Prospects for Syrian Civil Society Remain Dim While Sanctions Linger
Without tangible sanctions relief, Syrian civil society organisations will struggle to play a meaningful role in the country’s constitutional reform, local governance, or transitional justice efforts.
Last month, Syrian civil society actors, sanctons experts, and European officials gathered in The Hague to assess the role of sanctions in Syria’s political and economic transition following the fall of Damascus to Hayat Tahrir al-Sham (HTS). During a one-day workshop co-hosted by the Bourse & Bazaar Foundation and the Clingendael Institute, participants discussed how Western sanctions policy should be adjusted to alleviate Syria’s desperate economic situation. The gathering focused on ensuring meaningful support to local institutions and civil society, with the ambition of preventing the country from spiraling into renewed conflict.
Syria remains under multiple overlapping sanctions regimes led by the United States, the European Union, and the United Nations. These measures—originally designed to pressure the Assad regime—now inhibit economic recovery, reconstruction, and institutional reform, even though the political landscape has shifted.
The US regime, shaped by the Caesar Act and counterterrorism designations of HTS, is the most comprehensive and extraterritorial. General License 24, set to expire in July 2025, provides narrow exemptions focused on essential services but does not allow for new investment or broader engagement. The EU has taken steps to suspend sanctions on key sectors, including energy and transport, yet the extraterritorial effect of US sanctions limits the impact of EU moves. The UN still lists HTS under its 1267 regime, restricting international financial and diplomatic engagement.
While the legal frameworks differ, the overall effect is similar: financial institutions, aid agencies, and the private sector are reluctant to engage in Syria, fearing compliance risks and political fallout.
Participants described the Syrian economy as being in a state of accelerating collapse, with deteriorating civil services, soaring unemployment, and households struggling without purchasing power. The destruction of infrastructure, ongoing currency depreciation, and the withdrawal of Russian and Iranian economic support have compounded the crisis. Streets in Damascus are flooded with cheap Turkish imports that Syrians cannot afford. Even in now stable areas of the country, public utilities and services—electricity, water, telecommunications, education—are barely functional.
Against this backdrop, humanitarian needs are escalating, yet aid pledges remain grossly inadequate. According to estimates, Syria’s reconstruction needs range between $250 and $400 billion, while the March 2025 Brussels donor conference resulted in pledges amounting to just $6.5 billion. Even early recovery and resilience programming—technically permissible under many sanctions frameworks—remains underfunded and politically delayed.
Despite the continued implementation of sanctions, participants noted that the international donor community is not entirely constrained from engaging with Syria. Under existing exemptions and mandates, there are already pathways for supporting essential services, infrastructure rehabilitation, and early recovery efforts—particularly when these activities are framed as humanitarian or development aid. According to one workshop participant, the World Bank has confirmed that it can support infrastructure and basic services in Syria under its post-conflict operational framework. However, meaningful engagement still depends on greater clarity and political alignment from member states. If expanded and adequately resourced, the Bank’s early recovery programs could offer a critical lifeline to communities even in the absence of full-scale sanctions relief.
Failure to lift or ease sanctions will prevent private sector and institutional investment that is essential for rebuilding the Syrian economy. But failure to increase aid, even under the current legal frameworks, ensures continued suffering, deepens instability, and risks the re-emergence of violence, organised crime, and extremism.
A central theme in the discussions was the counterproductive reliance on political benchmarks—such as inclusivity, constitutional reform, and governance transformation—as preconditions for sanctions relief. While these conditions seem sensible, they have triggered a rushed and top-down political process in Syria that many civil society organisations (CSOs) described as inorganic and externally driven.
For example, the national dialogue conference was announced to many of its intended participants with less than 24 hours’ notice. Consultations were limited in scope and representation, with key civic figures and regions underrepresented. Similarly, the interim constitution was drafted in just weeks, concentrating power in the executive, offering minimal separation of powers, and making vague commitments to pluralism.
HTS has made symbolic gestures to show its commitment to inclusive governance, such as appointing technocrats and making deals with Druze, southern militias, and Kurdish factions. Civil society actors view these many of these moves as superficial and tailored to meet donor expectations rather than domestic realities. Many warned that the political process risks collapsing without parallel efforts to restore economic viability and institutional functionality.
Moreover, the current sanctions framework often fails to distinguish between political conditionality and humanitarian necessity. As one participant remarked, “you cannot expect people to fight for democracy when fighting for food.”
Syrian civil society actors at the workshop identified several priorities for supporting an inclusive and grounded transition. Chief among them was the need for clearer guidance on sanctions and access to channels for clarification from relevant authorities. Many CSOs, especially those returning from abroad, are eager to establish offices in Damascus but face significant challenges due to legal uncertainties and the degraded infrastructure. Establishing local operations is constrained by the lack of electricity and internet access in particular, two utilities affected by sanctions.
Participants also emphasised the importance of providing training and technical support to ensure compliance with evolving sanctions frameworks, especially around financial procedures and institutional engagement. Access to dedicated funding with simplified disbursement processes, along with protections against bank over-compliance, was also flagged as essential.
In addition, CSOs called for increased support for local governance and service delivery, including civil servant salaries and early recovery programmes. They urged international actors to move away from a narrow focus on minority protection and instead promote a shared civic rights agenda. Finally, participants highlighted the need for more unified CSO advocacy efforts to engage international partners with a coherent voice representing diaspora and in-country actors.
Without these resources, CSOs will struggle to play a meaningful role in Syria’s constitutional reform, local governance, or transitional justice efforts. The current imbalance between international expectations and the limited capabilities of civil society risks undermining its legitimacy—not only in the eyes of donors, but also among ordinary Syrians. When CSOs are unable to address pressing socioeconomic needs like livelihoods, essential services, and infrastructure, they can appear ineffective or disconnected from the reality on the ground. As one participant noted, if civil society is perceived as focused solely on political processes while daily conditions worsen, public trust and relevance may quickly erode.
