Democracy as a system of government is proclaimed to be superior to dictatorship. Since the collapse of the system in the Soviet Union and Eastern European countries, people in all countries are converging on the ideal of democracy to improve economic performance of their country as well as to ameliorate the human and civil rights of the people. For more than a century, the people of Iran have struggled to establish a democratic system of government. The Constitutional Revolution of 1907 in Iran tried to replace absolute monarchial regime with constitutional monarchy and parliamentary democracy, but it had limited success and a dictatorial monarchy was imposed. In the early 1950s a conflict emerged between nationalists, led by Prime Minister Mossaddegh, and monarchists, led by the Shah himself. The conflict concerned the extent of power and control exercised by the Shah and the royal family in the state's affairs and the nationalization of oil. In 1953 Mossaddegh was removed from power and arrested in an American CIA-engineered coup. Mossaddegh's overthrow occurred in part because he had nationalized British property. Iran's long border with the Soviet Union, which had an active Communist party, was considered to be in great danger of falling to communism. (1) With harsh repressive measures, the Shah was reinstalled. Soon, the Shah, through repression, established an absolute monarchy and controlled all the affairs of the country. (2)
The popular uprising against the Shah's dictatorship in the late 1970s led to the Revolution of 1979. Although there were many political organizations and groups with different ideologies and political orientations during the revolutionary process, the Islamic clerics gained hegemony and hijacked the ideals of revolution: liberty, justice and democracy; and turned the rebellion into an Islamic Revolution. The clerics eliminated other ideologies and tendencies in the system during the early years of the revolution and imposed a more repressive Islamic government on the people and the country. The Islamic regime has resulted in great economic and human loss and suffering since the Revolution of 1979.
This paper identifies and defines the political system in Iran without going through the historical analysis of how the regime established itself. From a political economy point of view, the Supreme Leader uses the scarce economic resources to repress the opposition, buy political loyalty, and maintain political power. This paper uses a political power production function model to establish the conditions under which the Islamic regime in Iran obtains power and behavior. The paper also shows the process by which the regime can be deprived of its power and move toward establishing a democratic system of government in Iran, using property rights theory and human rights theory approaches. These theories are used to compare different political systems in terms of their capacity to allocate power as well as to promote economic growth and efficiency.
THE ISLAMIC REGIME IN IRAN
In democratic societies, power is formally delegated to governments through free elections. Governments, in turn, use this power to affect the economy by regulating industries and providing public goods. Modern property rights theory allocates capital resources in the economy and human rights theory allocates political power. Property rights theory indicates that two conditions are necessary for private bargaining to allocate resources efficiently: (3)
1. Property rights should be well defined; and
2. Property rights should be transferable at low cost.
Coase's theory implies that resources will be allocated efficiently by private bargaining. These property rights are the rights to possess, use, develop, improve, transfer, consume, deplete, destroy, sell, donate, transform, mortgage, lease, loan, etc. According to Coase, transferability of property would maximize the market value of these assets allowing the people to own the assets that are most valuable to them.
In democratic societies, political systems are based on human rights, while the capitalist mode of production is based on property rights. Democracy makes power transferable just as capitalism makes the ownership of capital assets transferable. The economic advantage of the election in a democracy is that it allows transfer of power at a relatively low cost. In dictatorial systems, which do not allow free and fair elections, the way to transfer power and dismiss the regime is by costly means such as revolutions, insurrections, coups, or wars (e.g., the invasion of the Iraq to remove Saddam Hussein from power). Compared to these costly means, democratic elections based on inalienable human rights provide a formal and consensual procedure to decide on the allocation of political power. In a democracy, a government derives its legitimacy from the people and thus is the only regime that makes it possible for the ruled to dismiss a given government without bloodshed. Because the costs of transferring power are low, it is at least possible that power will flow into the hands where it is most valuable. (4) In a functioning democratic system, the election mechanism consists of the following:
1. There is a contest for the principal positions of political power and voters decide on a winner. This free election legitimizes the transfer of power to the winning group as the representative of the people;
2. The election is competitive; except for criminals, no one is barred from entry into politics;
3. Elections take place on the basis of inalienable human rights. Individuals have the absolute and unconditional freedom to express, organize, vote and participate in politics in any way without fear of reprisal from any individual or group;
4. There is the presence of an independent judiciary to protect human rights of the people. Politicians and government officials are constrained in their actions by the rule of law, so that no individual or group in government can take reprisal against any citizen or group;
