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Poverty in Iran: The Clerical Regime’s Contribution to a Growing Crisis

iran poverty girl begging

Iran, a nation with a rich history, diverse culture, and a tremendous amount of deposited world raw material has faced numerous serious challenges in recent decades. In the past four decades, intense controversy has erupted over the ruling clerics’ socio-economic, and environmental issues, water crises, sinkholes, land subsidence, and many other performances.

Among these challenges, poverty stands as a significant issue, which is not only a direct result of the country’s wealth mismanagement but also, the government itself managing poverty to spread among larger segments of society. As such, a considerable portion of Iran’s population struggles to make ends meet. The continuous increase in the poverty rate has been matched by the worsening of inequality among people.

As Hossein Raqfar a state-affiliated economist told the state-run daily Etemad, “The share of Iranians below the absolute poverty threshold is not below 50%. This means these people are deprived of the minimum level of standard of living”.

The goal of this article is to explore the multifaceted issue of poverty in Iran and examine how the clerical regime has contributed to exacerbating this crisis.

Poverty is a state or condition in which one lacks the financial resources and essentials for a certain standard of living. Poverty means that a person doesn’t make enough money from his or her job to meet his or her basic needs. People and families who are poor may not have a decent place to live, or access to clean water, healthy food, or medical care. Since the Industrial Revolution, poverty has gone down in wealthy countries. As production went up, prices went down, making goods became more affordable and accessible to many.

At the same time, innovations in agriculture increased crop yields and food production. Still, many individuals worldwide struggle to obtain basic needs. The World Bank stated that approximately 10% of the world’s population, totaling 711 million people, lived in severe poverty in 2021. This meant that they had to survive on less than $1.90 per day.

Poverty is a complex issue and is not solely defined by economic indicators but it also encompasses various dimensions, including social, cultural, and political factors. Therefore, solutions to poverty cannot be based exclusively on economic policies, but require a comprehensive set of well-coordinated and holistic measures. Indeed, this is the foundation for the rationale underlying comprehensive poverty reduction strategies.

iran poverty girl garbage

In Iran, poverty has deep-rooted causes, some of which are the results of historical factors, economic mismanagement, and the actions of the ruling clerical regime.

The vastly promised justice and equality of the 1979 anti-monarchy revolution outcome resulted in inflation, income inequality, war, unemployment, and increasing poverty. Much of the population slippeded into poverty. According to official reports, 80% of the Iranian population lives below the poverty line.  Children in rural areas are the most affected by this problem. Numerous exogenous shocks and international sanctions also accelerated the spread of poverty but the main affecting factor is the regime’s policies. One of the effects of poverty on the Iranian people is malnutrition, especially among children.

Now that poverty is defined, also the poverty line (threshold) must be explained which specifies the minimum income required to meet basic needs such as food, clothing, shelter (rent), electricity, water, fuel, transportation, education, health, and so forth.

In general, the term household is used to refer to a family, consisting of four people, and the minimum income required for this four-person family to meet their basic needs has been identified as the “poverty line”.

Although there have been various criteria for determining the basic goods and services, and their required quantities, various institutions in several countries calculate the poverty line differently. According to official statistics from the Ministry of Health and Medical Education around 16% of children under the age of six suffer from malnutrition in Iran, and 800,000 children in their growth years face energy and protein deficiencies.

Statistics also show that 11% of children in Iran are underweight and 5% suffer from severe malnutrition. According to statistics from the Food and Agriculture Organization of the United Nations (FAO), both the production and import of dairy products in Iran have declined significantly in the past years. In contrast, dairy exports have grown by 42% and have reached 1.58 million tons, indicating a sharp decline in domestic dairy consumption. The above-mentioned situations are due to the factors that will be explained below.

Economic Mismanagement

One of the primary drivers of poverty in Iran is the mismanagement of the country’s economy. Iran governance’s model has been widely characterized as one marked by corruption, nepotism, human rights violations, and mismanagement.