In response to these concerns, participants proposed a set of actionable steps for international actors to align sanctions policy with Syria’s evolving circumstances. For the United States, the immediate priority is to make General License 24 permanent and broaden its scope to include investment and infrastructure-related activities. Participants also urged Washington to remove HTS’ designation as a Foreign Terrorist Organisation (FTO) while maintaining its listing as a Specially Designated Global Terrorist (SDGT), at least for now. This modest move would reduce the legal risks associated with engagement while preserving necessary safeguards for the population. Alongside these steps, it was suggested the US should issue more explicit guidance on permissible engagements in Syria—such as FAQs or advisory notes tailored to humanitarian and development actors—to reduce uncertainty and risk aversion.
While the European Union has gone further than the US in suspending sanctions, it still plays a key role. Participants noted that the EU’s suspension of sectoral sanctions, enacted in February, is effectively permanent, but called for an outline of a transparent roadmap towards full sanctions removal. Additionally, they recommended launching an EU-led reconstruction trust fund that is both insulated from US financial jurisdiction as well as open to co-financing from Gulf states and multilateral actors. Restoring a diplomatic and technical presence on the ground would also assist the EU in monitoring developments in Syria, ultimately supporting a more credible political and economic transition.
Crucially, the EU must actively encourage the United States to take bolder and more decisive steps. Without parallel US action, the efficacy of EU measures remains limited, especially given the extraterritorial scope of American sanctions.
Recommendations for the UN mainly focused on unlocking key legal and diplomatic barriers. Participants called for a review of HTS’s designation under the 1267 regime, taking into account its public disavowal of ties to al-Qaeda and ongoing coordination against the Islamic State. The UN Special Envoy should be mandated to engage the new Syrian authorities to negotiate specific steps toward delisting or, at a minimum, time-bound exemptions aligned with transitional goals. Furthermore, the implementation of UNSCR 2664—which establishes humanitarian carve-outs across all UN sanctions regimes—should be actively promoted and incorporated into member state legislation to improve operational clarity and access for aid providers.
The workshop underscored the sobering reality that Syria’s future depends on concrete steps from the international community to ensure a successful political transition, economic recovery, and reconstruction. Maintaining rigid conditionality while under-delivering on aid and sanctions relief will neither foster inclusive governance nor prevent future conflict. Policymakers must realign their tools with the current realities—pairing cautious diplomacy with tangible economic support and giving civil society the space and resources to lead. As one participant put it, “sanctions might have been a tool to shape Syria’s future. Today, they are part of what’s preventing it.”
Photo: Ahmed Akacha
In a Time of Crisis, Iranians Seek Comfort, Connection Through Music
The coronavirus outbreak has wrecked Iran’s cultural calendar, putting strain on finances of theaters and livelihoods of performers. But Iranian artists are rising to the occasion, finding ways to ensure their music reaches audiences at a time when it is needed most.
Iran is enduring one of the world’s worst outbreaks of COVID-19. Over 73,000 infections have been confirmed in official figures. Faced with uncertainty and isolated during a national lockdown, Iranians have sought comfort and connection through music.
The coronavirus outbreak has wrecked Iran’s cultural calendar, straining the finances of theaters and the livelihoods of performers. But Iranian artists are rising to the occasion, finding ways to ensure their music reaches audiences at a time when it is needed most.
Concerts are being given in empty performance halls, but streamed to millions online. Musicians are practicing in the solitude of their homes, but connecting with fans on social media.
Alternative band Bomrani, whose sound combines influences from traditional Iranian music, jazz, and gypsy punk, had planned to give four concerts in March—all canceled due to the outbreak. The band decided to experiment with an online concert
With Bomrani’s six members social distancing, they decided to release a recording of a concert performed last year on the grounds of Sa’dabad Palace. They used Instagram to stream the concert. The platform’s chat function allowed the band to connect with fans during the stream.
“It was really nice. The whole band was online. We were chatting with each other, making jokes, and fooling around. This created an intimate atmosphere,” said lead singer Behzad Omrani.
“People later told us that it felt as if Bomrani had thrown a party and we were sitting next to them listening to the music,” he added.
The band had tried live-streaming performances before. “But we didn’t take it that seriously. You can’t compare anything with the joy of performing in front of an audience but we have to make do with what we've got.”
Despite the serious times, Omrani explains that the band isn’t taking their online performances too seriously. “I don’t look at these concerts as doing society a service,” Omrani explained. “That’s not what art is to me. Giving online concerts is a way for me to express myself, to be myself, and to enjoy myself.”
Despite this, Bomrani do not shy away from difficult topics in their music. “We’ve got an album in the pipeline, ‘Probably There Is No Hero’. It’s about all we have been through over the past year both personally and as a country,” he said.
Iranians rang in Nowruz, the Persian New Year, three weeks ago, just as the coronavirus crisis mounted. Omrani describes the year just passed as “really harsh” and “totally unprecedented.”
He thinks the music industry in Iran will be changed by the experience of the coronavirus. “The outbreak has catalyzed a transformation. Five or six years ago no one would have believed that one day musicians would throw online concerts in Iran. Things are changing and they are changing fast.
Power of Music
Iranian authorities have also sought to use the power of music. But the concerts have not been without controversy.
As part of a broad “stay at home” campaign, Tehran Municipality organized a series of online concerts between March 27 and April 9. The concerts were recorded live at the central hall of Tehran’s iconic Milad Tower and streamed online, reaching a staggering five million viewers.
The popularity of the first concert caught the attention of the leadership of IRIB, the state broadcaster and de facto media regulator. Reports emerged that IRIB had prohibited the concert organizers from streaming video of the performers on stage.
On March 28, a performance by musician Omid Jahani was streamed with scenes from nature rather than video of the performer. But the following day, IRIB denied imposing any such rules and the concerts were streamed as originally planned, bringing performances from the likes of Roozbeh Bemani, Reza Yazdani, Sadollah Nasiri and Mohsen Sharifian into the living rooms of Iranians across the country.
Peace of Mind
Musician Siavash Mollaeian plays the kamancheh, a traditional string instrument that features in Iranian, Kurdish, and Azerbaijani music. He is an unlikely convert to online performances. “I’ve never been into social media and giving online concerts. It was never my thing,” he said.
“Following the outbreak, I was feeling down. Then a friend reached out to me and asked me totally out of the blue, ‘Why aren’t you giving concerts on Instagram? It would be really nice and you’d enjoy it.’”
