Reading RAND in Tehran
by MOHAMMAD KHIABANI in Tehran
26 Oct 2009 13:11
Did anyone actually read this thing?
[ analysis ] After two postponements and much controversy, a 50% plus one share of the state-owned Iranian Telecommunications Company was sold via Tehran's Stock Exchange on September 27, 2009. Three different consortiums had been approved by the Privatization Council to bid on the shares. The winning bidder was to pay 20% of the block of shares immediately in cash, and the remaining 80% would be paid to the government in installments over eight years along with interest -- a very sweet deal. A day before the trade occurred, one of the three consortiums, "Pishgaman-e Kavir-e Yazd," was barred from participating on grounds of "lack of security qualifications." This left the "Mehr-e Eqtesad" and "E'temad-e Mobin" consortiums as the remaining two bidders, with the latter group successfully taking the bid. The shares, bought for the amount of $7.9 billion, made E'temad-e Mobin the majority shareholder in the largest listed company on Iran's Stock Exchange.
Protest immediately erupted in Iranian media over the question of alleged links between the E'temad-e Mobin consortium and the Iranian Revolutionary Guards Corps (IRGC). Modarres Khiabani (no relation), director of E'temad-e Mobin, told reporters after the sale, "the purchase of the Iran Telecom shares was not by IRGC sources, and this consortium has no connection with this organ and its own financial resources have been guaranteed by other areas." Speaker of the Parliament and former IRGC member Ali Larijani agreed, denying that the IRGC was involved in the deal. Instead, he said, confirming everyone's suspicions, that "IRGC cooperatives" were involved with the consortium. Reformist newspapers such as Aftab-e Yazd and Mardom Salari howled that this was a breach of the spirit of Article 44 of the Constitution, which had been amended in order to allow for privatization of state companies to the private sector. The conservative newspaper Jomhuri-ye Eslami, which frequently criticizes President Ahmadinejad for perceived incompetence, lamented the sale as one more defeat for the Iranian private sector. Javan, on the other hand, robustly defended the sale, arguing that a consortium consisting of "non-governmental organizations" -- organizations that may be affiliated with government activities but are officially independent and autonomous -- is perfectly eligible under the current language of Article 44 to take part in the transfer of state-owned assets. Furthermore, it pointed out that the process of privatization across the world has often included retirement pension funds, social welfare organizations, and many non-profit investment consortiums. The editorial line of Javan, to no surprise, is closely associated with IRGC views.
The overall result was a vigorous debate over how to interpret and shape the gradual process of privatization in Iran, and Parliament has promised to investigate the deal as well as look into a revision of Article 44's text. Yet this debate should not surprise followers of Iran's economy, as I wrote in a previous article for Tehran Bureau. What alarmed many, though, was the fact that the sale symbolized an increased role of the IRGC (also known in Iran as Pasdaran or Sepah) in the economy to go along with its increased role in Iran's politics. The trickle of news about this development in English-speaking media, in such grey institutions as the New York Times and TIME magazine, all point to a single source as overwhelming proof of this menacing and chilling development: the 2009 RAND report The Rise of the Pasdaran.
There is a (definitely apocryphal) story that, in the 1950s, the RAND Corporation predicted there would be five computers in the year 2000. A more accurate and less humorous story about RAND is that they were responsible for applying game theory to US-Soviet relations during the Cold War, and thus came up with the soul-crushing idea of mutually assured destruction as a rational foreign policy. Since the end of the Evil Empire, RAND has branched out into various research fields -- of course the obligatory work on terrorism and the "rogue" regimes of the day, but that's to pay the bills for skyrocketing DC office real estate prices. To its credit, RAND also put out a very damning report on the futility of the US' "War on Drugs" which was rapidly ignored by the recent Bush administration. So they have a maverick streak.
After reading the report on the IRGC, I seriously wondered if the big time journalists who cited it in their reportage were handed the same RAND document as me (if those journalists are reading this, check and make sure your copy has 129 pages like mine). When they wrote their articles, the IRGC was portrayed as "mafia-like," "isolationist," "firebrand," "radical," "monolithic," and that it was running the Islamic Republic of Iran behind everyone's back. Throw in a couple of quotes from Iranian dissidents in the West, and the article heads to the presses, nicely confirming what everyone already suspected about the somehow cynical yet irrational elites of Iran. The NYT piece ended up "below the fold" on page one, always a good sign that the editors think the article will buttress the wispy common sense of US policy makers.
Permit me a few lines of your time to just quote some of the main findings of this RAND report:
* ...the IRGC's power is ultimately circumscribed by the system of checks and balances inherent in the Iranian political system, as well as factional disputes that both surround and permeate the institution and its network of veterans.
* The commercialization of the IRGC has the potential to broaden the circle of its popular support by co-opting existing financial elites into its constellation of subsidiary companies and subcontractors. Similarly, through the socialization and recruitment of rural and lower-class populations into the Basij -- frequently accompanied by technical job training, scholarships, and other financial benefits -- the IRGC offers the promise of societal mobility to those who would otherwise be denied it.
* Instead of acting as a unified factional force itself, the IRGC can be better conceived as an institution over which the various ideological factions may compete for control and influence. This is consistent with the broader processes at work in the Islamic Republic of Iran.
