BBC News,

3 December, 2002

Youth shapes Iran's economy

Increased use of the internet is helping many young Iranians to connect to the outside world. But this poses a major challenge to the government as the urban youth in particular calls for greater economic and political reform.

Nearly three quarters of Iran's population is under the age of 30 and this new generation has a new way of doing things. They have a different attitude to business and making money. Many also feel frustrated by Iran's isolation from the international community.

In demand

Abdollah Fateh is an unusual businessman in Iran. He has spent most of his life in the US and came back seven years ago to join his family's construction business. Instead of building houses, he decided to build an internet company - Pars-Online.

Pars-Online is now one of the biggest service providers linking Iran to the world wide web.

"The market has grown, it is just unbelievable," Mr Fateh said.

"There's so much demand out there that we can't supply to it," he said, adding that the poor state of Iran's telecoms infrastructure is the company's biggest challenge.

Obstacles

In an economy dominated by the government, Pars-Online is so far a rare private sector success story.

It has had to struggle with government bureaucracy and slow decision making. (Mr Fateh has only just received an official license to run an internet company.)

And it has struggled to borrow money from state-owned banks.

It has also had to get round US sanctions on Iran, since most of its equipment comes from Cisco Systems.

Another problem is that many of his young workers are trying to get visas to go to places such as the US and Canada.

Hoping for profit

"Two of our top engineers here got their green cards and went to America," he said, adding that Iran must do something to stop young people feeling they will advance more if they travel abroad.

Despite all the difficulties, Mr Fateh is optimistic about the future and hopes that one day he will even make a profit from the business.

"What we are doing right now is we are growing the company from its own revenues," he said.

"We try not to but we always end up immersing more of our own money.

"Whatever money we make we keep reinvesting in the company, and hopefully one day we'll make some money out of this."

'Shaping the economy'

Pars-Online is a young company staffed by young people and in many ways it represents the new generation in Iran.

Bijan Khajehpour, who runs a consultancy company in Tehran, says this is where Iran's future lies.

"I think you will find a lot of merchant families where the parents are traditional merchants, focused on one sector or one region," Mr Khajehpour said.

"And then you see the younger generation, their sons and daughters, trying to develop the family wealth in a completely different way.

"I think the impact of the generational break on the economic elite is a very significant fact that's helping shape this economy and modernise it."

Frustration

While a well educated young population is an incredibly important asset for Iran, it also poses a risk if economic and political reforms do not provide them with better opportunities.

Hamid Varzi, a local banker, says youth is always the sector of the population which reacts most fiercely and most violently to their aspirations not being fulfilled.

"If somebody's at retirement age and doesn't like what's going on, well he just keeps quiet and sits at home," he said.

"But with the youth you can't expect that," he warns.