The Crisis in Iran

As the economic crisis bites ever deeper, the ruling class all over the world, respond with more austerity measures. The Iranian ruling class is not an exception to this, the only difference is that they spice it up with anti-western, “anti-imperialist” slogans. The unilateral sanctions by the West has renewed the everlasting opportunity for the Islamic Republic to blame everything and anything on the West to the extent that:

“Iranian President Mahmoud Ahmadinejad blamed the United States and Western powers for destroying rain clouds that would otherwise bring rain to the Middle Eastern country, which has one of the driest climates in the world.” 1

The Economy of Resistance:

On 29th July 2012, at a Ramadan gathering, in the presence of all state officials, Ayatollah Khamenei called on the government to adopt what he called the Economy of Resistance to combat the arrogance of the West. He asserted that since 2007 he had identified the enemy's intention to use the economy to undermine the Islamic Republic’s progress and for that reason, on every occasion in the last 3 new years he put out slogans, “Revising the pattern of consumption”, “Double Endeavour & Double Work” and “Economic Jihad“2 respectively to raise the nation’s awareness. He went on by urging the government, academia, experts … to explore and work around the idea of the Economy of Resistance to come up with ways to defeat the enemy once again. During his long speech, similar to those of the usual Friday sermon, he outlined the following as the pillars and essence of this policy:

  • Attempts to boost the Constitutional Article 44 (privatization)
  • Lessening of dependency on oil
  • Management of consumption
  • Support national production
  • Full implementation of the targeted subsidy plan
  • Combat corruption and the economic fraud

He ended his speech by calling on all three divisions of the legislature, executive and judiciary to maintain unity. Since the last election, the split within the ruling class has become the Achilles heel of the Islamic Republic. Considering the content of all that has been said, it seems that the main aim of Economy of Resistance is to deal with the consequences of sanctions by preparing the working class to accept further austerity plans and through this to try to unite the ruling class factions.

The following weeks did not witness much enthusiasm from Ahmadinejad’s government on the issue, nor did any specific discussion take place in the parliament. However a number of seminars, conferences were organised in relation to this. In web pages dedicated to it, the following five elements were identified as necessary steps for its full achievements:

  • Curbing speculation and corruption
  • Popularizing of the Economy of Resistance, against sanctions
  • Getting rid of the dependency on oil revenues, achieving true self-reliance
  • prioritizing trade partners.
  • Preference of domestic production to imports should be made part of the Iranian culture.

The below paragraph is an extract from an article by Adel Paighami, faculty member of Economics and Islamic Studies of Imam Sadiq University, where most of the second generation of diplomats, economists etc of the Islamic Republic are trained;

… If you read all the accumulated knowledge of the world economy and traditional books, you will not find any compiled and written paper on the Economy of Resistance theory. In this approach, we seek for an "ideal economy" that as well as being Islamic, it will place us on top of the region's economy, the economy with its efficiency will be inspiring for the Muslim world and will prepare the ground for the creation of "a great Islamic civilization" 3

Now compare that with the statement below from Mohsen Rezaei, The presidential candidate in the last election who currently holds the position of secretary of the Expediency Council and also the former IRGC commander with an interview with the Financial Times

“This is not going to be an austerity economy nor it will it be an underground economy, but an economy that will be within [recognised] economic theories to address conditions under sanctions.” 4

Whether within the recognized economic theory or an "ideal economy", a review of these writings reveals that there is absolutely nothing new. Two major points, privatization and the targeted subsidy plan have already passed into law and have already been in practice in any case. The use of phrases like “efficiency” , "great Islamic civilization", “recognized Economic theory” and “Support national production” ...etc are just attempts to hide the harsher exploitation and further cuts that are on the way.

More cuts on the horizon

All of what had been said so far, have been said and done again and again even in Iran itself, let alone elsewhere. They are old recipes from the past, just meant to spread confusion and disarm the working class for yet more attack to come. Let’s look at some of what has been said so far;

Mohsen Rezaei, at the 3rd International Islamic Resistance Conference and Festival at Isfahan on 4th September 2012 said:

The Resistance economy is not the same as an austerity economy …....We do not want to resort to the austerity economic plans that the Europeans have been adopting that would impose greater economic pressure over the people, as on the contrary we are after providing greater economic ease for our people.” 5

He does not provide any details or reason why this is not an austerity plan, anyhow he continues by saying,

“Our people made epic achievements during the years of the Sacred Defence (against the Iraqi invasion of Saddam’s armed forces), and great generals in the armed forces emerged from amidst these people, who managed the affairs of war, and today, too, these same people can govern and manage the country’s economy quite efficiently.” 6

This is why the ex-general does not see the economy of resistance as an austerity plan. If the Iran/Iraq war with a million dead and more disabled, was an epic created by emerging great generals who now enjoy a lavish life style, then the hardship of many millions of working class to implement the Economy of Resistance of course will not be seen as hardship, it rather will be considered as “greater economic ease for our people”.

He goes on to say that;

“Our culture and ideology provide sufficient insight for passing through this historical and sensitive turning point … To successfully pass through the imposed sanctions by the enemy the economic management and the economic structures of the country need to be reformed.” 7

Once again, at this “historical and sensitive turning point” the working class is called upon to sacrifice for the sake of the country, by the very people who in post-war Iran have taken part in an orgy of filling their pockets by promoting corruption. This has now spread in every corner of the society so that Iran is placed at the top of the list of the most corrupt countries in the world and in a scale that never seen before in Iranian history;

Mahmoud Reza Khavari, managing director of state-owned Bank Meli fled Iran because of the following reported scandal, later it was revealed that he held Canadian citizenship, having a mansion worth 3 million dollars in Toronto!

