Why Iran Needs Reform Before a Revolution

(Bloomberg Opinion) -- Those who advocate regime change in Iran are of varied political persuasions — some are monarchists, some are Marxists, and some are just fed up. But they all seem to believe that if Iran’s incorrigible “mullahs” can somehow be driven from power, their nation might finally be able to tackle its chronic unemployment, stave off its water crisis, cease its human-rights abuses, and, in the words of Secretary of State Mike Pompeo, become “a normal country.” In this fantasy, Iran also ceases to be a destabilizing force in its neighborhood.

Emboldened by the Trump administration’s withdrawal from the nuclear deal, and its use of sanctions to further degrade Iran’s economy and foment unrest against the administration of President Hassan Rouhani, who has fashioned himself as reformer, regime-change proponents have seized the political momentum from advocates of gradual reform. The turn in sentiment was perhaps best illustrated by Shirin Ebadi, a Nobel-prizewinning Iranian lawyer and human-rights activist, who told my Bloomberg Opinion colleague Eli Lake that “reform is useless in Iran.”

But what regime change proponents fail to see — or admit — is that successful regime change is impossible without reform. 

This becomes clear when you look to the role of institutions and culture in perpetuating many of Iran’s economic and social ills. The mullahs may rule Iran, but they do not run Iran. A major new work by political scientists Mehrzad Boroujerdi and Kourosh Rahimkhani notes the relatively small role of clerics in key government institutions. In the executive branch, looking across all the cabinets formed since the 1979 revolution, the average number of clerics serving as cabinet ministers is three, in an average cabinet size of 31. In the legislature, whereas clerics accounted for half of the members of the first post-revolution parliament, today the figure is under 6 percent. And clerics have no presence in the bloated hierarchies of state enterprises, such as the national oil company, national airline, national automaker, and national mining conglomerate.

There certainly are institutions, notably the judiciary, in which the ideological prerogatives of the clerical establishment breeds injustice and weakens the rule of law. But the reality is that Iran is run by bureaucrats — a decidedly normal state of affairs. Inefficiency and injustice are not the products of ideology, but of institutions.  

There is also the role of culture to consider. Faced with a bureaucracy that often puts them last, the Iranian people respond the way that many other people would — by putting themselves first. Take the most obvious result of the weak rule of law: A police officer's opportunistic solicitation of a bribe is as much about individual choices as it is about a institutional failures. Or consider environmental degradation and the fact that Iran’s average daily per-capita water consumption is 250 liters (66 gallons), twice the global average, while drought ravages the country.

These things won’t change with the abrupt toppling of the Tehran regime. Any new government will inherit both Iran's current institutions and its longstanding culture. Regime change, by itself, will have little bearing on Iran’s structural challenges, as comparative cases make clear. The experiences of East Asia and Eastern Europe, two regions that have undergone waves of political transformation in recent decades, demonstrate the limits of regime change in improving economic outcomes. As Columbia University economist Jeffrey Sachs has argued, inefficient institutions are a burden to economic recovery long after political changes have taken place.

Evaluating the greater economic success of East Asia in comparison to Eastern Europe, Sachs observes that Eastern Europe needed more restructuring than East Asia because it started “from a much higher level of industrialization, and a much greater degree of structural imbalance in the economy.” In short, the mere fact that an economy is highly industrialized and burdened with over-manned and inefficient state enterprises — as is the case in Iran — limits the economic benefits of rapid political transformation.

Sachs further shows that the presence of a large welfare state acts as an impediment to economic recovery following a change in government. In his assessment, the “communist-era commitments of universal social protection, which created a social-welfare state far more extensive than anything ever attempted in Asia,” held back states that had undergone regime change as social groups fought “to preserve their privileges under the old regime,” spurring “labor immobility, fiscal crisis, and political paralysis.” The same dynamics can be observed in Iran today as the Rouhani administration seeks to pare back Iran’s welfare system and rent-seeking in the economy.

Some regime-change proponents suggest that the return of diaspora Iranians, who would bring different management cultures to Iran, might address institutional and cultural issues. But the experience of returnees next door, in Iraq, allows no optimism on that score. The Iraqi lawyer and writer Zaid al­-Ali has chronicled the dismal experience of returnees in Iraq, who, following the 2003 U.S.-led invasion, took roles in the “highest echelons of government” only to “become lost in a web of bureaucracy in which they had no previous knowledge and which they struggled to understand even several years after their return.”

Regime change is not an alternative to reform in Iran. On the contrary, regime change without reform would likely make Iran less stable, and a greater danger to the stability of its neighborhood. In Iraq, Afghanistan and Libya, sudden political transition has led to greater violence and economic turmoil, which have combined to create a massive refugee crisis, as well as provide space and oxygen for terrorist groups. An Iran in chaos will similarly spill both refugees and violence across its borders. As the author and Iran expert Michael Axworthy has put it, “Destabilizing Iran would be like shaking up a kaleidoscope and hoping to get a Titian. It is far from clear that the outcome would be better than what we have now.”

Esfandyar Batmanghelidj is the founder of Bourse & Bazaar, a media company that supports business diplomacy between Europe and Iran through publishing, events and research.

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