5. Citizens are protected from political terror and unjustified imprisonment; and
6. A free and accessible press exists as a means by which people can express their dissatisfaction with public policies.
None of the above conditions for free and democratic elections exists in the Islamic Republic of Iran. The constitutional law of the Islamic Republic defines the system of government as Islamic. Believing in God and submission to Him is the rule, and the laws of the country must represent God's will, thus fatalism. Khomeini, after the Revolution of 1979, argued that religious judges have the "same authority" as the prophet, and disobedience to the religious judges was disobedience to God. (5) Political structure in Iran concentrates power in the hands of one person, the Supreme religious leader. Articles 4-5 of the Iranian Constitution indicate that all civil, criminal, financial, cultural, political, administrative, and military laws and regulations must be based on Islamic principles. According to article 57 of the Constitution, the Supreme Leader has the authority over legislative, executive, and judicial branches of the government. He determines and controls the principal policies of the Islamic republic, is the commander in chief of the armed forces, declares war and peace, he appoints chief justices, appoints and removes members of the Guardian Council, appoints the heads of TV and Radio organizations, appoints joint chiefs of staff, appoints the Commander of The Revolutionary Guard, appoints the Commander of the Army and Police, and he may remove the president from office. Moreover, in the Islamic Republic, the state owns and monopolizes power over heavy industries, foreign trade, all minerals, banking, insurance, electric power, radio and TV, postal services, and railroads in the country. (6) The private sector in Iran is crowded out and plays an insignificant role in the economy.
Friedrich and Brzezinski define totalitarianism (in effect dictatorial) as a political system with these characteristics: a coercive ideology, a country led by a single person, a terrorist police force, the monopoly of mass communications, the monopoly of armaments, and state control of the economy. The Islamic regime in Iran possesses all of the characteristics of the dictatorial regime, which has tried to dominate every sphere of life of individuals in the country. In the following sections, an attempt is made to analyze the process of producing and maintaining political power by the regime, and how the democratic opposition may use this analysis to disarm the Islamic regime of its political power and move toward establishing a democratic government in the country.
POLITICAL POWER PRODUCTION FUNCTION MODEL
As previously mentioned, the political system of governance in Iran is authoritarian and dictatorial. The regime uses loyalty and repressive instruments in its political power production function to build and maintain political power. To repress and eliminate political opposition, the regime allocates economic resources to produce and implement repressive laws, monitor the activities of individuals, and punish the offenders. Also, in order to create an environment of fear and terror, the regime's agents at times kidnap, torture, kill, assassinate and hang the suspected opposition. Furthermore, the regime buys support from individuals by creating and distributing political rents. The rent seekers subsequently become loyal supporters of the regime. The resources that are used by the regime to repress the population and create loyal supporters are wasteful expenditures that represent deadweight loss to the society.
A political power production function can be developed that shows the relationship between repression (R) and loyalty (L) as factor inputs and political power (P) as output. The interrelationships between repression and loyalty are very complex, thus their levels psychologically affect, as well as the organizational strength of the opposition, international diplomacy, and tolerance of the Western democracies. Moreover, the level of repression affects the supply of loyalty. A production function in economics is used to develop the following political power production function equation to explore possible interrelations between the two inputs, loyalty and repression in producing political power by the dictatorial regime: (7)
(1) P = f (L, R), where P stands for political power, L represent loyalty and R is repression.
[P.sub.L] > 0, [P.sub.R] > 0, [P.sub.LR] > 0, [P.sub.LL] < 0, [P.sub.RR] < 0
[P.sub.L]> 0 , [P.sub.R] > 0 are marginal products of loyalty and repression as factor inputs which are positive, meaning the use of additional units of these factors will have a positive impact on political power production. [P.sub.LR]> 0 is a marginal product of loyalty and repression, using additional units of them jointly in political power production, which is positive. [P.sub.LL]< 0 and [P.sub.RR]< 0 are marginal products of successive use of loyalty and repression factors alone, which are negative. This indicates that continued use of any instrument of loyalty or repression alone leads to a law of diminishing returns in production of political power. Therefore, as the regime increases the level of repression, it must buy loyalty by distributing more political rent among the supporters in order to make the repression more effective. Also, it should be indicated that, with an increased level of repression, people in the opposition increasingly hate the regime, and when hate increases, the autocratic Supreme Leader loses loyalty because the risk of being associated with the autocratic leader will become more likely. Thus, to maintain support and loyalty the leader has to reward supporters with more political rent. In other words, the supporters are rewarded for the additional risk. It should be indicated that this buying of loyalty by the regime and rent seeking behavior of the individuals have led to wide spread corruption in the country. Moreover, to maximize power over the people, the Islamic regime uses instruments of mass control, such as banning the free press and using state-owned mass media to manipulate the public opinion. The supply of loyalty to the autocratic leader will also depend on other variables. For example, citizens, political groups, and political factions supply loyalty because they expect to receive in return some portions of the political gains from the exchange. This rent to suppliers of loyalty can be represented as a "price" received per unit of loyalty supplied (Lp). Also, the supply of loyalty depends on the economic performance of the regime (PE). Improved economic performance increases the regime's legitimacy, which means that the regime has more financial resources at its disposal to repress the opposition, as well as to buy more loyalty. The supply of loyalty function can be written as:
(2) [L.sup.s] = f (Lp, R, PE)
Where, [L.sup.s] represents supply of loyalty, Lp is price of loyalty, R represents repression, and PE represents Economic Performance.
