7/28/2019 2004 Buying Time in Tehran Iran and the China Model http://slidepdf.com/reader/full/2004-buying-time-in-tehran-iran-and-the-china-model 1/9 Buying Time in Tehran: Iran and the China Model Author(s): Afshin Molavi Source: Foreign Affairs, Vol. 83, No. 6 (Nov. - Dec., 2004), pp. 9-16 Published by: Council on Foreign Relations Stable URL: http://www.jstor.org/stable/20034133 . Accessed: 10/08/2011 17:56 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Council on Foreign Relations is collaborating with JSTOR to digitize, preserve and extend access to Foreign Affairs. http://www.jstor.org
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7/28/2019 2004 Buying Time in Tehran Iran and the China Model
Buying Time in Tehran: Iran and the China ModelAuthor(s): Afshin MolaviSource: Foreign Affairs, Vol. 83, No. 6 (Nov. - Dec., 2004), pp. 9-16Published by: Council on Foreign RelationsStable URL: http://www.jstor.org/stable/20034133 .
Accessed: 10/08/2011 17:56
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact [email protected].
Council on Foreign Relations is collaborating with JSTOR to digitize, preserve and extend access to Foreign
foes. Not only did he fail to achievepolitical change, he also proved unable to
heal the sick economy he inherited or
toward off a looming employment crisis.
With itsextremely oungpopulationtwo-thirds of which isunder the age
of 3o-Iran needs to create more than
800,000 jobs ayear.So far,thegovernment
has failed even to come close to that target.
As a result, Iran's oung people have growndeeply frustrated and hungry for political
change and economic relief-even as they
remain unsure of how to achieve them.
The newlyresurgentonservativesthink they have the answer.Having beaten
back the reformers' challenge through
bureaucraticnfighting, rganized iolence, thejailing f leadingreformers,andelection-rigging,he conservativesnow want to embark on a program dubbed
the "Chinamodel" by Iran'smedia. The
idea-which is neither new nor pro
foundnoruniquelyChinese-is tooffereconomic growth, jobs, and limited social
freedomnexchange orcontinued ontrolof thepoliticalsphere. he conservatives
Ayatollah RuhollahKhomeini oncefamously dismissed an aide worried about
inflationy telling im that"this evolutionwas not about the price of watermelons."
Today,Khomeini'ssuccessors refindingthe high price of watermelons-not to
mentionofmeat,housing,andcars-muchharder to ignore.The untold storyof post
revolutionaryran isone of economic
decline:thesteady, 5-year eteriorationof a nation that once boasted a per capita
income quivalent o Spain's, umpedsixmillion barrels f oil a day,andnurturedavibrantmiddle class.Today,Iran's ealper capita income is a third of what it
was before the revolution; il production is two-thirds of the 1979 level, and
the middle class is being squeezed by
chronicallyhigh inflation,widespreadun- and underemployment,and debilitatingwage stagnation.
InMay 2005,PresidentMohammadKhatami,who thunderedntooffice in1997 on aplatform of political and social
skilled ndunskilled abor, largemarketof 70million people, low-cost nergyresources, mple ashreservesocushion heinevitablelowscaused y liberalization,strategicocation djacento themarketsof South and Central Asia and the Persian
judiciary nd the security ervicesandinfluenceran'supremeLeaderAyatollah
Ali Khamenei.The hard-liners see theChina model
principally as ameans to forestall un
rest. They are thus less interested in
real economic reform and more prone
to think in terms of patronage politics.
Their approach-more a distributivemodel than aChina model-will use oil
wealth strategically,olingout subsidiesto the populationand interest-freeloans and cash to their supporterswhile
creating a few highly restricted and
tightlycontrolledopeningsfor foreigninvestment and the private sector.
Hard-liners view Iran's economy as a
small party with a closely guarded invi
tation list. And the party, they believe,
shouldremainsociallyconservative.The pragmatists, on the other hand, are
less interested in controlling how people
live and have abetter grasp of how the
global economy works, of the need for
liberalization, and of the obstacles to eco
nomic growth. They, too,view theChina
model as a safety valve, but their economic
vision promisesmore opportunities for the
private sector and foreign investment.Un
fortunately, thehard-liners alreadyhave the
upper hand. InAugust, theMajlis overturned lawspassed by the earlier,reformist
parliament aimed at easing foreign invest
ment and facilitating the entry of foreign
banks into Iran.Mohammad Mir Moham
madi, ahard-line member of theMajlis,
announced that the vote had prevented
"foreign dominance of Iran'seconomy."
The hard-liners also have an advantage
thanks to three years of high oil prices,which have translated into a cashwindfall
forTehran. Swelling foreign reserves
($35billion, at last count) have allowed the
government oputmuch-neededreformson holdwithout disrupting tspatronage
networks.One influential ard-lineparliamentarian,hmadTavakoli,has evenbeguntalkingaboutfurther educing hecostof gasoline,which is already eptartificiallyow(ataboutnine centsa liter)by high government ubsidies.
Since Iran arns ome 85percent f itsforeign urrencyromoil exports ndgetsan extra billion dollars a year with each
$1-per-barrelise inglobaloil prices,thecurrent pike npriceshas inflatedranianGDProwthfigures, hich have tickedabove 6 percent in the last two years.High
oilpriceshavealsocontributed o aproperty boom and a bullmarket on theTehran
stockexchange.But theyhavenotyetresulted nsignificantobgrowth,whichcouldspellreal roubleortheconservatives n thenearfuture.
Thus thepragmatists ay eventuallyregaincontrol.Yet the only thing thatseems certain is thatprogress towardeconomicreform n Iranwill remainhalting, followingthe familiar ehrantango: one step forward, one back, one
step to the left, another to the right.
RAFSANJANI REDUX
The Iranian ublic,meanwhile,couldbeforgiven for feeling a strong sense of deja
vu. Iran has tried the China model before,
and the results nlycontributed o thecurrent conomicwoes. In1989,Rafsanjani, then president,made a similarattempt