Despite great efforts that Iranian authorities have made to improve the economic conditions of the country, no
tangible achievement has been made and all because of the dominance of the government and the public sector over the economy. Contrary to the claims made to the effect that the control of the state over the economy is to be eradicated and therefore the size of the government be reduced, this control has been actually expanding making it increasingly difficult for the private and cooperative sectors to survive, let alone flourish.

Worldwide trends, however, exemplified in the globalization process, are otherwise. Everywhere nations are supporting their private sectors, which, through competition, offer better and better products and services at lower and lower prices, every day.

This is such a strong trend that those countries that prefer to retain their public sectors, i.e. centralized economies, are forced to give them up, because they cannot afford to ignore external markets. This makes Iran’s present economic state rather precarious. On the one hand, external forces and economic conditions demand the country’s economy to become decentralized and private. Yet, on the other hand, the public structure of the economy will not render itself to decentralization nor will managers of staterelated companies who are all ex-government managers, let go of their desks, positions and authorities. They will not allow anyone to deprive them of their vested interests, concessions, supports and financial aids. However, the expansion of this huge centralized economy will necessitate marketing abroad, which demands free competition, high quality and sensible prices. We may force our nation to pay false prices, too high for the quality of the goods they buy, but we cannot do so with the people outside our frontiers.

The main obstacle to Iran’s entry into the international market is a centralized economy with enormous expenditures. This requires adjustment policies seriously aimed and applied towards reformation and a gradual – hopefully not too gradual – decentralization process, so that we may in the near future achieve an acceptable form of economy that can easily communicate with other economies worldwide and, in particular, can join the WTO.

Joining WTO requires certain conditions to be fulfilled and criteria to be met, in many areas of the economy. First and foremost is the decentralization of the economy or as is usual to say in the Middle East, privatization. This means that the state must not intervene in the economy in any serious way; it must not set rules and
regulations on imports that are discriminatory in favor of the public sector economic entities; it must allow and encourage the growth of the private sector; must facilitate domestic and foreign investment; reduce economic and trade risks etc. These actions will obviously reduce inflation, lead to economic growth, expand non-oil
exports, raise per capita income, and most important of all they shall lead to the welfare of the people and a higher standard of living.

Some work has apparently been done towards the same objectives: policies have been adopted that should have improved the economy and brought about reformations during the past three development plans, but so far – and we have only less than two years left of the Third Plan – no fundamental change has occurred in the economic structure of the country as regards liberalization of trade and decentralization of the economy. It appears that the propaganda made on the subject was the main purpose of the policies, not the actual changes!
Besides, there has been no logical connection between the objectives and the tools employed. For instance,
instead of bringing about real liberalization and privatization, the state is selling plants and factories to the banks (which are themselves state-owned) as a tool for the government to pay its debts and high expenditures.

Time is running out and no one seems to care! In 2005, WTO will impose restrictions that will make it very difficult for nonmember states to join it. This will lead to certain conditions that will make a state-run economy face great difficulties. But, privatization is not the only serious issue. To join WTO, Iran must control inflation; reduce unemployment to acceptable levels i.e. to the levels acceptable to the developed nations etc. And all this seems almost impossible. The work done so far to create jobs has only resulted in a limited number of temporary employment opportunities which will disappear like a mirage as soon oil export revenues are upset by some sort of recession in the oil market. Then, God knows what will happen!

Iran needs realistic and impartial investigations into its economic and political complexities for which the most vital prerequisite is that our authorities should truly and sincerely want to shift our presently highly centralized
economy into a liberalized economy compatible with world conditions.

It is not enough to talk about decentralization and privatization. Action must be taken and rather urgently. There is no need to sell each and every state-run production or service entity to the investors in the private sector, to professional businessmen though this would be an ideal solution. It would be sufficient to take away the extra concessions and privileges that state-run entities enjoy and which are denied to private organizations. Treat the staterun entity equally as you treat private firms. And let them compete.