Technocrats and Reformists Square Off Against Conservatives and Labor Over WTO Membership
Vahid Sepehri, Radio Free Europe:
The United States recently dropped its objections to Iran's accession negotiations with the World Trade Organization (WTO), and a nine-year-old membership application was approved by WTO members on 26 May. Iran's ambassador in Geneva, Mohammad Reza Alborzi, may now attend WTO meetings, representing Iran pursuant to observer status that could last for years before full membership is granted. READ MORE
The Iranian response has ranged from welcoming eventual accession as an opportunity to reform the state-dominated economy and boost exports, on the one hand, to expressing fears of foreign exploitation and the destruction of Iranian jobs on the other. Those with technocratic tendencies and officials linked to the reformist administration have been most positive, while traditionalists, conservatives, and labor-related sectors have expressed caution or hostility to the prospects of integration into the global free market.
Industries and Mines Minister Ishaq Jahangiri said in the northeastern city of Mashhad on 28 May that membership would provide Iran with "a golden opportunity" to export manufactured goods and oblige other countries to reduce tariffs on Iranian imports, IRNA reported the same day. Jahangiri reportedly said membership would not damage Iran's industries despite unspecified "restrictions" it would need to impose on them. Officials have insisted for more than a decade that Iran must diversify export revenues and end its dependence on oil sales.
Gholamreza Saharian, a deputy minister of Agriculture Jihad, the rural-development ministry, also welcomed membership on 30 May. He said the agricultural sector does not fear the free market, already claiming 25 percent of Iran's non-oil exports, IRNA reported the same day. Saharian cited the sector's successful cultivation of citrus fruit.
Economist Masud Nili wrote in "Sharq" daily on 28 May that WTO membership would make Iran more prosperous, as has happened in China and India. He rejected warnings of cheap imports flooding Iran and rendering Iranian workers jobless. Membership would force Iran to exercise "transnational discipline," or accept the responsibilities of an integrated member of the international community, Nili claimed. It would also force changes in "economic structures," he said, and compel sectors like services, banking, and manufacturing to become more competitive.
...Or Not Quite Ready?
There is recognition, however, that in spite of potential benefits, Iran is not yet ready for membership. Farhad Dezhpasand, a deputy finance minister, said in Tehran on 28 May that Iran needs to develop its electronic-commerce sector, which he called an important component of modern free trade, IRNA reported that day. Legislator Adel Azar told ISNA on 21 June that Iran would need an "electronic government," or the computerization of key bodies like customs, insurance, and banks.
The head of the Khorasan Trade and Industries Chamber said in Mashhad on 19 June that "the country has no professional traders," a dilemma that would "destroy our economy" in the long run, the "Donya-ye Eqtesad" financial daily reported on 20 June. Identified only as Shafei, he vowed that his regional trade chamber would run e-commerce courses to prepare traders for global trade.
Separately, Jamshid Pazhuyan, a lecturer at Tehran's Allameh Tabatabai University, said on 28 May that it would be impossible to join the trade regime now, given "the low quality of goods" from Iran and the low profitability resulting from the use of old machinery imported from communist countries in the 1980s, "Keyhan" reported on 29 May.
The daily "Jomhuri-ye Islami" argued in a commentary on 29 May that Iran has "a long way to go" before it can export competitive products and remains dependent on its oil-related revenues. There are "legal and executive" shortcomings in Iran, the daily warned, and "weaknesses" in government institutions. Iran would have to reform its "economic situation," end "extensive monopolies," and better "existing infrastructures," according to "Jomhuri-ye Islami." Separately, commentator Mansur Bitaraf wrote in "Iran," a daily close to the executive branch, that Iran must increase its support for the private sector, end "cronyism," and make the economy more "transparent," specifically the allocation of subsidies.
Legislator Peyman Foruzesh said in Tehran on 17 June that the country needs to address "structural" problems in its economy, before its diplomats negotiate entry terms, "Donya-ye Eqtesad" reported on 18 June. State bodies should coordinate efforts to make those structural changes, and the judiciary should think about e-commerce regulations or intellectual property rights, he said. The trade ministry has reportedly submitted the draft of a new trade law to the cabinet, though business sectors have said they do not know if it will conform to WTO norms, "Donya-ye Eqtesad" reported on 18 June.
On a more skeptical note, "Resalat," a conservative daily close to traditional merchants, commented on 28 May that WTO membership might be both dangerous and beneficial. It observed that past governments have already made relevant economic adjustments, reducing import duties, changing different import barriers to tariffs, and cutting subsidies. Little more needs to be done, "Resalat" argued, and "the gates of the country, which will be further opened by membership, were opened a long time ago." Iran imported $34 billion worth of goods in the year to 20 March, the daily stated.
Membership, "Resalat" added, will open foreign markets to Iranian goods but also open the country to "pillaging multinationals,... international banks, and insurances companies," with which Iranian rivals are hard-pressed to compete. "There is a possibility that most local manufacturers, investors and banks and insurance companies" will go bankrupt, according to "Resalat."
Davud Qaderi, a member of the coordinating body for the Tehran Islamic Labor Councils, was more hostile when he said on 1 June that "foreign producers will dump their products and [Iran's] production cycle will be totally destroyed...and many workers will be" rendered jobless, ILNA reported the same day.
Another academic, Sadiq Khalilian, told Mehr news agency on 28 May that swift acceptance into the WTO would mean that "all our industries, except for a small part of the light and food industries, will be closed," leading to "extensive unemployment." He said Iran needs 10 or more years of preparation.
The 'Rich Minority'
The radical right-wing weekly "Ya-Lesarat" interviewed its own "eminent professor" on 1 June, Shapur Ravasani. Ravasani warned that WTO membership would open the door to a flood of imports and make Iran dependent on the outside world. "When foreign goods are imported, the result is unemployment," he cautioned. "When foreign capitals flow in, the result is an outflow of domestic capital... [and] an increase in poverty and unemployment." But he added that "a minority of people will become rich." Foreign investors, he said, will arrive and make money: "Do you think they will care about our interests and act to our advantage?" Modern Iranian history, Ravasani said, "shows a bitter experience" with foreign capital.
Supporters and opponents of membership alternatively make pertinent points and omit equally pertinent ones to suit their arguments. An increasingly liberalized market might indeed eliminate inefficient industries and jobs -- both of which are currently maintained by a system in which consumers must pay high prices for domestic products that are often (although not always) inferior to their foreign equivalents.
Opponents assume that Iran will keep selling oil at premium prices to pay for an extensive network of subsidies and subsidized industries that provide jobs for thousands. And why not, their logic goes, since oil is considered a national asset that should be used to better the lives of Iranians? Supporters of membership counter that few of the immediate consequences of accession or of the related economic reforms would represent adverse effects on Iranian jobs or lives.
And where, one wonders, would large-scale privatization and increased respect for private property leave the ideals of the 1979 revolution?