* ... other security organs are staffed by ex-IRGC officers. Yet it does not follow automatically that these individuals continue to act in lockstep with the corporate interests of the IRGC -- office-holding tends to generate its own specific set of imperatives and priorities that can challenge or even completely offset the powerful social bonds created by shared war experiences or military indoctrination. ...the ascent of IRGC leaders to civilian office may not be as deleterious as many have thought, as it appears that it can lead to moderating the more extreme ideological and corporatist views of at least some IRGC veterans.
And, lastly, the opening paragraph of its conclusion:
* Rather than framing the IRGC as a purely military organization marked by mafia-type economic tendencies and a homogeneous ideological outlook, this monograph has surveyed its broad-ranging roles in Iranian society and its emerging internal divisions. Our analysis underscores that the twin poles of commonly held assumptions about the IRGC are both incorrect. The IRGC is neither a corrupt gang nor is it a firebrand revolutionary vanguard with the aim of exporting Iran's revolution across the region. Rather, its vested and increasing interests in the country's economy make it an increasingly conservative force rather than a radical one.
The ironic postscript to this report is that RAND is specifically writing this for the US Department of Defense as a strategic document. It is not a scholarly investigation to understand how Iran actually works, but is explicitly written as an instrument for US foreign policy. Yet its findings are completely ignored, even by the journalists who cite it!
This cuts deeper than simply an easy potshot at globetrotting journalists. For its entire existence, the Islamic Republic of Iran has been portrayed by the US as devoid of internal politics, and eagerly affirmed as such by the most vocal segments of Iran's diaspora (both left and right). Predictably, this results in slackjawed surprise whenever Iran upends the common wisdom, as it often does. Then a scramble ensues to "understand" Iran, mostly through the usual binaries, and ends up vindicating the preexisting assumptions. This repeats every four years or so. Even with the recent election crisis and the largest demonstrations since 1979, which represented significant shifts in Iran's politics, one cannot dismiss the last 30 years of Iranian history while trying to fathom the present.
Of course, this is not to say that IRGC's creeping involvement in the economy is entirely benevolent. All one needs to do is listen to opposition politicians in Iran to hear the other side of the debate. But first one must realize there exists a debate, one that has historical roots, and that it can be comprehended.
The IRGC puts forth a very reasonable argument for its presence in the economy: middle-income countries cannot generate a private sector that can handle major infrastructure and development projects, and therefore the IRGC must help to contract out these projects using its expertise and manpower in order to achieve Iran's development goals. This is exactly what the Shah said when he was asked about state direction in the economy during the 1960s, and can also be found in any development economics textbook. Private sectors in middle-income countries mostly engage in speculation and commercial trade. If you want to see the main results of Iran's private sector over the last twenty years, look at Tehran's skyline.
The opposition to this position, which is quite fierce and split among many different political factions, argues that by engaging in these economic activities (as well as the more nefarious smuggling operations the IRGC is rumored to have -- but these remain rumors even in the RAND report), government and quasi-government intervention in the economy "crowds out" the private sector from investing productively. Government-linked firms have not only the economic scale to outcompete any newcomer to the Iranian market, but they also possess the political connections to get easier loans, faster licenses, and bend the ear of the government to keep their monopoly positions.
This is a complex debate, and is made trickier since the positions are embedded within the political aspirations of the Islamic Republic's factions. Thus, Mousavi and Karroubi scorned the telecom deal in a recent public meeting, but this needs to be read as a political move, especially from two gentlemen who were instrumental in the nationalization of the Iranian economy after the 1979 Revolution.
The RAND report makes some useful comparisons to Pakistan and China, two countries that also have histories of military intervention in the economy. One could add Turkey, Indonesia, Brazil, Chile, and Egypt, to name a few. These are the kinds of comparisons that are necessary in order to understand Iran, no matter where one's politics lie, since they allow us to see the possible long-term outcomes of Iran's social and political patterns. If one's only strategy is to screech incessantly about totalitarianism and expect this to generate results, well, you're probably not reading this by now anyway.
One should add one more country for comparison. Iran spends between 2 to 3% of its GDP on the military. US spending on its military hovers around 4% of its (much larger) GDP. Like Iran, the US has its own weapons industry, defense contractors, think tanks, teeth-gnashing generals, and flag waving politicians. As a result, the US economy is extremely dependent on the military and its affiliated consortiums. Indeed, small arms exports, weapon information systems, and various boondoggles associated with "securing the homeland" are some of the few growth markets in the US right now, aside from Goldman Sachs. Imagine a major politician in the US opposing this kind of quasi-governmental nexus, even though it is so rife with backroom deals that it makes Third World corruption look like a little league game. I hope I am not the only one who can see the irony in a RAND corporation report on a possibly nascent Iranian military-industrial complex. The RAND corporation, by the way, though it gets most of its funding from the US Defense Department, and does most of its work for the US Defense Department, considers itself a non-governmental organization.
Many in Iran are genuinely worried that an increased military role in the economy would damage prospects for future democratic reform. But maybe they are overreacting. Perhaps, here in Iran, we could learn something from the citizens of the United States, including the Iranians who live there. So, please tell us: What has it been like living in a bona fide militarized economy for the past fifty years?
Copyright © 2009 Tehran Bureau