A Quick Peek Inside the Ayatollah’s Revolution

Asia Sentinel does not normally print articles about Iran or other parts of the Middle East because it is outside of our readership area. But with Iranian President Mahmoud Ahmadinejad in New York this week to speak before the United Nations, we present this postcard from Iran by Eric Ellis, a frequent contributor to Asia Sentinel on Asian issues. Ellis recently returned from Iran. This is his report.

The Shah is Dead. Long live the Shah — and I don’t mean Reza Pahlavi, the 45-year-old pretender to his late father’s Peacock Throne, who many in Washington would like to install atop this most vexatious nation.

The way things are going nuclear-wise, he may have a chance. But almost three decades after Ayatollah Khomeini’s revolution, the monarch who matters among Tehran’s business elite is the Shah of Pistachios, Akbar Hashemi Rafsanjani. Iran’s once and perhaps future president is widely believed to be the country’s richest man. His family’s writ runs to airlines, caviar, oil, mining, automobiles, property and agriculture, which pretty much covers the entire economy.

There are supposedly billions stashed in Switzerland, Singapore and Luxembourg; and property in France, Canada, Dubai, India and Thailand. The ex-president’s clan denies it but poor Iranians who see their leaders squandering Iran’s wealth in Hezbollah adventurism (and, says the Pentagon, in Iraq) snort that Rafsanjani protests too much.

One intrepid local hack pried too closely into Rafsanjani Inc a few years back and is now doing a stretch inside. A local businessman I met is convinced he did three years’ porridge in the 1990s because he refused to yield when Rafsanjani’s lieutenants fancied his profitable farms. That, or because he was Baha'i, regarded as heretical by Iran’s Shia mullahs.

But the businessman was lucky: Tehran’s small coterie of investigative journalists and anti-corruption activists are reeling from a spate of unsolved murders in 2000. In most places, bankers know that to follow the money is to discover where power lies. In this by-turns frustrating, complex and charming country, you follow the mullahs and ayatollahs to find the loot.

To the Everyman's disgust, the mullahs' looting extends to cab drivers. Turbaned clerics have got used to lining Tehran's streets, flagging down cabs. But many seem to regard a taxi ride as a privilege, much as the clichéd gratis doughnuts are for a New York cop. But cabbies are hurting too and now they just drive past the waving clerics.

Tehran's night-time streets are soulless. Khomeini's revolution was a peasant triumph, so it is unsurprising that the capital feels Sovietesque, even Stasi-esque, in its authoritarian chill. Burly men in greatcoats loiter on street corners. Cars park furtively near hotels, their sole occupants betrayed by the red cigarette-end illuminating the dark. A massive portrait of the unsmiling Khomeini stares down from the side of a building, 18 years after his death, still ruling from the grave.

The theocracy can be a particularly frustrating and complex country for foreigners to operate in, particularly journalists, whom the system sees as spies. Visas take months to be granted and, once arrived, one is assigned a minder from the Ministry of Islamic Guidance, for which you pay upwards of US$200 a day to "foreign agencies" controlled by cronies of officials from Iran's intelligence service, who also have pull at the foreign ministry to stop visa applications.

One such agency is Ivansahar, which wanted US$1500 from me for the privilege of them "hosting" me in Iran for a week. Claiming impeccable contacts, they are supposed to set up meetings and insist that nothing is off limits for inquiring hacks. The reality is very different. Last time I was here, I heard from Ivansahar just twice - once on arrival to guide me to the guidance ministry and second as I was on my way to the airport seeking their US$1500 for meetings that I set up myself. Corruption and cronyism is rampant in Iran and at agencies like Ivansahar there's also just plain incompetence, all of it dispensed with the charm of old Persia.

To a child of the 70s, Tehran can feel very retro. While sophisticated and rich North Tehran tilts strongly to Europe, particularly France, the poorer south of the city is a chaotic urban sprawl and very little of it has changed, cosmetically, since Shah days. Khomeini had urged Iranians to breed wildly and make permanent the Shia revolution with sheer numbers. Problem was there was no meaningful response from his government and civil service. A population that has nearly doubled since 1979 struggles to get around on 30-year-plus infrastructure. Old pre-revolutionary Hillman Hunter knock-offs called Paykans cram permanently clogged streets. As enlightened technocrats, the Ayatollah's revolutionaries make great clergymen.

Apart from name-calling between Iran's Great Satan taunt at the United States and Washington's return-fire Axis of Evil (which has the annoying impact of stopping the use of credit cards anywhere), Iran's essential internal conflict seems to be cultural, between those who proudly hail Persia's 5000 years of secular civilisation, versus the Islamists, who are winning, at least for the time being. Many Iranians have fled to the US, Canada and Europe where they are among their adopted nations' most successful immigrants.

Apart from what the politically weak President Mahmoud Ahmadi-nejad would have us believe Iranians want, no one I've spoken to wants to "wipe Israel off the map" or has politically invested much at all in the Palestine issue, regarded here as a rather boring Arab preoccupation.