Given the economic performance (PE), the autocratic leader would choose combinations of R (Repression) and L (Loyalty) to maximize political power or maintain the hold on power subject to the constraint posed by the supply of loyalty. The Lagrangian function for the maximization of the political power production function, equation (1), subject to the supply of loyalty function expressed by equation (2), can then be written as equation (3) below:
(3) Max P = f (L, R) + [lambda] [[L.sup.s] - f (Lp, R, PE)]
Maximization of the constrained political power production function, equation (3), is accomplished by setting the partial derivatives of the Lagrangian function taken with respect to independent variables, equal to zero, and then solving the resultant system of equations. The solution simply is:
(4) [P.sub.R] [P.sub.L] = [differential]R [differential]L
Equation (4) shows that if the supply of loyalty is the only constraint, the slope of the supply curve [differential]R [differential] L must be equal to slope of iso-power line [P.sub.R]/[P.sub.L] at the optimum point. Iso-power, derived from iso, meaning "equal" and power meaning "political power," denotes a curve that represents all the different combinations of inputs; in this case, repression and loyalty, when combined, produce a specified political power. The slope of the tangent to a point on an iso-power is the rate at which repression (R) must be substituted for loyalty (L) in order to maintain the corresponding political power level. The shape of the iso-power reveals a great deal about the substitutability of the input factors, that is, the ability to substitute one input for another in the political power production processes. In other words, repression and loyalty can be traded for each other while holding the political power constant. One implication of this model is that in the authoritarian Islamic regime, repression is carried to the point that, at the margin, an increase in repression reduces the supply of loyalty. Thus, more repression increases the level of fear among the people and at the same time makes them despise the regime even more. As the level of hate increases this makes the population more resistant, which in turn increases the repression requirement to keep the population in line. More fear by the people lowers the repression requirement for maintaining power. (8) A rational dictator will never use a combination of repression and loyalty, as it results in a negative contribution for one of the inputs at the margin in the production of political power.
APPLICATION OF THE MODEL IN THE ISLAMIC REPUBLIC OF IRAN
The autocratic Supreme Religious Leader as the representative of the Allah's sovereignty on the earth uses repression and loyalty instruments to maximize political power over the population. For producing and maintaining the political power over the population, the regime represses the opposition and buys political loyalty from supporters. From a political economy view point, the central and basic question is not the maximum political power obtained by the Supreme Leader, but the importance of the nature of the constraints and limiting factors in political power production. From the Supreme Leader's point of view, the most important factor is the loyalty of the population. What constrains the Supreme Leader in the maximization of power is the economic resources under his control. The regime, in order to produce and maintain political power, represses the opposition and buys political loyalty by using up economic resources. In Iran, oil and gas, other minerals, and large industries are state owned. More than 80 percent of the economy is under state control. There are also huge economic foundations that are separate and independent from the government, with monopoly power under direct control of the Supreme Leader. Therefore, he has access to huge economic resources to play with and use as it pleases him.
From the regime's point of view, the most important and critical factors in its political power are the support and loyalty of the people. As long as the regime is supported by the masses, the despotic leader can maintain his political power and control with more repression of the opposition and non-supporters. If the regime enjoys the continued and unconditional support of the masses, the outcome will be the total suppression and elimination of the opposition. This has been the goal of the Islamic regime since its inception -the absolute control over all aspects of the individual's life. In earlier years after the revolution, Khomeini had the support of the masses due to their religious belief and revolutionary fervor. It was easier for the regime to repress and eliminate opposition, centralize political power, and interfere in the individual's life by the installation of Sharia-based Islamic law. Khomeini and his disciples used the hostage crisis to eliminate opposition and consolidate political power and called it the "second revolution." (9)
The second wave of mass elimination of opposition happened in the summer of 1988, after Khomeini accepted the United Nations resolution 598 to end Iran-Iraq war. He took advantage of the domestic and international political environment which was created right after ending the war with Iraq, and secretly ordered the mass murder and execution of tens of thousands of political prisoners, just to reestablish his credential. The victims were buried in mass graves in different cities without families and relatives knowing about their loved ones burial sites. (10) As people became more aware of the nature of Khomeini's Islamic Republic, they resisted the interference in their personal life, and the Iranian society has never been as disgruntled and displeased with its leadership as it is today. Thus, today the regime that was created in the name of Islam has alienated young people from Islam.
