Saffron: Iran’s Pink Gold

It is the harvest season for Saffron. This delicate spice extracted from saffron flowers is one of Iran’s classic agricultural products, mainly planted in Khorasan area in north east of Iran. Iranians use saffron in their cooking, distinguishing their cuisines from their neighbors. Saffron, with pistachio, is one of Iran’s traditional agricultural products.

 Saffron is extracted from the dried stigmas of the saffron crocus; it takes 75000 blossoms or 225000 hand-picked stigmas to make a single pound which explains. Thus supply is highly restricted and its price is rather high. It is mostly used in gourmets intended for guests. And households keep small amount of it.  Although many Iranians would think that Iran’s saffron is of highest quality, and the writer shares that belief, and Iran share of global market in Saffron is almost 90% but the international market is dominated by Spain in quality. Iranian saffron is falling behind its competition because of poor marketing and low quality packaging. Although a major producer it does not seem that Iran is a Stackelberg leader in this market[1].  Saffron certainly is a labor intensive product requiring 200 man day per hectare during harvest season. It also constitutes up to 70% of household income in Khorasan saffron plantations. There is no question or doubt that Iran considers saffron a strategic product. In recent years policy makers have become interested in saffron as a weapon in fighting drugs and limiting opium plantations in Afghanistan, but there is no evidence to measure how effective that would be.  

There is no doubt that demand for saffron will be increasing in coming years: increasing global preference for natural ingredients and flavors, increasing income and the absence of any discouraging factors as well as positive externalities of using saffron. This makes investing in this product a rather safe endeavor.

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[1] I welcome any comment that contradicts this statement based on evidence.

Spill Over Effect of Small Things

This is not a note on either economics or politics. It is more a story. Today I was discussing with a friend about initiative that some Iranian bloggers take and their consequences.  The discussion was not unfamiliar, similar debates are common among friends and acquaintances. Do these initiatives mean anything? I believe any initiative means something and is of some consequence.

When I was a freshman student in Sharif University of Technology, Sharif, Industrial Engineering students came together and started publishing a professional, topic-oriented, student run magazine called “Sanaye” or “industries”. It was nothing political or even social. All it did was talking about industrial engineering world; designs, events, research, projects and etc.

Sharif was and is the finest engineering school in Iran[1] and for that purpose it was a place where fun came and comes to die! Everyone was itching to do something more and to evade the boredom of just studying. So other departments followed the example of industrial engineering department.

Electrical engineering students started their own magazine and called it “Bargh” or “electricity”. Mechanical engineering and civil engineering students all started some sort of activity. This was early 1990’s and the atmosphere was not suitable for political activities so many active and energetic students joined these magazines. These activities spilled over to organizing student conferences of the fields. Sharif hosted the first student conference of electrical engineering in Iran. IEEE chapters began to appear in most of notable schools.  The magazines were published irregularly sometimes it took 6 months to put together one, but they did appear and they did leave their mark.

On another note publishing technical magazines paved the way for many to say: “why we should not have a weekly paper dedicated to students? Of course nothing political!” so in Sharif students went ahead and published “Noghteh, Sar-Khat” literally it means “End, Begin from the beginning of the line” I remember this vividly that it was in 1996 walking in Tehran International Book Exhibition that I saw a copy of a student paper circulated by the students of communications department at Allameh Tabataay’i University. Its editorial read something like this: “even engineering students have their own publications and we do not. Let’s write, after all it is what we are being trained for!”

I know the stories of a few of these people. Many joined reformist papers, many continued their studies and received their degrees and are faculty members, researchers and developers across the globe. The work they begun some 14 years ago continue to construct infrastructure and to link self motivated individuals to be better and to go forward. Iran’s academia is a better place because of them. History may not remember them or record them, there won’t be any “Reading Lolita in Tehran” for them, but the steps they took covered a few miles of the thousand miles ahead of Iranian people.

 When someone picks up a banner and goes forward, he or she never knows how many rally behind, how far the cause would go. In the case of Iran the many small initiatives taken by many unknown individuals have contributed and continue to contribute to the development of Iran to constructing the infrastructure of a civil democratic society. Amidst what is going on it comforts me to think someone somewhere is starting something new, something rather small but of significant impact. 

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[1] My sincere apologies to all students and graduates of University of Tehran Engineering College, Tehran Polytechnic (Amir Kabir University), Science and Industry University and etc your schools are good too. 

