Academic journal article The Journal of Developing Areas

How Ahmadinejad Changed Iran's Economy

Academic journal article The Journal of Developing Areas

How Ahmadinejad Changed Iran's Economy

Article excerpt

INTRODUCTION

Iran's sixth president since the 1979 revolution, Mahmoud Ahmadinejad, began his presidency in June 2005 as a populist champion of poor and working-class Iranians. Ahmadinejad's populist promises to redistribute economic opportunities and fight against corruption played an important role in his 2005 electoral victory. And during his two terms in office, Ahmadinejad implemented a number of important economic policies that had a profound effect on socioeconomic conditions in Iran. Ahamadinejad's close affiliation with Iran's Supreme Leader and the Islamic Republic Revolutionary Guards (IRGC) also had an important influence on his economic policies as he used his executive power to substantially increase the economic role of IRGC in both private and public sectors1. This essay analyzes President Ahmadinejad's most significant economic policies that are likely to be remembered as the economic legacy of his eight-year presidency (August 2005-July 2013).

While the Supreme Leader and the IRGC had direct influence o n Ahmadinejad's economic policies, the fragmented nature of Iranian political system also influenced his ability to manage the economy, indirectly. Since the beginning of his presidency, Ahmadinejad was a polarizing factor within the ruling regime, and many powerful politicians opposed him; on some occasions, factions opposed to Ahmadinejad in the parliament or the judiciary blocked or modified his economic policies. In the early years of his presidency, the Supreme Leader frequently supported Ahmadinejad against his opponents; in later years, however, these opponents became more effective in blocking his policies as the Supreme Leader reduced his support for Ahmadinejad.

AHMADINEJAD'S ECONOMIC IDEOLOGY

Ahmadinejad's economic policies, and the multitude of speeches that he delivered on economic issues2, reveal several core values that dominated his thinking about economic issues. Ahmadinejad believed that the distribution of economic wealth and opportunities prior to his presidency was unjust and required redistribution. He was particularly mindful of underdeveloped regions of the country. This belief was the main motivation behind his frequent visits to provinces and remote areas as president. He blamed the unfair economic conditions on corruption and on the economic reform policies of his predecessors, Khatami and Rafsanjani. He believed that their reforms, such as privatization and price deregulation, had been exploited to benefit a small group of powerful businessmen and politicians.

Regardless of their left or right orientation, Ahmadinejad viewed Western economic ideologies as alien, and as incompatible with Iran's economic in stitutions. He refused to accept the mainstream economic view that excess liquidity would result in inflation, even when his own trusted economic advisors presented that view to him. 3 He also showed little regard for the country's five-year plan, or for its formal budget guidelines for fiscal spending.

Ahmadinejad believed that people deserved to gain tangible economic benefits from the government's oil revenues, and that this could be accomplished only if a portion of those revenues was either distributed as cash payments or else spent on goods and activities that produced short-term tangible benefits for the people.

AHMADINEJAD'S ECONOMIC POLICIES

Driven by his economic ideology and political forces that were mentioned above Ahmadinejad initiated several important economic policies that had a profound impact on structure and performance of Iran's economy. His government followed a very interventionist approach to the economy and used all the political and bureaucratic means in its disposal to actively guide and manipulate the economy.

Privatization: Ahmadinejad inherited a privatization program that was initially launched during Rafsanjani's presidency. Ahmadinejad sharply criticized this program during his 2005 election campaign, and with the backing of the Revolutionary Guards, he appealed to the Supreme Leader to modify the privatization program in order to make it more equitable, and to prevent corruption in the sale of public assets. …

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