Theoretically, there is a conflict between maximizing the political power of the regime with total political repression and ignoring the loyalty factor. This will become apparent as the relationship between repression and loyalty is discussed below. As mentioned, autocratic rulers use two instruments to produce and maintain political power over the population of the country. These are:
1. Repression: To eliminate political opposition, the Islamic regime designates the opposition's political activity as illegal and represses it. The repression of the opposition requires allocation of economic resources in order to pass repressive laws; establish revolutionary courts, which have been in operation for the last twenty six years since the inception of the regime; build more prisons and secret detention centers; employ special police and security forces; and hire vigilante groups and thugs to attack and kill people. According to a June 2004 report of the Human Rights Watch, the center of the human rights violations is the Islamic regime judiciary, a small group of judges accountable to the Supreme Leader; this judiciary has shut down public dissent through torture, indefinite solitary confinement, and denial of basic due process rights to all political prisoners. This report indicates that "The authorities have largely succeeded in their campaign to send a message to the broader public that the costs of voicing peaceful political criticism are unbearably high". The regime's judiciary system is part of the repression apparatus rather than a part of protecting the rights of citizens. The Islamic Republic is the only regime in the world that eliminated the opposition by calling them "the corrupt on the earth and the enemy of the God" and by telling them that their elimination is a God given order. The Islamic regime is one of the most repressive in the world today as documented by human rights organizations. According to July 2004 report of the International Federation for Human Rights, the Islamic Republic of Iran is ranked 160th out of 166 countries in term of freedom of expression.
2. Loyalty: The autocratic Supreme leader, by distributing political rent and creating rent opportunity among a portion of the population, buys their loyalty and support. The regime's top officials and bureaucrats consistently focus on their political survival by always ensuring adequate political support from social groups. The dominant strategy they use is material advancement in return for support and political loyalty. Politicians and bureaucrats have turned the institutional arrangement of the country into instruments for their own political purposes. This also explains why they oppose changes while maintaining the status quo. Consequently, this has led to widespread corruption and economic mismanagement which has resulted in high annual inflation, high unemployment, a brain drain and the decline in economic growth and per capita national income. (11)
Political rent donors themselves are rent seekers at a higher decision-making level. According to an Economist Intelligence report in early 2002, a corruption case was exposed and Shahram Jazayeri, a 29 year old business man, confessed he had given money to as many as 60 reformist deputies. This included more than $500,000 to the brother of the Supreme leader who is a reformist deputy, and to many government officials and clerics including the Supreme leader's office and $700,000 to President Khatami. In fact, all the 500 or so mullahs with political positions in the Islamic government are stockholders in the same corporations or serve on the board of the foundations established by the regime.
The government, by owning oil, natural gas, other minerals and the major industries, as well as by controlling about 80 percent of the economy, is the biggest contractor, buyer and employer. There are several Foundations which are involved in all lines of business and trade that are not accountable to any one but the Supreme Leader. The Foundation for the Dispossessed, for example, controls assets worth $80 billion and is Iran's second biggest corporation after the National Iranian Oil Company. The foundation owns factories, banks, hotels and properties in Iran and foreign countries. It has purchased interest in 80 foreign companies. About 25 percent of banking business in Dubai is owned by this foundation. The foundation never publishes its accounts and reports only to the Supreme Leader. The second largest foundation is Imam Reza Foundation. By some estimates, the foundations under the control of the Supreme Leader control about 70 percent of the national economy outside agriculture and state-owned industries. (12) These foundations emerged after the revolution when the Islamic regime seized the assets of the Shah's family, the rich people and individuals closely associated with the monarchy.
In the early 1990s, the government launched a privatization program of some of the state-owned enterprises. Often this has meant the transfer of ownership to these foundations, to politicians and mullahs and their family members and associates who actively campaign for the regime. (13) Senior clergies and close associates, including Supreme Leader and former president Rafsanjani, are the major stockholders of more than 100 companies. The foreign trade is a monopoly of the government, and the regime is granting trade licenses to influential people in government and their associates as political rent. Trade with much of Asia, specially Japan and China, and many of the foreign investment deals in Iranian oil and gas are under Rafsanjani's control. In September 2003, it was revealed by Dagens Naeringsliv, Norway's daily newspaper, that Stat Oil, Norway's state-owned Oil Company, had given 15.5 million-dollar to Rafsanjani's son for obtaining an oil contract in Iran.
The regime not only uses financial resources of the country to buy loyalty domestically, it also gives special discounts in oil exports to foreign politicians and friends to buy their support in international diplomacy. The regime, by granting economic concessions to Russia, China and European countries, is obtaining international support and legitimacy to advance its political agenda.
The Islamic regime has developed a network of loyalty in the country that is estimated to be about 2 million people. These supporters are offered low interest loans to buy houses and set up businesses, priority in obtaining business licenses, admission to the universities, and pilgrimage to Mecca and other shrines. There are about 20,000 theology students in seminaries that receive stipends from the regime. The regime very often pays the loyalists' cost of hospitalization, weddings and vacations at state-owned resorts. Moreover, the regime is buying loyalty through a network of mosques and 400 Friday prayer leaders throughout the country. (14) Now that the price of oil in the international market has risen to about $60 per barrel, the regime has more financial resources to buy more loyalty by providing more subsidies which give way to the loyal supporters mentioned above. Consequently, we may observe a new wave of repression in the country.
