Shift to open market economy no easy task for Iran
Suggested reforms as part of Iran's sixth five-year development plan envisages more competition, but will President Hassan Rouhani's team be able to push for a true open market economy?
TEHRAN, Iran — Late last month, the Management and Planning Organization (MPO) of Iran drafted the country’s sixth five-year strategic development plan. In the plan, the MPO urges the administration of President Hassan Rouhani to dissolve the Organization for the Protection of Consumers and Producers (OPCP), which critics say disrupts markets by intervening in pricing mechanisms. If the proposed action on this matter is passed by the parliament, the Rouhani administration will have one year to dissolve the controversial OPCP, which is affiliated with the Ministry of Industry, Mines and Trade.
MPO’s announcement came after Abbas Akhoundi, minister of roads and urban development, engaged in harsh criticism of OPCP executives who recently annulled his ministry’s decision to increase the prices of train tickets. Akhoundi slammed those seeking to artificially suppress prices as “socialists” and “Marxists” whose performance in recent decades has caused “monopolistic” groups to take shape in the country.
Despite efforts to apparently get rid of a state pillar that adopts distorting pricing policies, the MPO left two other disciplinary entities — the Governmental Discretionary Punishments Organization (GDPO), affiliated with the Ministry of Justice, and the Competition Council, affiliated with the Ministry of Economic Affairs and Finance — free to operate. These two organizations largely limit the public and private sectors from competitively pricing goods and services. Some economists say that if the Rouhani administration is serious about liberalizing the economy, it should order the dissolving of the GDPO and Competition Council as well, even as others consider it as overly challenging to completely liberalize the economy overnight.
Mohammad Ali Najafi, a Reformist politician and economic adviser to Rouhani, has publicly noted that the parliament and many senior officials still have deep concerns about a rise in prices. Indeed, public opinion favors populist politicians who voice support for the suppression of prices, regardless of the realities on the ground. Najafi believes the liberalization of prices should be gradual. His thoughts are shared by Yahya Al-e Eshaq, former president of Tehran's Chamber of Commerce, who believes any sudden hike in the prices of goods and services could deepen the ongoing recession, as the market is not yet fully competitive.
