Maturity of career doesn’t come easy, and that is what Seyed
Mohammad Hussein Adeli has achieved. The deputy foreign minister for economic affairs
completed his studies in Iran up to the master’s level, and then left for the United
States to receive his Ph.D. Following his return, Dr. Adeli taught for a number of years
at Iranian universities including Tehran University while writing a few books on economic
issues. He has served in a number of capacities including the governor of the Central Bank
of Iran (CBI) and the ambassador to Canada and Japan.
Leading the CBI during the difficult days of war and tightening sanctions, plus his
diplomatic experience in Asia and North America allow Dr. Adeli to speak out his mind
about the necessity of joining the world team, economic restructuring, and adopting a
logical stance vis-à-vis what the future has in store.
In a recent interview with Iran International, he elaborated on a number of topics
including the outlook for Iran-U.S. relations and Iran’s accession to WTO:
Now that the world is facing an inevitable
globalization particularly in terms of economy, what measures should be adopted by Iran?
Globalization is
a reality of the present world and the practical result of this is undermining of borders
in physical, cultural, mental, economic and trade terms.
With the growing global communications, these barriers are being eliminated. As other
global and historic phenomena, globalization may have positive or negative impacts on
countries. Globalization is not a finished product to accept or reject. It is an ongoing
process which is being shaped gradually. The question is not whether to accept or reject
it. The key here is how the players act in this event. We should try to seize its
opportunities and address the challenges it poses to our nation in order to prevent or
reduce its negative implications. We should look into the issue on a relative basis.
Having an ideal in mind is very good, but we should not live with a utopia in our mind.
The fact is that information technology has created a situation in the world where no
country can have any kind of influence of limiting the far-reaching impacts of this
technology which is to facilitate the communications of the human beings all over the
globe. We are now facing the challenge of getting exposed to many new things that we did
not know before, and the new generation in a matter of five to ten years would know many
new things around the world that the present generation does not. The present generation
can have virtual life on the Internet, by which they can interact with the outside world.
It is a fact that the authorities of any nation state in the world nowadays do not have
the same control over the national elements as in the past. Nobody has control over the
transfer of money, transfer of ideas, etc. Ideas, innovations, creativity and ways of life
can easily be exchanged between people. We have only one choice: to expose ourselves to
the new world. Because Iran is an internationalized country, in terms of thoughts and
ideas, whether it is Islam, our culture, or the recent doctrine of “dialogue among
civilizations”. Our economy is also international.
Your post in the Ministry of Foreign Affairs requires you to
speak constantly with potential investors and partners of Iran’s trade and economy.
What are the major points that you aim to make?
As a matter of fact, my
experience with the Central Bank of Iran has in some aspect created a very good background
for me in order to be able to explain to international economic players the real situation
in Iran from a more practical point of view, because once you talk on the economic
cooperation with the world, you do not limit yourself to generalities. You would like to
expand on the details and that how practically our potential partners would be able to be
absorbed in the economic activities inside the country. One of the objectives that we have
pursued in the Foreign Ministry is based on the fact that economic interests and power are
more present in the definition of national interests in the world. In the interaction
between countries, economic interests are becoming more prominent than before.
The economic aspect of foreign relations has somehow attracted the Iranian authorities,
too. In our foreign relations we do attach more interests to the economic aspect and do
believe that the primary objective in our national economy is developing it, but this
would be possible when we establish a friendly relationship with our partners and create a
favorable international environment for the interaction between our economy and our
partners.
In fact we see Iran’s economy as being international-oriented: We sell oil on the
international market and collect the money and use the whole money to buy products from
various parts of the world. Our whole economy is interacting with the world. It is
necessary for us to adopt a kind of relationship with foreign partners that would enable
both parts to act in a more favorable manner.
| We have only one choice: to expose ourselves to the new world,
seize the opportunities and properly address the challenges |
In order to create a favorable
international environment, we must promote the business and investment opportunities in
Iran. It is not enough to have a good opportunity in Iran, it is necessary to promote and
explain it to other people. Even ideas in today’s world should be promoted with a
planned and organized promotional policy. It is not important to have a good idea! The
important point is to convince the other side that this idea is a practical one and would
be of some assistance and benefit to others.
We have a lot of advantages in our economy: abundant natural resources and raw materials,
skilled manpower and educated human capital, low-cost energy, etc. Iran is a land of
opportunities, and making investment here will have a better yield comparing to many other
parts of the developing world. Of course, I am not saying this is the best country for
investment, but the fact is that foreign investments in Iran are yielding attractive
returns.
In line with your overseas discussion, how do you comment on the
trend of economic liberalization in Iran?
We went through an eight-year war and
the Iranian economy used to look like other war-stricken economies in other parts of the
world: The intervention of the government was huge. But since 1989, we have embarked on a
new economic plan which is based on a “peace economy” rather than a “war
economy”. Huge intervention of the government started to diminish in 1989 and a set
of reforms were introduced to the economy.
