Bonyad

Islam in Iran

Bonyads are controversial charitable trusts in Iran that dominate Iran's non-petroleum economy, controlling an estimated 20% of Iran's GDP. [Molavi, Afshin, "Soul of Iran", Norton, (2006), p.176] Exempt from taxes and government control, they have been criticized as "bloated," reaping "huge subsidies from government," while siphoning off production to the lucrative black market and providing limited and inadequate charity to the poor. [Mackey, Sandra "Iranians, Persia, Islam, and the soul of a nation", New York : Dutton, c1996 (p.370) ]

Background

Founded as royal foundations by Shah Mohammad Reza Pahlavi, the original bonyads were criticized for providing a "smokescreen of charity" to patronage, economic control, for-profit wheeling and dealing done with the goal of "keep [ing] the Shah in Power." [Graham, "Iran", (1980) p.157, 8)] Resembling more a secretive conglomerate than a charitable trust, these bonyads invested heavily in property development - such as the Kish Island resort - but the developments' housing and retail was oriented to the middle and upper classes, rather than the poor and needy. [Graham, "Iran", (1980) p.161)]

After the 1979 Iranian revolution, the Bonyads were nationalized and renamed with the declared intention of redistributing income to the poor and families of "martyrs", i.e. those killed in the service of the revolutionary Islamic Iran. The assets of many Iranians whose ideas or social positions ran contrary to the new Islamic government were also confiscated and given to the Bonyads without any consequence.

Today, there are over 100 Bonyads, [ [http://www.payvand.com/news/07/jan/1295.html#_edn7 "Ahmadinejad's Achilles Heel: The Iranian Economy" by Dr. Abbas Bakhtiar] ] and are criticized for many of the same reasons as their predecessors. They form tax-exempt, government subsidized, consortiums receiving religious donations and answerable directly (and only) to the Supreme Leader of Iran. The Bonyads are involved in everything from vast soybean and cotton fields to hotels to soft drinks to auto-manufacturing to shipping lines. The most prominent, the "Bonyad Mostazafan", (Foundation of the Underprivileged), for example, "controls 20% of the country's production of textiles, 40% of soft drinks, two-thirds of all glass products and a dominant share also in tiles, chemicals, tires, foodstuffs." [ [http://nhh.no/sam/res-publ/2007/08.pdf NHH Sam 2007, Destructive Competition ] ] Its chair - and not the Minister of Finance or president of the central bank - is considered the most powerful economic post in Iran. [Molavi, Afshin, "The Soul of Iran", Norton, (2005), p.176]

Criticism

Bonyads are criticized as enormously wasteful: overstaffed, ["Business: A mess; Iranian privatisation", "The Economist". London: Jul 21, 2001. Vol. 360, Iss. 8231; pg. 51] corrupt, and generally unprofitable. In 1999 Mohammad Forouzandeh, a former defense minister, reported that 80% of Iran's Bonyad companies were losing money. ["Business: A mess; Iranian privatisation", "The Economist". London: Jul 21, 2001. Vol. 360, Iss. 8231; pg. 51]

Bonyad companies also compete with Iran's unprotected private sector, whose firms complain of the difficulty of competing with bonyad firms whose political connections provide government permits and subsidies which eliminate worries over the need to make a profit in many market sectors. These Bonyads, by their very presence, hamper healthy economic competition, efficient use of capital and other resources, and growth. [ [http://www.payvand.com/news/07/jan/1295.html#_edn7 "Ahmadinejad's Achilles Heel: The Iranian Economy" by Dr. Abbas Bakhtiar] ]

As charity organizations they are supposed to provide social services to the poor and the needy; however, "since there are over 100 of these organisations operating independently, the government doesn't know what, why, how and to whom this help and assistance is given." Unaccountable to the Central Bank governor, the bonyads "jealously guard their books from prying eyes." [Molavi, Afshin, "Soul of Iran" (2005) p.176] Lack of proper oversight and control of these foundations has also hampered the government's efforts in creating a comprehensive, central and unified social security system in the country undertaken since 2003. [ [http://www.payvand.com/news/07/jan/1295.html#_edn7 "Ahmadinejad's Achilles Heel: The Iranian Economy" by Dr. Abbas Bakhtiar] ] Iran has 12 million people living below the poverty line, six million of whom are not supported by any foundation or organization. [ [http://www.tehrantimes.com/Description.asp?Da=4/29/2007&Cat=14&Num=001 Tehran Times - Poverty in Iran] ]

Rather than charitable organizations, the bonyads have been described as "patronage-oriented holding companies that ensure the channeling of revenues to groups and milieus supporting the regime," but don't help the poor as a class. ["The Failure of Political Islam" by Olivier Roy, translated by Carol Volk Harvard University Press, 1994 p.139]

Further reading

*" [http://www.economist.com/displaystory.cfm?story_id=705282 A mess] ." " [http://www.economist.com The Economist] ", July 19, 2001.
*" [http://www.economist.com/displaystory.cfm?story_id=1522098 Stunted and Distorted] ." "The Economist", January 16, 2003.
*" [http://www.economist.com/displaystory.cfm?story_id=3471508 Still fading, still defiant] ." "The Economist", December 9, 2004.
*" [http://online.wsj.com/public/article_print/SB118072271215621679.html Inside Iran's Holy Money Machine] ." "Wall Street Journal", June 2, 2007. Details about the Imam Reza shrine, the largest active bonyad in Iran.
*" [http://www.globalsecurity.org/military/world/iran/mjf.htm Foundation of the Underprivileged] " "globalsecurity.org"
* [http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/MENAEXT/IRANEXTN/0,,menuPK:312982~pagePK:141132~piPK:141109~theSitePK:312943,00.html World Bank Statistics] Human development, social and economic indicators for Iran

ee also

* Astan Quds Razavi (Imam Reza shrine Foundation)
* Economy of Iran - Social protection
* Health care in Iran
* Privatization in Iran
* List of Iranian companies
* Labour and tax laws in Iran

References

External links

* [http://www.emdad.ir/Homepage.aspx?lang=en-US Imam Khomeiny Relief Foundation] - Provides sickness, maternity, and work injury benefits to some workers in the private sector.
* [http://www.isaar.ir/HomePage.aspx?TabID=0&Site=DouranPortal&Lang=fa-IR "Bonyad Shahid va Isaar-Garaan" (Foundation of the Martyrs and Veterans Affair)] - The biggest with +100 companies. Provides welfare assistance to families of the Martyrs of the Iran-Iraq war.
* [http://www.iran-bonyad.com/ "Bonyad Mostazafan" (Foundation of the Underprivileged)] - One of the largest welfare organization, A semi-public foundation originally founded in 1979 with the assets of the last Shah’s family; it operates a wide variety of charitable activities. With a reported $10 billion in revenues (2005).
* "Bonyad Panzdah Khordad" (Foundation of the 15 Khordad)
* [http://www.aqrazavi.org/ "Astan Quds Razavi" (Imam Reza Shrine Foundation)] with $12 billion in revenues (2005).