August 29, 2022
The Islamic Republic will soon start its 7th national developmental plan, but an expert who worked in previous government economic plans doubts it can succeed.
Since 1940s Iran has launched 11 plans to build infrastructure, establish key industries, expand public services and education. Five plans were launched under the monarchy until 1979, and six during the Islamic Republic. Nevertheless, Iran is still considered a developing country.
There are a few reasons for this. The revolutionary chaos of the early 1980s, immediately followed by the 8-year Iran-Iraq war that caused hundreds of thousands of casualties derailed Iran from its modernization trajectory.
Also, the Islamic government, built on an anti-Western ideology engaged in hostage taking and supporting militant groups from its very inception. This kept Iran isolated from advanced economies. Inefficiency of successive clerical governments during the past four decades, and many years of international sanctions that have crippled the country’s economy, were added to the adverse factors.
Reza Shah on the inauguration of Iran’s railways in 1938, with the crown prince next to him
For longer than a decade, governments have not been able to carry out any meaningful development plans as sanctions and growing corruption kept the economic growth rate at around zero.
Economic development until the 1979 revolution
In an interview, Fathollah Aghasizadeh, the author of the book Seventy Years of Planning for Development in Iran, told Khabar Online website in Tehran on Saturday offered his expert views about the failures of developmental plans.
Interestingly, he had words of praise for the pre-revolution plan during the reign of Mohammad Reza Shah Pahlavi.
Fathollah Aghasizadeh, economist and expert on Iran’s development plans
Aghasizadeh said in the interview that Iran’s initial development plans which started in 1949 were successful partly because the country’s -then- newly established Planning Organization was genuinely interested in furthering development plans.The powerful organization operated independent of the prime ministerial bureaucracy and was directly accountable to the Shah.
With focused governance and rising oil prices in the 1970s Iran was perhaps the best placed country in the region to take the next leap, just as South Korea did in the following two decades. Economic development was taking place and per capita income was rising until the 1979 revolution.
Success with development plans
The outcome of the first two development plans included major projects such as several dams, fertilizer production companies, the construction of some 11,000 kilometers of railways, the Mehrabad Airport as well as several garment factories, sugar mills and cement production companies. At that time, Iran was not a rich oil exporter. It was still a poor country, getting a small share of the oil income from the British who controlled the industry.
Abolhassan Ebtehaj (L), head of Iran’s Planning Organization in 1950s
Another reason for the success, according to Aghasizadeh, was the authority and independence of the organization and its chairmen, particularly Abolhassan Ebtehaj who was chairman after 1954. Ebtehaj left the post in 1958 when his powers were curtailed by the Prime Minister’s Office. Later Ebtehaj wrote in his memoires that he got his mandate from the Shah and his mission was to make sure that no one other than himself would have access to the oil income set aside of infrastructural development.
Aghasizadeh says that evidence supports the fact that Ebtehaj was directly backed by the Shah. Even the Islamic Majles acknowledged in a 2010 report that “The Shah personally backed the development efforts.”
The expert said that as the organization lost its authority, its success began to diminish, and development plans were changed into comprehensive plans that lacked focus. However, Aghasizadeh said he is not sure whether the current development plans could be effective. “They have very little if any achievement and the country can do without them,” he added.
Post-revolution developmental plans
He agreed with Khabar Online that post-revolution development plans reflect Iranian politicians wishful thinking rather than the country’s needs. “Plans are no longer written to be executed,” he said, adding that institution such as the parliament and the Expediency Council also try to reflect the country’s general [ideological] orientation in the new development plans. Meanwhile, he added that governments in the Islamic Republic are more interested in long-term plans that cannot be effective in Iran.
Ayatollah Hashemi Rafsanjani, the post-war president who tried to relaunch Iran’s development in the early 1990s
He did not say why, but it appears that politicians’ short-sightedness, and the transitional nature of presidential governments, each representing a different faction in the Islamic system, derail their own long-term plans. On the other hand, it appears that the plans with ill-defined objectives provide a better situation for corrupt politicians who block inspections and spend the money for unrelated projects where their allies can enrich themselves.
Aghasizadeh said that Iranians cannot expect much from the 7th development plan for similar reasons as the government is barely taking care of the nation’s day to day business amid sanctions and a perpetual economic crisis.
Like India, Iran should turn to one-year developmental plans, Aghasizadeh believes, or plans for a maximum of four years. This gives officials a better chance to follow up on the successful parts of their plans. At the same time, their expectations from each plan is well defined and objective.