Iran’s economy lies in ruins, exerting immense strain on its populace. Rather than tackling the nation’s dire financial catastrophe, regime authorities, mainly Supreme Leader Ali Khamenei, persist on exploiting the country’s wealth under “privatizing” large economic entities.
Following the humiliating economic and social debacle of his so-called consolidated system and Ebrahim Raisi’s “young and Hezbollahi government,” Khamenei tried to explain the regime’s bankruptcy to his demoralized forces and outline his plundering strategy in a speech on April 18.
“We must entrust the nation’s operational facilities, production centers, and functional factories to the private sector, for the government’s inability to effectively manage such enterprises has led to problems and corruption in recent years. Privatization was the only viable option, carefully planned and thoroughly discussed, as there was no alternative. This decision was made with careful consideration, extensive study, and anticipation for the future,” Khamenei claimed. But is there a “private sector” in Iran?
The state-run Roydad-e 24 website wrote on May 21, “We don’t have a ‘private sector.’ We have a government-led private sector. The whole privatization plan is a game in Iran, and the ruling system is behind it, yet they speak of giving more resources to the ‘private sector.’ Who runs this sector? Their relatives.
“Who can find law and order in this country? I believe that everything is controlled by the ruling system, and the system is inefficient. The government should uphold law and order, but do we experience that? The government does not do its job. Instead, it has other priorities.”
In his April 18 speech, Khamenei said, “People should control the important economic sectors. I have repeatedly said that governmental and semi-private companies shouldn’t compete with the private sector. We thought the government could realize economic justice, but it didn’t. Now we have to have people and the private sector to generate income.”
Blaming Iran’s economic crises on the “state-run economy,” he advocated for the “private sector and its activists” to control vital factories, companies, and wealth creation. However, the private sector, a euphemism for the Revolutionary Guards (IRGC) and Khamenei-controlled conglomerates, monopolizes substantial economic power in Iran.
What is the Privatization Plan?
The “privatization” plan was initiated in 2005, as Ali Khamenei and the IRGC strategically installed loyal executives aligned with Khamenei’s interests. Under a directive in May 2005, 80 percent of Iran’s economic enterprises were transferred to non-governmental sectors, supposedly private and cooperative. This maneuver resulted in a staggering $12 billion transfer of shares from 2005 to 2008, marking a twelve-fold increase compared to the period of 1991 to 2004.
The Supreme Leader’s office has voraciously seized control of financial markets, establishing dominance over banking, financial institutions, credit organizations, insurance, stock markets, commerce, and real estate. This control has been achieved through the cooperative (ta’avoni) system, primarily within the 14 economic blocs. In 2006, Khamenei issued a directive to restructure Iran’s economy around the IRGC and Basij cooperatives and foundations, particularly Setad. Subsequent banking system reforms in 2008 turned Iran’s banks into channels for the Supreme Leader’s entities to siphon funds. IRGC affiliates and Khamenei’s aides gained access to low-interest loans, resulting in a financial crisis.
The 2010 subsidy cuts brought about a profound economic transformation, rivaling the impact of the 1962 Land Reforms. Gasoline prices surged by 21 times, natural gas prices rose sevenfold, and manufacturing costs soared. As a result, approximately 60-70 percent of production facilities either closed down or operated at reduced capacity, while the commercial enterprises linked to Velayat-e faqih dominated the market. The removal of subsidies expedited the monopolization of financial markets and economic activities, devastating a significant portion of the manufacturing sector and increasing inflation rates.
In the wake of a sweeping nationwide uprising that shook the very core of his regime and left his IRGC cronies disheartened, Khamenei sought to bolster the organization’s perks in a desperate bid to prop up the faltering theocratic rule. Khamenei’s admission of the government’s economic failure also mirrors the failure of Raisi’s administration, which Khamenei had once held great expectations for.
“Raisi’s government, which dreamed of being a popular government, not just doesn’t know about popular support, but instead insists on privatization instead of making resources public. This will finally cause a social rift,” said Abolfazl Fakouri Poudineh, the Secretary General of Students’ Basij Council, on April 28.