After mulling it over for a few days, Mollaeian decided to give it a shot.
Now, regularly gives live performances for his followers on Instrgram. “I received messages telling me that my music instills a sense of calmness and rekindles hope. I didn’t expect that,” he said.
Mollaeian believes that the uncertainty introduced by the pandemic has taken a toll on people, who are increasingly anxious about the future. “My music is a reflection of my personal struggles. I think coming across works of art, people see what they long for. And these days what people need is peace of mind and hope.”
In a time of crisis, a deeper sense of community has emerged. “People are working hard to rekindle long lost friendships. They are more willing to go the extra mile to get in touch with strangers, to forge new fellowships, to go beyond boundaries,” Mollaeian explained.
Bridging the Gap
Two weeks ago, Mollaeian reached out to Aida Shahghasemi with a simple invitation: to perform a duet.
Shahghasemi is an Iranian-born singer and kamancheh player living in Minneapolis, Minnesota. She and Mollaeian have never met in person—they got to know one another through social media.
“We have known each other for years. We had discussed doing a joint project but had never managed to do so,” Mollaeian said.
The pandemic provided the two artists with a chance to bridge the 10,000-kilometer gap between Iran and the United States.
Shahghasemi is a music teacher who has also had to adapt as the coronavirus outbreak in the United States worsened. “My husband and I, along with our dog, have been self-isolating since March 13. Following the outbreak, I had to switch to giving online classes,” she said.
She has seen a surge in demand for classes over the past few weeks as people search for new hobbies to pass the time. But Shahghasemi thinks that for most of her new students, learning music, like the lockdown, will be temporary. “I think many of them might not have enough time to continue taking lessons after the pandemic is over,” she noted, wryly.
After agreeing to play a duet, Mollaeian and Shahghasemi did a trial run to test their Internet connection. But otherwise, they decided improvise their performance. On April 3, they performed a few pieces live on Instagram.
For Shahghasemi, the online performance lacked the ritual and the connection with the other musicians that make concerts special. “With these online performances, artists go online, people pop in, listen to half a song, get distracted by notification on their phones and drop out. It certainly wasn’t as fulfilling as performing in front of an audience,” she admitted.
Shahghasemi is hesitant to give it another try. “Maybe I’m holding myself back but I’m open to collaborating with my fellow artists and friends.”
But for Mollaeian the concert still felt meaningful, perhaps because of the lack of context. “While playing the duet it felt as if she was sitting next to me. So far, yet so close. We are practicing social distancing, but are we really distancing from each other? To me, it doesn’t seem that way. The crisis is bringing people together. New connections are being made.
“Iranian, American. In the face of this pandemic, these differences are immaterial,” Mollaeian said, referring to the longstanding animosity between the governments of the United States and Iran.
“Humans have been divided by borders and boundaries for ages. Technology has afforded us the opportunity to cross such boundaries—and with our music we have.”
Photo: Amir Jadidi
Iranian Civil Society, Businesses Step-Up in Virus Fight
Faced with the gravity of the COVID-19 outbreak, members of Iranian civil society and private sector business leaders have joined the fight against the virus, seeking to address gaps in the government’s response.
It may be springtime, but the nights are still chilly in Shiraz. It is 2:30 am. The streets of Iran’s fifth largest city are deserted and Ali Mousavi and his team of volunteers are walking along the boulevards and back-alleys with their disinfection equipment.
Shiraz has been an epicenter for cases of COVID-19 in Iran. Less than two weeks ago the city council wrote a letter to Iran’s president, Hassan Rouhani, expressing grave concerns over the soaring number of the new cases and calling for the government to take more serious action.
But many Shirazis were not content to wait for government interventions that tend to arrive slowly and often fail to provide adequate support. Mousavi, who is a lecturer at a local university, decided to take matters into his own hand by launching a volunteer effort, as they had last year in response to the deadly flash floods that hit Shiraz.
Mousavi and his team began disinfecting neighborhoods just a few days after Iran officially disclosed its first cases of COVID-19. Starting with two groups of 20 volunteers, there are now over 300 people contributing their time. Mousavi reports on the group’s efforts on Twitter.
The volunteers have also helped with the production of protective face masks and hand sanitizer. “A local factory was understaffed and we could contribute manpower,” Mousavi explained. “With the coordination of Shiraz University of Medical Sciences, our team started working at the facility in three shifts producing 20,000 disposable surgical masks daily to meet the new demand.”
Grassroots Efforts Across Iran
COVID-19 has killed over 3,603 in Iran and the country has registered more than 58,000 cases of the illness, with 2,483 new cases announced just yesterday.
The government’s slow response to the virus allowed it to spread unhindered for several weeks before serious action was taken.
As the toll from the outbreak continues to mount, already diminished stockpiles of critical medical equipment are nearly depleted. To make matters worse, the Iranian government faces a significant budget deficit as a result of a collapse in the global oil price, a fall in regional trade, the pressure of U.S. sanctions, and fiscal mismanagement.
Faced with the gravity of the situation, members of Iranian civil society and private sector business leaders have joined the fight against COVID-19, seeking to address gaps in the government’s response.
Groups of concerned citizens have organized in dozens of cities across Iran, mobilizing to support sanitation efforts, to increase production of critical supplies, and to deliver groceries and medication to the homes of those most vulnerable to infection, including the elderly and those living in underprivileged communities.
A group of young seminary students in Mashhad were lauded after they volunteered to wash the bodies of coronavirus victims before burial, in keeping with Islamic custom—a risky job that few people were willing to do.
Volunteers are working selflessly, putting themselves at risk to help people in need, explained Mousavi, describing it as the “right spirit.” When asked whether any of his volunteers had been infected, Mousavi responded “no one so far, thank God.”
Mousavi and his team, like many similar groups around the country, are funded by donations. “Many people think we receive financial help from the government or military institutions, but in reality we receive limited support from those bodies.” He presents a receipt for a purchase of 400 pairs of industrial gloves for his disinfection teams, paid for by donations.
So far, Mousavi has collected around USD 20,000 in donations to purchase food and basic supplies for vulnerable households, especially those families that have lost their breadwinners to COVID-19.
