
Uncertainties of the “Generation” Plan; in conversation with Dr. Hossein Raghefar, economist/ Amir Aghaei
After the idea of “generating” government assets was proposed, the market strongly criticized this plan. Opponents pointed out that Iran’s economy is a government economy and the massive capacity known as government wealth has been accumulated over the years. Handing over the fate of this massive wealth to a seven-member team, even with legal and judicial immunity, creates many ambiguities that must be addressed. However, in a situation where defenders of this plan declare that it is intended to achieve the sterile idea of privatization, a figure like Dr. Hossein Raghefar, a well-known economics professor who has conducted extensive studies on Iran’s political economy, believes that the “generation” plan is completely distinct from previous privatization methods and that such plans are susceptible to corruption.
The resolution for privatization has become a highly debated issue. Interestingly, the meaning that is derived from the terms of transferring and selling unused government properties is the same as privatization, which has been a bitter experience in previous years.
During the privatization process of the 1980s, it was announced that government companies would be sold, but ultimately the promised privatization led to widespread corruption. In fact, privatization, with its current process, resulted in the loss of billions of tomans of national assets. Many large factories and agricultural and industrial companies were sold at a low price without proper evaluation or consideration of the buyer’s qualifications. Only those who were close to the government and its officials were able to benefit from these assets and economic opportunities. In reality, neither the private sector had a real demand for purchasing these assets, nor did they have the ability to do so.
Dr. Raghefar, in regards to this decision and the history of such plans, says: “Basically, privatization in Iran means the appropriation of public resources and their allocation to friends and comrades! To make matters worse, these gentlemen do not even have the money and will use their authority to order and recommend financial support from banking resources and the central bank. In other words, this decision is the formal and legalization of major corruption in the country.”
This economics professor continues, “We have a formula in political economy that says corruption equals monopoly plus discretion, minus accountability. The recent decision regarding generating government assets is exactly the practical application of this formula that these gentlemen have designed and given a legitimate legal form to.”
One of the most important criticisms of the generative resolution and its executive regulations is the first judicial immunity of the seven-member board and the second suspension of laws and regulations conflicting with this resolution for two years. Critics say that the wide-ranging powers of the seven-member board, without accountability and judicial immunity, may help advance the plan, but the experience of government transactions around the world shows that the most corruption occurs in the transfer of government assets. On the other hand, proponents of granting this immunity argue that legal cases related to some assets and the risk of prosecution for decisions leading to generation are a concern that prevents government managers from making decisions in the field of generation. In their view, the privatization law had provided for the High Council of Privatization to have judicial immunity, but with the arrest of the former manager of the Privatization Organization, the credibility of this immunity was tarnished. Also, the removal of some owners in privatization transfers leads to private concerns and buyers facing future regulatory
A member of the faculty of Al-Zahra University, referring to the judicial immunity of the seven-member delegation and its composition, says: “Where no one had previously gone under such a resolution, a judicial immunity has also been granted to these individuals to ensure the completion of this non-accountability and its process.”
He adds: “According to this resolution, the determination of government assets is under the control of seven individuals who are representatives of the government and represent various branches of the government. These gentlemen must also be considered as representatives of special interest groups in order to represent the interests of the people. These individuals have both the exclusive power to identify excess government assets and the exclusive power to evaluate and price them. Furthermore, the sale of these assets and to whom and how they are sold is also entrusted to these individuals, and they will not be accountable to anyone with legal immunity.”
Hossein Raghefar continues, “These are the representatives of the parliament who must use their supervisory powers to answer these questions and ambiguities through legal means in regards to this approved law. These ambiguities exist and are being discussed among people. In general, laws must be approved by the parliament. According to Article 85 of the Constitution, parliamentary immunity is only applicable to members of the parliament. However, immunity has various types and levels of coverage. In this specific case, not only the seven-member committee for the transfer of government properties, but also all individuals who are in some way related to this law and are implementing it, are protected by judicial immunity which lacks legal justification.”
Dr. Raghefar evaluates the issue of generating assets by the government as a sign of the economy being locked and bankrupt. He adds, “The decision to generate government assets is, in a way, an official declaration of the country’s economic bankruptcy. This declaration of bankruptcy also includes the failed economic policies after the imposed war, which we are witnessing the results of today. In this regard, public opinion does not matter. In fact, for years, public opinion has not had any importance in policymaking. The issue of public opinion is not considered important by policymakers in our country, and they believe they can easily pass over these issues. However, the important issue that goes beyond these words is the economic bankruptcy that has occurred in our country in the past few years due to wrong economic policies – regardless of which government was in power. The outcome of this is the same results that we have seen on the streets.”
