Bahman Ahmadi Amooi is a journalist and author of the well-known “Political Economy of the Islamic Republic of Iran” and “How Did People in the Islamic Republic Become Technocrats”. In an interview with Rooz he discussed his views on current problems and raises a very fundamental question that is asked by many: what has the Iranian government done with the $238 billion in oil revenues. Here are the details.
Rooz (R): In a recent article you raised the question what has the government done with its $238 billion revenue since coming to power. What did you mean by that?
Bahman Ahmadi Amooi (BAA): President Ahmadinejad has said that his administration has not spent even a single penny (Rial) more than what the Majlis assembly had authorized. On the other hand, parliamentarian Bahonar said about a month ago that while it was true that Iran’s budget had been calculated on the premise of a $56-58 per barrel of oil, but in reality the requests of the government and its budget amendments, expenditures are based on an $80 price for oil. In fact this is what a Majlis deputy has confirmed that the government is spending money contrary to the premise of $56-57 per barrel of oil. The other issue is the government’s efforts to increase expenditures for development purposes. For the first time in 2006 since 1981 four budget amendments were presented to the Majlis for approval. His argument is that he wants to spend the development budget in the first six months of the fiscal year, and thus turn the country into a large workshop, and through this create happiness. But all of these steps have led to a waste in the use of the budget.
R: What has the extra money been spent on?
BAA: This has to be looked into in 2 parts: the hidden and the open. Regarding the open extra expenditures Majlis deputies and the government itself are accountable and must declare. If the trends that existed during former president Khatami’s administration had continued, based on statistics and numbers, using the same oil revenues that existed during Khatami’s terms - which were much loser than what Ahmadinejad’s administration earned - the rates of unemployment and inflation would have been reduced to single digit figures. But despite the huge oil revenues, the rate of unemployment today stands at a 2 digit figure while inflation is about 30 percent, which is one a half times of what it was during the Khatami period. So statistics tell us that there have been no successes and it appears that this extra money has been spent elsewhere. They claim that the extra money has been invested, in which case where have investments been made? Why have they not reduced the unemployment rate? If the government has spent this extra money elsewhere then it must declare where it has been spent.
R: Why? Because of mismanagement and inappropriate expenditures or because it has been spent in hidden areas, i.e. expenses that are normally not announced.
BAA: It can be all of the above. Because of bad spending, spending for clandestine purposes; for example it could be expenditures in projects related to the development of nuclear projects, or military and armaments areas. These are the issues that are not clear in the budget. Even the budget of the Ministry of Intelligence is no clear. The same is the case with the military and law-enforcement budgets. In the national budget these items are not identified and no specific figures for these are identified.
R: If trends continue as they have been, what will happen to the economy in say 2years? We have an election coming up next year and so one cannot expect a contractionary fiscal policy from the administration.
BAA: They have been so undisciplined in their expenses that there is no way to control this in the short term. So we shall continue to have the same problems and issues next year as well. If the administration continues to press to implement its “economic change” policy despite opposition from the Majlis and even the State Expediency Council, and pay about 50,000 to 70,000 Toman per month to every Iranian while ending its subsidies on many consumer goods, inflation would increase by another 20 percent. With the current 30 percent inflation rate this means we should watch out for an inflation of 50 percent. In my view during the last three years Mr. Ahmadinejad has hurt the Iranian more than anybody else during the last thirty years.
R: From what you know, who does the public hold responsible for this inflation and situation?
BAA: I too have been thinking about this in the last 3 or 4 months and have been asking different people in the provinces, in Tehran and wherever I have gone what they think about Mr. Ahmadinejad’s administration. Everywhere people say they hold Mr. Ahmadinejad responsible for this. Some people who have more information mention the unlawful support that some agencies such as the judiciary or the law enforcement forces provide to the government and some believers in the Islamic Republic say that the support that these agencies provide is overdone which may even hurt them as well. So the target of the criticism is Mr. Ahmadinejad himself and then those who support him.
