Christian Science Monitor

Borzou Daragahi,
March 12, 2002 edition

Iran captivated by prophet of fiscal doom

During the years leading up to the Islamic revolution in 1979, Iranians distributed bootlegged tapes of the Ayatollah Ruhollah Khomeini's angry sermons against the Shah. These days, the speeches of a humbler figure have shown up on the pirated cassette circuit: Muhammad-Hussein Adib, a university professor. Rather than fiery political rhetoric, he delivers plain-spoken lectures to students, business executives, and workers on a subject close to the heart of every Iranian: the imminent collapse of the economy. "Within four years," says the University of Isfahan economist, "a series of simultaneous crises will place the Iranian economy beyond control."

Adib's message, spoken in the colorful sing-song accent native to this city of blue-domed mosques and medieval bridges, is echoed though not fully seconded by other experts. But it resonates among ordinary Iranians. And it carries implications for the United States, which has pinpointed Iran as a foe in the war on terror.

Though President Bush named Iran a node on the "axis of evil" in his Jan. 29 State of the Union address, an economically hobbled Islamic Republic could be a far less worrisome threat. The country is likely to need $130 billion in loans from its prosperous friends in western Europe and Asia over the next dozen years just to stay afloat, says Adib.
In a nutshell, Adib says that interrelated economic crises will cause massive "unpredictability" in about four years. A postrevolutionary baby boom will peak, heavily subsidized agriculture and industry will collapse, and water will run out in the central and eastern provinces. To top it all off, oil revenues will shrink to nothing. "Iran till now has been administered by swords and oil," says Adib. "Because there won't be any oil, it won't be able to continue as it has."

Most Western and local analysts and government officials here agree with some of Adib's analysis, though they shy away from his dismal predictions. "I think it's a bit too radical," says Albrecht Frischenschlager, analyst at Atieh Bahar, a Tehran investment consultancy firm.

The author of several books, Adib comes with an impressive resume. He graduated from high school at 16, and at 21 began teaching at Tehran's Beheshti University. Each week he delivers lectures in the cities of Shiraz and Isfahan, speaks at factories, and writes several newspaper and magazine columns.

"He's the only one who says it outright," says a 67-year-old retired civil service employee in Tehran in possession of a two-hour tape of one of his lectures. "The economy here is at an end."

His ubiquity attests to a national obsession with the economy. Unemployment, 13 percent inflation, and stagnant wages have taken a toll on people's lives. The official jobless rate is 13.7 percent, but independent analysts place it at around 20. The average family earns $3,125 a year; it spends $3,750. More palpably, Iranians eat 20 percent less food and 30 percent less meat than they did 10 years ago, according to a recent report by the Central Bank here. The birth rate here jumped from 1 million a year in the years before the revolution to 2 million year from 1979 until 1989. That baby boom has come of age, and Iran needs an estimated 800,000 to 1.2 million new jobs a year to keep the young generation busy. It created 400,000 in 2000. That was a good year.

Large government expenses also present a problem. State-owned businesses suck up to 65 percent of government expenditures according to The Heritage Foundation and The Wall Street Journal's 2002 Index of Economic Freedom.
The future of Iran's oil revenue is also in doubt. Iran produces 3.7 million barrels a day, 1.6 million of which goes to domestic use. But starting in three years, Iran will have to hand 1.2 million barrels to the oil companies who helped rebuild the energy industry. Unless the country succeeds in its goal of increasing production to 5 million barrels a day, it will have scant left to sell.
Frischenschlager says he sees the will to combat the trends Adib describes. Next year's budget complies with 90 percent of the International Monetary Fund's recommendations.

Adib says joining the World Trade Organization could draw investment and ameliorate the crisis. That could require curtailing the power of the conservatives, who have rejected free-trade proposals. But Adib politely switches the subject when asked about Iranian politics or foreign policy.

In addition to being the heart of Persian culture, Isfahan is infamous for its cunning merchants. And in Adib's urgent message, one detects the wounded pride of a centuries-old business culture striving to regain its former glory. "We're the most closed economy in the world," Adib says, citing a 2002 report ranking Iran the least competitive of 178 nations. "This is the end of the world, right here. We're dead last. Right here, where we're sitting, drinking tea."

© 2003 All Rights Reserved. Atieh Bahar Consulting.