One of the ambiguities and concerns – mainly raised by the private sector – regarding this resolution is the lack of prohibition on transferring government properties to public and private institutions. In the implementing regulations of the resolution, it is defined as: any action, including 1- sale, 2- rent, 3- exchange, 4- swap, 5- participation, 6- exploitation, 7- securitization, and 8- similar actions that result in creating economic added value with the participation of the non-governmental sector. In other words, there is no prohibition in this resolution for the public and private sectors to purchase government properties. The private sector argues that without this prohibition, they will not be able to compete with the public and private sectors. It seems that the government could have imposed restrictions on buyers from the public and private sectors in this resolution. We should pay attention to the remarks of Mohammad Reza Pourabrahimi, the current representative of the parliament
According to the approved text and its executive regulations, this resolution mainly focuses on the subject of sales, while in the world, one of the best methods for generating revenue is the use of government-owned land for urban development and land leasing. In other words, the lack of attention to diversifying revenue-generating methods and not utilizing modern tools is one of the criticisms of critics towards the revenue-generating resolution. Additionally, the experience of a decade of revenue-generating from government properties in our country shows that unlike global experiences, when it comes to revenue generation, all managers only think about selling assets. This is while one of the best paths is the opportunity to utilize the capacity of land revenue generation (creating new urban areas).
Raghfar continued, pointing out that apparently some people have settled in the country and are planning for public property, saying, “The results of this plan will be seen by the people sooner or later. I believe that the continuation of this plan shows that traditional income-generating capacities have dried up in the country and methods such as selling oil are no longer effective. Therefore, the government officials do not want to rely on conventional methods that have been tried and tested in the world, and have chosen unconventional methods instead.”
This economist continued by pointing out that the conventional method of income generation in the world is through taxation. He said, “It seems as though there is no intention for a state taxation system to be established in Iran, and the current inefficient system will be replaced by an efficient one. The best opportunity for this is the existing pressures and limitations imposed on the country’s economy, and if in such circumstances the government cannot make a decisive decision to change this inefficient path, future opportunities will also be lost.”
Raghfar continued, “One of the most important requirements at present is the implementation of real privatization instead of generating revenue. The state-owned enterprises and institutions that act as intermediaries between the government and the private sector and have extensive economic activities should offer their shares to the people or the real private sector in a process. Then, reforming the tax system and complete withdrawal of special agencies and institutions from economic activities is necessary. Otherwise, continuing the current method and resorting to revenue generation will result in much more unfavorable consequences than incomplete privatization in the country.”
This university professor continued by stating that this plan is highly problematic and ambiguous. He added, “Aside from the lack of financial resources for the private sector to purchase these properties, the current political and social conditions will not allow the private sector to participate in this plan, and as a result, the government’s goal of attracting public investment will not be achieved.”
Dr. Hossein Raghefar emphasized that this plan will be in the best form a temporary solution for the next year and a half. According to him, the most important action in the current situation is to reform the banking and taxation structure and solve the problems of privatization through structural and serious reforms in order to stabilize the economy and close the door to any corruption.
He emphasized, “This is while a current plan with a predicted structure can create the grounds for increasing corruption and in these cases, we should not rely on personal tendencies, but it is necessary to have the main basis of the law.”
It is clear that criticism of the content of any decision or plan must be fair, and the critic must address both positive and negative points. The question that arises here is whether the government could have asked the leaders of the branches to approve the resolution of asset generation. It seems that asset generation is necessary for the country regardless of who holds power in the government and parliament, due to reasons such as the current budget deficit.
Dr. Raghefar says about this: “The first reality is that the government has a budget deficit and it compensates for this deficit either through 1- not allocating enough budget for development projects. Not allocating enough budget for development projects is completely detrimental to the country because it negatively affects capital formation, hinders economic growth, leads to bankruptcy of the private sector (contractors), increases the number of unfinished development projects, and many of them become obsolete before completion. 2- The government takes the budget deficit out of people’s pockets by creating money. Both of these events are happening while according to the estimates of the report of the conference on generating assets and idle assets in 2017, the volume of the government’s numbered idle assets was 5,000 billion tomans and the total of numbered and unnumbered assets was about 18,000 billion tomans. The first number is 2.5 times and the second number is 9 times the general budget of
One of the most important challenges is related to identifying idle assets. Lack of complete information about government assets and, more importantly, resistance from managers of government agencies and companies, is one of the biggest obstacles to this plan. This has led to a 91% failure rate in the asset generation process during the years 1392 to 1401. Therefore, in the current situation where the government is moving towards generating its idle assets due to budget deficits, the first step is to establish a comprehensive database of all assets so that the government can then plan short-term, medium-term, and long-term implementation for their generation. However, there are obstacles in this path (mainly resistance from mid-level managers) that have caused the government to enter the field and request more legal authority through a government resolution.
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Conversation Government property Hossein Raghefar Judicial immunity Paragraph Peace Line 142 Privatization Qusulti State funds State funds Government property پیمان صلح پیمان صلح ۱۴۲ تولید تیم هفت نفره Hossein Raghefar Privatization Qusulti peace line Peace Line 142 شخصی فساد فساد Paragraph Conversation ماهنامه خط صلح ماهنامه خط صلح Judicial immunity مولدسازی مولدسازی هیات هفت نفره هیات هفت نفره