The nouveaux riches in Tehran drive Porsches, Ferraris and Maseratis and live in multimillion-dollar luxury apartments replete with walk-in closets, Bosch appliances and computerized shower systems.
I was stunned when I caught a glimpse of what Iran’s megarich can afford — on, of all things, a program made by Press TV, an English-language news organization sponsored and monitored by the Iranian state. 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.
Thirty-five years after a revolution that promised an egalitarian utopia and vowed to root out “gharbzadegi” — the modern Westernized 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 Corps (the branch of Iran’s military in charge of protecting the country’s Islamic government), have engineered a system where it is largely they, their family members and their loyal cronies who prosper.
“When Ayatollah Ali Khamenei became supreme leader in 1989, he built his own system of patronage by building a network with the I.R.G.C.,” said Alireza Nader, an Iran expert at the nonpartisan RAND Corporation and an author of its report “The Rise of the Pasdaran: Assessing the Domestic Roles of Iran’s Islamic Revolutionary Guards Corps.” Saeed Ghasseminejad, an economist, and the political scientist Emanuele Ottolenghi, writing in The Wall Street Journal, estimated that the Revolutionary Guards Corps controls about 20 percent of the market value of companies traded on Tehran’s stock exchange, across the telecommunications, banking, construction, metals and mining, automotive and petrochemical sectors. Mr. Nader said the corps was also involved in sanctions-busting and the smuggling of alcohol and drugs into Iran, both forbidden under Islamic law.
The corps also runs large parts of the economy. Since 2006, Al-Monitor reported, it has been awarded at least 11,000 development projects, from construction and aerospace to oil and gas. Khatam al-Anbiya, a company that acts like the United States Army Corps of Engineers on the construction of roads, bridges and public works, subcontracts to firms owned by businessmen with connections to the Guards.
To his credit, soon after he won the presidential election last year, Hassan Rouhani called on the Revolutionary Guards Corps to limit its economic activities to only a few national projects. But the corps is not alone in amassing wealth. According to the American conservative think tank the Heritage Foundation, “The hard-line clerical establishment has gained great wealth through control of tax-exempt foundations that dominate many economic sectors.”
A recent Reuters investigation of Ayatollah Khamenei’s economic empire found that Setad, a foundation ostensibly set up to help the poor but controlled by the supreme leader without oversight, is worth $95 billion. Part of its modus operandi is to appropriate real estate, allegedly by claiming — often falsely — that it is abandoned. According to Mr. Ottolenghi and Mr. Ghasseminejad, Ayatollah Khamenei also controls three of the 10 banks listed on the Tehran stock exchange.
Some ministers have indicated that corruption and maladministration are more to blame for Iran’s economic problems than international sanctions. A former health minister, Marzieh Vahid Dastjerdi, blamed mismanagement for the recent shortage of medicine, charging that $2.5 billion in funds earmarked for drug supplies from abroad had gone to subsidizing the importation of luxury goods. The current minister, Seyed Hassan Ghazizadeh Hashemi, conceded, “The medicine problem is caused by ourselves, it is not related to sanctions at all.” The same is true for the oil industry, where Deputy Oil Minister Mansour Moazami also blames domestic mismanagement more than sanctions for delays and problems.
A lack of reliable data makes it difficult to pin down how many Iranians live below the poverty line. A Budget and Planning Parliamentary Commission member, Musalreza Servati, stated earlier this year that 20 percent of the population (about 15 million people) was poor, while the Financial Times estimated it was 35 percent, based on research by Hossein Raghfar, an economics professor at Alzahra University in Tehran.
The government-set poverty line for a family of four is a meager $720 a month. The pro-reform economist Saeed Laylaz recently told Al-Monitor that “The purchasing power of 40 percent to 50 percent of the Iranian citizens has been reduced to the subsistence level.” In February, millions stood in line for food handouts.
With inflation running at nearly 34 percent, families can’t keep up. The average family makes $600 a month in urban areas and $339 in rural areas, according to the Statistical Center of Iran. Even a university degree does not improve chances for mobility. In April, Bloomberg News reported that monthly starting salaries for graduates rarely exceed $500. One in four Iranians under 29 was jobless, Forbes reported last year.
Mehrdad (who asked for his family name to be withheld so he could speak freely) is a businessman, with a factory that makes refrigerators and employs 300 people. He pays his line workers 10 percent more than the minimum wage, which is a mere $248 a month.
“You can’t live on that,” he told me by phone from Tehran. “There is a lot of corruption. A limited group of people can make a lot of money here, but most people can’t.”
Mehrdad said Mr. Rouhani is trying to get the banks to help industry, but life is not easy. Dealing with regulations that make it overly complicated to register a company or difficult to buy a place to build a factory is further complicated by having to pay something extra at every step.
With all the obstacles independent entrepreneurs face, people think you have to be crazy to be a manufacturer, Mehrdad told me. “But I contribute to the G.D.P., and I help unemployment.”
Foreign companies are waiting for sanctions to end to enter Iran and make their own profits. But before restoring those economic ties, the Islamic Republic’s leaders should normalize relations with its own citizens.
Last week, a court dismissed a grievance filed by workers about the inadequacy of the minimum wage. Besides encouraging entrepreneurs like Mehrdad, Mr. Rouhani needs to give working people a break. That also means rooting out the corruption that has left Iran’s poor and youth behind.
Shahrzad Elghanayan is working on a book about her grandfather, an Iranian industrialist who was executed by the regime during the 1979 revolution.