Last week Iranians went to cast their votes to elect the members city councils and the members of House of Experts[1].  The process was anything but doll. Still fresh from their victory in 2005 President Ahmadinegad’s supporters hoped to win the majority of councils nationwide and the seats of
Tehran’s council.  Since President Ahmadinegad’s rise to power had begun by becoming the mayor of
Tehran, he and his supporters also wanted to block the road for potential presidential candidates; including present Mayor: Mr. Ghalibaf, a conservative technocrat who happens to be a former General of Revolutionary Guards and an aviator.

 Reformers and Technocrats joined ranks for a come back. Their list included promising names such as Dr. Najafi a MIT graduate and former minister of Higher Education and former vice president and the head of Management and Planning Organization.  Ironically he was Kargozaran[2]’s first choice for presidency in 2005; he decided not to run because he did not have the approval of Mosharekat, the main reformer party headed by President Khatami’s brother at the time.

While the conservatives were divided between supporters of Mr. Ahmadinegad and those of Mr. Ghalibaf, the reformers and technocrats become united after 4 years. The results were surprising. In
Tehran moderate conservatives won the majority while 4 reformers including Dr. Najafi also were elected. Mr. Ahmadinegad’s supporters won 3 seats becoming a minority.  Nationwide voters were divided between reformers and moderate conservatives. One cannot analyze the results in many towns and villages politically, since in many places city councilors are elected based on their local prestige and influence rather than their political conviction.

Women did well too. In provincial capitals across country women won 43 seats out of a total of 269[3].  In Arak, Urumeye, Ardebil, Zanjan, Shiraz,
Qazvin and Hamedan women candidates received the largest number of votes to become their cities first councilors. In Shiraz the capital of
Iran’s rich classic literature and the rest place of its greatest poets a 25 years old female[4] student of architecture has received the largest number of votes.  It must be mentioned that in 7 provincial capital cities women have not made it to city councils.

Although many interpreted the outcome as a signal of public dissatisfaction with President Ahmadinegad’s administration, the most important development of December’s elections in Iran is neither ultra-radicals’ failure to secure Tehran’s city council nor reformers success. The most important development of last election is the revival of moderate conservatives and reinstituting their traditional role of a stabilizer. A role that
Iran’s moderate conservatives and traditional clergies have always identified themselves with. Many have noticed how Mr. Ghalibaf shared reformers’ concerns about the process of counting the votes and how he was able to act as a moderator between reformers and radical conservatives. 

This is not an insignificant achievement at all. Moderate conservatives advocate a market economy and are more pragmatic in dealing with international community than their radical colleagues who consider any deal a compromise of their values.  Traditionally their social base has included merchants, small business owners and parts of
Iran’s middle class. Polarization of
Iran’s domestic policies during President Khatami administration compromised their political position and public identified them with ultra-radicals and radical conservatives. That era is over now.  Centrist politics is back in
Iran. That is good news indeed.

 

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[1] Knowns as KHOBREGAAN in
Iran.

[2] Kargozaran e Sazandegi Iran is the main technocrat party in
Iran, advocating privatization of economy and cautious approach to social issues.

[3] Statistics are from Hamshahri Daily published in
Tehran, Iran.

[4] Fatimeh Hoshmand

Not Many Hail Privatization

Living in a foreign land as an Iranian obliges one to answer questions asked by curious people and to think about his or her identity as an Iranian and Iran even more. Those who ask questions often do so with innocence of naivety and no matter how awkward the question is one can always appreciate their effort to reach out to understand.As a student of economics I have been asked several times about the reasons behind under-development of Iran and its economic problems. I often find that the questions are posed by those who already have assumed Iran’s economic problems are caused by its political structure and its ruling elite, like any other inexperienced observer would do.

The inexperienced foreign observer presumes that Iranian public and intellectuals are all for economic development of country. Indeed it is a rational assumption, since he already has assumed Iranian public and intellectuals to be freedom leveling peaceful people. Although it might be rational, it is a very wrong and a very unrealistic assumption.

It is wrong to assume that public hail privatization policies or trade open door approaches. It also is very wrong to assume that Iranian intellectuals are supportive of such policies and consider them necessary. In reality such policies have been criticized by the very same presumably freedom loving intellectuals in no uncertain terms. When to these one adds government bureaucrats who are unwilling to let go their grip on industries and manufacturing, one hardly could be surprised by slow progress in privatization in Iran.

