Vali Nasr, an Iranian-born scholar and advisor to the Obama White House, speaks on the rise of the Muslim middle class and the shaping of economic prosperity in the Middle East at Robertson Hall on the Princeton campus on Wednesday, December 8 at 4:30 p.m.

Nasr is largely optimistic about the prospect of wealth and influence as a means of change in Islamist nations, so long as it comes with a capacity for globalism.

Below is an excerpt from Nasr’s latest book, “Forces of Fortune: The Rise of the New Muslim Middle Class and What It Will Meanfor Our World,” published by Free Press in 2009.

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In so many ways, Iran is well qualified to become a true economic powerhouse driving wider growth in the region. Its nearly 70 million people give it a population about the same size as Turkey’s. It has vast oil and gas reserves, plus a strong industrial base by regional standards. Labor is cheap but the literacy rate is high, over 75 percent. As the country’s thriving art scene and internationally acclaimed movie industry suggest, Iranians are also far better plugged into world culture than is the norm in the region.

Iranians are web and mobile-savvy (Persian is the world’s third most widely used language online, the country boasts the most bloggers per capita anywhere in the world, and almost two-thirds of the country — some 48 million people — are mobile phone users). They are also technically adept. The country’s leading technical school, Sharif University of Science and Technology in Tehran, turns out world-class engineers and scientists. Stanford regularly admits Sharif alumni into its graduate programs in engineering, and according to one Stanford professor and former department chair, “Sharif now has one of the best undergraduate electrical-engineering programs in the world.”

This sort of human-capital development can make Iran a player in the competitive global economy. The degree of ingenuity and skill already present is attested to, ironically, by the nuclear program, which is run by homegrown experts. Iran’s rulers even like to claim — despite great skepticism in most Western quarters — that the nuclear drive and rocket program will be Iran’s ticket to economic globalization’s cutting edge.

And it is not just splitting atoms that is supposed to catapult Iran into global status. The country is also investing in space research and biotechnology. Research outfit Iran Cord Blood Bank, created in 2003 with the Supreme Leader’s blessing, has committed $2.5 billion to human embryonic stem cell research to help cure a range of ailments from heart disease to multiple sclerosis. The initiative has surged ahead, taking advantage of the fact that a fetus is not considered a human in Islamic law before the end of the first trimester of a pregnancy.

In a more down-to-earth vein, Tehran mayor and former Revolutionary Guards commander Muhammad Baqer Qalibaf talks of development in terms of economic reform, private sector growth, and globalization. When he ran for president in 2005 he fashioned himself as the Islamic Republic’s version of the maverick state-builder and founder of the Pahlavi monarchy, Reza Shah, turning heads with his colorful feel-good campaign posters that promised growth and prosperity. The same themes crop up routinely in Qalibaf ‘s speeches and interviews as the can-do mayor of Tehran.

Such hopeful talk from the higher-ups falls flat, though, before the reality of an Iran, where inflation is running at double digits and about a quarter of the workforce is jobless.

The problem is not a lack of enterprise or fundamental potential. Iran has a dynamic private sector and the middle class to go with it. The economist Djavad Saleh-Isfahani estimates that around half of Iran’s population of 70 million is middle class or above — counting their possessions, disposable income, level of education, and family size — with the kind of social attitudes that are needed to support robust consumption habits and modernizing change.

The problem is that Iran’s private sector is shackled by a corrupt and inefficient state that dominates 80 percent of the economy.

The state grew to its current size after the revolution by devouring large parts of the private sector — nationalizing businesses, banks, and industries. It prioritizes spending on the poor above achieving economic growth, and therefore sees no problem in stifling entrepreneurship with red tape, starving businesses of resources, and taxing them dry. It is top-down centralized economic management at its worst.

When it comes to the economy, Iran is not a regional leader but a regional laggard, dawdling in the soggy bottomlands of suffocating statism. This economic stagnation was a powerful driver of the vehement opposition to Ahmadinejad in the recent election.

The thing to watch in Iran over the next few years is the private sector and the middle class tied to it — the same class that in the aftermath of the June, 2009, election led millions to ask, “where is my vote?”

The great battle for the soul of Iran — and for the soul of the region as a whole — will be fought not over religion but over business and capitalism. At issue will be whether the state will free the economy and let this dynamic society reach its full potential.

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