Iran has emerged from the era of Western imperialism as a renter state and the Islamic regime uses the state structure, including the parliament, to adapt and implement policies that are decided by a small group of mullahs and their advisors in secrecy, without being held accountable to the people. This in turn has affected the character of social classes and their political participation. The dichotomy results in elitist Islamists above a dependent citizenry. According to the 2002 Iran Statistical Yearbook, about 56 percent of working people in 1998/1997 were employed by the government, excluding the number of people working for the Ministry of Information, Defense Ministry, Armed Forces, Police and Security forces and people working in companies affiliated with these government agencies. Considering the size of these parallel security and police forces and these government agencies in the country, the private sector in Iran's economy is insignificant. The majority of the working people depends on government for their livelihood and are scared of criticizing government policies. According to the United Nations report of January 2004, "the climate of fear induced by the systematic repression of people expressing critical views against the authorized political and religious doctrine and the functioning of the institutions coupled with the severe and disproportionate sentences imposed, lead to self-censorship on the part of many journalists, intellectuals, politicians, students and the population at large, thus in effect impeding freedom of expression".
The Islamic Republic, in addition to Information Ministry agents and spies, mandate that every public or parastatal economic organization has to have a clergy on its board; thus, every ministry, government agency, or university has an Islamic committee. All trade unions are run by the Islamic workers' council in order to control the employees. These employees are silenced by the fear of losing their jobs if they criticize the ruling clergy or express any opposition toward their policy. These support and loyalty-buying activities by the regime are consuming another major part of the country's economic resources. Therefore, the regime continues its reign of power by exploiting and controlling these two determining factors and the amount of the economic resources allocated between them.
The relationship and interaction between these two factors, namely repression and loyalty as the two determining factors in political power, are complicated and interdependent. The level and extent of the repression of the opposition are influencing the loyalty level of the regime's supporters. For example, as the regime becomes more repressive, repressions become less effective, and at the same time supporters of the regime require and demand more financial rewards for their loyalty. Analyzing the nature and mechanism of the authoritarian Islamic regime from a political economy view point helps us to understand the allocation of the economic resources between the above two factors and their interrelationship in political power production. This understanding is likely to help the democratic and secular oppositions in their struggle against the regime, especially in unraveling the regime from its political power base. The level of the political repression is affecting the political loyalty to the regime. As the regime increases the political repression of the opposition, in order to produce and maintain its political power, the additional repression will diminish its initial effectiveness. In other words and in economic terms, the marginal product of the repression will decline. Nevertheless, if there is a decline in fear from repression, the expected big repression reoccurs as the regime reestablishes its credentials. That is why, after a period of harsh repression and control, it is observed that the regime lowers its level of repression in order to make the next repressive action more effective. (15) Nonetheless, with the increased level of repression, the level of political loyalty among the regime's supporters diminishes. This is because the regime realizes that, with increased repression, people hate the regime more, and the regime's supporters are exposed to more risk for their political affiliation and loyalty.
The level of political loyalty and repression to the Supreme Leader depends on two other variables. The first is the price of the loyalty. Political parties and groups which are loyal supporters of the regime want and demand in return participation in the political power and share in economic benefits. The supply of loyalty has a direct and positive relationship with these economic benefits or rents, which are called the price of loyalty. Increasing this price increases the supply of the loyalty. The second factor is the regime's economic performance. If Iran's economy experiences more economic growth and improved performance, the regime claims the credit which improves its legitimacy. Moreover, the improved economy means that the regime has more financial resources available to repress the opposition, which increases the regime's political power. The added repression resulting from improved economic performance increases the risk of being associated with and loyal to the regime. The supporters of the regime then, for continuation of their loyalty, want to be rewarded for this additional risk; thus they are likely to demand more financial reward from the autocratic Supreme religious leader. This helps us to understand the factional politics within the Islamic regime between the so-called reformist faction and the conservatives.
