October 14, 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 the 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 have been launched by 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 eight-year Iran-Iraq war 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, kept Iran isolated from advanced economies. Inefficiency of successive clerical governments during the past four decades, and many years of international sanctions added to the adverse factors.
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.
But the goals have frequently been outlandish and project failure from the get-go. For example, recent plans have forecast an average of 8 percent annual growth over the life of the plan. And the Supreme Leader recently decreed that 8 percent should also be the goal for the upcoming 7th five-year plan.
In an interview, Fathollah Aghasizadeh, the author of the book “Seventy Years of Planning for Development in Iran,” told the Khabar Online website September 3 his perspective.
He had words of praise for the pre-revolution plans during the reign of Mohammad Reza Shah Pahlavi.
Aghasizadeh said Iran’s initial development plans, which started in 1949, were successful partly because the country’s newly established Plan and Budget 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.
The first two development plans in the fifties included major projects such as dams, fertilizer production companies, the construction of some 11,000 kilometers of railways, Mehrabad Airport as well as several garment factories, sugar mills and cement production companies.
Another reason for the success, according to Aghasizadeh, was the authority and independence of the organization and its chairmen, particularly Abol-hassan 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 memoir 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 for infrastructural development.
Aghasizadeh says that evidence supports the argument that Ebtehaj was directly backed by the Shah. Even the Islamic Majles acknowledged in a 2010 report, “The Shah personally backed the development efforts.”
Aghasizadeh 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 said.
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 institutions such as the Majlis and Expediency Council also try to reflect the country’s ideological orientation in the new development plans. He said governments in the Islamic Republic are more interested in long-term plans that cannot be effective in Iran.
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 plans with ill-defined objectives provide a better opportunity for corrupt politicians who block inspections and spend the money for unrelated projects where their allies can enrich themselves.
Aghasizadeh said Iranians should not expect much from the latest 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.
