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homogeneous corporate body or an independent class.82 Rather, as part
of their role as ˜˜supervisors,™™ the state of¬cials were to be selective in
their relations.
In fact, this was exactly the regime™s approach from the outset.
Individual bazaaris, or those with bazaari roots, who were ˜˜correct,
religious, and skilled™™ were to be rewarded with government portfolios
and protection from property seizures. Many of these ¬gures were part
of the clandestine ICA that had been under the tutelage of Khomeini
and his students since the 1960s.83 For instance, Habibollah ˜Asgar-
awladi-Mosalman, who is one of the founding members of the ICA and
its long-standing secretary general, has held a number of government
posts including head of the Ministry of Commerce (1981“3), the
Supreme Leader™s Representative at the Imam Relief Fund Committee,
and member of the central council of the 15th of Khordad Founda-
tion.84 His brother, Asadollah ˜Asgarawladi-Mosalman, who was a more
active trader in the Bazaar, has been a mainstay of the Chamber of
Commerce. ˜Ali-Naqi Khamushi, an ICA member and an engineer from
a bazaari family, was a director of the Foundation of the Oppressed and
Disabled, and initially Khomeini™s representative to Iran™s Chamber of
Commerce, Industry and Mines. Since then he has been the Chairman
of the Chamber of Commerce and has also worked in the Ministry of
Commerce. Taqi Khamushi, ˜Ali-Naqi™s brother, was a member of the
board of directors of the Islamic Propaganda Organization and the
Islamic Economy Organization. Asadollah Lajevardi, who was assassi-
nated in the Tehran Bazaar in 1998, was the Chief Prosecutor
who oversaw the summary executions of political prisoners in 1988.
Mohsen Ra¬qdust, who as a teenager joined the ICA, became the
Commander-in-Chief of the Islamic Revolutionary Guard Corps and
later became the head of the most powerful bonyad, the Foundation for the
Oppressed and Disabled. Meanwhile, Kazem Hajj-Tarkhani, who was a
member of the Revolutionary Council and had close ties to the ruling
clergy and the actors mentioned above, avoided full-scale expropriation of
his assets in cement and carton production and sugar processing. How-
ever, probably because of personal disputes with revolutionary ¬gures,
˜Ali Hajj-Tarkhani, Kazem™s younger brother and owner of Shahd Sugar
Company, was on the initial list of ¬fty industrialists who had their assets

82
Ibid., vol. 2, pp. 43“4 and 56.
83
See Chapter 3 for references.
84
˜Asgarawladi is alleged to have helped place ICA members in the Center for
Procurement and Distribution of Goods. Ahmadi-Amuii, Eqtesad-e Siyasi-e Jomhuri-e
Islami, p. 23.
156 Bazaar and State in Iran

appropriated. This example indicates that personal relations and political
ideology, rather than bazaari af¬liations, are what created the close con-
nection between ICA members and the state.
Thus, the prominent supporters of the Islamic Republic within the
Bazaar community were coopted and accommodated into the regime™s
bureaucracy, giving them direct supervision over state assets, and
aligning their individual interests with those of the regime to maintain
the political order. The very fact that individual members of the Bazaar
have so readily broken ranks with their fellow bazaaris and pursued
personal advantage demonstrates the precarious and nonessential nature
of the Bazaar™s solidarity and corporate logic. From the perspective of
the state, this mode of patronage and blurring of state“society bound-
aries was a method of rule and atomistic incorporation of bazaaris. The
link between state power and patronage is traced by Catherine Boone in
her study of postcolonial Senegal. ˜˜Patronage relations linked those
with direct control over state power to those interested in, or in need of,
state resources.™™ She continues, ˜˜By infusing these resources into new
and existing social hierarchies and organizations, possibilities for gath-
ering and reproducing power in these settings became more contingent
on political favor from above.™™85 Likewise in postrevolutionary Iran, the
state established patron“client relations with members of the Bazaar
through the distribution of a wide range of resources and the use of state
authority to produce rents for allies.
In the early years of the Islamic Republic, the supporters of economic
nationalization and state-led development clashed with those favoring a
more laissez-faire approach to the economy. However, these disputes
also changed the political economy in ways that made it reasonable to
regulate economic activities without undermining the principles of pri-
vate property and accumulation. In summary, the regime identi¬ed and
separated the ˜˜correct™™ from the ˜˜corrupt™™ bazaaris, the former being
revered and the latter reviled. In the process, the ruling class, as a social
stratum wielding power, was fashioned through the exercise and
reproduction of state power, through the creation and application of
institutions, and through the forging of mutual interests. Since the
Bazaar™s economic position clashed with the populist agenda that called
for a distributive policy in favor of the lower and lower-middle class, the
bazaaris were integrated into the political elite as individuals, not as a
corporate entity.86 Postrevolutionary state“bazaar relations were an
85
Catherine Boone, Merchant Capital and the Roots of State Power in Senegal 1930“85
(Cambridge: Cambridge University Press, 1992), p. 17.
86
James Bill writes, ˜˜Whenever in doubt, however, he [Khomeini] would go with the
attitudes of the lower and lower-middle class masses “ even at times to the
Networks in the context of transformative agendas 157

articulation of the new Islamic populist transformative project that was
inclusionary without being pluralist or corporative.

