However, Fatemi disagrees. He implicitly accuses Iranian governments of inaction, saying politicians win millions of votes “to make tough decisions at tough times.” Of note, with an exception of three years, Iran has suffered from a double digit inflation rate since 1973. Throughout these years, governments have mistakenly suppressed prices whenever citizens have complained about a rise in commodity prices — a prescription that has never worked. Fatemi believes that the authorities should have the commitment to fiscal discipline if they are concerned about high inflation, and he discourages direct intervention in the market — apart from exceptional cases.
Ordinary Iranians have traditionally expected the government to artificially maintain prices, despite surging costs — an expectation that has made it uneconomical for many businesses to keep operating. On the other hand, populist and semi-socialist groups within the establishment continuously push for a downward pricing regime. Liberal economists have been caught in a pincer between these two groups.
Even if advocates of an open market economy are given enough room to maneuver, the Iranian market needs a prerequisite such as the existence of effective competition. Fatemi insists that in the absence of competition, there is always the threat of the emergence of “monopolistic pricing,” which in the long run will also jeopardize the supply side.
Thus, it appears that winning over public opinion is the most serious challenge the Rouhani administration is facing in its efforts to promote an open market economy. Close interaction is required between the government and the nation to introduce necessary economic sense into the public debate, so ordinary citizens will be informed of the advantages and disadvantages of a free market.
The second challenge that needs to be addressed is the lack of consensus among economic elites. To achieve sustainable development by diversifying the oil-based economy, a consensus, such as the one that brought the nuclear dispute with the West to an end, should be reached among key economists and economic policymakers — regardless of their political tendencies.