Major Companies Join the Effort
Perhaps the largest philanthropic campaign under way in Iran is the Nafas Campaign (nafas means “breath” in Persian, but it is also the base of the Persian idiom for “trust in oneself”). Launched in late February, over 200 companies from Iran’s private sector have joined the campaign, coordinated by chambers of commerce and the philanthropic arms of several of Iran’s largest firms. Together, the members have donated over USD 1,000,000, medical equipment, in-kind services, and cash assistance to help fight COVID-19.
The Nafas Campaign has managed to supply ventilators to hospitals across the country. Last week, the campaign donated 55 ventilators, valued at around USD 350,000, to hospitals in Golestan, a province facing one of the most severe outbreaks of COVID-19 in the country.
Hospitals are also facing unprecedented demand for medical oxygen cylinders—and the Tehran Compressed Gas Association has stepped-up. Mahrad Ebad, vice chairman of the association, described a market under strain. "Unfortunately, in recent months, oxygen cylinders have been in short supply in Iran for variety of reasons, including high demand, sanctions pressures, and the depreciating rial. Prices have skyrocketed and we are seeing cylinders sold at prices as high as 2 to 3 million toman (USD 125 to USD 185).”
“Within the framework of our support to the Nafas Campaign, we have procured and donated over 1800 oxygen cylinders for use at hospitals across the country.” Ebad added.
Medical systems around the world are scrambling to procure N95 masks used by healthcare workers to protect themselves from the risk of infection. Tapping into the supplier relationships of its member companies, the Nafas Campaign has imported over 500,000 N95 masks from China, with another 120,000 masks slated to arrive in the coming days.
The Nafas Campaign’s flagship project was the construction of the Nafas Clinic, a center where patients can be tested for COVID-19 and other acute respiratory disease. Built in just eight days, the clinic, located in Tehran’s Sadeqieh square and adjacent to Ebnesina Hospital, has the capacity to test 300 patients daily and is open 24 hours, seven days a week.
Despite these successes, campaign members continue to be disappointed by the bureaucratic hurdles and lengthy custom clearance procedures that have delayed delivery of critically needed items to hospitals. “It is unacceptable that such key supplies are held for days merely for certain bureaucratic processes while our medical centers are facing shortage of protective gears,” said Farzin Fardis, communications director for the campaign. The campaign has called on the government to reduce the red tape.
Fadis believes the campaign is pioneering a new model of civic action, and the private sector nature of the initiative has enabled donations to be solicited from Iranians abroad. “The fact that so many businesses have come together to cooperate in civic activities as part of this campaign, sets an important precedent in Iran and we hope that when the coronavirus crisis is over, this campaign will be considered a successful model for such efforts.”
Photo: IRNA
Under Lockdown, Iranians Rediscover the Joys of Baking Bread
Iranians are staying at home, doing their part to “flatten the curve” as the country confronts COVID-19. Adjusting to confinement at a stressful and uncertain time, many Iranians have found a new and creative pastime—baking bread.
Iranians are staying at home, doing their part to “flatten the curve” as the country confronts COVID-19. Adjusting to confinement in a stressful and uncertain period, many have found a new pastime—baking bread.
The bustling streets of Iran’s cities are now deserted, although the country’s lockdown measures are not as strict as those in Italy or France. The government has instructed bakeries to keep normal working hours and bakers continue to be well-supplied with flour, which is heavily subsidized in Iran.
Some customers continue to line up—keeping a safe distance from one another—and many bakeries have stopped accepting cash to avoid bakers handling spare change. But many Iranians have opted to stop visiting bakeries, if only to limit their time outside.
Unable to get fresh bread each day, Iranians have turned to store-bought brands. Others have bought bread to freeze, hoping it would last them during the lockdown.
On March 13, armed forces chief of staff Mohammad Bagheri, announced that security forces would begin enforcing restrictions on intercity travel, a move many interpreted to mean that a full lockdown was imminent. Iranians rushed to stock up on essentials.
Hearing the news, Ahmad, who declined to share his last name, headed to the nearest bakery. Married and with two children, he bought stacks of bread that could sustain his family for at least a week. “At the time I thought if the government imposed a lockdown, at least we’d have bread to eat.”
Although Iranian cuisine is often associated with rice, bread is the true staple. Iranian per capita bread consumption is 160 kilograms each year—by some accounts the second highest level in the world. It should be no surprise then that the global “bread-baking boom” would reach Iran.
Nasim Moghaddam is a manager at an Iranian startup. She is immune-compromised and has been self-isolating since early March. Four weeks into her quarantine, with ample time to take on a new project, she tried her hand at baking Lavash and Barbari, two of the most popular Iranian flatbreads.
“I have always been into cooking and baking. I had even tried baking bread once or twice before. Bread-baking takes time and effort, but time is something I’ve got in abundance these days,” she said.
Moghaddam explained that baking helps her wind down during these stressful days. “Baking takes your mind off all the tensions. You need to concentrate on what you are doing or you will simply ruin what you are making.”
Maryam Keshtparvar, a psychologist, believes many Iranians are seeking ways to cope with the profound psychological effects of the pandemic. “The first priority for everyone has become the urge for survival and people feel that that they have been deprived of the many securities of modern life. This can trigger fear and anxiety,” she said.
Keshtparvar notes that as people settle into a new routine at home while they wait out outbreak, new pastimes are gaining popularity. “Some of these activities may be considered throwbacks to an earlier age. People have started growing vegetables and baking bread at home. They find themselves experimenting with soil, plants, and flour. This newfound familiarity with the elements rekindles calm in people.”
Artist Pooya Shahsiah and her husband Ehsan started baking bread a few months before COVID-19 outbreak. But they have taken their baking to new heights since beginning self-isolation. The pair have come to see baking bread as a “creative experience that has a prevailing presence during your daily life.”
Pooya recalled the origin of their hobby in an Instagram post, writing, “One day I woke up and found Ehsan trying to bake bread. A new hobby, I thought to myself, which he’d give up on soon. But he didn’t. This still comes as a surprise to me, but we have not bought bread even once over the past six months.” In the same post, she explains the basics of baking sourdough bread.
Their loaves have won fans. “We have been receiving calls from friends asking us to bake them a loaf or two,” she said, laughing boisterously. “We might even start selling bread.” The couple is currently going through as much as 8 kilograms of flour a week.
