Lacking Substance

EghtesadOnline: A company is in distress, its stocks are tanking, and red ink is all over the place. To address these, the board of directors ousts the CEO and starts looking for a more competent manager.

News ID: ۷۷۸۶۹۶

22 August 2017

They go through likely candidates, mark the most seemingly credentialed ones based on the available information and choose one to appear before the board and outline plans to turn the tide.

The board is all ears. They know their situation and expect the candidate to have done the necessary research and come forward with concrete plans. What they hear, however, is wordplay on the priorities they already know, such as “building up stocks’ value by boosting revenues, clearing liabilities and setting new strategies”.

The candidate could have the most impressive track record, but could he be picked based on the incoherent presentation of a general outline for addressing the company’s woes? It would be an irresponsible, blind pick rife with liabilities and prone to further economic losses.

According to Financial Tribune, such was the case with President Hassan Rouhani’s ministerial nominees appearing before the parliament last week. The candidates meant to take the helm of the most economically sensitive ministries, such as Economic Affairs and Finance; Industries, Mining and Trade; and Communications and Information Technology had barely anything concrete to say on what and how they are going to lead the way.

However, all the candidates, except for Habibollah Bitaraf—the nominee for Energy Minstry, received their vote of confidence on Sunday. This is, indeed, a great victory for President Rouhani.

But as an Iranian citizen, one cannot help ask how the parliament gave an overwhelming vote of confidence to certain candidates who had no clear-cut strategies for addressing the economic problems of Iran?

Let us start with Mohammad Shariatmadari, the new industries minister. He holds a Master’s in commercial management and led the now-dismantled Ministry of Commerce from 1997 to 2005.

According to his vision plan dubbed “Freedom & Security; Peace and Progress,” Shariatmadari divided the objectives of his prospective ministry into two categories of general and quantitative goals. His general goals include improving productivity and competitiveness, boosting high value added exports, increasing the share of private sector in the economy, creating sustainable jobs, improving foreign investment and the efficiency of goods and services distribution as well as augmenting the share of mining in the economy.

His quantitative goals include increasing trade, jobs, industries’ share in GDP and foreign investments from the current level in four years.

Shariatmadari barely added any details to these goals in addressing the parliament or during meetings with economic players prior to his confirmation. He did not point to introducing or blocking any piece of legislation, did not elaborate on ways he is looking to achieve his goals. Still, he finally won 241 out of 288 of the MPs’ votes.

Masoud Karbasian, the new minister of economic affairs and finance who replaced Ali Tayyebnia, is the former head of Islamic Republic of Iran Customs Administration and has a PhD in commercial management. His published priorities in brief include denationalization and strengthening of production, reducing reliance on oil revenues, promoting transparency, internationalizing the economy and creating jobs. He is not considered an economist, but perhaps being an experienced executive he managed to collect 240 votes in his favor.

Unlike most of the new ministers, the 35-year-old Telecoms Minister Mohammad Javad Azari Jahromi, who had vowed “to turn things around” if elected, does at least offer some numbers as targets for his goals, yet they only cover the basic duties of the ministry such as improving Internet access. His more complicated promises such as “promoting transparency, freedom of information and privacy” and “turning Iran into a postal and information hub of the region” curiously lack any details. Jahromi got 152 votes from the MPs.

The Iranian society has been famously described by prominent economist and political scientist, Homayoun Katouzian, as a “short-term” or “pickaxe” society, alluding to the predominant Iranian practice of demolishing buildings after only a few decades by considering them to be “dilapidated”.

In his book titled “The Short-Term Society and Other Essays”, first published in 2002, Katouzian applies this concept to analyzing the Iranian economic history. He argues that the “pickaxe” mindset has effectively impeded capital accumulation in Iran and caused economic growth to be stuck in a start-stop limbo under a succession of monarchs or statesmen, which either plundered the predecessor’s riches or scrapped his plans and started anew.

Today lack of detailed and sustained strategies by ministries have caused most of their plans to barely last a whole term before being scrapped or slowed down by the next decision-maker.