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The Strength of the City

by ALI MOSTASHARI

27 Aug 2010 18:161 Comment

The prospects for city-centric democracy in Iran: Part 2.

Amoodi.jpg[ IDÉ ] This is the second installment in a series on city-centric democratic governance in Iran. The first article, which appeared on August 9, introduced the idea of city-centric governance as an alternative paradigm to federalism and pure centralism in countries like Iran. A week later, Foreign Policy published an article by Parag Khanna on the importance of cities as hubs of governance in the 21st century that is worth reading for those interested in additional perspectives on the subject. In this article, I will explore the structure of the city-centric governance model in more detail and will try to address some of the questions and concerns raised by readers of the first article.

Decentralization as a Means to Meet Local Needs

The general tendency toward increased decentralization is evident in most countries, including Iran. In 1950, there were only 12 Iranian provinces; currently, there are 31. Still, the allocation of resources descends from the national government to the province (ostan) and is subsequently channeled to the county level (shahrestan) in an inefficient and highly political process. As Iran's history since the 1920s shows, such a centralized allocation and decision-making structure creates substantial challenges in meeting the needs of a diverse, multiethnic, multicultural population. Under both the Pahlavi regime and the Islamic Republic, investment in border areas such as Kurdistan, Khuzestan, and Baluchistan has been minimal and local authority over resources and decision making on sociocultural issues has been close to nonexistent. Understandably, the resulting disenfranchisement of minority groups can result in a desire for more autonomy. There are two basic ways to deal with this issue: federalism and city-centric democracy.

Federalism and Its Drawbacks for Iran

Recently, there have been calls for decentralization in the form of federalism. However, there are some serious issues with the federal system that need to be considered. John Kincaid, in his introduction to Handbook of Federal Countries, 2002, outlines some of the recent experiences with federalism:

The Middle East is one region where federalism has not gained a firm foothold. The United Arab Emirates is the only entity in the region that has adopted federal principles. It consists of seven emirates in a federal-type alliance of chieftains. In Asia, India has sustained its federal "Union of States" for more than 50 years, but it is facing significant changes arising from the decline of the Congress Party and the end of the Cold War. Pakistan, again experiencing military rule, has had considerable difficulty building federalism and democracy. Malaysia, one of the few federations to expel a member (i.e., Singapore in 1965), remains highly centralized and troubled by ethnic conflict. The Federated States of Micronesia continues to be a federal country more as a result of its US trusteeship status than internal cohesion.

With respect to Iran, there are two central, concrete issues that need to be taken into consideration when it comes to federalism.

Federalism as a precursor to disintegration

As recent history has shown, federal systems in multicultural and multiethnic countries can result in either a total territorial disintegration into smaller, less functional countries -- as in the case of Yugoslavia -- or a fragile union where the relationship between the different regions is strained at best -- as in the case of Iraq. The Iraqi model of federalism, which might be more applicable to Iran, hypothetically allows for regions (federal states) to be created out of one or more existing governorates (provinces) joining an existing region, or by two or more existing regions merging. In reality, however, the federal system primarily exists to justify the Kurdish Regional Government in Iraq. Currently, there are proposals to add regions to the federal structure, while a central government governs those areas of the country that do not fall within a particular region. The logic holding together the various regions is at best the avoidance of civil war, rather than any considerations of effective governance. In the case of Iran, it is conceivable that more or less autonomous regions within a federal system could break away at a time of heightened nationalist sentiments, particularly given the long history of resentment toward the central government. In my view, in a world where integration spurs growth and collaboration, such a development would be disastrous for both the breakaway region as well as the other states in the union.

Challenges in economic sustainability

In Iran, the geographic distribution of resources is asymmetric. Some regions, such as Khuzestan and Kurdistan, are well endowed in terms of natural resources. Some, such as Esfahan and Fars, have a strong industrial base. Others, such as Sistan and Baluchistan, possess neither substantial resources nor significant industries. Having economically troubled provinces on the long eastern borders of Iran, particularly given their proximity to unstable states such as Afghanistan and Pakistan, is a recipe for social and political disaster.