Speaking by phone, the couple explained that for them, baking has an emotional significance. “For years, Ehsan longed for the taste of bread his late aunt baked. Sourdough was the answer,” Shahsiah explained. “Some even name their sourdough starters as if they were newborn babies. We don’t, but we certainly pamper our starter.”
Posting about their baking exploits on social media, the couple was asked by friends to share their starter, which helps speed the fermentation process. “We did, just to give them a head start in the process. But I was worried that they wouldn’t take proper care of it. You need to pay attention to minuscule details. The smallest details can change the outcome.”
The pair learned how to bake by watching YouTube tutorials, accessed by VPN.
Over the past few weeks, as the coronavirus outbreak grew worse, similar tutorials have been uploaded to Aparat, Iran’s leading video-sharing platform. Even IRNA, a state news agency, has published an article entitled “How to Make Taftoon Bread at Home: An Enjoyable Pastime.”
Those who have tried it tend to agree.
Photo: Nasim Moghaddam
Closure of Tehran Bazaar Reflects Fierce Elite Competition, Not Popular Politics
◢ The bazaar of today is not the bazaar of forty years ago, and no longer plays the same role as a key actor in Iran’s popular political mobilizations. The recent bazaar closures reflect primarily the economic self-interest of bazaar elite, who sense an opportunity to put the brakes on reforms that threaten their unique capacities for lucrative arbitrage. Protests are being co-opted as a political tool at the expense of genuine civil society mobilization.
The closure of Tehran’s Grand Bazaar yesterday, and the closure of the consumer electronics bazaar the day before, seemed to be part of the regular and widespread protests that have roiled Iran over the last few months, spurred by economic volatility. Many saw the bazaar’s closure and subsequent protests as a meaningful escalation, a sign that perhaps popular discontent was spreading to key institutions and that coalitions were forming that could challenge the government more directly. After all, the bazaar has historically been seen as the heart of Iranian civil society, an institution where people of all walks of life could cross paths. As a physical institution, it was long a rare incubator for solidarity: “the rooted nature of the market… establish[es] the necessary foundation for communal allegiance, with its confined nature fostering long-term and face-to-face interactions among bazaaris.”
But this conception of the bazaar is an artifact of an earlier time. The bazaar in Iran today can no longer claim to be what historian Roy Mottahedeh eloquently described as “the assessor that sets the valuations politicians must use when they trade.” Over the last few decades, the bazaar has been cleaved from Iran’s civil society, no longer standing at its heart, but rather in isolation, losing its former role as a cite for broad civil society politics, and acting instead in its economic self-interest as the recent protests so transparently expose. Understanding this transformation is fundamental to an assessment of the recent protests.
The networks of the bazaar that linked the merchants to civil society were deliberately disrupted and broken following the 1979 Islamic revolution. As detailed by Arang Keshavarzian in his seminal Bazaar and State in Iran, the new revolutionary government, concerned about the continued role of the bazaar as a site of contentious politics, sought to constrain the role of the bazaar in civil society via two processes.
First, those bazaar merchants loyal to the revolution and the new Islamic Republic were co-opted into the state, offered positions as the heads of ministries and bonyads. The regime rewarded namely the members of the group of the Islamic Coalition Association (ICA), a small segment of bazaar merchants, who had “financed and organized many political rallies and events… became part of the new ruling elite.” Incorporating these bazaaris into the regime gave them new incentives and power, changing their relations with the bazaar—indeed, they are no longer referred to as bazaaris by other merchants but instead called dawlati, meaning “of the government.” Personal gain motivated the separation from the bazaar. With the economy under state control, officials were in the position to take advantage of power for personal gain, with, “direct access to rents via exclusive importing licenses, tax exemptions, subsidized hard currency, and control over procurement boards and industrial establishments. The bazaaris who have established patronage channels have used them for personal and exclusive ends, and not as a tool for the benefit of the entire bazaar.”
Second, a new kind of profiteering was introduced to the bazaar. During the Iran-Iraq war, the government of the Islamic Republic saw its coffers emptying rapidly. Iran’s economy was increasingly cut-off from global markets for goods and services as a result of economic sanctions. Some goods were unavailable, others became more expensive. Turning a crisis into an opportunity, elements in the bazaar began to engage in smuggling both in order to gain access to goods that would be sold for high prices in the market, but also to engage in profiteering and to secure rents that could be funneled to quasi-state institutions. Dawlatis in the bazaar enjoyed state-sanctioned access to black market goods that they could sell at market for large profits. They could also benefit from preferential access to foreign currency.
To be clear, these changes did not make the bazaar apolitical. On the contrary, the merchants continued to mobilize in a coordinated fashion, but with a new and more self-serving outlook. Bazaar closures like those seen this week are relatively rare, but did occur numerous times during the the Ahmadinejad years, with notable closures in 2008, 2010, and 2012. It would be easy to assume that these closures were due to the general economic malaise and popular dissatisfaction that marked Ahmadinejad’s tenure, but the fact that the bazaar did not engage in any significant mobilization in 2009, when sustained mass-protests emerged in response to Ahmadinejad's disputed reelection, demonstrates that civil society solidarity was not the motivating factor. The merchants of the contemporary bazaar do not mobilize for the people. They only mobilize for their own interests.
These is a clear line that can be drawn from the bazaar mobilizations of a decade ago to those of today. The Ahmadinejad years saw the rise of a new kind of rentierism in the Iranian economy, where quasi-state entities extended their role in Iranian enterprise. Iran’s Islamic Revolutionary Guard Corps (IRGC) ambitiously expanded their industrial operations, taking advantage of free-flowing contracts and financing made available by the Ahmadinejad government. A new kind of corporatist rentierism was emerging. Rather than rely on smuggling and arbitrage, quasi-state groups leveraged political connections to provide more valuable products and services to the economy than mere market commerce, sensing an opportunity as the Iranian private sector was squeezed by international sanctions and international companies reduced their presence in the market.
The nascent rivalry between the bazaari class and the IRGC would have been unthinkable in at the outset of the bazaar’s post-revolution transformation, but as IRGC generals saw opportunities develop in the boardroom, new fault lines have emerged, particularly in light of Rouhani’s pursuit of economic reform.
