Causes of corruption in Islamic Iran

[Rasputin]

The existence of corruption is fundamentally a philosophical problem and has roots in human nature and ethics. Though from a political perspective, this writing is concerned with the percolation of corruption throughout political life. I seek, here, to outline the causes of political corruption, with a focus on Iran. Political corruption is widespread in Iran almost to the proportions of an endemic disease. The modus operandi of Iranian political life requires a recipe of bribery, nepotism, cronyism, secret deals, and financial collusions, among others, camouflaged by the rhetoric and visage of Islamic justice. But this camouflage fools no one. In fact, the strength with which political corruption holds onto Iranian society is publicly acknowledged, so much so that in 1993 “the parliament approved a bill banning government officials from receiving kickbacks on foreign deals.”[1] Although this problem is not at all a new one to Iranian society, it is especially consequential today with the reign of the Islamic Republic. For this reason, and to keep consistent the empirical basis, I will concentrate my attention on the post-revolutionary period: 1979 onwards.

Writers on political corruption have extensively commented on the costs and consequences of corruption. But this is a study of why corruption emerges; as such there will be no explicit mention of the costs of corruption—although those are well understood implicitly in Iran’s case. In this piece, then, I will synthesize a theoretical and empirical study, arguing that political corruption in Iran grows from the roots of economic incentives, culture and social norms, and the kleptocratic structural arrangement of the government. These distinctions, however, are by no means exclusive nor are they set in stone; there are fundamental and deeply entrenched overlaps of these outlined causes. A kleptocracy arises out of the pursuit of economic interests, culture may be determined by the forces of market, and social norms dominate the state officials’ behaviours.


Semantic Clarification

Before any attempt to outline the exact causes of corruption, some semantic clarifications must take place. The causes of corruption cannot be determined if it itself is not recognized; hence corruption needs to be defined in such a way that it can be discerned within the scheme of political processes. To begin with, political corruption is the topic at hand; we are therefore confined to a discussion of political processes involving institutions and officials. In a broad sense, James Scott sees such corruption as a “violation of certain rules.”[2] But since rules can vary greatly, they cannot be the standard by which we may judge an act corrupt. Corrupt behaviour, then, can be practiced even if it is not in violation of established laws. Therefore corruption as understood in the domain of political science must be identified by a quality that is applicable cross-jurisprudentially. In my view (which is redolent of that of others[3]), this quality lies in corruption’s effects—a mixture of inequity and inefficiency. It follows, then, that corruption is both an ethical and procedural issue; for instance it can cause unjust distribution of wealth, on one hand, or bring about ineffective bureaucracy, on the other. For this writing, I will adopt J. S. Nye’s definition, echoed by a wide array of scholars[4], which regards corruption as a deviation from the “formal public duties of a public role because of private-regarding wealth or status gains.”[5] There is an ethical standard guiding this understanding, for an official who is deviating from his duties for personal gain may be acting under a legal system permissive of this.[6] What I wish to stress here is that my working definition of political corruption does not hinge on legal frameworks or the norms of society. With all this in mind, and having sketched the form of political corruption, we can move on to explore the forces behind it.


Causes

What conditions are conducive to political corruption? Which factors construct the road leading a politician away from his duties? Why does he travel that road? Are political institutions and laws neutral to, permissive of, resistant to, or simply too indolent towards corrupt activity? These queries form the explorative basis of corruption’s causes and accordingly underlie the ensuing sections. The causal links established are for the most part theoretically oriented, which speaks of the macro-evidential approach of analysis: Drawing from theorists who have worked with a wide range of evidence, I try to outline causes by superimposing the theories on the empirics of Iran while, at the same time, explaining the theories with the Iranian case. That cultural traditions can contribute to political corruption, for example, is a point by theorists that can be utilized to explore the role of Iranian culture in the corrupt political atmosphere of the country—even though its role might ultimately be different than theoretically suggested. This disclosure is important in not only showing the overlap, but also the indefinite composition, of each cause. Economic incentives, culture and social norms, and structural deficiencies do not simply react to yield the ‘product’ of political corruption. The interplay of these outlined causes and political corruption is more complex than what will be shown by my research. Nevertheless, these links are real and help us understand the phenomenon of political corruption. To make easier and clearer the impression of the causes and their link to corruption, I start economically, why each individual has incentives to engage in corruption; I continue with culture, why each individual is likely (and raised or conditioned) to engage in corruption; and I end politically, and build on cultural and economic reasons, to demonstrate institutional and structural sources of corruption. These root causes do not include subsidiary factors that sustain corruption. An example of this is the heavily politicized media that aids the circle of corruption in Iran; [7] the very corrupters control the media and suppress all dissident and critical voices. Thus a restricted press inhibits any anti-corruption movement.

