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Neoliberalism in IRI: a brief history From Rafsanjani (1989) to Rouhani (2014); a continuum


by Majid Tamjidi:

Translated by Hoshang Tarehgol

Although Iranian revolution of 1979 had one of the highest rates of industrial strikes and actions, compared to any other revolution before it, and workers played a significant role in overthrowing of monarchy, alas due to lack of clarity in workers’ demands and prevalence of a populist mode of thought amongst vast sectors of Iranian Left, the glorious anti-monarchist movement was ultimately defeated when a theocracy replaced the ousted monarchy.

Workers, especially Oil refinery workers who stopped all Oil production through their strikes, were the backbone of 1979 revolution. Besides the Oil workers many other workers as well had created their own workers’ councils, in factories where the owners had fled the country, and implemented workers’ management and control over production. Workers’ power in revolution was so significant and substantial that even after revolution’s defeat, and expulsion, arrests and execution of labor activists opposed to IRI, workers’ rights in certain areas were formally still protected in Labor laws, which was a testimony and a reflection of this balance of power. Although none of them recognized the workers’ rights to organize freely, in comparison to Labor laws of Shah’s era, there were some improvements such as compensation for dismissal, and universal coverage of all workers under the Labor laws. With the onset of Iran-Iraq war in 1980 and priorities of a war economy, especially due to shutting down of Abadan Oil refinery (the largest refinery in the world at the time) and other industrial centers, IR was able to impose harsher conditions on workers, augment the position of its supporters (“Workers House”, Islamic societies, Islamic councils) and weaken the presence of vanguard and Leftist labor activists. It needs to be said that IRI was also tremendously helped in this process by some so called “leftist” groups that used IRI’s sham “anti-imperialism” as a pretext to facilitate IRI’s grip on power. June 1981 was a milestone in defeat of vanguard labor activists and victory of IR supporters in work centers.

With the end of war in 1988 a “reconstruction Era” begun during Hashemi Rafsanjani’s administration.(1989-1997) Main characteristics of this era were: onset of economic reforms, transformation of state ownership to individual owners and institutions close to IRI, expansion of private sector in economy, facilitation of foreign investments and cooperation with foreign capitals.

In Mohammad Khatami administration (1997-2005) this privatization process was drastically intensified and legal obstacles were removed step by step to augment the private sector. During eight years of Khatami’s presidency a management style very similar to post-modernist management in the West was savagely imposed on workers. This new system of management was institutionalized by: concentrating on elimination of collective bargaining agreements; division of large production centers into smaller units; handing out hiring and production contracts to outside contractors; reduction of inventory, production based on presold orders; non-coverage of workers in small workshop from Labor law protections (effecting millions of workers); drastic increasing of temporary work contracts and “white signature” contracts (contracts in which workers sign an unwritten contract, whose details are determined by the employees as they see fit) In the context of vast unemployment many retreats were imposed on workers. In this period non-payments of wages, sometimes going back to a year or two, became an ordinary phenomenon and a norm.

During Ahmadinejad’s administration (2005-2013) these economic reforms were continued with even more vigor, accompanied by a few populist gestures such as payment of cash subsidies. Although these subsidies were of some help to those below the poverty line, due to high inflation rates such cash subsidies were of no assistance to workers trying to obtain basic necessities of life. During administrations of Rafsanjani, Khatami and Ahmadinejad, the process of privatization and transfer of state ownership to individuals and institutions close to ruling Clergy and Guardians’ Corps. had consistently continued. When Western economic sanctions on Iran were implemented, majority of Iranian economy was in hands of individuals and institutions close to the ruling class. Western economic sanctions were implemented while eighty percent of Iranian workforce is employed as temporary labor, without any formal work contracts or benefits, considerable percentage of workers are not protected or covered by Labor laws, official minimum wage of workers is about one fourth of the poverty line, and official unemployment rate stands at about twelve percent which is significantly lower than the real rate of unemployment which is being estimated at about 30 percent.

Although Rouhani had promised to raise wages in line with the increases in inflation and adopt a more egalitarian social policy, during his campaign, in actuality his conduct has proven to be anything but what he had originally promised. Upon taking office his first act was to reverse a decision that was supposed to be making 500,000 temporary positions in various IRI ministries into permanent jobs. A most alarming development in his administration has been appointment of the previous head of Tehran’s Chamber of Commerce (TCC), Masoud Nili, as his senior economic advisor. Nili has an extensive track record as a fierce proponent of most aggressive neoliberal policies in Iran, which is basically what he has been consistently advocating in his various positions as an academician or an official or his latest position before becoming Rouhani’s senior economic advisor as the head of TCC, which for many years has been pushing to impose the interest and policies of private capitalists and mega merchants as the official state policies. Nili’s appointment is an indication of their victory in that goal.

The content of Nili’s economic plan is in complete accordance with all neoliberal “structural adjustment” policies, such as: extensive privatization of all public institutions and services, promotion of competition in financial sector, changing of bankruptcy laws in favor of businesses, gradual increase of prices in the energy market, reduction of state and public expenditures, decreasing role of state in economic affairs, promotion of foreign investment, maintenance of a cheap labor market.

IMF in its March 2014 report on Iran has advocated exact same policies for Iranian economy, which are in complete agreement with the direction of Rouhani’s administration economic goals and agenda. Rouhani’s economic priorities and his implementation of the “Second Phase of Subsidies Elimination” (see the article on that theme in this issue) are early indication that in term of pursuing aggressive neoliberal policies, he will prove to be the most neoliberal administration yet.

*This piece is based on two articles by Majid Tamjidi:
"Rouhani's Administration and Plans for the Great Robbery"- April 2014
"Conditions of Iranian Working Class in Islamic Republic" Unpublished manuscript.
Majid Tamjidi is a labour activist and member of IASWI in Sweden.


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