President Rouhani was elected in 2013 on a mandate to liberalize the economy through two interrelated processes: improve monetary policy and overall transparency in the economy and boost foreign trade and investment. He has been a vocal critic of the IRGC and its role in the economy. But it should be noted that corporatist rentierism is not entirely incompatible with liberalization. Rouhani has always positioned himself as giving the IRGC leaders a choice—they can either engage in business or serve proudly in the military, but they cannot do both. Faced with this choice in a liberalizing environment, an entity with links to the IRGC that is a beneficial owner of a company can either profit by offloading its shares in that company to a non-IRGC linked firm (phenomenon which has been observed in several cases) or it can clean itself of its IRGC links in order to position itself to benefit from expected foreign trade and investment. The availability of these options also help explain why liberalization has received a relatively robust endorsement from the supreme leader, Ayatollah Ali Khamenei, including a recent statement that parliament must “must independently make legislation on issues such as terrorism or combating money laundering.” Khamenei’s concern is mostly about the pace of liberalization and the provisioning of its fruits, not its intended structural effects.
Importantly these structural effects threaten the bazaar as it operates today. The fundamental source of rents in the bazaar is arbitrage. Access to goods is secured at a low price, either through smuggling or manipulation of the foreign exchange markets, and then goods are sold at a high price. The disproportionate economic muscle of the bazaar network, stems from rents generated by high-value items such as gold and jewelry and electronics.
As the consumer electronics bazaar shut in protest over the currency fluctuations, Mohammad-Javad Azari Jahromi, the Iran’s Minister of Information and Communication Technology, sought to expose the predatory arbitrage. He disclosed that while consumer electronics sellers in the bazaar were sold a total of EUR 220 million of foreign currency at the official exchange rate in order to purchase stock, only approximately EUR 75 million of mobile phones were imported. So two-thirds of the foreign currency provided cannot be accounted for.
The implication is that approximately EUR 145 million in foreign currency was siphoned-off to be sold at the black market rate, likely allowing the traders to nearly double their investment in the foreign exchange. As demonstrated by Jahromi’s resolve to expose such fraud, these types of activities would become impossible if the Rouhani administration can successfully implement the liberalization measures currently being pursued. Whether it is improving tax collection mechanisms, bettering customs controls, raising accounting standards, introducing stronger financial crime laws, or instituting tighter controls on foreign exchange, including a unified rate, such reforms would spell the end of the bazaar’s cash generation, now seen as a drag on the economy at large.
Meanwhile, IRGC-linked development companies are among those building a plethora of malls across Iran, slowly eroding the bazaar’s long-standing role as the a pillar of Iran’s consumer-driven economy. Ironically, in undermining the bazaar in this way, the Islamic Republic is achieving something the Shah had always sought to accomplish. In 1979, the bazaar mobilized against the Shah largely due to his declared dislike for their “worm-ridden shops” and his attempt to curtail their economic influence. In his own words, the Shah “could not stop building supermarkets. [He] wanted a modern country.” But he never got the chance to render the bazaar obsolete.
Four decades later, economic liberalization and modernization is finally chipping away at the bazaar’s customer base as consumers habits see hours spent in malls and supermarkets rather than in the labyrinthine bazaar. The benefactors of this shift in consumer habits are both Rouhani and his private sector supporters and the opportunistic elements of the IRGC. The losers are the elite traders of the bazaar.
To be clear, not all merchants are part of the predatory elite. There remain plenty of humble grocers and shoe-sellers and spice merchants who can count themselves among those under relentless economic pressure. For these merchants, participating in a closure is not always a matter of choice. Journalist Reihaneh Yasini, in her reporting from the bazaar on Monday, spoke to merchants who described being ordered to shut their shops unwillingly. One young bazaari said, “It was about 11 o’clock when some people came by and said everyone must close their shops. We got scared and also closed.” Another added, “They were angry. They said they would use bricks to smash the windows. They appeared to me to be people complaining about rising costs. It was right for us to close the shop after this happened, though in reality closing the shop has little cost for us. Our sales are so low that closing the bazaar for one day will make little difference to us.”
It is unlikely that the closures were spontaneous. This has not been the historical norm for mobilizations at the bazaar and accounting for historical trajectories and the intense competition of Iran’s present-day economy, the bazaar’s mobilization is best understood as a manifestation of elite competition. Bazaar elites sought to co-opt the voices and slogans of a frustrated and economically insecure population in order to undermine their political opponents and put the brakes on threatening reform processes.
In this sense, the bazaar closures may follow the same playbook as some of the initial mobilizations in Mashhad at the end of last year. These tactics must be called out. There is a very real risk that genuine civil society frustrations are becoming instrumentalized by elites in an effort to preserve the kind of predatory economic activity that has led to so much economic suffering among the Iranian people. Outside observers must remember than the success of civil society protests in Iran depends principally on the independent collective action and claims-making of those mobilizations, not merely on the spectacle of the protests themselves.
Photo Credit: Thomas Cristofoletti
The Politics of Sanctions Relief in Iran: Three Roles for the Private Sector
◢ As politicians and analysts consider the wisdom of offering Iran sanctions relief in exchange for restrictions on the country’s nuclear program, a key stakeholder group remains unaccounted for in the debate – the private sector.
◢ Private sector leaders can play three vital roles to help bring a brighter economic and political future to Iran— interlocutors, stewards, and creators.
As politicians and analysts consider the wisdom of offering Iran sanctions relief in exchange for restrictions on the country’s nuclear program, a key stakeholder group remains unaccounted for in the debate – the private sector.
Iran’s private sector stands to gain the most from sanctions relief, and they are uniquely positioned to advance the agenda of normalization through their interactions with both domestic and international business people. Corporate leaders are poised to play three vital roles— interlocutors, stewards, and creators—without which the long awaited nuclear deal will not successfully improve the economic situation in Iran in the way many Iranians anticipate. Policymakers must take account of the relationship between sanctions relief and private sector leadership for the deal to have its much-awaited impact.