Repertoires of state incorporation
Islamic populism does not operate only on a discursive plane or through
informal clientelistic channels; rather by transcribing this policy of
˜˜supervising™™ the economy into multiple regulatory institutions and
creating new organizations, the new political elite transformed Iranian
society as it created a new regime. The Islamic Republic™s approach
toward the bazaaris approximates Ruth and David Collier™s concept of
state incorporation.87 For the Colliers state incorporation entails the
legal and bureaucratic incorporation of a social group in order to control
and mobilize it for the regime™s ends. In their treatment of state“labor
relations in Latin America, they show that unlike cases in which parti-
cular parties represented the interests of labor (i.e. party incorporation),
in the Brazilian and Chilean cases, the state initiated inclusion through a
legal framework and at the administrative level of the state. Analogously,
under the Islamic Republic, the state turned to trade policies, foreign
currency regulations, and economic organizations to control and sub-
ordinate the Bazaar. My treatment of state incorporation, nevertheless,
modi¬es the Colliers™ analysis in one respect. While the Islamic
Republic developed a wide array of legal and bureaucratic methods to
control and regulate the economy as a whole, and as I will argue in
Chapter 6 this resulted in the depoliticizing of the Bazaar, it does not
necessarily follow that this outcome was engineered by deliberate and
conscious actions of the regime to demobilize the bazaaris. Lacking
explicit statements of such motivations, I interpret the process of
incorporation as a means by which the regime situated the bazaaris
within its transformative project through the creation of clusters of
policies that over time and unwittingly recon¬gured the Bazaar™s
internal form of governance.



consternation of other important supporters such as the in¬‚uential merchants and
bazaaris.™™ James Bill, ˜˜Power and Religion in Revolutionary Iran,™™ Middle East Journal
36 (Winter 1982), 43. While I agree with the general tenor of Bill™s assessment, as the
example above demonstrates, Khomeini was careful to appear as if he was not picking
sides and strove to carve a middle ground between the two groups within ˜˜the
oppressed™™ (the poor masses and the devout bazaaris).
87
Ruth Barins Collier and David Collier, Shaping the Political Arena: Critical Junctures,
Labor Movement, and Regime Dynamics in Latin America (Princeton: Princeton
University Press, 1991).
158 Bazaar and State in Iran

Before we investigate exactly how the state incorporated the Bazaar,
we must analyze the architecture of the regime itself. Under the Shah,
the state was ostensibly a monolithic and centralized entity that placed
all decision-making powers in the hands of the monarch. An of¬cial in
the prerevolutionary Ministry of Commerce writes, ˜˜[the Shah™s]
administrative hierarchy was highly centralized, totally unintegrated,
and responsive only to him.™™88 Conversely, the postrevolutionary
regime, even though it is neither pluralistic nor corporatist in its
representation of interests, consists of multiple and competing decision-
making and power centers.89 Not unlike China™s communist regime,
which has been described as ˜˜fragmented authoritarianism,™™90 below
the of¬ce of the Supreme Leader (Khomeini, 1979“88, and ˜Ali Kha-
menei, 1988“the present), a fragmented and overlapping bureaucratic
grid persists, allowing and engendering elite factionalism and competi-
tion. This has been a product of constitutional design and is re¬‚ected in
the clustering of loci of power within both the republican institutions of
the regime (the legislature and the presidency) and the unelected
˜˜Islamic™™ institutions (Supreme Leader, Guardian Council, and
Expediency Council). This regime structure has resulted in the ¬‚our-
ishing of numerous parallel organs, many of which have survived
throughout the postrevolutionary era.
These countervailing foci of authority and power have given the
political system stability by managing regular elite contestation,91 but
they have also rendered policymaking ineffective. The multiple institu-
tions with overlapping jurisdictions have impaired the state™s ability to
develop a uniform and coherent regulatory system that can design and
implement policies effectively. For instance, an of¬cial of the Central
Bank, which is authorized to monitor all banking operations, has
recently argued that it is unable to control the nation™s ¬nances since the
88
Khosrwo Fatemi, ˜˜Leadership by Distrust: The Shah™s Modus Operandi,™™ Middle East
Journal 36 (Winter 1982), 9. Also see Homa Katouzian, ˜˜The Pahlavi Regime in Iran,™™
in Sultanistic Regimes, ed. H. E. Chehabi and Juan J. Linz (Baltimore: Johns Hopkins
University Press, 1998), pp. 182“205.
89
Houchang Chehabi has recently described the Islamic Republic as ˜˜factionalized
authoritarianism.™™ H. E. Chehabi, ˜˜The Political Regime of the Islamic Republic of
Iran in Comparative Perspective,™™ Government and Opposition 36 (Winter 2001), 48“70.
On this issue also see Hojjat Mortaji, Jenahha-ye Siyasi dar Iran-e Emruz (Tehran:
Naqsh va Negar, 1378 [1999]); and Buchta, Who Rules Iran?
90
Kenneth G. Lieberthal, ˜˜Introduction: The ˜Fragmented Authoritarianism™: Model
and Its Limitations,™™ in Bureaucracy, Politics, and Decision Making in Post-Mao China,
ed. Kenneth Lieberthal and David Lampton (Berkeley: University of California Press,
1992).
91
Arang Keshavarzian, ˜˜Contestation without Democracy: Elite Fragmentation in Iran,™™
in Enduring Authoritarianism: Obstacles to Democratization in the Middle East, ed. Marsha
Pripstein Posusney and Michelle Penner Angrist (Boulder: Lynne Rienner, 2005).
Networks in the context of transformative agendas 159