Iran has been stagnant on the corruption perception index at its historical minimum of 25 for the past three years, which illustrates this point. Tensions in the country had been building up as a result of the economic crisis, grievances over corruption, and not so much the impact of international sanctions. Despite Iran’s possession of vast oil and natural gas reserves, it has struggled to create a meaningful sustainable, and diversified economy.

iran poverty old man begging

The core reason for the protests in the last few years has been the declining living conditions, lack of freedom, and corruption of the government which further fueled massive anti-government messaging. In a country with mass repression, sham elections, and apparent corruption and economic mismanagement, Iran’s theocracy rules with all that remains brute force. The clerical regime’s policies have often been characterized by corruption, misallocation of resources, and inadequate investment in productive sectors. As of early 2022, more than 30% of Iran’s households were living below the poverty line, and other reports are revealing even more alarming figures. Yet the reality of life in a country battered by devastating sanctions and government neglect is still not fully encapsulated by these statistics, since people who are not officially considered as living in poverty also continue to struggle to cope with the rapid pace of inflation and find it difficult to make ends meet.

Lack of Appropriate Economic Reforms

Iran is in the grip of an unprecedented era of high inflation. Year 2022 was the fourth consecutive year with annual inflation of higher than 30%, influencing heavily the purchasing power of its population and worsening poverty. So far, the recent government’s subsidy reforms have not produced the desired results either and an ever-growing budget deficit is generating further inflationary impulses.

The government’s reluctance to implement meaningful economic reforms has certainly exacerbated the poverty crisis. In addition to the above-mentioned reasons, another factor is the rigid nature of the Iranian economy, characterized by IRGC dominance, state control over key industries, and lack of market-oriented policies, which has hindered economic growth and job creation. The absence of meaningful structural reforms would have profound impacts on the economy as well. Inflation and unemployment were likely to climb, economic growth would decline and the rial would depreciate even further.

iran poverty girl crying

Inefficient Welfare Programs: According to various income and human development index (HDI) indicators, the economic and developmental performance of Iran under clerics is at best one of mediocrity rather than outright failure or success, compared to other middle-income countries in the Middle East. Due to government cronies’ behavior, the country has confronted an array of political, economic, and social issues that compelled the state to consider serious suppressive tactics in order to avoid the possibility of another revolution.

For more than four decades, the clerical regime’s social welfare policies have helped explain its vulnerability, the agency and dynamics of its state-society relations, its changes and continuities, and its inclusivity and exclusivity. While Iran has established a range of welfare programs, these initiatives are often plagued by inefficiency, mismanagement, and corruption. Consequently, they fail to provide adequate support to the impoverished population.

The Clerical Regime’s Role in Contributing to Poverty

According to official figures, some 60 million people, or 75% of the country’s population, lived below the poverty line in March 2022. A Ministry of Cooperatives, Labor, and Social Welfare report in 2019 said 26 million people lived in abject poverty in Iran.

According to a recent report by the Tehran-based Statistical Center of Iran (SCI), the inflation rate in the country reached a record high of 51.3% in January. Ignoring the problem of inflation and inequality is detrimental to our understanding of the dynamics of poverty, income inequality, and the effectiveness of fiscal policies. The Iranian government, under the leadership of the clerical regime, has played a significant role in exacerbating the country’s poverty crisis due to its unrealistic economic policies, inflation, and huge budget deficit.

The Diversion of Resources

Iran increased its military spending by 11 percent, making it the 14th largest military spender in 2021. This is the first time in 20 years that Iran has ranked among the top 15 military spenders. The Iranian regime allocates a substantial portion of its resources to bolster its military capabilities and fund regional proxy groups, diverting resources away from essential social and economic programs. These expenditures come at the expense of addressing the needs of the impoverished population.