In the aftermath of a deal, Iran’s private sector business leaders will be the ideal actors to pick up where the diplomats leave off. These individuals, with global outlooks and ambitions, have already begun reaching out to their peers in the West. And while this outreach is primarily about securing new investment and business opportunities for themselves, it also offers an opportunity to present Iran in a new light, and undo the effects of political vilification and cultural misconception.
The notion of “business diplomacy” has emerged in the last decade as a serious topic of strategic thought, suggesting that the business executive can serve as a special kind of “ambassador.” And in the transition from high-stakes diplomacy to the “business as usual” mentality expected from a détente between Iran and the West, business diplomacy is the essential intermediate step.
But in order to take on this role, Iran’s private sector business leaders will need a place at the table. They must be welcome to visit Western countries much the same way American and European trade delegations have begun visiting Iran. Sanctions, stigma, and arcane visa policies should not prevent an Iranian CEO from coming to London, Paris, or New York to discuss his country and his company in the hope of finding an investor or partner. On the contrary, this should be welcomed as a necessary and productive kind of engagement.
If Iran’s private sector business leaders can consolidate their economic position on the back of foreign investment and trade, they will be able to take on a vital role as stewards of a nuclear deal.
For the average Iranian, the nuclear deal has one fundamental promise: greater prosperity. The mechanism embraced by the United States and its allies of using sanctions as a coercive policy tool has had the effect of conditioning Iranians in an almost Pavlovian way— geopolitical strife begets economic pain. Consequently, the signal of political accord and the “relief” of sanctions seems to be triggering the expectation of the relief of this economic pain, and even that of economic reward. Indeed, as opinion polls suggest, President Rouhani’s legitimacy in the eyes of the Iranian public hinges on his rebuilding of the economy.
But the rollback of sanctions will not bring about relief unless it translates directly into an increased flow of goods, services, and capital into Iran. Following the change in the Iran regulatory environment, only private sector companies will be able to establish the flows necessary for economic growth— whether to introduce vital pharmaceuticals, the latest fashions, or investment funds into the country.
Iran’s private sector is uniquely positioned to create value for Iran’s long-term development. Value creation, as a concept of management, entails the proper treatment of shareholders, employees, and customers as part of corporate social responsibility. When value creation is more than the policy of a single business, and instead reflects the ethos of a whole industry or economic sector, private enterprise can take on a true social significance.
In this sense, Iran’s private sector firms, if properly empowered, can serve as the anchor for Iranian civil society. Through a commitment to corporate citizenship, companies can become advocates for the citizenry within the context of Iranian political economy.
In the current situation, the Iranian state and private enterprise compete for access to limited resources and capital. Livelihoods are either tied to a state affiliate or to a private concern Knowing this, class and cultural divisions are exacerbated by economic antagonism. Issues of public health, environmental degradation, educational policy, and legal protection will not be effectively addressed.
The Islamic Republic’s support for privatization has been surprisingly persistent, if unfulfilled. The technocrats are well aware that state owned enterprises struggle to generate economic gains of real value.
The Rouhani administration is committed to privatization and to the success of the non-governmental sector in Iran. The aim is to give new actors a voice in the wider arena of public affairs.
This commitment has been signaled since the early days of the administration's tenure, and in Rouhani's cabinet’s engagement of the current crop of Iran’s private sector business leaders. The logic is clear. The Iranian state ought to focus on security and governance, and rent seeking should be formalized through taxation.
But in the history of modern Iran, and especially in the age of globalization, economic policy has never been a national prerogative.
The imposition of sanctions and their aftermath are testament to this fact. As key actors in Iran try to turn over a new leaf, it is up to the P5+1 to empower Iran’s private sector as interlocutors, stewards, and creators, and thereby ensure that policy treats such empowerment not as an afterthought, but as an intended effect of a nuclear deal. Sanctions relief ought not to be seen as merely the quid-pro-quo of any final nuclear agreement. It is truly the sine-qua-non of everything promised by the ongoing détente.
Photo Credit: AP Photo/Michael Euler
The Business of Political Economy: Moving from Bazaar to Bourse
◢ A prospective détente between Iran and the West is dependent not only on the normalization of political ties but also on the realignment of economic ties. It is a matter of political economy.
◢ In order to envision the future role of Iran’s private sector, it helps to look to the past and the historical role of the bazaar, once the center of Iranian political economy.
Originally published on Lobelog.com
Anticipation has been building among international investors and business leaders as Iran and the P5+1 edge closer to a nuclear deal. Each week another trade delegation— whether American, or Swiss, or German—makes its way to Tehran to scope out opportunities.
I have argued before that Iran’s private sector business leaders need to play a bigger role in the country’s reengagement of the international community. Indeed, a prospective détente is dependent not only on the normalization of political ties between Iran and the West, but also on the realignment of economic ties. In this sense, détente is a question of both politics and economics. It is a matter of political economy.
In order to envision the future role of Iran’s private sector, it helps to look to the past and the historical role of the bazaar, once the center of Iranian political economy.
The Centrality of the Bazaar
We commonly think of the bazaar as a pre-modern marketplace of dark and winding corridors, full of carpets and other exotica. But the bazaar was in fact the economic heart of Iran until the end of the 20th century. It was even more important perhaps than the country’s oil refineries. In the 1970s, the economic might of the bazaar was so significant that the marketplace controlled “as much as half of the country’s handicraft production, two-thirds of its retail trade, and three-quarters of its wholesale trade.” Beyond trade, the bazaar was also a vitally important creditor. As late as the 1960s, “the bazaars in Iran were estimated to loan as much as all the commercial banks put together.” And even after a decade of expansion of modern banks, “in 1975 the bazaar was estimated to control 20 percent of the official market volume, or 3 billion in foreign exchange and 2.1 billion in loans outstanding.”
In this way, the merchants of the bazaar, known as bazaaris, constituted a powerful network of economic actors. Acting as a social class unto themselves, the bazaaris anchored Iranian civil society, granting immense political power to the Iranian people by supporting mass mobilizations such as the 1905 Constitutional Revolution and the 1953 movement to nationalize the Iranian oil industry.
In 1979, decades of political turmoil culminated in the Islamic Revolution, in which a broad coalition of Islamic and leftist political movements collaborated to oust the Shah. In the years leading up to the revolution, the bazaaris had played a critical role.
