Kenan Mortan is Professor of applied economics at Istanbul Mimar Sinan University. In this op-ed piece for Project Syndicate, he describes the political and economic problems of doing business in Iran.

Iran’s Failing “Mullahnomics”

As the stand-off between Iran’s government and opposition continues, one factor that may determine the outcome, but which is rarely discussed, is the rickety state of the Iranian economy...

[T]he real source of Iran’s dysfunctional economy is the country’s peculiar political and economic power-sharing. According to the International Monetary Fund, the Iranian economy is almost totally controlled by political actors…

These public companies make up what is called the bonyad economy. A bonyad is a foundation very tightly connected to and actually run by the religious authorities. Through the bonyads, the mullahs have their say in most production and trade deals.

Parallel to the bonyads, another economic network has emerged around the basij, the paramilitary force linked to the pasdaran (Revolutionary Guards), who are in turn closely connected to Ahmadinejad...

These two networks are very often in competition, if not in conflict, with each other, reflecting the current Iranian political turmoil. Adding to the confusion, another group, the sarrafs (primarily private money lenders) are the key interface between foreign investors and an Iranian counterpart, whether basij or bonyad…

See also:
  • The new elephant in Iran

  • Government by Revolutionary Guards

  • More signs of militarization in Iran
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