by Amir Taheri
To deny facts of the past is more difficult than making outlandish claims in the present. The western press has as long as I can remember classified the Iranian economy as in a "destructive downhill spiral". Statements of deep recession, stagnation and utter self-implosion have also been written to describe this economy of 70 plus million. Much coverage and reference was devoted in the last year to bleak reports from the IMF and the WTO on Iran's economy. (Un)strangely enough, when two weeks ago a delegation from the IMF visited Iran and after reviewing the books retracted its prior weak assessment of Iran's economy, there was little to no coverage. The IMF did not just adjust its assessment of Iran's 2009-2010 economy, it flat out praised Iran's current path and future potential. Having originally claimed that Iran's economy had near 1% growth in 2009 they readjusted it to 3.5% growth in hindsight. This notwithstanding that oil prices last year were down from the year before. They further went to say that, "The mission commended the authorities for the early success in the implementation of their ambitious subsidy reform program." Inflation was also brought down from 25.4% to 12.4% even though prices had increased at time as high as 700%.
I myself have now officially lived in Iran for 6 months. I don't see a country that is self-imploding, or in recession or any of the other terms that are used by most of the major papers. I even studied business and economics, so I should be able to see some of the signs of an economy in bad shape. What I do see for my own eyes are people living, spending money more than I have ever seen in my life in the West, and a society that is more capitalistic than many western countries. Although gas is between $1.60-$2.80 a gallon a far cry from just recent memory when it was 40 cents a gallon, the streets are clogged. In my city there is a popular street where the young come to cruise for dates. They do this Iranian style, by driving their gas-guzzlers up and down the street until finding a suitable match, sometimes hours. With gas prices almost 300% higher, surprisingly you see no less traffic on this street. I see average earning families putting their kids in private and expansive schools prior to even reaching high-school or college when costs really add up. I see an incredible number of foreign cars on the streets that cost a pricy 100% extra due to import taxes. And no these are not crony government officials or drug dealers driving these high-end cars. They are mostly business people who run restaurants, shops, and even hair salons. I see with my own eyes, construction everywhere. No section of any city I have visited has been immune to this expansion. Large public works like metros, highways, and bridges compete with privately funded and even bigger and higher hotels, apartments, and shopping malls. In September Shiraz will get the largest mall in the world according to number of shops; 2500! Tabriz is expanding with private money in all directions and is set to start construction on the largest hotel complex with story reach of 66 floors. Mashhad with an influx of over 20 million pilgrims each year (more than Mecca) has more ongoing hotel, mall, and public works projects than I have time to list. The capital Tehran has recently opened the world's largest revolving restaurant in its Milad tower. A meal for one person will set you back $160. The restaurant itself pays a whopping $300,000 monthly rent.
I ask rhetorically, how can this economy be in a spiral for so many years (31) and attain some of the positions it has now? Iran today has reached the 17th largest economy (GDP PPP). There are projections that this will further increase to 12th in 5 years. Non-oil exports have reached over $30 Billion last year from a mere $3 Billion not too long ago. How can this economy be in such a recession and yet be recently ranked in the top 15 auto producing countries? (Un)strangely enough, it has NOT been offered a position in the G20 (top 20 world economies). The time will again come when facts become just too apparent to deny for its face value. To say that the story of Iran's economy is told with hints of politics is an understatement. History is filled with such stories. Galileo's claim that the planets revolve around the sun versus the earth took a few hundred years to be accepted as fact. I only hope the more obvious question doesn't take that long!
Editor’s Note: Amir Taheri is one of the authors of Uskowi on Iran. His weekly columns appear here on Fridays.