It is workers who have been hit the most, writes Yassamine Mather, while those close to the regime have benefited enormously
We all remember Hillary Clinton’s promise of “targeted sanctions” against Iran’s Islamic republic. They were deployed to ‘moderate’ the Shia government’s regional policies, as well as its internal human rights record. Of course, anyone with any knowledge of the regime in Tehran would have told the then secretary of state how futile such policies were.
We knew that, given the existing political and economic structures in Iran, sanctions would enrich those in power, while creating misery, through food and medical shortages, for the majority. Yet none of us could have predicted the extent to which those associated with the government of the populist, Mahmoud Ahmadinejad (the supporter of the poor and disinherited!), were benefiting from sanctions – profiting to the tune of millions of dollars.
Last week in a trial in Tehran we got a glimpse of what had occurred under the ‘targeted’, ‘smart’ sanctions of the Obama era. The latest government drive to root out corruption – concentrating on events that occurred under the previous government, not the current one – has revealed a scandal which, according to the Iranian judiciary, involved the theft of some $7.4 billion.
The case involves 14 executives and board members of Iran’s Petrochemical Commercial Company (PCC), going back to the last years of the second term of Ahmadinejad’s presidency (2010-13). Most of the suspects are in custody in Iran, while three who now reside abroad and are being tried in absentia.
The charges read out in court involve “disrupting Iran’s economic system” by profiteering from the multi-tiered exchange rate. According to a senior judiciary official, who addressed the hearing on March 7, “Despite numerous letters [from] the minister of oil … to the defendants that the foreign currency proceeds must be paid in full … the defendants did not pay any attention … and seized a portion of the foreign currency.”
In other words, they were involved in circumventing sanctions when selling petrochemical products and in the process they embezzled a percentage of the profits. A spokesman for Iran’s prosecutor general explained on March 9:
The suspects converted the foreign currency into Iranian currency before returning it to the government, making a profit in the process. They kept some of the foreign currency, allegedly selling it for up to three times the official rate on the black market.
Of course, this case is not unique. We already know of a similar one – that of billionaire businessman Babak Zanjani, who is currently in prison awaiting execution.
All this is a familiar story. The immediate effect of sanctions is a dramatic fall in the rate of exchange and Iran’s currency continues to fall, as new sanctions are imposed. The current administration under president Hassan Rowhani relies on the export of oil and petrochemical products and often the deals negotiated open the way to uncontrolled black-marketeering.
As with most other industries, Iran’s petrochemical companies have been privatised and inevitably those close to various factions of the Iranian religious state have benefited. Managers are often nominated by the president and his cabinet, and also involve influential MPs in the majles (Iranian parliament), as well as the Revolutionary Guards militia.
The case of the Iranian PCC is getting widespread attention, mainly because of the sordid tale of one of those being tried in absentia – you couldn’t make it up. The controversial figure involved is Marjan Sheikholeslami Aleagha, who is currently in the United States. She was apparently a supporter of ‘reformists’ in the regime, but switched to support for Ahmadinejad, once he was in power. She now lives in the US and is married to Mehdi Khalaji, a ‘senior researcher’ in the Washington Institute for Near East Policy (WINEP). The institute is by all accounts a rightwing, pro-war, pro-sanctions set-up – it was established in 1985 by, amongst others, Martin Indyk, an Australian-trained academic and former deputy director of research for the American Israel Public Affairs Committee. According to an article by David Ottoway, published in 1989, “Indyk described the think tank as friendly to Israel, but doing credible research on the Middle East in a realistic and balanced way.”1
In December 2003, professor Rashid Alkhalidi, director of Columbia University’s Middle East Institute, criticised WINEP in an interview with Al Jazeera, claiming it represents “the fiercest of the enemies of the Arabs and the Muslims”, and described it as the “most important Zionist propaganda tool in the United States”.2
As for Khalaji, Iranians know him as one of the most ardent advocates of sanctions! In recent months he has promoted ‘discussions’ with the pretender to the Iranian throne, Reza Pahlavi. In a number of BBC Persian TV debates, where he was promoting sanctions, I have argued against his position. And now, of course, Farsi social media is inundated with comments about his political stance and his wife’s role in the current scandal.