The Shah, with his drive for modernization, despised the bazaaris, whom he considered remnants of Iran’s backwards past, ridiculing them for their “worm-ridden shops.” Annoyed by the domination of the bazaar in the retail and banking sectors, the Shah sought to render them obsolete, writing in his memoirs: “’I could not stop building supermarkets. I wanted a modern country.”
The bazaaris felt threatened by the trajectory of economic planning and saw its shortcomings. Sitting within an institution visited by both the lower and upper classes, the bazaaris understood the consequences of growing inequality all too well.
The bazaars’ broad support of the Islamic Revolution, and Ayatollah Ruhollah Khomeini in particular, made all the difference for the durability of the revolutionary movement. In numerous instances, bazaaris across the country mobilized funds and people to ensure that different groups could sustain their protests. In 1977, for instance, bazaaris stepped in to cover professor salaries at Aryamehr University so that protestors could endure a suspension of pay.
Ultimately, the revolution succeeded in establishing the Islamic Republic, with Khomeini as its Supreme Leader. When Khomeini began consolidating power, he quickly sought to neutralize the bazaar, worried that a deteriorating economy would pit the bazaaris against his nascent rule. The new regime rewarded the members of the Islamic Coalition Association (ICA), a small segment of bazaaris, who had “financed and organized many political rallies and events” by making them “part of the new ruling elite.”
By cleverly creating ties of allegiance between the bazaar and the new government, Khomeini sought to eliminate the bazaar as a site for independent political contention. It was no longer an institution of the private sector. Indeed, even today, those bazaaris with ties to the political establishment are referred to as dawlati, meaning “of the government.”
Decline of the Bazaar
Since 1979, weakened by the policies of the Islamic Republic, the bazaar has ceased to be the locus of power in Iran’s political economy. Consider that in the 2009 so-called Green Movement, the bazaar played hardly any role, despite dissatisfaction with the government among many merchants. This was the first time in over a century that the bazaar was not active in a mass mobilization.
Because of the bazaar’s decline in the years following the revolution, and because of the simplistic portrait of Iranian political economy as that of a rentier state defined by oil, scholars and analysts alike have largely ignored the critical role of the bazaar. Only a few works, such as Arang Keshavarzian’s excellent Bazaar and State in Iran and recent scholarship by Kevan Harris, give the institution its due attention.
With the help of this scholarship, it is possible to identify a few key qualities of the bazaar and its merchants. First of all, the bazaaris were private actors, but with strong communal ties and a sense of civic and religious responsibility. Their political leanings were moderated because their fortunes were tied to the economic wellbeing of the wider Iranian public. And they were willing to mobilize resources to support political actors whom they felt represented the interests of the common man.
The emergence of institutional actors with these three qualities could have a profound impact on Iran in a post-sanctions environment and on the road to political reform. Unfortunately, since the weakening of the bazaar, such qualities have been largely absent in any institution of Iranian civil or commercial life. In the current environment, those commercial entities with the means to mobilize resources in politics are neither private, nor sufficiently moderate, nor beholden to a sense of civic duty. They are usually part of the country’s military-industrial complex, serving first-and-foremost their dawlati members.
Therefore, if Iranian political economy is going to once again find its fundamental institution, one that can empower civil society and bolster the middle class, new stakeholders need to step up.
Iran’s Future Political Economy
The most likely candidates are the firms of Iranian private enterprise, especially those that are publically traded and are therefore committed to a wide range of shareholders in addition to their employees and customers. Every member of civil society takes on economic roles as a customer, employee, or shareholder. If these stakeholders can be economically engaged, then Iranian civil society can once again find its capacity to mobilize and make political claims bolstered by economic clout.
In this sense, the future of Iranian political economy requires that the companies of the bourse, Iran’s stock exchange, serve the role once played by the merchants of the bazaar. We might call this the bazaar-to-bourse theory.
This is not to say that business leaders should get involved in politics directly. But when companies seek to provide goods, services, and employment within an economy, they begin to constitute what Keshavarzian calls “socially embedded networks,” which give economic systems political meaning through the everyday transactions of people. If these transactions can occur outside state-controlled channels, the Iranian people will have a better chance of holding their government accountable to promises of reform. Encouragingly, the current Iranian President Hassan Rouhani supports such a rebalancing of Iran’s political economy.
But private businesses have a long way to go. Misguided sanctions have significantly weakened their position in the economy. Shayerah Illias, a researcher at the Congressional Research Service, has noted how sanctions have only contributed to the marginalization of private enterprise begun under Khomeini, awarding more control to state-owned companies and their affiliates. Squeezed by inflation, unemployment, and without an economic anchor in the form of private businesses, Iranian civil society has suffered the most under sanctions.
It follows that, if the United States and the rest of the P5+1 are really committed to a durable political agreement, they ought to properly plan for a realignment of political economy in a post-sanctions environment. Pragmatically speaking, foreign investment cannot be an afterthought of a nuclear deal. Clear and consistent sanctions relief needs to be guaranteed early so that Iran’s private sector can get to work fast. Securing investment and boosting trade will help put businesses in a position to empower their customers, employees, and shareholders. We would expect a reduction in unemployment, lower inflation, greater purchasing power, and altogether more influence for the average Iranian in the composition of the country’s political economy.
On this basis, Iran’s private sector business leaders must aspire not only to the power and influence of the historical bazaar, but also to its sense of community and common purpose. In the bazaar, the “steady accretion of interactions blurred the divide between potentially distinct spheres of life—kinship, friendship, partnership, and commerce.”
When we think about business leaders, it is easy to dismiss them as out-of-touch “fat cats” and to expect little from a capitalist institution like a stock market. But Iran’s business leaders, like the bazaari merchants before them, have the ability to facilitate constructive social change. And Iran is one of the few countries where ideologies of politics and economics find truly syncretic forms.
So far, the signs are encouraging that the men and women of Iran’s private sector are the kind of global leaders we would want to see empowered. To leave them out of the picture of détente would be a mistake. It would also expose an all-too-typical lack of historical awareness on the part of Western policymakers.
“Corporate citizenship” can be more than a buzzword if it is woven it into the fabric of Iranian business culture. The bazaar provides the model to emulate.
Photo Credit: NPR Media
