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Iran: Khatami Receives Mixed Marks For His Economic And Political Legacies

What direction did the Iranian people go under Khatami? By Bill Samii, Fatemeh Aman, and Maryam Ahmadi

In the final days of his presidency, Hojatoleslam Mohammad Khatami met with Supreme Leader Ayatollah Ali Khamenei. During that meeting, Khatami discussed what he saw as the accomplishments of his administration during his two terms in office (1997-2001 and 2001-2005). Khatami was very upbeat, but outside observers gave mixed marks to his economic and political record.

Boost From The Oil Boom
During his meeting with Khamenei, according to Iranian state radio on 2 August, Khatami described his administration's efforts to deal with economic issues such as unemployment and inflation. Khatami said poverty is something the incoming government of Mahmud Ahmadinejad must confront, and he noted that the poverty rate had fallen sharply during his eight years in office.

Djavad Salehi-Isfahani, a professor of economics at Virginia Polytechnic Institute and State University (aka Virginia Tech), described Iran's economic realities in a 2 August interview. "The situation has improved both in terms of real wages and in terms of unemployment. [Iran has] much lower unemployment for the 30-years-and-older [age] group. In fact, if you look at the latest data on employment (about 3 percent unemployment for men and 6 percent for women), it's so low for that group [that] it's hard to imagine it will fall any lower.... For the younger [citizens], it hasn't improved much."

Youth unemployment is where Khatami failed, according to Salehi-Isfahani. "[Khatami] did not do enough to help the young people, especially young women.... Urban women's unemployment rate was 60 percent in 2004," he continued. "This is an astronomically high figure. For men 20-24 years of age, it's also very high -- 25 percent." Khatami tried to resolve this problem by pushing through a package of unemployment benefits that targeted young people. This effort was misplaced because the Iranian economy just was not capable of absorbing the large increase in young job seekers.."
One former parliamentarian said the Khatami proved to be more of an obstacle to reform than its promoter.

It is not clear to what extent the overall economic upturn is due to Khatami's policies. Oil revenues have climbed in recent years, Salehi-Isfahani noted, and this is inevitably accompanied by an economic boom, income increases, and a fall in unemployment. "Khatami in the last five years has been riding this oil boom," Salehi-Isfahani continued. "This is not to say he hasn't done anything. External events such as oil prices and internal events -- some policy -- may have contributed to this improved situation. I believe it's mostly the external factors, the rising oil price is responsible for this improvement."

Salehi-Isfahani said Khatami intended to introduce new programs, but he eventually continued the economic reforms initiated by his predecessor, Ayatollah Ali-Akbar Hashemi-Rafsanjani. This encouraged investment and led to privatization. "The private sector has been continuously growing in term of employment and output at the expense of the public sector," Salehi-Isfahani said. "Those are important achievements of Khatami, but really it is more staying the course as opposed to coming up with the program and doing something."

The average Iranian citizen's situation has improved over the past eight years, with real wages increasing. Salehi-Isfahani said the annual economic-growth rate has been in the 5-7 percent range, which places Iran in the top 20 percent of the world's fastest-growing economies. Salehi-Isfahani went on to say that the poverty rate has declined, mainly because "you have a system of subsidies that protect the poor from hunger and you have a booming economy and booming employment."

Not all the subsidies helped the poor, however, and recent studies have found that much of the gasoline subsidy goes to relatively well-off people. "That does not benefit the poor," Salehi-Isfahani said. "But, if you look at the subsidies, especially for food and medicine, the poor benefit a lot from them and this is what is holding Iran together."

A discussion of the economic legacy of the Khatami presidency can seem abstract until one gets a sense of how an Iranian lives. Mehrdad, a young disabled man in Tehran, told Radio Farda that nearly all of his activities take place in his own home. Mehrdad works on his computer and writes a weblog. He said he is financially dependent on his father, who is retired from the army and has a modest income. Mehrdad went on to say that there are few training centers for the disabled, and getting to them is difficult. "There is only one in west Tehran, and I need to spend 4,000 tomans [approximately $5] just for transportation. The government has only 10 buses for disabled transportation for the whole Tehran Province."

Mixed Political Accomplishments
Khatami's presidency probably will be remembered best for its political impact. But his efforts to achieve reform within a constitutional framework were not entirely successfully, not least because they were countered by unelected institutions, such as the Guardians Council. Furthermore, hard-line institutions managed to violate citizens' rights without having to account for their activities. Therefore, Khatami's presidency has received mixed reviews from many observers.

One perspective is that the new open discourse on issues such as civil rights, democracy, and social freedom created a new and unprecedented environment in Iran. Majid Tavalai, editor of the monthly "Nameh," said that this environment boosted Iranians' courage. "The official discourse on human rights and democracy created an umbrella for people under which they felt secure to express their opinions and demand," Tavalai said. He went on to say that this was not a stable or consistent trend, referring to the reduction in social and political activities after the crackdown on student demonstrators at Tehran University in 1999, the mass closure of the reformist press from 2000 onward, the trials of participants in a conference in Berlin in 2000, and the continuous arrests of political activists.
Iran's economy grew to the tune of 5-7 percent annually during Khatami's presidency, placing the country in the top 20 percent among the world's fastest-growing economies.

Tavalai said a sense of hopelessness gradually came to dominate society. "In this time the conservatives managed to raise the costs of political activism resulting in its rapid decline and its limitation to a small group of elites," Tavalai said, adding that people came to dislike politics and adopted a more apolitical lifestyle.

Former parliamentarian Qasem Sholeh-Saadi at one time sided with the reformists, but he broke with them over what he saw as a lack of resolve on Khatami's part. Asked if the president created the environment in which Iranians could express themselves, Sholeh-Saadi retorted that Khatami himself was a product of the bravery of the Iranian people. "Khatami himself by his own accounts and that of his friends cannot be categorized as a courageous man," Sholeh-Saadi said. "So he cannot be credited for the people's bravery. People themselves created this environment and not Khatami."

Sholeh-Saadi conceded that some institutional improvements did take place during Khatami's presidency, and he credited the president with revealing the serial killings of dissidents by alleged rogue elements in the Intelligence and Security Ministry. He also praised the country's first municipal elections, which took place in 1999. Sholeh-Saadi described these as fairly minor achievements and insisted that Khatami actually hindered progress in other areas, such as the crackdown on students and the jailing of journalists and dissidents. He criticized Khatami for doing nothing to change the constitution, which effectively stripped the president of power. Sholeh-Saadi said Khatami should have led the people to the streets, but that he proved to be more of an obstacle to reform than its promoter.