Suppression of Dissidents

Iranian authorities are grave violators of human rights, have the highest number of executions per capita in the world, and severely restrict freedoms of assembly and expression. Over the past three years, security forces have responded to widespread protests stemming from the worsening economy, civil rights issues, and other social matters with excessive and unlawful force, including lethal force, and arrested thousands of protestors.

The devotion of the country’s wealth to the suppression of political dissidents and freedom of expression has hindered any efforts for meaningful political and economic changes. Citizens who dare to voice their concerns are often met with harsh consequences, further perpetuating the status quo.

iran poverty (1)

The Iranian regime has carried out an especially brutal crackdown on dissidents in reaction to the protests that exploded in the country in reaction to the state killings and executions of political prisoners and citizens. Even recently, the regime has allocated more resources to IRGC which would directly be spent on suppression and terrorism.

Corruption

Corruption is a complex issue that exists almost in every country around the world in various forms and to a certain degree. It normally refers to the abuse of power for personal gains and the diversion of public resources for private use.

It is customarily done behind closed doors and is difficult to observe as it happens. Iran is among the most corrupt countries in the world, ranking 150th out of 180 in Transparency International’s Corruption Perceptions Index for 2021. Corruption is a pervasive issue within the Iranian government. The regime’s officials have been accused of embezzling public funds without any shame. The corruption has led to the misallocation of the country’s wealth and resources, depriving vulnerable populations of essential services.

Mismanagement of State-Owned Enterprises

State-owned enterprises in Iran have been plagued by corruption, kleptocracy, and mismanagement. These entities are often used as instruments of political patronage for IRGC, religious foundations (bonyads) under the Supreme Leader’s watch, elite clerics, banks, and corporations rather than as vehicles for economic development, leading to wasted resources and missed opportunities.

Disabled-Iranians-in-poverty

Financial crime is a pervasive issue in Iran, with economic fraud, misuse of funds, embezzlement, and large-scale tax evasion being the most common types of financial crimes in the country. The number of corruption and embezzlement cases in the country has tripled in recent years. The majority of these cases involve either government employees or people appointed to managerial positions at state-run economic entities, exemplified by the presence of non-taxable foundations (bonyads) and opaque organizations. These bonyads have reportedly diverted trillions of dollars in public funds into the bank accounts of political elites, leading clerics, and other prominent State figures.

Lack of Transparency

Transparency is essential for holding a government accountable, but the clerical regime has consistently failed in this regard. A powerful system of political patronage, nepotism, and cronyism pervades all sectors of the economy in Iran. Therefore, it has significantly affected transparency. Irregular payments and bribes are often exchanged to obtain services, permits, or public contracts. Dissecting and succinctly summarizing the many drivers of Iran’s economic afflictions is a tall order given the lack of transparency in the economic landscape, as well as both economic complexity and a confluence of factors that have produced the nation’s grinding poverty. Lack of transparency makes it difficult for international organizations and civil society to assess the government’s policies and their impact on poverty.

Conclusion

Poverty in Iran is a multifaceted issue with deep-rooted causes. While the country faces economic challenges, the clerical regime’s actions and policies have played a significant role in contributing to this crisis. Economic mismanagement, misallocation of resources, corruption, and a lack of transparency have all hindered progress in addressing poverty in Iran. The Iranian government’s diversion of resources to fund its military and regional ambitions further exacerbates the problem.

The results of all the above-mentioned factors contribute even more to the expansion of poverty. It has increased the illiteracy of children, child workers, and street children, and overall malnutrition of the population, especially kids. To address poverty effectively, it is essential to address these systemic issues. Only through regime change in Iran can there be a meaningful solution to the poverty crisis. This not only benefits Iranians but also promotes peace in the region and enhances global security.

 

* Khalil Khani is an Environmental Specialist and a Human Rights activist. He holds a Ph.D. in Ecology, Botany, and Environmental Studies from Germany and has taught at the University of Tehran and the Hesse State University in Germany. He is also a Doctor of Medical Psychology from the United States.