Wealth Aggrandizement and Economics

The basic assumptions of economics have to do with consumption at the lowest cost and maximization of profit. “People respond to incentives,” we are told by the Economics professor, and if the opportunity arises to save money, the rational individual responds by making use of it. This uncomplicated view unveils some reasoning behind corrupt behaviour. The desire of aggrandizing wealth joined with elementary economics is the explanatory force behind the mantle of corruption which covers the ordinary citizen, businessman, bureaucrat, and politician. Although wealth aggrandizement may seem kleptocratic, its difference lies in its association with the common individual, as opposed to the ruling faction to which a kleptocracy refers. “Corruption is a crime of calculation, not passion,” declares Klitgaard,[8] a statement evocative of the financial expediency often coupled with corruption. Corruption is symptomatic of market inefficiencies, often a result of mismanagement in the Third World—as consistent with the case of Iran. In the face of these inefficiencies, opportunists driven by economic incentives emerge to fulfill their wealth aggrandizement ambitions.[9] Susan Rose-Ackerman lists compendiously situations in which corruption is likely to sprout:

[Rasputin]

· The government may be charged with allocating a scarce benefit to many individuals and firms using legal criteria other than willingness to pay. Bribes clear the market.

· Officials in the public sector may have little incentive to do their jobs well, given official pay scales and the level of internal monitoring. Bribes act as incentive bonuses.

· Those engaged in legal pursuits seek to reduce the costs imposed on them by government in the form of taxes, customs, duties, regulations. Bribes lower costs.

· Illegal businesses frequently purchase corrupt benefits from the state. In extreme cases illegal businesses and organized crime bosses dominate the police and other parts of the state through corruption and intimidation. Bribes permit criminal activity.[10]

In the undeveloped world, especially, the government’s all-encompassing role undermines market economics, and its role as an “employer, regulator, producer, and consumer” produces inefficiencies crystallized in bureaucratic processes. The obscure world of bureaucracy loses the faith of the citizen in legal avenues and propels him to seek his affairs by means of bribery and nepotic relationships.[11] Such an overstated role of the government further compromises its ability to adequately respond to the demand for its services; the governmental price regulations prevent the limited supply of services to reach an equilibrium price with public demand—services are dispensed largely on criteria other than prices. This then leads to attempts of “citizens to circumvent government non-price criteria for the award of these valuables [government services].”[12] James C. Scott raises two new points as to the occurrence of corruption, which still fall under the umbrella of Rose-Ackerman’s four points above, and are particularly relevant to Iran. The first has to do with “growth of a large financial elite with little formal access to influence,” and the second with discriminated minority groups and their efforts for influence in order to secure their rights. Acknowledging the corrupt means to which these groups have to succumb, the two points raised bear considerable weight upon the conclusion he reaches about preindustrial nations: “That the bureaucracy remains a most important avenue for wealth, status, and power.”[13] To capture laconically the above, we can say corruption “is an alternative to other processes of influence and allocation.”[14] Here we shift our focus to Iran, and how it fits the models given.

