Editorial
For more than two decades, Iran’s economy and civil society have been on a path of gradual decline. The consequences have been visible in the erosion of social trust, weaker capital formation, slower economic growth and a steady deterioration in household purchasing power. The recent military confrontations involving Israel and the United States against Iran have added new economic costs and created an urgent need for reconstruction. Yet Iran’s most pressing challenge today extends beyond repairing wartime damage. The country needs a strategy to reverse the long-term decline that has weakened its economic and social foundations.
Economic revival will not come from reconstruction alone. Returning the economy to its previous state is neither sufficient nor desirable. What Iran requires is a fundamental correction of the policy path that has shaped the past two decades. At the center of this challenge lies the need for governance reform.
One of the defining features of the current trajectory has been the growing dominance of directive-based governance over governance rooted in universal rules and the rule of law. While directive governance may appear orderly because of its hierarchical structure, it often generates uncertainty, hidden imbalances and institutional inefficiency. Rather than creating a predictable environment for economic activity, it weakens accountability and blurs responsibility.
In such a system, public officials frequently operate under instructions that extend beyond formal legal frameworks. As a result, responsibility becomes diffused and accountability diminished. This helps explain why policymakers rarely accept responsibility for unsuccessful policies or acknowledge costly mistakes.
Directive governance is often justified in the name of “expediency.” Yet this concept can become so broad and flexible that it serves primarily to preserve existing political arrangements and protect the interests of influential groups. When expediency takes precedence over clear and transparent rules, national priorities risk being overshadowed by short-term political considerations.
The national interest should be the ultimate objective of any system of governance. Unlike temporary political calculations, it provides a durable framework for strengthening social trust, encouraging investment, promoting economic growth and improving public welfare. These goals require institutions that operate according to the rule of law and apply rules consistently to all citizens and economic actors.
The gap between these principles and current realities can be seen in a range of policies. Administrative price controls continue to distort markets and weaken property rights. Restrictions on access to the global internet limit the free flow of information and threaten the livelihoods of millions whose economic activities depend on digital connectivity. Proposals for tiered internet access risk institutionalizing discrimination while creating new opportunities for rent-seeking and corruption. Such measures may be introduced in the name of expediency, but their long-term economic and social costs are substantial.
The consequences are increasingly evident. Investment remains weak, economic opportunities are constrained and public confidence in institutions has eroded. These challenges cannot be addressed solely through financial injections, reconstruction programs or short-term policy adjustments.
Iran’s economic future depends on more than rebuilding physical assets. Sustainable recovery requires stronger institutions, greater accountability and a renewed commitment to the rule of law. Without meaningful governance reform, efforts to revive the economy are likely to fall short. Economic renewal and governance reform are not separate objectives; they are inseparable parts of the same national challenge.
