“Oil is a very strong and significant rent in Iran’s economy. This rent runs through all parts of society. And a society that is rentier cannot be democratic.”

These were excerpts from “Oil Government and Democracy: Possibility or Not,” a speech delivered by political activist and journalist Abbas Abdi in a gathering attended by Tehran University’s law and political science students.

Abdi, who is a former member of the Mosharekat Party [Islamic Iran Participation Front, Iran’s largest reformist political party], added, “A rentier economy has other destructive effects as well. In reality, in this economy, the understanding and rationality of the government is dependant on a large rent…. An increase in the government’s oil revenues leads to other social ills such as an increase in income equality, which undermines democratization.”

According to Abdi, “Today, everybody agrees on the necessity of democracy and respecting the rights of the people. After many years, human beings have realized that the best and least costly method of governance is democracy. Democracy did not come from the heavens and it is not a holy system; but, gradually, it has tuned into the most desired form of organizing human societies.”

Abdi also commented on the creation of Iran’s Foreign Exchange Reserves Account: “Iran’s rising oil revenues in 1999 enticed some economists to offer a plan for the creation of the foreign exchange reserves account. In my opinion, that was a very good measure, but since we have not yet matured politically, it seemed from the very beginning that this account can undermine the reform movement, and we all witnessed the conclusion.”

“If we look at the experience of other societies,” said Abdi, “we can see that measures of this sort have succeeded in countries that have strong civil society and high levels of political and economical maturity. But in Iran we did not have these preconditions. Even in Khatami’s cabinet, people had different views on how to use this account.”

Abdi believes that the oil rent played a significant role in the outcome of the last presidential election: “Where did the slogan of bringing oil revenues to people’s tables come from? If the revenues did not exist to begin with, no one could have promised to bring them to people’s tables. It was oil that moved against the process of democratization. Essentially, oil exacerbates economic inequality and is against democracy.”

“If oil is taken away from the government’s hands,” added Abdi, “and the government loses such a huge lever of power, undoubtedly people’s expectations of the government will also dwindle. Distributing this money changes the balance of power between people and government to the advantage of the people. This is why some are not willing to take over power without taking control of oil.”

Abdi said, “I think it is very good, as a first step toward democracy, to take oil revenues out of the budget and tax the people instead. This will change even the behavior of current officials. But we should know that, just as most governments do not budge down to democracy, our government would not budge down to the distribution of oil wealth either. Nevertheless, we should work to actualize these plans by taking them seriously.”