Ministry of Interior and the Security Forces, rather than the Bank, issues
licenses to the thousands of interest-free credit associations (qarz al-
hassaneh) in Iran.92 The issuing of import licenses meant to restrict
imports is another example. A member of the parliament™s Economic
Committee reported that as many as thirty centers and organs issue
import licenses. The parliamentary representative bemoaned the fact
that the plurality of licensing authorities has undermined accountability
and transparency in the process.93 Not surprisingly this heterogeneity
also hinders value integration and planning. A young technocrat in a
development ministry, who by his own admission had idealistically
taken the job thinking that he could have an impact on Iran™s devel-
opment trajectory, commented that the multiple institutions, which do
not share objectives, information, or responsibilities, often contradict,
and even neutralize, each other.94 Finally, these multiple state af¬liates
are an important means by which to distribute patronage and encourage
cronyism. In the ¬eld of domestic trade, for instance, multiple minis-
tries, municipalities, and Islamic associations play a role in supervising,
licensing, and representing traders. Under the promise of con¬dentiality
a member of the Association of Guild Affairs bluntly told me, ˜˜Nobody
knows exactly who is in charge of what. All these ministries, associa-
tions, and societies are just ways to provide jobs and ˜to lend each other
bread.™™™ Through these multiple and parallel organs a myriad patronage
networks have developed, tying clusters of clients to multiple patrons.
Another consequence of the heterogeneous decision-making organs
and competing factions in the Islamic Republic is policy volatility. As
already mentioned, the Constitution stipulates that international trade
should be under the supervision of the public sector, but this has not been
fully implemented. Instead, depending on macroeconomic ¬‚uctuations
and which faction enjoyed the upper hand, governments have contracted
or liberalized trade policies. Private capital faced a more restrictive
economy during 1980“4, 1987“90, and 1993“7, and a relatively more
liberal regime in 1979, 1985“7, 1990“3, and 1997“the present. The
numerous shifts in trade, foreign exchange, and tax policies have resulted
in truncating the time horizon for economic actors and the transfer of
existing assets into quick-return, high-pro¬t services and trades, including
speculation in foreign currencies. A survey of economic units found that

92
Aftab-e Yazd, 18 Shahrivar 1381 (September 9, 2002).
93
Nawrouz, 23 Khordad 1381 ( June 13, 2002).
94
This of¬cial mentioned that one of the most important achievements of the Khatami
government was to merge several of these ministries for, example the Ministry of
Industry with the Ministry of Mines and the Ministry of Agriculture with the Ministry
of the Crusade for Construction.
160 Bazaar and State in Iran

three-quarters of managers surveyed believed that frequent changes in
laws and regulations were either ˜˜very™™ or ˜˜quite important™™ in hindering
production, making this issue the leading factor cited.95 Addressing the
issue of policy volatility, the chairman of the Isfahan Chamber of Com-
merce, Industries and Mines said, ˜˜Experience gained from the last
decade shows that certain in¬‚uential ¬gures have made new decisions
each day. They have modi¬ed the regulations for imports/exports,
investment, taxes and duties to either facilitate or restrict the respective
sectors. Without doubt, no one would be willing to make industrial
investments under these conditions, unless on exceptional occasions.™™96
The issue of perpetual instability in trade regulations was one of the
most consistent themes in my interviews with traders and wholesalers.
Distinguishing between market ¬‚uctuations and policy and regulatory
instability, the bazaaris spoke of how changes in laws affect
prices, quantities, and the channels through which goods may enter the
economy. Bazaaris reiterated that they are never sure whether import
rules, hard currency laws, and customs regulations announced one
month will be in place the next. Changes in customs duties have been
among the factors leading to a large quantity of imports being aban-
doned at ports. A businessman told a newspaper ˜˜that constant changes
in the customs duties is one of the main reasons why importers abandon
their commodities in customs. ˜These changes take place in the mid-
year, while legally, they can only occur on a yearly basis. It seems the
government should take more serious measures to resolve this problem
and ¬x duty rates.™™™97 Importers no longer freely import since licenses
might be lifted and state organs may import the same good at lower
costs (since they have access to subsidized dollars and do not pay
duties). Speculation has replaced long-term investments in reputation,
and economic relations have become more temporary.
To manage the volatility successfully one needs information, and here
the state, or allies within its penumbra, enjoy a highly privileged posi-
tion. But these alliances too are riddled with instability and have become

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