During a June 21 speech to judicial officials in Tehran, President Hassan Rouhani hinted at the need for a number of structural and cultural reforms required to promote private-sector activity in the Iranian economy.

Most significantly, Rouhani pointed to the fact that some regime constituents viewed private wealth and investments as a problem. Rouhani said, “Some still view an investor as a negative phenomenon and believe capital is immoral and see poverty as an honorable status. As long as such beliefs exist, we won’t reach our objectives.”

Rouhani is clearly targeting the remnants of the anti-capitalist revolutionary ideas that dominated the initial postrevolutionary years, whose initiatives included confiscation of property owned by industrialists and merchants. Many officials in Iran still have an antagonistic approach toward private businesspeople, which translates into restrictions on private-sector activity.

The president also remarked that the privatization process had failed, saying, “The new interpretation of Article 44 [of the constitution] was meant to privatize the economy, but this did not happen and assets were shifted from the government to the semi-state sector.” This is an important admission regarding the failure of privatization and the fact that Iran's genuine private sector still faces many challenges in the face of public-sector dominance of the economy.