Since the inception of the Islamic Republic, and especially during the war against Iraq, Iran’s economy has been just short of disastrous at its best. Many reasons can be purported to account for this, but mismanagement and maladministration have without doubt contributed to the crisis. In analyzing the economy, an extensive list of government services and dispensations marked by cronyism compiles; unable to effectively meet the demands of the public, the Islamic Republic has forced the precipitating of a clandestine system, pervasive in all corners of Iranian society, within which accomplishing a bureaucratic task requires familial or relational ties or the pragmatic currency. Indeed, the continually decreasing real wages[15] account for the Iranian administrator’s disinclination for providing quality service. This in turn gives rise to the bribe: An incentive for the administrator to provide service. Further, Iran’s lack of sufficient oil refineries produces the need to import gasoline from abroad. While this toll is heavy on the Iranian economy, gasoline is nevertheless subsidized. Cheap gasoline, relative to global and regional prices, is inviting the opportunist to reap tremendous benefits by smuggling gasoline to neighbouring countries.[16] To further substantiate the disarray of the Iranian state which gives rise to instances of corruption, one can turn to the suppression of minority rights. Although not a significant gateway to corruption, when a group is marginalized by law, the only remaining option is to resort to illegal methods in order to secure rights. The Baha’i’s, the leading example of a minority group suppressed in Iran, are subtly yet forcefully driven to corruption. The denial of their education has been met by their responses of bribery; entrance to post-secondary institution is either financially bought or done through a nominal conversion to Islam. More significant in their incestuous affairs are the bazaaris, or merchants—a wealthy elite characterized by a traditional hold to influence, little of which is through formal means. Having the backing of the ultra-religious factions, as well as maintaining close ties to the regime, the bazaaris enjoy comfortable economic positions. A notorious example is the family of Asgaroladis, among whom Asadollah has accrued close to $400 million through landing lucrative foreign-trade deals.[17]

An objector may question the causal relationship of the regnant corruption in socioeconomic spheres with that in the political scene; the two might in fact be adversarial, evidenced by government efforts to restrict corrupt behaviour. A response would point to the myopia embedded in the objection: Corruption is being treated as a product of linear events and the socioeconomic and political spheres are viewed as too unrealistically discrete. But such is not the case. Political corruption is consequently derivable from the misbegotten, bribery-infested economic conditions. The secrete deals we see in Iran, as a form of imparting influence, or the bribery which aims to counterbalance the market inefficiencies, explain why an individual may well commit corrupt acts within political processes (by which I mean any event affected by political decisions). These economic forces bear a reciprocal relationship with the government and the broader society; private businesses and individuals are seduced by the economic benefits of bribery which, in turn, seduces the bureaucracies to engage in corrupt activity. This corruption-producing circle, then, is maintained by the mismanagement that corrupt bureaucrats and government officials induce onto the system. It is in this way that political corruption is given incidence to in Iran.

Culture and Social Norms

Owing to its unique culture, and the peculiar social norms of contemporary times, Iran here can be consolidated much less effectively with the work of theorists than in the previous and subsequent sections of this discussion. Studies of culture and corruption have characteristically been of the elusive boundary of traditional gift-giving and bribery. They have dealt with the nature of corruption within the dynamic nature of culture.[18] And although traditions of gift-giving exist in Iran, they are relatively weak and sporadic in their influence on corruption. The obligations of Islam, and the dominant Sharia Law, though do impart similar charitable acts (as gift-giving) which I shall shortly mention.

What I wish to direct my attention to, here, is the perceptible duplicity of character prevalent among Iranians. This can predominantly be accounted for by the integration of Iranian liberalism and Islamic conservatism. The integration has translated into the great disparity of public and private life in modern Iran,[19] especially with the strict rules of the Islamic Republic. People are outwardly religious in the public, to win the bonuses associated with piousness; at the same time, what is considered “Western” behaviour is commonplace inside homes and in underground societies. Such duplicity naturally overflows to all factions of life, encouraging deceit, enticement, and trickery for the sake of easing social pressures. An instrumental example is in bureaucracies, where officials tend to put on a facade of religiosity that wins undeserved bonuses.

Still more, the political apathy gaining new prominence in Iranian society[20] permits corrupt behaviour. Fear, frustration, despair, and even poverty, arguably results of policies of the Islamic Republic, all join hands in making irrelevant to the average citizen cases of embezzlement, for instance. Such apathy is an offspring of moral detachment; the public may well have become desensitized to matters of ethical gravity. This is not at all to undermine the traditional role of religion in Iranian lives, although at least in the urban population the role of religion is deteriorating. In fact, religious obligation is an avenue of corrupt practices. It is required by Shiite tradition to “donate 20% of [business] profits to” the local mosque; increasingly, however, this pious act has become politicized and corrupt, with many businessmen complaining that “as soon as you start to make some money, the leading mullah will come to you and ask for a contribution to his local charity...If you refuse, you will be accused of not being a good Muslim. Some witnesses will turn up to testify that they heard you insult the Prophet Mohammad, and you will be thrown in jail.”[21] The superstition that follows daily life grants the religious elite the license to do as they wish, under the pretext of religious righteousness—the cited example is a case in point. This brings us to the paradoxes within Iran, as skilfully penned by Boroujerdi:

[Rasputin]

· A society in which many cultural, political, and social institutions are Western and modern in pedigree and configuration, yet native and traditional in iconography and nomenclature.

