First Iranian Millionaire Woman

Iran’s revolutionaries inherited an economy in the throes of massive change and epic growth. In less than one century, Iran had been transformed from a small, predominantly agricultural economy run by a fading tribal dynasty into a modern centralized state with a booming manufacturing sector and a central role in international oil markets. Much of this transformation occurred during the reign of the Pahlavi monarchy, which sought state-led modernization modeled after the policies of Turkey’s Kemal Ataturk. Since the 1979 revolution, the Iranian economy has been beset by a costly eight-year war, unremitting international pressure and isolation, and ideological conflict. The revolutionaries clashed over what constituted an Islamic economy— and whether growth or social justice should be the top priority. Iran’s reliance on oil revenues put the state at the mercy of energy market fluctuations, with prices below $10 per barrel in 1999 and above $145 per barrel in 2008. The Islamic Republic’s approach to the economy is illustrated by the policies adopted during four distinct periods.

Revolution and economics
In the 1960s, Mohammad Reza Shah Pahlavi launched a far-reaching program that included sweeping land reforms, infrastructure development and huge investments in the country’s industrial base. Iran’s fortunes surged even more dramatically after the explosive rise in oil prices in the 1970s, helping fuel the shah’s grandiose ambitions to overtake the French and German economies.

The Pahlavi economic program generated rapid growth, but the reforms also alienated influential constituencies, including the clergy, landlords and merchants or bazaaris. In addition, inflation and other problems spawned by the scope and pace of development created hardships for many Iranians. Economic grievances helped galvanize opposition to the monarchy, and revolutionary leaders such as Ayatollah Ruhollah Khomeini appealed to Iran’s poor and its increasingly squeezed middle class.

Still, the economy was not the primary factor that mobilized opposition to the shah. After the monarchy’s collapse, Khomeini dismissed its importance in the new order, remarking that, “Iran’s Islamic Revolution was not about the price of melons.” Consistent with Shiite tradition, Khomeini was a staunch defender of property rights and the role of the private sector, a view shared widely among clerics and reinforced by their alliance with the bazaar.

The clergy’s economic conservatism unraveled during the chaos and competition that emerged as the Pahlavi regime imploded. Labor strikes and elite emigration paralyzed the industrial sector, and informal expropriations proliferated. Squatters were provoked by radicals hoping to accelerate the transfer of power and undercut the moderate provisional government. Iran’s constraints intensified after the November 1979 seizure of the U.S. Embassy in Tehran, when Washington froze approximately $11 billion in Iranian assets and imposed other sanctions. After two years of disruptions to the economy, the post-revolutionary turmoil put the country on the brink of economic collapse.

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Everyone is born equally capable but lacks equal opportunity. Pierre Omidyar