Rich getting richer in Iran

by Nicholas Birch

Two years ago, Hossein Yazdi was looking forward to a quiet retirement. Now he's back at work as one of Tehran's countless unofficial taxi drivers, trying to supplement a monthly pension of $ 65.
"A kilo of meat costs $ 5 these days; most weeks my wife and I go without," he says angrily. "If things carry on like this, people like us will soon be dying of starvation."
Strong words, but by no means unusual in a city where people's conversation turns with alarming speed to their daily struggle to make ends meet. But what makes such talk baffling is that most economists insist that the country is relatively well managed.

"Iran has huge resources of oil and gas, and the rise in oil prices since 1999 from $ 10 a barrel to over $ 26 today has given the economy an immense boost," says Yves Cadilhon, head of the French economic mission in Tehran. "Quite frankly, they've used the money well: Roads have been improved throughout Iran, and their electricity infrastructure is now as good as Turkey's."
"Our sales have more than quadrupled since 1996," says Saeed Laylaz, assistant manager of sales and marketing for the country's biggest car maker, Iran Khodro. "Somebody must have money to buy them."

So why are Iranians complaining? For Mr Laylaz, a supporter of Iran's moderate President Muhammad Khatami, popular gripes are a side effect of political reforms. "People are no longer afraid to speak out. They're not getting angrier, just more vocal," he says.
Jahangir Amuzegar, Iran's finance minister in the 1970s, disagrees. "It's the envy factor," he says. "I doubt anybody is getting poorer, but the trouble is that a tiny minority is getting richer very quickly." A bitter pill to swallow given that "the covenant of the meek," or social justice, was a favourite catch-phrase of the leaders of Iran's 1979 revolution.

It's all made far worse, though, by the fact that the principal beneficiaries of wealth redistribution have been the regime clerics and their closest allies. Amongthe main bastions of clerical control are the bonyad, immense foundations built up after 1979 from wealth confiscated from Mohammed Reza Pahlavi, Iran's last shah.
Ostensibly "charitable" organizations, they frequently use their amassed wealth -- up to 35 % of the country's economy, according to analysts -- for more questionable purposes. In 1997, for instance, one senior cleric and bonyad boss announced his institution was offering $ 2.5 mm for the assassination of novelist Salman Rushdie.

Another bonyad based in the holy city of Mashhad in north-eastern Iran has used donations from as many as 8 mm pilgrims a year to buy 90 % of the arable land in the surrounding region. Controlled since 1979 by arch-conservative Ayatollah Abbas Vaez-Tabazi -- whose son and daughter are married to two of supreme leader Ayatollah Ali Khomeini's children -- the foundation also owns universities and a Coca-Cola factory.
Backed by President Khatami, Iran's majority reform-minded parliament recently scrapped laws exempting the foundations from paying tax. Most observers doubt anything will change. In any case, they argue, bonyad bosses can always fall back on privileged relations with Iran's banks, almost all state-owned.
"Credit is rationed," Mr Amuzegar explains, "and it's rarely private business that gets it."

"I've never even bothered trying to get a bank loan," says Ataollah Khazali, owner of a small smelting works just outside Tehran. "Perhaps the private banks will be better for people like me, but they're very new and few people trust them."
For now, cash-starved businessmen like Mr Khazali are obliged to turn for credit to members of the country's bazaari class, strongly pro-regime merchants who double as money lenders. "Iran lacks liquidity; we do our best to remedy that," one bazaari says. One method used, he explains, is the systematic back-dating of cheques. "Strictly speaking, it's illegal, but it enables us to play with money that isn't ours."
This bazaari is a small player, specializing only in copper goods. Others are far more powerful, and with political attachments to boot. The current head of the influential pro-bazaari Coalition of Islamic Associations, Habibollah Asgar-Ouladi, was commerce minister in the 1980s, a position he used to procure lucrative foreign trade contracts for his brother. The family is now estimated to be worth $ 400 mm.