· A theocracy where religion is an axiom of political life and yet secular agents, aspirations, ideas, institutions, language, and motifs continue to survive and—more importantly—manifest their significance in the realms of private and public space.

Such a duplicitous and paradoxical way of life is deemed unnatural, to the analytical mind, and at the least inefficient, creating a society with high costs of pretension and deceit. If it is the norm to have to pretend, if any level of religious ostentation will be realized to achieve certain objectives, then surely bribes will be paid, relationships exploited, and formal duties will be forgotten for the sake of personal gain. Political corruption, then, is an important consequence of social and cultural behaviours.

Kleptocracy and Structural Deficiencies of Government

Perhaps the most elemental reason for the existence of political corruption is the lack of institutional checks and balances (“political, administrative, or judicial”)[22]—or as I call it: Structural deficiencies. Although no democracy is impregnable by political corruption, it is theoretically more immune than the non-democratic state.[23] A horizontal dispersion of power—among the judicial, executive, and legislative bodies—can be an important step in implementing mechanisms of corruption-control. By simple inference, then, an opposite system might witness the excrescence of clientelism, nepotism, cronyism—or all-out corruption (like what is apparent in Iran). In non-democratic systems, where the leaders are not accountable to the public nor internally controlled, a kleptocracy might surface. Indeed, a regime marked by self-interest, concerned solely with preserving power and accumulating wealth, is composed of kleptocrats. Policies, for a kleptocrat, are “personalized,” they are for his benefit and not that of the state; regulations and licensing requirements are merely a means to generate cash-flow; state ownership, similarly, is valuable only in the way money is generated—through rent-seeking and not actual productivity.[24] Structural adjustments to the way a system operates occur, at least mainly, at the “input state,” to borrow a term from Scott.[25] This is a state where laws are being drafted and passed, bent for the financial benefits of the rulers. And these rulers are elites “divided only by personal and parochial alliance networks.”[26]

The marriage between the theory, above, and the evidence observable in the Iranian political regime is easy to make out. In the first place, though, a kleptocracy may be a crude way to describe the regime in Iran, especially when one notes the political factionalism evident within Iranian politics[27]—mainly, the hard-line conservatives at odds with the moderates; a point to which it was alluded immediately above. It however captures the general way the Islamic Republic functions. What is more, undressing the true ideological profundities of the Islamic Republic and its political agents is difficult to say the least—and is a task unfitting in this writing. But what is evident is the improving positions of wealth and power of the Islamic politicians, which signify their kleptocratic nature.

Before evidencing Iranian kleptocracy, I want to briefly touch on the argument that a lack of accountability brings about the likelihood of corrupt behaviour. At the outset, it seems, if a politician has gained power without use of electoral processes, he is more inclined to steal, for his actions do not centre on popular opinion. Rose-Ackerman, however, has presented a view saying because officials in democracies are held accountable and are subject to overthrow, they are more likely to steal in the short-term due to insecurity. In presenting the Iranian case, I aim to repudiate this view by positing that greed is less effectively constrained when the threat of unpopularity is irrelevant.