According to documents presented to last week’s court hearing, Marjan Sheikholeslami transferred proceeds from sales of Iranian petrochemical products to the accounts of her trading companies in Turkey, profiting by a cool $9 million.3
Another individual facing corruption charges is Reza Hamzelou, who was managing director of the Iranian PCC in 2010-11. It is now alleged that in the autumn of 2011, as new economic sanctions went into effect, he was given a new role: to bypass them by selling petrochemicals on the black market.
By the time all this was happening, I had already written extensively on the consequences of the US’s ‘targeted’ sanctions. According to the theocratic government’s own statistics, by 2009 one third of the state assets had been privatised (value: $37 billion, out of $110 billion), and 78% of such privatisation occurred under Ahmadinejad, who was following the International Monetary Fund’s model for ‘structural adjustment’. In many ways, this dismantling of the public sector resembles what happened in Russia and other east European states in the 1990s, when vast sections of the economy were turned over to oligarchs at bargain-basement prices. In Iran it was the Revolutionary Guards Corps of Iran (RGCI) and its subsidiaries, followed by individuals associated with pro-Ahmadinejad factions of the regime, who benefited from relentless privatisation. In this period tens of billions of dollars in state assets were handed out to the RGCI in secret deals. The sanctions were supposed to be ‘targeted’ at the Revolutionary Guards, close associates of the supreme leader and senior clerics, but, because these people own everything, they were the least affected.
Of course, it would be a complete mistake to believe that anything has changed in Iran. Now that the country faces a new wave of sanctions imposed by the Trump administration, it would be foolish to think that with the departure of Ahmadinejad the economy is more transparent or that those associated with the Rowhani government are not involved in sanctions-busting, the black market and dodgy currency deals. As before, the ones who are suffering from sanctions are mainly the workers – for instance, those who have lost their jobs, as companies incapable of importing basic raw materials go bust; those who have not been paid their wages for months; civil servants who have suffered pay cuts; patients who cannot get the medicine they need or receive treatment in hospitals where basic surgical equipment cannot be repaired.
Next time someone tells me about corruption in Iran, I will remind them that the money made from it manages to find its way out of the country. So how come western banks and financial institutions – which in the two years since Trump’s presidency began have, in order to avoid US-imposed penalties, blocked the accounts of thousands of Iranian law-abiding citizens in their searching for ‘money laundering’ – have failed to detect millions in dirty money sent from Iran to Canada and the US?
Next time anyone advocates sanctions against Iran, they should be reminded of a certain Mehdi Khalaji – he also advocates US sanctions, while his wife has been raking in millions as a direct result of them.
The US administration preferred Islamists to leftists, says Yassamine Mather
Commemoration of the 40th anniversary of the February 1979 uprising in Iran has been marked by dozens of scholarly seminars in Europe, numerous documentaries produced by the Persian-language media, as well the usual military parade inside the country.
Documentaries produced outside Iran concentrate on memoirs of key players who are still alive – from the wife of the ex-shah, Farah Diba, and the officials of the Pahlavi court, to Abolhassan Banisadr, one of ayatollah Ruhollah Khomeini’s closest allies in 1979, who is now in exile in France. Most of them have made similar comments on previous anniversaries of the Iranian revolution, but this time quotes from American general Robert Huyser’s reports (originally declassified in 2015), which have been repeated by a number of news agencies, give us a better idea of US plans after the shah’s departure.
Iranian opponents of the Islamic Republic have peddled various conspiracy theories about Huyser’s secret mission of January 1979. However, the published documents show the confusion emanating from the Carter administration, which was trying to manage events thousand of miles away, in circumstances where it had failed to understand the reasons behind mass protests against its favourite Middle Eastern tyrant. One of Huyser’s main tasks was to encourage the shah to leave the country and to stop a potential military coup by generals loyal to him. According to BBC World Service journalist Kambiz Fattahi, who has studied the state department’s declassified documents, 10 days after the shah’s departure, Khomeini sent a message to Washington offering a deal:
If president Jimmy Carter could use his influence on the military to clear the way for his takeover, Khomeini suggested, he would calm the nation. Stability could be restored, America’s interests and citizens in Iran would be protected.1
Khomeini’s note to the president was declassified in 2016, but it is only now, on the 40th anniversary of the Islamic revolution, that comments and analysis of it have become well known – shedding more light on the Carter administration’s secret negotiations in the crucial weeks after the shah’s flight from Tehran. While, as I have pointed out, Huyser’s main mission was to stop pro-shah generals from organising a military coup, he had in fact given the generals the green light for such a coup if the left was in a position to take power. In other words, the secret deal demonstrates that the US administration was more fearful of the left than the Islamists – particularly the working class, whose strikes had paralysed the country. In the true tradition of US ‘foreign intervention’, not least during the cold war, it was better to ally with the Islamists against secular and leftwing forces.