Even in the developed world, federalist systems are facing substantial challenges. The United States has long served as a model federal union, yet the economic sustainability of individual American states, particularly in tougher economic climates, has always been a major challenge. California, the richest state, is right now close to declaring bankruptcy, while the state of New York is struggling to ensure the continued operation of its government. A recent Center on Budget and Policy Priorities report indicates that 46 of the country's 48 contiguous states are facing serious financial sustainability challenges. This has led to drastic cuts in public services, abandonment of critical state programs, and funding freezes for public universities, among many other consequences.

While facing its own set of challenges, a shift toward a city-centric democratic governance with strong national-level support and coordination can go a long way to both address the needs of diverse populations and preserve the territorial integrity and economic sustainability of Iran.

City-Centric Governance

The city-centric governance model is compatible with Iran's rich urban history, natural geography, and current sociopolitical realities. Rather than a poor imitation and adaptation of an existing Western form of governance, it builds on the limited recent experiences of decentralization in Iran while facilitating a smooth transition from the current centralized structure.

Iran's urban history

As a semiarid country, Iran's population has primarily concentrated in the areas surrounding cities. One of the earliest sites of civilization, the city of Susa, dates back seven millennia. Around 3000 B.C., Elam became the center of civilization. By 500 B.C., the Achaemenid Empire had been established, based on four capital cities: Pasargadae, Babylon, Susa, and Ekbatana. In post-Islamic Iran, civilization was again organized around cities such as Tabriz, Hamedan, Qazvin, Shiraz, Isfahan, Kerman, Toos, Damghan, and Sarakhs. Between the 16th and 19th centuries, the capitals of the Safavids and the Zand dynasty shifted within the same set of cities until the Qajar dynasty moved the capital to Tehran, beginning a new era of urbanization. The concentration of social, political, and economic life around cities has continued to expand over the past two centuries. According to United Nations estimates, within the next 20 years more than 80 percent of the Iranian population will be urban.

Iran's natural geography

Iran's agricultural base is quite limited due to water shortage in many areas. Less than 8 percent of Iran's land area can be used for agriculture. Hence most economic activities have concentrated around cities with some access to water resources. Vast areas of Iran are very sparsely populated. This is in contrast to many European, South American, and Asian countries where villages can survive farther away from urban areas.

Experience of city and village councils

City and village councils are publicly elected as mandated by the current Iranian Constitution (articles 7, 110, and 111). Theoretically they have the authority to elect mayors, oversee the municipalities, and attend to the social, economic, and cultural needs of their constituents. In practice, due to severe resource limitations and central government interventions, their level of authority is much more limited. Though they have been constitutionally required since 1980, the first city and village council elections were not until held until 1998.

Within each council, there are between five and 11 members; Tehran has a 15-member council. Describing the local council election law of 1997, Kian Tajbakhsh in "Political Decentralization and the Creation of Local Government in Iran" (2000) states, "Other articles stipulate that the elected bodies will have precedence in decision-making over the corresponding appointees of the central government bureaucracy, emphasizing that local democratic institutions should possess a degree of autonomy and that the democratic principle has precedence over other forms of authority." He adds the important point that "the local councils have also been interpreted as potentially creating a new type of political space in Iran, in which one can be critical of, but not in opposition to, the central state."

The record of such councils in the past 12 years has been quite mixed. In the larger cities, the councils have been prone to manipulation by national political interests, while within the smaller municipalities they have in many cases proved to be a good test bed for participatory local democracy. The very fact of this nationwide experience is a major advantage for the city-centric governance model, which builds on the existing structure and enhances it to empower local authority over resources and social policy to meet the needs of diverse constituents.

Administrative Structure of City-Centric Democratic Governance for Iran

The main difference between a city-centric governance model and the current centralized administrative structure in Iran is in the allocation mechanism for resources and the respective government revenue models. Unlike the current structure, where all the resources are distributed top-down by the national government based on centralized decision making, resource allocation within city-centric governance happens primarily at the local level.

Local government responsibility and resources

As discussed earlier, the city-centric democracy model provides direct budgetary and policy authority to the shahrestan. The model maintains a strong central government that supports the economic growth of local governments while it deals with issues of national scale. 
Within the current administrative structure in Iran, each shahrestan consists of one or more cities, along with multiple rural agglomerations, or sets of villages, called dehestans. One city in each county is appointed as its capital. The 324 current shahrestans already have some discretionary authority on local issues. The administrative office managing a shahrestan on behalf of the national government is the farmandari (county government).