In the 1996-1997 presidential election, Khatami ran for the position. It should be noted that election in Iran is not free. There is a Guardian Council, for which its members are selected directly and indirectly by the Supreme leader. This Guardian Council decides who is qualified to run for presidency and the Parliament. Only those who have shown their dedication to the regime and belief in Supreme Leader, in Islamic terms known as Velayate faghih, and the Constitution of the Islamic Republic, may run for these positions. In the 1996/1997 election, voters supported Khatami because he was aware of the public discontent and promised reform. The Supreme Leader favored the other candidate. Nevertheless, the people supported Khatami to express their opposition to the Velayate faghih and hope for reform. Khatami's presidency created an environment of hope and optimism for reform in Islamic regime. As president, he made promises and asked people to stay with him patiently. He wanted to make people, especially the young, believe that he would change things. He never followed his promises, but the regime could draw out and identify the opposition. With this strategy and 22 million votes for Khatami and his "dialog of cultures" campaign, the regime was able to gain legitimacy, particularly with Western countries. With this gain, and the now identified opposition, a new wave of repression started. The autocratic Supreme Leader, without this strategy, lacked the power to impose his will on the Iranian people, with huge political risk for the regime associated with both "civil" and "uncivil" warfare. After Khatami was elected, torturing and murdering political activists, students, writers and journalists continuously increased. Mr. Daryush Forouhar, the general secretary of the Iran's Mellat Party, and his wife were murdered by the Ministry of Intelligence agents in his house in Tehran. In July 2003, Zahra Kazemi the Iranian-Canadian photo journalist was murdered by the Public Prosecutor of Tehran and his associates while in detention. The regime has been also very active in extending its reign of terror beyond Iran's borders by murdering Iranian political leaders and activists in the Diaspora. By murdering Dr. Shapour Bakhtiar, the last Prime Minister of the Shah's regime, in Paris; Dr. Ghassemlou, the secretary general of the Kurdish Democratic Party of Iran and his associates, in Germany; and about fifty other political activists outside Iran, the regime has tried to create an environment of fear and terror outside the country, too.
Khatami's first term (1997-2001) coincided with the conservative faction domination of the parliament. He claimed that his inability to make changes was due to this domination and people should vote for reformist deputies. In his second term, with reformist deputies in majority, and then, executive and legislative branches in the hand of reformists, the parliament passed legislation to redistribute and shift political power within the system and increase power of the president. This act was vetoed by the Guardian Council. From a political economy viewpoint interaction between the two factions of the regime during Khatami's presidency 1997 to 2005 needs special attention. During this time period, the so-called reformist faction created and capitalized on an image of change and reform. People, hungry for real reform, supported them politically. Then, this faction used this loyalty to bargain with the conservative wing, the Supreme leader. The discredited conservative wing needed legitimacy for the regime domestically and internationally, and the other wing now could deliver this in return for more economic and political resources. For the Parliamentary election of February 20th, 2004, the majority of the reformists who had even served as deputies were disqualified. They staged a sit- in protest, and President Khatami, with the speaker of the Parliament, engaged in a negotiation with the Supreme Leader in order to remove this disqualification, but failed. The election was conducted and conservative deputies, as it was planned, were chosen.
The reformist's deputies, while protesting, never appealed to the people for support in order to resist the complete domination by the Supreme leader. People did not support them because deputies had lost their credibility with most of the people and the deputies never requested and appealed to them. Deputies feared that the regime might lose control of the situation with violent conflict, and consequently, both factions might lose political power. Secondly, their rent-seeking activities and kickbacks while in office had made them a target of corruption investigation by the conservative wing in control of the judiciary, if they did not remain silent. According to a Human Rights Watch 2004 report, the Islamic Republic judiciary launched a politically motivated campaign against corruption in December 2001 that netted about fifty people in parliament deputies and government. Furthermore, because the president and deputies under the current Constitution are first selected by the Guardian Council of the Supreme leader to run for their position, they have a weaker bargaining position than if they are elected independently by the electorate.
The Supreme leader dismissed the so-called reformists. He knew that reformists had lost their credibility with the people and were unable to exert effective political pressure through resistance. Thus, they could no longer deliver loyalty for the regime as before. Therefore, from the political economy view point they were excluded from participating in sharing the political power. It should be noted that Khatami and reformist deputies were not able, nor wanted, to reform the system because they had pledged their allegiance to the Islamic Republic Constitution and Supreme leader. The latter are the required credentials to get and have any position in the government.
The regime, with all the hanging and flogging in Iran's city squares and stoning and amputation in public places, has tried to create an environment of fear that increases the cost of political activism, such that the disgruntled do not get involved in political activities and remains silent. The regime wants to make sure that if they can not absorb the disgruntled as loyal supporters, they should become inactive and not engage in politics. The regime knows that these people have the potential and may sympathize with and join the activist groups. The conservative faction and so-called reformist's faction are two sides of the same coin, or two faces of the Islamic government. The reformists' disagreement with the conservatives is over the harsh repressive acts in public, which they believe are damaging the Islamic Republic's international image. They also bargain for greater portions of economic resources, which are under the control of the conservative faction. Other than that, they believe in Islamic governance, the Supreme Leader, and the Constitution of the Islamic Republic, which guarantees the supremacy of the religious leader and his absolute power.