The plan agreed between the Carter administration and Khomeini (via his secular advisors) was to hold back the workers’ movement and organise a smooth transfer of power to Khomeini. What shattered those plans was the involvement of homafars (technicians and junior flight crew) in the Iranian air force, who took up arms against their commanders in support of the Organisation of Iranian People’s Guerrillas on February 11-12.
As I have written on a number of occasions, in February 1979 we were not facing a situation of ‘dual power’ in Iran. While the Islamists were powerful before the uprising, leftwing activists were the last to be released from prison. In fact Islamists had faced far less repression under the shah than the left – holding meetings in mosques and other religious institutions had been tolerated. They were also much better off financially, benefiting from donations from the bazaar. That is why the religious movement was far better organised than the left and other secular forces. In addition the left was politically confused, made many mistakes and allowed the Islamists to outmanoeuvre them.
Looking back at the film reels of 40 years ago, it is interesting to see how the current situation in Iran is hardly what was envisaged at the time of the February revolution. In late 1978 and early 1979 two of the common slogans on demonstrations were: ‘Bread, work, freedom!’ and ‘Equality, independence!’ Forty years on, I do not think anyone in their right mind would argue that Iranians has won ‘freedom’ or ‘equality’, let alone democracy. The supreme leader dominates the political agenda, while presidents are ‘elected’ from a pre-selected list of supporters of the current order. Prisons are full of labour and civil rights activists, and the Shia religious order cannot even tolerate opposition from within its own ranks. Leaders of the reformist green movement have been under house arrest for the last 10 years.
That is why, when I was asked to talk at a seminar to mark the 40th anniversary, I decided to speak on ‘“Equality” and its relation to “independence”.
Needless to say, the Iranian people would not have rebelled against the shah had it not been for the massive gap between the rich and poor. In the absence of any financial support for the peasantry, the shah’s ‘land reform’ had impoverished the countryside, while the massive exodus to the big cities created sprawling shanty towns.
Two parallel universes existed – not just in terms of income and standards of living, but also in terms of culture. The secular upper classes in north Tehran looked down on the poor and even the lower middle class. The word chadori (the long cloak worn by religious women) was used by westernised, upper class woman as a derogatory term. In the words of Pierre Bourdieu, certain forms of ‘cultural capital’ were valued over and above others – they helped or hindered social mobility just as much as income or wealth.
Far from being a ‘conspiracy by the west to depose the shah, because he was getting too powerful’ (one of the theories put forward by Iranian royalists), the uprising was a direct result of the failures of the shah’s regime to respond to the economic crisis that followed the boom of the early 1970s. Most skilled workers faced a drop in their living standards in 1976, while the ‘White Revolution’ in agriculture had left massive numbers of peasants landless and penniless, forcing them to seek seasonal jobs in the big cities. Recession left them unemployed and destitute. In addition to the above two groups, the small independent producers had been forced out of business, and sometimes made bankrupt, by the decision of Iran’s chamber of commerce to shore up the already privileged position of the big capitalists. Corruption and the rule of a clique around the royal court meant that many traditional merchants, often associated with the bazaar, were deprived of large profits available to the more privileged sections of the ruling class.
Such decisions, exemplifying the arrogant dictatorship of the royal family, fuelled widespread political discontent, while the suppression of leftwing and in fact all secular opposition allowed sections of the clergy and the Islamic movement to mobilise what was in reality class discontent in the name of religion. The clergy, which had survived the repressive measures of the shah’s dictatorship by making compromises with the regime, was in a much better position to benefit from political discontent than secular and socialist groups, who had lost many in their ranks through execution and imprisonment. In the summer of 1978 religious demonstrations in major cities were led by the clergy, financed by the bazaar and supported by independent producers, the urban poor and students.