In the proposed city-centric model, county governments will be responsible for the day-to-day provision and regulation of public services (law enforcement and emergency services, infrastructure, education, healthcare, environmental and social services), legislation of local-level policies (zoning, real estate, education, healthcare, traffic laws, tax laws), and longer-term strategic planning for their respective shahrestans. Local government budgets will be funded by individual and corporate income taxes (with rates set locally), real estate taxes, and additional allocations from national resource revenues based on their respective populations. Local governments can earn additional income through investments.

National government responsibilities and resources

The national government will be responsible for ensuring compatibility of all local laws with the Constitution and citizens' bill of rights, for preserving Iran's national interests in the international arena, for national defense, for cross-jurisdictional enforcement and policy issues, and for managing national resources and the national financial reserve. Additionally, the national government will support weaker local governments through grants, technical expertise, and special provisions to ensure equitable growth opportunities across Iran. The national government budgets can be funded by individual and corporate income taxes (with rates set nationally) and any tariffs imposed on imports and exports. The national government could potentially manage the extraction and sale of natural resources such as oil, gas, and minerals, as well as any respective leasing arrangements, but could potentially be restricted in its use of the generated revenue for its budget. All revenue from such sales can be partially allocated to local government budgets (proportional to shahrestan-level populations) and partially invested in national reserves that can be leveraged for lending to local banks and for national social security funds.

National constitution versus local laws

In this model, a citizens' bill of rights embodied within the Constitution would maintain priority. Any local laws that undermine individuals' constitutional rights would be invalid. The body in charge of making sure that laws are not incompatible will be the judiciary, which will be present at the shahrestan, regional (shahrestan agglomeration), and national levels. The enforcement of constitutional and local law within each shahrestan can be the responsibility of the local governments, while national and cross-jurisdictional enforcement will be the responsibility of the national judiciary in coordination with local law enforcement officials.

Overview of Next Article

In the next installment of this series, I will examine the fiscal and economic sustainability issues of the city-centric model, including revenue generation and distribution (taxation, national resource share of local governments, etc.), economic growth, and individual social security, which are among the most critical challenges for this model of governance.

Dr. Ali Mostashari is Director of the Center for Complex Adaptive Sociotechnological Systems (COMPASS) at Stevens Institute of Technology, where he also serves as Associate Professor at the School of Systems and Enterprises. Together with Prof. Matthias Finger (EPFL, Switzerland), Dr. Mostashari is the co-lead of the Intelligent Governance of Large-scale Urban Systems (IGLUS) Project, a consortium of 16 universities in 16 megacities across five continents studying the future governance models of urban systems. From 2004 to 2008, Dr. Mostashari served as a strategic advisor to the Assistant Secretary General for Africa at the United Nations Development Programme (UNDP). He received his Ph.D. in Engineering Systems/Technology, Management, and Policy from MIT; an M.S. in Civil Engineering/Transportation from MIT; an M.S. in Technology and Policy from MIT; an M.S. in Chemical Engineering/Biotechnology with a minor in Business Administration from the University of Nebraska; a graduate certificate in Negotiation and Conflict Resolution from Harvard University; and a B.S. in Chemical Engineering/Energy Systems from Sharif University of Technology.

Copyright © 2010 Tehran Bureau

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1 Comment

Ali, this is a great start and I commend you for taking the initiative on these key questions. However, your model has a slight conflict with the fact that Iran is a rentier state, where oil revenues out-bid even the wealthiest cities in the country. This is the best case scenario, under which it is assumed that all citizens would be willing to pay taxes, which is not necessarily always the case (1).

You propose that "Local government budgets will be funded by individual and corporate income taxes (with rates set locally), real estate taxes, and additional allocations from national resource revenues based on their respective populations." The question is, based on what qualification of their "respective populations" (2)? The number of their "respective populations"? The amount of political influence the "respective populations" carry in the national political sphere? Under the current situation, ultimately these decisions are made at the national level, which leaves us back where we started with the centralized system.

(1)http://www.guardian.co.uk/commentisfree/2010/aug/23/why-taxes-low-arab-world
(2)Bossert T. "Analyzing the Decentralization of Health Systems in Developing Countries: Decision Space, Innovation and Performance," Social Science and Medicine, November 1998.

Babak Mohit / August 27, 2010 11:32 PM