If Bureaucrats argue that for the good of people government is the best available candidate for ownership of industries, intellectuals argue that any policy that results in creating an industrialist cast, who could become reach, is against social justice and is an act of robbing nation out of its treasures and resources. Ironically pro-revolution extensive nationalization of industries was planned by Mr. Ezzatollah Sahabi then a liberal member of government and later a famous member of opposition. Not surprisingly he was among the first to criticize President Rafsanjani’s plans to privatize Iran’s public sector.

The truth is that privatization and other economic reform policies in Iran have been advocated by a small group of technocrats and leadership. Such policies have been executed by a leadership working with a reluctant bureaucracy, facing severe criticism from intellectuals. The reality is that in most cases Iran’s intellectuals do not want a free market, do not advocate a free trade policy and do not demand Iran’s inclusion in World Trade Organization.

My First Paper in Industrial Organization

hen I started this blog I thought not to share too personal things. However this is an exception. My first paper in industrial organization with my advisor John Heywood is accepted for publication and now is in press. It is titled: “Mixed Oligopoly in a Single International Market.” Here is its abstract:

It departs from previous literature by considering a mixed oligopoly with two countries each with public and private firms competing in a single market. This differs from the traditional framework of examining a single domestic market in which foreign and domestic firms compete and is motivated, in part, by international airline markets but serves to characterize many markets. The resulting equilibrium emphasizes that the strategic interaction of the two public firms usually serves to reduce welfare. Thus, the usual reason to imagine a public firm in a mixed oligopoly, to enhance welfare, is lost when such firms compete in the interest of their respective countries.

For me the most interesting finding of this paper is the fact that countries sometimes are locked in a prisoners’ dilemma, should they choose to do so unilaterally in regional markets they would suffer a decline in social welfare. This explains the reluctance of several governments to carry on liberalization policies when public firms act as trade strategical instruments.

Paper is forthcoming in Australian Economic Papers.

Do Not Even Think About It

If the phrase “very bad idea” would have only one application, it would be partition of Iraq. Even thinking of partition has catastrophic consequences. It provides political parties involved with a new set of motivations to not cooperate with federalism plan and to seek vigorous cleansing programs of their own, if existence of such programs could be acknowledged, to guarantee a strong hand to negotiate a larger slice of land.

This would threaten Iraq’s neighbors. Iran would seek means and instruments to protect its western borders and to guarantee its territorial integrity. Turkey would pursue a vigorous policy in its southeastern provinces. The Arab nations, already suspicious of the true reasons of invading Iraq, would accept the word of conspiracy theorists as facts and realities. The resulting psychological atmosphere would doom any effort to democratize the political process in Arab countries. Radical groups’ popularity would rise to new levels unheard of.

Should it happen the worst nightmare of Middle East would materialize. There would be two land locked states deprived of economic means to develop on their own. One would become the perfect environment for Al Qaedeh to grow; the other would be accessible only through air. A third one would have access to sea, but depends for water supply on its northern neighbor. Iran and Turkey would have to pay military bills, which have no contribution whatsoever to regional stability or their own prosperity.

There would not be an easy solution for Baghdad where millions of Shiites, Sunnis and Kurds live whose significance is only second to that of Mecca. A partition would have to destroy Baghdad, that Arab nations and Islamic world would neither forgive nor forget.

Economically partition of Iraq would ruin any chance of sustainable growth in the region. Iraq is a potential market for growing economies of Turkey and Iran, where a private sector is coming to age and venturing markets to stay on its own feet independent from government. It has the potential to revive tourism in the region to open the way toward an intense commercial competition. Iraq and Iran together can muster a population of 100 million blessed with the most highly educated work force in the region. Their economic corporation would ignite a path of economic growth that reduces the incentives for violence and shrinks the support for violent insurgency.

Partition of Iraq might be attractive to some seeking a shortcut solution and to those who in instability of this country seek security for others, but it would be a disaster to the region and a true betrayal of the cause of democracy. It is regrettable to remember how the windows of opportunities were missed, how “axis of evil” alienated Iran and how administration assumptions had been totally wrong. But it would be more regrettable if this administration even considers a partition plan. One would think this administration has more than its fair share of mistakes, it is time it has its fair share of solutions; real ones and not that of colonial 19 century British minds.

Check: http://blog.washingtonpost.com/postglobal/ for more comments

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