After the revolution, as protests against inequality and for better wages and working conditions continued in factories and throughout the oil industry, the new Islamic government attacked protesters and labour activists. For a regime whose main support was based in the bazaar and amongst small capitalists, defence of private property became paramount.
In addition, the non-homogeneous (multi-class) mix in the Islamists’ camp necessitated a policy of denying class struggle, or at least marginalising it and removing it from the political agenda. This social bloc, united under the umbrella of religious culture, had no other way of surmounting the class antagonisms within it between the poor shanty-town dwellers and the much better-off bazaaris. The new religious state needed ‘unity’, and it therefore quickly developed a hatred of the left, which wanted to continue the struggle, and champion independent working class action. In the first month after coming to power the new regime used paramilitaries and civilian supporters to attack workers’ protests. In March 1979 those attending a meeting of oil workers in Tehran refinery were attacked by Hezbollah and Bassij militias, who were shouting Hezb faghat hezbollah: ‘Only one party – Allah’s party’.
New and weak
The Iran-Iraq war (1980-88) was the only time when the state took welfare measures such as issuing coupons to most of the population. The harsh conditions created by the war masked some of the underlying inequalities within the country. But even then the rich and powerful were able to pay bribes to prevent their sons being sent to the front – some even found ways to send their offspring abroad to avoid conscription. In other words, there was not much equality in terms of those who were sent to the front, where hundreds of thousands of soldiers lost their lives.
The end of the war was marked by the country’s re-integration into the world economy. The death of Khomeini led to the appointment of a new supreme leader, Ali Khamenei, who was by comparison relatively weak – not yet the dictator he was to become in later years. He was completely loyal to Akbar Rafsanjani, the senior cleric who had nominated him as vali faghih (‘guardian of the imbecile’, or supreme leader). The international domination of finance capital and globalisation, as well as the ascendency of a powerful ‘reformist’ faction in the Iranian regime, paved the way for a massive post-war reconstruction plan, entirely in line with the new capitalist world order. No-one pursued this more eagerly than ayatollah Rafsanjani, who was already a businessman with a considerable personal fortune. It is this period that marked the beginning of an ever widening gap between the rich and the poor in Iran’s Islamic Republic.
This is the time when the World Bank and International Monetary Fund became involved in aiding Iran’s economy – a situation that has lasted until today, despite the Islamic leaders claims of ‘independence’. These institutions drove the policy of privatisation and the maximisation of profit for the sake of ‘growth’ (plus the ending of welfare subsidies).
The following report by the World Bank in October 2018 gives a reasonable summary of the situation:
Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms, as reflected in the government’s 20-year vision document and the sixth five-year development plan for the 2016-2021 period … On the economic front, the development plan envisages an annual economic growth rate of 8% and reforms of state-owned enterprises, the financial and banking sector, and the allocation and management of oil revenues among the main priorities of the government during the five-year period.2
However, in Iran – as elsewhere under neoliberal capitalism – there was no ‘trickle-down effect’. There was no reduction of the gap between the rich and the poor, let alone fulfilling promises of ‘equality’. While clerics and their closest civilian and military supporters have made billions of dollars from sanction-busting and the black market, ordinary Iranians have faced hunger, abject poverty and death due to the shortage of medicines and surgical equipment. No doubt the display of grotesque wealth is adding insult to injury, but the supreme leader does not pay much attention to the injury.
Last year a New York Times reporter was shocked by what she saw in a programme screened by the pro-government Press TV:
It was not just the wealth that struck me, but how freely Iran’s ‘one percenters’ flaunted the symbols of western decadence without fear of government retribution ….
After a revolution that promised an egalitarian utopia and vowed to root out gharbzadegi – the modern, westernised lifestyles of Iran’s cosmopolitans – how have some people become so rich? Much of Iran’s wealth, it turns out, is in the hands of the very people in charge of maintaining social justice. Hard-line clerical leaders, together with the Islamic Revolutionary Guards, have engineered a system where it is largely they, their family members and their loyal cronies who prosper.3
The son of an Iranian diplomat, Sasha Sobhani, who apparently has half a million followers on Instagram, recently posted photographs from his travels to Greek islands. There he was sitting on the deck of an expensive yacht drinking champagne. Under one post he wrote: “How long will you be jealous of me?”