The literature on the eco-political condition of Iran largely revolves around the bonyads and their influences, implications, and consequences. This is reminiscent of the pervasive nature of these institutions; they extend their control over social activity, the economy, and political processes. To be precise, bonyads are “massive semi-governmental foundations with religious and philanthropic missions [which] have metamorphosed into huge holding companies that dominate key industries while evading competition, taxing and state regulation.”[28] These bonyads, such as the Foundation for the Oppressed, are controlled by the Supreme Leader of the regime[29], Ali Khamenei, and the IRGC,[30] and in many ways form the kleptocracy existing in Iran. With the creation of these foundations, the mullahs made way for a propitious start to a revolution, funnelling funds to their cliques under the cloak of social munificence. What is perhaps most conducive to corruption is the lack of oversight for these political and economic giants. As part of the structural make-up of the system, “the administrative rules also favour them in their access to credit, foreign exchange, regulatory permits, and government contracts.”[31] In an objective, economic sense, the Iranian economy is severely diseased. Yet the Islamic Republic, cemented to its kleptocratic credo, has little incentive to produce real, fundamental changes; for economic prosperity can undermine its very existence.[32] To exemplify this negligence of the welfare of the Iranian economy, one can turn to 1993 and the near 70 per cent rate of inflation; the government’s application of “official exchange rate to earmarked imported amounts of some basic goods” benefited the import-businesses of the bonyads, rather than the low-income sectors which could have been protected by the full unification of exchange rates.[33] And the recent self-sufficiency that the Islamic Republic has achieved with regards to wheat production, a spectacle that some see as the government’s intent on improving the overall economy, is undercut seeing as that it has tremendous hidden costs—other crops such as barley have been sacrificed, and other shortages came about that ultimately increased the import bill of the government.[34]

The structure of a regime ruled by kleptocrats is therefore deficient from the view that corruption inheres in it. A society marked by low-end corruption, among bureaucrats and administrators, as well as the prevalence of Islamic pretentiousness, sees its leaders, who profess to carry divine messages, “amassing fortunes.”[35] The clerical oligarchy—the kleptocracy—remains adamant in maintaining its power and fortunes alike.

Closing Remarks

Corruption in a society can parallel corruption in an individual and can reflect weak moral character. Engagement in corrupt behaviour is, fundamentally, a result of self-interested pursuits. That is precisely what we saw in the economic incentives that drove the administrator to accept bribes, in the businessman who assumes a Muslim character of piousness to reap benefits, and in the kleptocrat who exploits his nation’s wealth to add to his own. Iran is distinctly stained by all these. Having said this, that the realm of the economics and political are very close and not easily subject to demarcation merits another mention; bad economy is due to bad politics which arises out of kleptocratic conditions, for example. The course that this study has taken is one to introduce concern; it is a foundational research piece which encourages more in-depth analysis. It also serves as a stepping stone to realizing the costly socio-political impact of corruption.

[Rasputin]

[1] Farzin, 1995, p. 199.

[2] Scott, 1972, p. viii.

[3] Johnston, 1986, 459-477.

[4] Scott, 1972, p. 4. , Nye, 1967. Banfield, 1961, p. 315. Klittgard, 1998, p. 3-6.

[5] Nye, 1967.

[6] This can be so in cases of legal weaknesses or where laws have been deliberately put in place to serve the intentions of those in power.

[7] Samii, 2007.

[8] Klitgaard, 1998, p. 3-6.

[9] Jimenez and Cainzos, 2003, 7-24.

[10] Rose-Ackerman, 1999, p. 9-10.

[11] Scott, 1972, p. 19

[12] Ibid., p. 21

[13] Scott, 1972, p. 24, 89, 77.

[14] Johnston, 1986, p. 459-477.

[15] Mazarei, JR, 1994, p. 289-314. and Molavi, 2004.

[16] The Economist, 2007.

[17] Klebnikov , 2007.

[18] Rose-Ackerman, 1999, p. 110.

[19] Loewenstein, 2007.

[20] Molavi, 2004.

[21] Klebnikov , 2007.

[22] Jimenez and Cainzos, 2003, 7-24.

[23] Rose-Ackerman, 1999, p. 113.

[24] Ibid, p. 115-118.

[25] Scott, 1972, p. 23

[26] ibid., p. 77.

[27] Esposito. 2001, 3.

[28] Takeyh, 2004, p. 131-143.

[29] Esfahani and Taheripour, 2002, p. 34

[30] IRGC stands for Iranian Revolutionary Guards Corps.

[31] Ibid.

[32] Molavi, 2004.

[33] Farzin, 1995, p. 187.

[34] Bozorgmehr, 2007.

[35] Takeyh, 2004, p. 131-143.

[Rasputin]

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