The reform of the existing system and gradual transition to democracy are impossible with the current Constitution, which guarantees the Supreme religious leader absolute authority and veto power. The reform, gradual reassignment of policy-making power, and emergence of democracy are a possibility with a bipolar system of government in which power is gradually transferred from autocratic leader to a broadly freely elected representative government. This is similar to the transition in many European countries from the king dominated system to the parliamentary system of governance. (16)
It should be noted that in the current crisis in Iraq, the Islamic regime is trying to create and take advantage of turmoil in the country to engage in a diplomatic dialog and exchange with the European countries and the United States. The goal is to warm up its relations and increase the regime's legitimacy. If the regime were able to achieve this goal, another wave of repression is anticipated for the reestablishment of the autocratic Supreme Leader credential. Moreover, it is important that Western countries and the US, in their foreign policy formulations toward Islamic regime should not compromise on human rights violations; they should ask for observation and respect for human rights issues. Today in Iran, majority of the people do not believe in Islamic ideology and Supreme Leader with divine right, but rather, struggling for ideals of popular sovereignty and universal suffrage. Iranian people are the only people in the region with strong conviction for separation of religion and state with a democratically elected government. Western countries should help this movement with their political and moral support. A democratic system of government in Iran will greatly impact democratic movements in the region.
WESTERN COUNTRIES' POLICY TOWARD THE ISLAMIC REGIME
he Islamic Republic of Iran was the first government established with the Islamic ideology in the region in 1979, and since then Islamic extremism and terrorism have increased. These are threats to the security and well being of the people and the country's economy. As it is observed in Iran and Afghanistan under Taleban, the Islamic Government is the most repressive regime, and it has tried to expand its influence in other Moslem countries, especially supporting the Islamic extremist groups in regional conflicts. The Islamic regime in Iran is using these extremist groups to gain and improve its negotiating power and legitimacy among western countries. Therefore, policies of the democratic governments, the United Nations, and international human rights organizations toward the Islamic regime are very important. The Iranian opposition groups and parties with democratic platforms should try to obtain the moral and political support of western democracies and international organizations to unravel the Islamic regime's hold on power.
With regard to democratic governments, especially western countries, it is assumed that the promotion and development of freedom, liberty, human rights, and democracy are their foreign policy objectives, rather than their economic interests which should be less significant and secondary. It is known that this assumption may not hold in some of the major western countries in which economic interests dominate their foreign policy objectives. Nevertheless, their values and major goals are the support and defense of liberty and human rights. Thus, the role of the Iranians in the Diaspora should be to lobby western governments and politicians to pressure the Islamic regime to respect human rights and liberty of individuals in the country. Nonetheless, the fundamental questions for the democratic Western governments are (1) should the democratic countries expand their economic ties with the Islamic and dictatorial regime in Iran? Or are they going to impose economic restrictions to limit the regime's ambitions? (2) Should not the democratic countries of Europe, Canada, and the United States in their diplomatic and economic relations demand from the Islamic regime the respect and observation of human rights? Answers to the above questions should help in finding out which policies curb terrorism and repression and improve human rights conditions in Iran. The improvement of human rights conditions in Iran, supplemented with the moral and political support of the democratic opposition of the Western democratic governments, can unravel the Islamic regime's hold on power. An empirical study of 150 countries showed that ensuring human rights, civil liberties and freedom of press significantly reduces the chance of a dictatorial regime's survival. (17)
In regard to the democratic countries' trade policy toward the Islamic regime, the following factors should be considered: First, the expansion of the economic relations of the democratic countries with the Islamic regime will improve Iran's economic growth and performance. With the improved economic performance, the regime will claim more credibility and legitimacy, and consequently, will increase the level of loyalty to the regime. The improved loyalty may result in more repression of the opposition and democratic forces, and more political power for the regime. Therefore, any expansion of trade relations with Iran, such as the case of the United States lifting trade sanctions, must obligate the Islamic regime to honor and observe the human rights conditions. This is the least that can be expected of the democratic countries. If they can not ignore their economic interests, they can use diplomatic pressures to force the regime to respect human rights of the Iranian people. Second, some people may argue that expansion of western countries' economic ties with the Islamic government will improve economic conditions in the country. Once segments of the population accumulate wealth, they are likely to demand more freedom, thereby diminishing their loyalty to the regime. With regard to this point in Iran, with more than eighty percent of the economy owned by the government and Foundations under the control of the Supreme Leader, and most of the private sector owned by the clergy and their relatives and associates, those who benefit would likely want to preserve and maintain the regime which has endowed and provided them with the opportunity to accumulate such wealth. These wealthy individuals have their wealth both inside and outside of the country; thus, the argument in favor of the trade expansion with Iran does not hold. Third, expansion of foreign trade will increase the regime's revenue from tariffs. Also, trade may increase Iran's national income and tax revenue. With the increased national income, the regime can claim credit for this improvement and loyalty to the regime is expected to increase. As a result, the Supreme Leader, being the guardian of the regime, has more economic resources in his disposal to maintain his hold on power by spending on repression and loyalty. The result is always increased political power and extension of the regime's political life. For example, in recent years, with the increase in oil prices, the regime has become more repressive. Therefore, the link between economic growth and political liberties and democratization in authoritarian states is weak. Economic growth, rather than being a force for democratic change in authoritarian states, can be used to strengthen tyrannical regimes. (18)
The political implications of the above three factors are undoubtedly related to the increase or decrease of loyalty to the regime. Therefore, if the foreign trade tends to increase the level of loyalty among the regime's supporters, which in turn increases the level of repression against the group of the people called outsiders, such as students, writers, journalists and political activists, the trade contracts should be made contingent upon respect for human rights to prevent repression. Trade with the dictatorial Islamic regime can be expected to produce beneficial effects if it is accompanied by human rights constraints. The World Bank and International Monetary Fund should also consider these factors in dealing with the repressive regimes such as the Islamic Republic. It should be emphasized that all dictatorial regimes that have collapsed have done so due to the decline in economic resources and revenues available to them. For example, the Soviet Union collapsed partly because of its engagement in the arms race and its decline in economic performance. In China, with 9.4 percent average annual GDP growth, the highest growth rate in the world in the last 25 years, (19) the level of repression has not declined.