I repair in some despair to lunch at Nayeb, in fashionable north Tehran. Elegant ladies who lunch pick at grilled Alborz trout and salad, the chatter gliding effortlessly between French, English and Farsi. The clientele is as chic as in any Paris eatery, and the only hint that we’re in the heart of the Axis of Evil is the hijab Iranian women are obliged to wear or risk attacks from Islamist militias. The demands of mosque and mode merge in expensive Hermès scarves, exposing sexy blond-tipped fringes. The Nayeb set’s preferred tipple is probably Krug, but Khomeini’s was a teetotal revolution so they make do with Coca-Cola. Coca-Cola? Hang on, isn’t corporate America banned from doing business in Iran? Yes, but Washington bent the rules in 1999 for ‘foodstuffs’, allowing Pepsi and Coke to open a new front in their global Cola wars.

Coke has been selling here since 1999 and Pepsi since 2001, after being kicked out in 1979. They’ve already grabbed about half of Iran’s $1 billion beverage market and are taking aim at the sector leader, Zamzam, named for the blessed well at Mecca. The theocrats want Iranians to shun ‘Great Satan’ brands which allegedly send profits to be converted into ‘bullets piercing the chests of Lebanese and Palestinian children’. Mehdi Minai, a hardline official of the mosque-linked Public Demands Council, says Pepsi stands for ‘Pay Each Penny to Save Israel’. Big Beverage dismisses such blather: they know Iran’s young consumers are by no means as engaged in the Palestinian conflict as their Arab neighbours.

Anti-US protests in Tehran are pretty thin these days and most Iranians lament their government’s stand-off with Washington. ‘I joke with customers not to buy this stuff because it’s American,’ says Tehran storekeeper Reza Shahgholi, around the corner from the old US embassy, today the American Atrocities Museum. ‘But that only makes them want to buy it more.’

The best thing going for Coke and Pepsi isn’t their American-ness but the fact that Zamzam is run by a bonyad. These are the religious charities Khomeini used to quasi-nationalise Iran’s economy after 1979. Conceived to help Iran’s needy, bonyads are no model of modern management. Many have become goldmines for the powerful, which in Iran means the pious. Zamzam’s plants are controlled by the Foundation of the Dispossessed, answering to the Supreme Leader, Ayatollah Ali Khamenei. If he chooses to fatwa Coke and Pepsi out of Iran, what will look like a religious ruling might actually be about something quite different.

Bonyads control trillions of rials worth of assets, including the four hotels that operated under the Hyatt, Hilton, Sheraton and Intercontinental banners in the 1970s. I stayed at the old Hyatt, now the $150-a-night Azadi (‘Freedom’), where barely a cent has been spent since the revolution. After four days at the $US150-a-day Hotel Azadi, "retro" is a nice way of describing it. Very little works properly, from TV to Internet to hot water to the lifts. The unsmiling staff seem much put upon, and simply lazy. Much of the coffee-shop food is near inedible, even though this is regarded as Tehran's best hotel. The health club is off-limits to female guests for five days a week.

The hotel's dial-up net connection struggles to connect between 2.4kps and 32kps. No warp-speed broadband here. Not that getting online matters much here. Most of the sites I want to visit - the world news pages - have been blocked by Separ, the mullahs' net nanny. I get connected at the minders' ministry, where everything is available. Satellite TV brings the BBC into the room but when something isn't to taste, the mullahs simply cut or delay the sound. The catch-up can be funny. The BBC had run an ad for Singapore Airlines' "luxury first class" but by the time the sound caught up on my room's TV, the ad's voice-over came during vision of a news item showing someone being air-winched to safety during a storm somewhere, with near perfect timing.

I brave Tehran’s stifling smog to see the two companies largely responsible for it, state-owned carmakers Iran Khodro and Saipa. Iran Khodro recently junked the venerable Paykan, which had been in production since the 1960s. It had one of the world’s least fuel-efficient engines — but when a full tank cost just $8, miles-per-gallon wasn’t an engineering priority. Punching out a million cars a year, one of the biggest markets in the developing world, Iran now assembles for the French, German and Koreans. But executives presume they are in the crosshairs of Washington’s warmongers, so they’ve prudently made plans just in case.

The plans evoke traffic lights, which I’ve noticed Iranian motorists have particular contempt for. Green is for normalised relations with the US, while yellow is the status quo: Iran as Western pariah. Red presumes ‘attack and invasion, even nuclear’. ‘We would operate,’ Hossein Momeni of Saipa says, ‘but we would decrease some of the lines because of the lack of customers.’ As war edges ever closer, the carmakers are sanguine about the uncertain future. ‘Business is business,’ he says. ‘After five to six years, I believe we will be producing Chevrolets.’

Eric Ellis is Southeast Asia correspondent of FORTUNE Magazine