Sometime in the middle of June of 2010 Mahmoud Ahmadinejad proudly announced during a televised interview that since coming to office he had privatized 60 trillion Toman worth of government property (about USD 60 billion).

“Privatization began in 2003 and totaled 3 trillion Toman. During the ninth and tenth administrations however more than 60 trillion Toman worth of property had been privatized most of which was carried out through the Stock Exchange. The implementation policy of article 44 of the constitution means the transfer of the economy from government control to people. Countries that have had government controlled economies took about 20 years to accomplish this whereas the pace of this in this administration is very fast,” he said.

Fars news agency recently took up how this was accomplished by publishing a series of articles on the implementation of article 44. The important point in implementing article 44 is the first paragraph of the provision. The provisions of this paragraph were ordered to be implemented in the month of June/July and emphasized the following:

2          Investment, ownership and management in the following sectors is permissible under article 44 of the constitution by foundations, and public, non-government, cooperative and private institutions:

2.1       Large industries, mother industries (such as large downstream industries in oil and gas), and large mines (excluding oil and gas).

2.2       Foreign trade activities in the framework of the country’s trade and foreign exchange policies.

2.3       Banking performed through public non-governmental entities and institutions, public stock cooperative companies, and, public stock companies subject to a stock ceiling on each shareholder as defined by law.

2.4       Insurance.

2.5       Power generation, including the generation and importation of electricity for domestic purpose and exports.

2.6       All postal and telecommunications activities with the exception of mother telecommunications networks, activities related to the assignment of frequencies, main distribution and transmission networks, and, the management of the distribution of basic postal services.

2.7       Roads and railways.

2.8       Airline (air transportation) and shipping (marine transportation).

The share of the government and non-governmental sectors in the main activities outlined in article 44, with attention to maintaining the sovereignty of the government and the independence of the country, social justice and economic growth and development, as determined by law.”

Section d that was ordered to be implemented in 2006 after Ahmadinejad came to office stresses the following:

The transfer of 80 percent of the stocks of government companies identified in article 44 of the constitution to publicly shared cooperative companies and to public non-governmental companies are permissible with following provisions:

1             Government companies that are active in large mines, large industries and mother industries (such as large downstream industries in oil and gas) except the national Iranian oil company and companies engaged in the extraction of crude oil and gas.

2             Government banks with the exception of the Central Bank of the Islamic Republic of Iran, Bank Melli, Bank Sepah, the Industrial and Mining Bank, the Agricultural Bank, Housing Bank and the Export Promotion Bank.

3             Government insurance companies except Bimeh Markazi and Bimeh Iran insurance companies.

4             Aircraft and shipping companies except the National Aircraft Organization and the Ports and Shipping Organization.

5             Power generation companies with the exception of the main electricity transmission networks.

6             Postal telecommunications companies with the exception of basic telecommunications networks, activities related to the assignment of frequencies, the main distribution, transmission and management of the distribution of basic postal services.

7             Industries related to the armed forces with the exception of the production of necessary defensive and security productions as determined by the supreme commander in chief.

In its recent report Fars news agency wrote that the volume of government stock transfers implemented by Ahmadinejad’s administration was in the amount of 75 billion Toman, adding, “Analysis of the annual transfers indicates that the largest transfers took place in 2007 and 2008 when stocks valued at 24.9 trillion Toman and 21.4 trillion Toman respectively (about USD 24 billion and USD 21 billion) were transferred. In 2005, more than 764 billion Toman, in 2006 more than 2.5 trillion Toman, in 2009 more than 17.9 trillion Toman in 2010 more than 5.5 trillion Toman and in 2011 2.4 trillion Toman.”

Majlis’ research center has reported in Azar (November/December) that from all the stock transfers were implemented, only about 19 percent were transferred to the designated sectors and the rest went to cooperative and common stock non-governmental cooperative companies. These latter companies are mostly either under government management or are affiliated to military institutions or the supreme leader. In reality what has been happening is that the privatization of public property and their departure from government control, where they are at least on paper under government supervision, is moving them to institutions that are not under any supervision, such as the supreme leader or the military. Fars news agency claims that of all the transfers, 38 percent were made to the private sector, which probably includes the transfers to the supreme leader’s institutions and the military. This figure therefore is not reliable. The figures presented by the Majlis research center are closer to reality compared to what Fars presents, while even they remain questionable.

So in fact what has been happening is that government entities have been passed on to entities affiliated with the military and the supreme leader. Research indicates that the transfers to the military far outweigh those to the supreme leader’s entities. Part of the conflicts of the government with the leader and the Revolutionary Guards Corps (IRGC) that have erupted over the past year can be viewed to be indicative of the government’s resistance in transferring property rights to these entities and the attempt to continue its control over them by transferring them to cooperative agencies under its control. At one point, this trend brought the protest of Parviz Fattah, the managing director of IRGC’s cooperative foundation who asked, “How is it possible for the government to be the seller of stocks and its own company, SAIPA, be the purchaser of the same stocks? What economic rule justifies this? All this, while they politely removed the IRGC cooperative foundation from this competition.” One may conclude that the implementation policies of article 44 in fact pursue nothing other than implementing the thesis that the whole country belongs to the supreme leader. The supreme leader has tried in this way to directly and officially to take over the country even though it has been challenged by a powerful but exhausted force called the executive branch and an energetic and healthy force called the IRGCV. It looks like the ultimate winner in this struggle is the IRGC.