The diplomatic crisis in the relationship between the United States and the Islamic Republic after the revolution was created by Khomeini who was facing the growing opposition to the Clerical Rule. By invading the United States Embassy and taking Americans hostage for 444 days, the regime diverted attention. He subsequently increased political executions, imprisonment, torture, and widespread repression in order to strengthen the regime's hold on power. This international crisis was followed by the Iran-Iraq war, which was continued for eight years. During this war, Khomeini said that the war had been a God given gift for the regime! The regime used the war to eliminate any opposition, improve its hold on power, and augment the regime's political power. When the regime ended the war in 1988, up to 30,000 political prisoners had been massacred in a period of three months during the summer of that year. During the earlier years, the regime used the international crisis to repress and eliminate the opposition, because it had legitimacy domestically due to revolutionary fervor. These days the regime tries to improve its international relations and legitimacy, especially with the Western European countries and the United States. This is because the regime has lost its credibility and legitimacy with the people. If the regime succeeds in improving its international legitimacy, it is likely to see another wave of massive repression. If the aim of Western governments is to promote freedom and democracy and fight the international terrorism, it is critical that these governments stay on the side of the Iranian people in their aspiration for liberty and democracy, as well as to support their rights in determining their future political system. The public in non- Arab Iran has a better impression of the United States than in all other countries in the Middle East (20) and is more ready for democratic change. It is important to note that a democratic and secular system of government in Iran has great political implications and repercussions for the Middle East and the rest of the world, especially Western democracies, given international terrorism, which the Islamic regime in Iran sponsors. The key to unraveling the autocratic religious leader's hold to power is to attack the instruments that are used to maintain that hold on the population, namely repression and loyalty support.
With the political pressure of Western democracies on the Islamic regime and their support of the Iranian people in their pursuit of liberty, people become less fearful of the regime and can organize themselves through mass civil disobedience to remove this regime from power and establish a secular and democratic system of government.
The Islamic Republic in Iran is a dictatorial and autoritarian system with Islamic ideology. As a renter state the regime has all of the oil, natural gas and other minerals and major industries in the country under its direct control. The regime in its political power production function uses financial resources of the country to buy loyalty and repress the opposition in order to build and maintain power. The result is a regime that is the most repressive and corrupt in the world today. This regime, with the current Constitution and political structure, in which Supreme religious leader has absolute power, can not be reformed. It must be changed. Reform is possible in a bi-polar political system, not in a uni-polar Islamic regime. There is strong opposition by the Iranian people to this regime. Western democracies and all international organizations in their dealings with the Islamic regime in Iran should pressure the regime to respect human rights, and at the same time lend their moral and political support to the Iranian people in their struggle for liberty and justice, and a regime change. A democratic and secular system of government in Iran has broad positive political impact in the region and for the fight and defeat of international terrorism.
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(13.) Hosein M. Abghari. "Tehran Stock Exchange and Iran's Economic Performance", Journal of Accounting and Finance Research, Volume 11, No. 6, Winter 2003, pp. 123-129.
(14.) Amir Taheri. "Who Rules Iran?" Jerusalem Post, March 28, 2004.
(15.) Michael Spagat. "The Dynamics of Repressive Dictatorships." Paper presented at annual Conference of American Economic Association, January 2002, in Atlanta.
(16.) Roger D. Congleton. "On the Durability of King and Council: The Continuum between Dictatorship and Democracy", Constitutional Political Economy, 12, 2001. pp. 193-215.
(17.) Bruce Bueno De Mesquita, and Georg W. Downs. "Development and Democracy", Foreign Affairs, Volume 84, No. 5, 2005. pp.77-87.
(19.) Zheng Bijian. China's "Peaceful Rise" to Great-Power Status, Foreign Affairs, Volume 84, No. 5, 2005. pp.18-24.
(20.) F. Gregory Gause III. "Can Democracy Stop Terrorism?", Foreign Affairs, Volume 84, No. 5, 2005. pp
Siavash Abghari, Professor Abghari is chair of the Department of Business Administration at Morehouse College, Atlanta, Georgia 30314.…