization 32, no. 4 [autumn 1978]: 881-912) Peter Gourevitch, made a pointed observation applicable to Iran’s distribution of power and economic wealth after the Islamic Revolution. According to Gourevitch, countries with disproportionate distribution of political power, capital, organization, technology, and military preponderance “are locked into a structure where the benefits of growth accrue disproportionately to the core.” Such countries develop dual economies: an expanding modern sector tied to the needs of the core, and “a stagnant, miserable sector, irrelevant to the needs of international capitalism, hence abandoned and ignored.”

The above-mentioned observation is the situation uniquely applicable to present-day Iran. There is no evidence that lifting sanctions has visibly lifted Iran’s economy. The budget appropriations, in the aftermath of the Iranian unrest, are an example of the political competition between the government’s financial policy and the demands of the Islamic “charity organizations.”

Based upon the currently prevailing structure of the governing body in Iran, the policy formation in the Islamic Republic reflects the interests of two distinct bodies – official bureaucracy and Islamic extra-constitutional entities.

The public anger, was not just a reaction to the price hikes of the basic household materials, but to the government’s preferential policy on financial expenditures as well. For example, according to a parliamentary budget commission member’s statement on 24 January 2018, four billion dollars was allocated as “redirection from the Iranian National Development Fund” (originally set aside to develop infrastructure), to “boost military spending.” Further, while the street demonstrations were continuing, a substantial budget allocation was made to build a gold-plated “Koran ship,” launched in January 2018.

Yet, concerning the forthcoming years, the fundamental question remains to be answered: “what is the projection for the future of Iran”? There are several factors that will have a significant impact on the moderation, if not melting away, of the current theocratic system of governance in Iran.

Developments within Iran promise that Iran will become less governable under the Islamic State’s model:  Two social developments are non-stoppable:

First, the high – and climbing – literacy rates, especially in large cities and the urban areas (currently as high as 97 percent), will pose a growing challenge to control by the regime.  As more and more Iranians become literate, and aware of the wider world, the harder it will be for the Islamic government to maintain a veil of ignorance and isolation over the country.

Second, the increasing use and dependence of the population to the internet and global information.  According to the United Nations’ “State of the Broadband” report, in 2016, the percentage of Iranian households using internet, was at 52.18 percent.  And according to “Internet World States” (Internet Usage, Broadband and Telecommunications Reports), in June 30, 2017, over 70 percent of the population in Iran have used the Internet at least once, with the digital gender gap in young ages being very low.

Internet commerce is one of the few flourishing non-oil industries in Iran, and the Iranian economy is increasingly dependent upon a reliable internet for business.  Official figures suggest that during the December 20017 and January 2018 unrest, because of internet interruption, bank transactions fell by 40 percent and national postal service income fell 18 percent. At present nearly, 60 percent of Iran population use mobile internet.

In the future, Iranians’ use of internet, access to, and communications with, the outside world will continue to grow. In short, the widespread use of Internet in Iran is an effective means to become aware of the developments of the outside world and when needed, communicate with the interested parties.

Developments Outside Iran are more variable and thus ambiguous as to the domestic impact of other states’ policies.

Although there is an insatiable desire and a determination on part of the young college age Iranians to continue their education in an American or western university, the new U.S. visa policies towards Iran are limiting that outlet.

Traditionally, Iranian students returning from abroad have been the most active elements in the population seeking domestic reform and change.  This was as true under the Shah’s Iran as it is today under the Islamic government.

Young Iranians are aware of the oppression and economic stagnation in Iran.  That is why so many Iranians want to go abroad.

Were the U.S. administration reverse its current immigration policy concerning Iran and allow Iran’s younger generation engage in higher education in America, the returning students could provide a substantial force to resist and effectively combat the extra-constitutional organizations, the political-religious clergy and spurious charity organizations now ruling Iran.

Iran’s young educated urban population is the most progressive element in that country. In many respects, the demands from young educated Iranians are uniquely parallel to the kind of policy changes that the U.S Government wishes the government of Iran to pursue.

In the long run, it is the free world’s “soft power” that most frightens Iran’s Islamist Republic.  This fear was reflected in early 2018 concerning a decree – issued from the office of the Supreme Leader – prohibiting the teaching of foreign language in the elementary schools of Iran.  But that genie is already out of the bottle.  The decree will prove to be imprudent since millions of Iranians are already proficient in English.  Further, it exposes for all, in outside world, the insecurity of the establishment towards its own increasingly educated populace.

The immigration policy currently adopted by the Trump administration concerning Iran, effectively, and in a perverse manner, contributes to the ideological goals and political philosophy of the prevailing orthodoxy in Iran. The young and educated people of Iran have started a “clash of civilizations” with the seemingly unbending monolithic theocracy of the Islamic Republic. In the long run the time is on the side of the new generation, so should be the United States.

Post-Revolutionary Iranian Law

Banking Without Interest

Fictitious Partnerships

Praying for Rain

Luxury Services & Useful Fields

Competitive Bureaucracies

World Trade Organization