Khamenei declares 1391 the year of “National production and supporting Iranian labour and capital”

For nearly two decades now the Islamic Republic of Iran’s supreme leader, Ayatollah Ali Khamenei, has declared a special theme during his Norouz (new year) address. Each new years theme has gained greater significance as time passes, giving an indication of the regime’s central concerns and the focus of its short-term strategy. The theme for the calendar year 1390 (21 March 2011- 20 March 2012) was “Economic Jihad”, a reference to the perceived need for Iranians to struggle to overcome their economic woes. The theme for 1391 (21 March 2012 – 20 March 2013) is “National production [and] supporting Iranian labour and capital”.

This year’s theme, like last year’s, is a sign of the pressure that is being brought to bear against the Iranian economy thanks to United States and European Union economic and financial sanctions as well as the economic mismanagement that has been characteristic of  the Islamic Republic since its inception in 1979. As the sanction’s noose tightens around the regime’s neck imports and exports- which have been crucial for the country- are drying up. No doubt, some of these trade flows will be compensated for by turning “East” to countries such as China, Russia, and India. However, given Iran’s weakening currency and high rate of unemployment, this may present a good opportunity for the regime to realize some of the country’s needs through domestic production. According to Khamenei:

“We must be able to support the labour of the Iranian worker, support the capital of the Iranian capitalist; and this can only be done by strengthening national production.”

It is difficult to reconcile the goal of supporting Iranian workers with the realities of labour in the Islamic Republic. Any and all attempts by workers to organize into independent labour unions to defend their interests has been met with violence and imprisonment by the regime. According to Amnesty International:

“Iran’s workers are fighting to protect their rights and their livelihoods. Prohibited by law from unionizing freely and independently, they are battling for decent wages, better working conditions and job security. They want their voices to be heard and their labour rights to be respected. The response of the government to workers’ demands has been brutal – the authorities regularly attack, harass and detain trade unionists. Some are serving long prison sentences.”

Moreover, while wages have increased annually they have done so at rates below inflation, expressing an overall decrease in the purchasing power of Iranian workers over the long-run. Given the regime’s potential pursuit of an economic development model based on the use of cheap labour, it seems unlikely that the regime can or will change its trajectory in relation to the issue of Iranian workers.

The idea of supporting Iranian capitalists also seems far-fetched given the regime’s track-record. The consequences of disastrous economic management by the regime since the Islamic Revolution of 1979 has meant economic stagnation for the country during this period. Iran has had a historically hostile regulatory climate toward investment, making it difficult for capital to be safely invested and profits to be realized. What is more, sanctions have magnified Iran’s economic woes by reducing the pool of potential trading partners and significantly curtailing foreign investment, including the oil and gas sector which is central to Iran’s economy. With the exception of a select few with strong ties to the regime who will benefit from oil and gas contracts, increased domestic production, and the eastward shift of trade, most capitalists are likely to suffer under worsening conditions.

In addition to his new year message, Khamenei also gave a recent speech in Mashhad which may be an indication of deepening political cracks dividing the regime. Although the theme of unity was a key one in the 02 March 2012 legislative elections, the increasing acrimony within the Principalist faction (who dominate the regime) is clearly visible. The supreme leader, traditionally viewed as standing outside factional politics, more and more has been forced to get his hands dirty in order to make the system function.

In the same speech, Khamenei touched on the dangers of the Internet which he claims have become a medium for factional squabbles, calling for it to be more regulated to ensure political stability. In light of the decision to create the Supreme Council for National Cyberspace before the new year, the regime appears to be signalling its strong desire to restrict the Internet even more than it does at present.

All in all 1391 looks as if it will be a difficult one for the regime- though perhaps not completely unmanageable.