Since that time we have implemented two 5-year economic development plans. The objectives
of reforms in the framework of the First Economic Plan was primarily the reconstruction of
war-stricken areas, to start liberalization of the economy to some extent, to start
privatization and giving more room to the private sector in the economic management. That
was the most challenging reform which still continues to be applied to reduce distortion
in the economy. The reform included the rationalization of subsidies, thinking of social
safety nets and also the reduction of multiplicity of exchange rates, to eliminate the
economic rents that had been created by the bureaucratic involvement and lots of others.
The First Plan was successful to increase the production, non-oil exports, and to reduce
multiplicity of exchange rates. It was successful in securing five years of GDP growth
rate in real terms at the average of 7.3% and to keep the inflation modesty, at the
average 18%.
The Second Plan of course reduced the rate and the pace of reforms in order to put more
emphasis on the other side of the coin that is social considerations. What is more
important in the Second Five-Year Plan, is that the Iranian economy was successful to
secure five years of uninterrupted GDP growth rate in real terms despite difficulties.
As a country which is dependent on oil and despite the volatilities of oil prices one in
1992, and second in 1997 and 1998, Iran has been able to successfully secure 10 years of
GDP growth. We still have lots of challenges, but the fundamentals of economy are not
weak.
We have now started the Third Development Plan, which has distinguished characteristics
compared to two previous plans: First, it calls for a more open economy in terms of both
liberalization and privatization, and it has envisaged the creation of a special
organization to focus on privatizing the state-run companies. Moreover, privatization has
included some sectors which were not included in the past two plans: downstream oil and
gas sectors, transportation, some activities in telecommunications and above all, in my
point of view, the privatization of the banking sector. Carried out properly, this would
really make a difference in the management of our economy.
Also there is a good mood in receiving foreign investments comparing to previous plans.
The amazing fact is that the new legislation that is now before the Majlis was passed in
the first hearing unanimously. Of course this is a strong indication that the whole
system, whether they are from this faction or that faction, are united to invite the
foreign investors to be partners with Iranians. This is a strong signal to foreign
investors that they should not be concerned with the internal political debate.
| It is not enough to have a good opportunity in Iran, it is
necessary to promote and explain it to other people |
The question of “Whose money is
coming here?” no longer makes sense. People’s savings are accumulated in
financial institutions that operate on a global basis. They have an international thinking
to invest their money wherever an opportunity arises. For us, the art is being able to
attract the deposits of the people who saved their money in different parts of the world
and deposit it in the financial institutions for those who are capable of using them. This
kind of thinking is beginning to grow: No matter where the investment is coming from; we
can use this money to create more jobs, and to expedite our economic development.
Liberalization, privatization of the new sectors of the economy and the attention paid to
foreign investment and other logical reforms in the financial sector, in the fiscal policy
and in the trade policy and the new approach to the international economic cooperation,
which are among the features of the Third Plan, all create a solid base for our
international interaction with the whole world and our economic development.
A new president will shortly take office in the United States.
What is your perspective of Iran-US economic relations?
A limited level of commerce between Iran
and the United States has been declared permissible and has practically started. Both
sides want the other side to open its market. This is the very first and the important
step. The trade is limited but it is important to build the confidence. We want to see
whether the regulations in the U.S. have been put in place to enable our manufacturers to
export their products to that country. Once this is properly in place, our permission for
reciprocation is there. We have to see what will be the policies of the new president and
to what extent those initiatives, if any, contribute to the confidence-building.
You have spoken on occasion in favor of Iran’s membership in
WTO. Please provide a brief update of the status.
WTO symbolizes the globalization
trend. All countries have reached a collective agreement to let their products to have
free and easier movement across borders. WTO also imposes many challenges especially for
developing countries.
In the past four years Iran has been engaged in some reforms and some adjustments of its
regulations and policies, and at the same time these approaches were in conformity with
international standards. Iran is now more prepared for the challenge of interaction with
the world trade issues than many other developing countries who have already joined the
organization. We have applied for the accession to WTO, but our application has not been
tabled yet on the agenda. We are working to expedite putting our application on the table
and we hope it would be carried out as soon as possible. Multilateral trade rules are
being decided and shaped and we will be subjected to them. Joining WTO will give us a
chance to be a player to shape whatever is going to govern us later.
There are some people in Iran skeptical of joining the WTO; therefore, they are warning
the government to be more prepared for the challenge of joining the Organization. We
should have confidence in our system that we would be able to successfully face these
challenges. The global response to President Khatami’s support for the rule of law,
human rights and freedom of speech has created an environment where we can be a major
player. Based on this, a better future can be predicted for Iran to be more active in
today’s world comparing to the past. |
