In a previous analysis, we emphasized the urgent need for fundamental reforms in Iran. These reforms are not a set of minor adjustments; they require a profound transformation capable of unlocking the country’s latent economic and social potential and paving the way for sustainable development. But what exactly do these reforms entail?
1. Economic Liberalization and Restoring True Market Signals
The foremost necessity for the country is economic liberalization through the removal of market distortions. Continuous manipulation of price signals by state-controlled entities has led to misguided decisions and driven overall productivity close to zero. While economic activity exists at the micro level, its cumulative impact at the macro level remains minimal. Restoring genuine price mechanisms must be accompanied by the removal of arbitrary tariffs and trade restrictions to establish a free and healthy flow of commerce.
2. Enabling Genuine Competition
Iran’s economy is currently dominated by five major employers. Three of the primary players are Khatam Headquarters, the Mostazafan Foundation, and the Executive Headquarters of Imam’s Directive. The remaining two include the government itself and a select group of politically connected elites who acquired their initial capital largely through confiscation or preferential allocations. This monopolistic structure has stifled the growth of the creative and innovative private sector. Restoring economic dynamism requires the return of these assets to their rightful owners or heirs and the subsequent dissolution of such structures.
3. Downsizing the Government and Reducing Governance Costs
The vast size of the governmental and quasi-governmental apparatus, combined with the low efficiency of many of its entities, has led to significant resource waste and bureaucratic complexity. Some of these bodies have no positive economic impact, while others are outright harmful. Eliminating redundant institutions and reforming regulations to simplify business processes and reduce unnecessary licensing is essential for improving economic efficiency.
4. Combating Structural Corruption
Entrenched corruption remains one of the main obstacles to development. Addressing it requires three key measures:
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Liberalizing media and ending state monopoly over information,
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Ensuring the genuine independence of the judiciary and transforming it from an instrument of political repression into a mechanism for holding the executive branch accountable,
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Enacting and enforcing effective legislation to criminalize and prevent the “revolving door” phenomenon within regulatory and supervisory bodies.
5. Political Reform and Establishing Real Governance Competition
Abolishing the system of vetting candidates and fostering genuine political competition—both in legislation and in executive positions—would allow capable and qualified individuals to enter governance structures while sidelining incompetent actors. This is the most crucial step toward overcoming systemic inefficiency and moving toward effective governance.