In other words, nothing is left of the egalitarian slogans of the February uprising. Today most young Iranians laugh at their rulers’ claims of pursuing ‘social justice’ and, just as in February 1979, Iranians live in two parallel universes. Gold-topped ice cream, Lamborghini and Porsche cars in north Tehran are a world apart form the real life of millions of Iranians who face hunger and lack of basic medication, not to mention the tens of thousands who still live in shanty towns, such as Nassir Shahr just outside Tehran. In addition, the dominance of superficial, US-type celebrity culture, spread widely via social media amongst well-off sections of Iranian youth, means that the rich flaunt their wealth shamelessly – increasing the anger and resentment felt by the majority of the population.
The poverty line in 2018 was set at approximately $480 a month per household. This means that 33% of the population – more than 24 million Iranians – live below that poverty line. The median income for an average household is only $885, leaving those above the official poverty line struggling to make ends meet. The top one percent spend 86 times more than the poorest one percent. According to the Iranian paper Donya-e-Eqtesad, “The bottom 10% of the population spend one 14th of the sum spent by the richest 10%.”
When Donald Trump reimposed sanctions against Iran, following the US unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in November 2018, Iran’s oil and banking sectors were hard hit. The currency lost more than half its value last year. No need to remind readers that those in power, or close to the centres of power, are not affected by these new sanctions. They can still buy goods using unreal government rates of exchange – selling them at the highly inflated, semi-official price, thus securing huge profits. In addition those related to centres of power have a monopoly over the distribution of food and medicine. Most of them have amassed their astronomic fortunes through control of the black market during the era of sanctions. This group is using its expertise in sanction-busting in the growing black economy sector to accumulate yet more wealth at the expense of the working class and the poor.
Khamenei and increasingly the government under president Hassan Rouhani tell Iranians that the ‘sacrifices’ they are making are worth it, because, after all, Iran is now politically independent. This is not quite true. The nuclear deal signed in 2016 was in fact a sign of submission to western dictat. Speaking to crowds gathered for the celebrations of the February uprising, Rouhani said the country was in a “state of war”, and, as Iranians increasingly question the price they have to pay for this celebrated ‘independence’, the obvious reality is that it is meaningless, given the country’s economic dependence on global capital. Economic sanctions have had a devastating effect on Iran’s economy precisely because of this dependence – at least in terms of the importation of basic goods.
If you intend to take on the world hegemon, it helps if, in addition to economic independence, you enjoy overwhelming support within your own borders. But this can hardly be achieved if you accuse workers who protest at the non-payment of wages of being agents of foreign powers; if you arrest every lawyer who dares represent a leftwing activist; if you accuse retired teachers and state employees demanding payment of their hard-earned pensions of being spies!
On the 40th anniversary of the Islamic revolution the Iranian state went through the usual routine of massed street celebrations, while Iran’s foreign minister, Mohammad Javad Zarif, and US president Donald Trump exchanged Twitter insults.
Trump wrote: “40 years of corruption. 40 years of repression. 40 years of terror. The regime in Iran has produced only #40YearsofFailure. The long-suffering Iranian people deserve a much brighter future.”
Zarif responded: “#40YearsofFailure to accept that Iranians will never return to submission. #40YearsofFailure to adjust US policy to reality. #40YearsofFailure to destabilize Iran through blood & treasure. After 40 yrs of wrong choices, time for @realDonaldTrump to rethink failed US policy.”
The clerics and their government managed to get tens of thousands of Iranians to attend celebrations. However, the majority were soldiers, teachers, school pupils and government employees. Footage shows that there was none of the enthusiasm or spontaneity of 1979. In contrast last month’s demonstrations at the Haft Tapeh sugar plant and the workers’ protests in Ahvaz in mid-January all showed that the spirit of 1979 is alive and well. If there is going to be any change in Iran, it will come from these forces – and definitely not the supporters of ‘regime change from above’ sponsored by the Trump administration, Saudi Arabia and Israel.