_The story of Iran’s largest bank scandal first broke last September. The first court session in the trial of 32 defendants accused of involvement in a $2.6 billion financial fraud case was held in Tehran on February 18 2012. So far, 4 have been sentenced to death, 2 facing life sentences, while 33 others face up to 25 years in jail._8

That is how they are going to “Combat corruption and the economic frauds”! And as for “Curbing speculation”? Well why would you want to curb something like that?

ISNA the official Iranian news agency on 7th October 2012 proudly announced that Tehran is in 3rd top performance amongst the world stock exchanges

According to the latest statistics Bloomberg Index, Tehran Stock Exchange with a 3.43% rise was in the third place in the stock exchanges of the world's top performance.9

and “Revising the pattern of consumption ”? Well, if you ever wanted to know how it has been progressing after 3 years sinceits launch, here it is

Porsche says it sold more cars in Tehran in 2011 than in any other city in the Middle East. 10

It is important to note that the Middle East itself is on the top of the luxurious car import, so to reach the top of this list, gives an indication of just how the pattern of consumption has been revised! The price of a Porsche Panamera model, just a year ago was $630,000 in Iran. That is a month’s salary for 2300 workers or if you like the salary of a worker for 170 Years. The Islamic Republic of Iran, 33 years ago assumed the power on the promise of “Islamic brotherhood” and creating “heaven” on earth, certainly kept its promise, as far as the rich are concerned, they are in heaven. For the working class living conditions in Iran today however, using the word “hell” wouldn't be an exaggeration.

More than a century ago, Karl Marx wrote on the emergence of a capitalism ;

"dripping from head to foot, from every pore, with blood and filth."11

Today it can be reaffirmed by adding that, it continuous with its murderous existence with more blood and filth.

Sudden outburst and riots will be witnessed in the near future. That is almost certain, but the question is how to fight back.

The Working Class Must Fight

On 20th September 2012 ILNA the Iranian official Labour News Agency, in an article “ The 30% Fall in Worker's Purchasing Power”, reported;

The approval of 3,900,000 Riyal for the minimum wage in 2012, was criticized as the inflation rate and currency fluctuations ….were not correctly taken into account in determining worker wage's, however the situation has reached to a new stage where a 1 in 1900 rate for dollar exchange has increased to 1 in 2500 which shows a 30% jump.12

At the time of implementing the targeted subsidies plan, the currency dollar/riyal rate was 1 in 1260, so the figure should be 50 rather than 30. In any case at the time of writing this article, 9th October 2012, the rate after reaching its record high level of 1 in 3600 has fallen back to 1 in 3000, which means an additional increase of 17% which brings the total to 47%, using the official figures, in real term the fall in workers Purchasing Power is much higher. The targeted subsidies plan pay of 40 dollars per month for every individual has now fallen by 58%. In fact, one aspect of the present fall in the riyal's value can be seen in relation to last year’s implementation of the targeted subsidies plan. The subsidies cut was implemented without much resistance from the workers partially because of the monthly payment offer already quoted which is now losing its value on an almost daily basis. This is the last ring of the first stage of the subsidies cut chain as far as the state and Iranian capitalism is concerned. Another aspect for the fall is that it increases the value of state reserves, as the main provider of currency to the market, in order to deal with the budget deficit. However, workers as consumers are faced with a daily price increase of essential items too, during the last 3 month most items have seen a minimum increase of 50%.

Furthermore, on the employment side things are also getting worse;

The Centre for Statistics reported that the unemployment rate reached 12.9% in the spring of this year compared to last spring, which showed a 12.3% increase. _According to the report, the number of unemployed persons has risen by 3.146 million._ 13

With this picture of the working class’ current situation, Iranian capitalism, as well as preparing itself to confront the future protest head on, is also spreading confusion among the workers about the root cause of this crisis. They have started to blame it on Western sanctions, the mismanagement of the Ahmadinejad government, … etc, but the root cause of the crisis, which is the result of the fundamentally antagonistic capitalist relations of production is not questioned.

During the oil price hike, when billions and billions of dollar were making their way to the pockets of Iranian capitalists, none of these gentlemen actually had time to think about speculation, corruption and national unity … in fact, as the oil price was going up, the miracle of the dollar was so overwhelming that the news heralding the imminent appearance of Imam Zaman14, made the headlines. Presumably to deal with the windfall himself, rather leaving it to his vicegerent, Ayatollah Khamenei! CD's were distributed on a massive scale in Iran under the title “The Emergence of Imam Zaman is Imminent”.

Now, the Iranian capitalist class, from the current government factions to the reformists, monarchist and leftists are talking about the precarious situation in Iran, disintegration of the country, civil war, occupations, unity of the nation ..etc , just to mobilise the working class for further sacrifices. The only way that the working class can break the vicious circle of being used by the capitalist class is to start to fight back from its own domain and raise the class struggle flag once again. This is not just an ideal aim, it is the only practical option open to working class, the rest is just an illusion. For that, the formation of new political vanguards who are starting to settle accounts with the counter-revolutionary role of the reformist organisations and in the process exposing the limitations of the demand struggles is the first priority and the immediate step and task which we will repeat again and again.

D Saadati


2 For details see the



5 islamic Republic News Agency/IRNA NewsCode: 80311111

6 Ibid

7 Ibid




11 Marx, Capital, volume 1, page 712, Progress Publishers, 1977




Friday, October 12, 2012