Experts agree that Iran’s path out of its current economic situation will have to include a growing focus on private sector activity as a source of employment and economic growth. While private sector players face a host of challenges due to outdated regulation as well as the dominance of governmental and semi-state companies in the economy, they also face an unlikely challenge from society at large.

A recent poll by a televised economic program (“Payesh”) asked: “How have Iran’s wealthy individuals become rich?” While 83% responded, “Through rents and connections,” 12% believed that the wealthy had achieved their success through their own hard work and 5% considered “luck” to be the main reason.

The overwhelming belief that successful private sector players are only a result of their contacts and the rents they secure from the state has been shaped throughout the past decades. The government’s dominant role in the economy and its arbitrary approach to entrepreneurs and private sector players can be considered the main reason for the suspicion that the state would only allow those entrepreneurs to succeed who are closely affiliated with the political power structure.

Instruments such as licensing, access to bank facilities and so on are perceived to be at the government’s disposal to limit the space for the genuine private sector. Furthermore, the involvement of apparent entrepreneurs (such as the recent case of Babak Zanjani) in corruption and embezzlement cases has intensified this belief. Due to the complexity and the multidimensional nature of the power structure in Iran, it is difficult to measure how far political connections have contributed to the success of private sector players. Can one consider the effort by a provincial Majles deputy who wishes to attract an investment to his own constituency also “rent”?