2 THE POLITICS OF LOW-CARBON ENERGY IN IRAN AND IRAQ
21
between these groups include statist versus more private enterprisefocussed approaches to the economy; self-sufficiency and the ‘resistance
economy’ favoured by the supreme leader versus international openness and engagement; priority to national and regime security versus the
economy; and looking to Europe as Iran’s main trade partner versus
China and Russia. 2 Note however that all factions co-opt the rather
vague rhetoric of the ‘resistance economy’ since its promulgation by the
supreme leader. 3 The ‘moderniser’ faction (grouping those often termed
‘reformists’ and ‘moderates’, including President Hassan Rouhani) is
increasingly blamed for failing to deliver prosperity following the signature of the Joint Comprehensive Plan of Action (JCPOA), the ‘nuclear
deal’ or ‘Barjam’ in Farsi in October 2015 and the US withdrawal in
May 2018. The modernisers lost out heavily in the parliamentary elections of February 2020 to the ‘Principlist’ and ‘Securocrat’ (Islamic
Revolutionary Guards Corps) groupings. This suggests a further shift
towards economic self-sufficiency and trade with Russia and China. This
was emphasised by the trade and political deal with China announced
in July 2020, a purported text of which was ‘leaked’, but which originated with Chinese President Xi Jinping’s visit to Tehran in January 2016.
However, these countries are not willing, and Russia is not able, to replace
Europe as a trade partner. The new Islamic Republic of Iran inherited
after the revolution a large state-dominated energy sector. Its constitution, adopted in December 1979, has a statist orientation, with socialist
influences. 4 It states (Article 44): ‘The economy of the Islamic Republic
of Iran is to consist of three sectors: state, cooperative, and private,
and is to be based on systematic and sound planning. The state sector
is to include all large-scale and mother industries, foreign trade, major
minerals, banking, insurance, power generation, dams and large-scale irrigation networks…’ [Author’s emphasis]. Tavanir, the Iran Generation
and Transmission Management of Electric Power Company, had been
established in 1970 as a vertically-integrated, monopoly state utility, and
continued in that role after the revolution.
This orientation changed somewhat following the Iran-Iraq War, in
which 2210 MW of generating capacity was damaged, and under the
administrations of then President Ali Akbar Hashemi Rafsanjani (1989–
1997). Foreign investment in the upstream oil and gas sector, though not
ownership of reserves or production, was allowed by a creative interpretation of the constitution and the introduction of ‘buyback’ contracts from
1997, 5 effectively a service contract. Widespread blackouts in the early
21
between these groups include statist versus more private enterprisefocussed approaches to the economy; self-sufficiency and the ‘resistance
economy’ favoured by the supreme leader versus international openness and engagement; priority to national and regime security versus the
economy; and looking to Europe as Iran’s main trade partner versus
China and Russia. 2 Note however that all factions co-opt the rather
vague rhetoric of the ‘resistance economy’ since its promulgation by the
supreme leader. 3 The ‘moderniser’ faction (grouping those often termed
‘reformists’ and ‘moderates’, including President Hassan Rouhani) is
increasingly blamed for failing to deliver prosperity following the signature of the Joint Comprehensive Plan of Action (JCPOA), the ‘nuclear
deal’ or ‘Barjam’ in Farsi in October 2015 and the US withdrawal in
May 2018. The modernisers lost out heavily in the parliamentary elections of February 2020 to the ‘Principlist’ and ‘Securocrat’ (Islamic
Revolutionary Guards Corps) groupings. This suggests a further shift
towards economic self-sufficiency and trade with Russia and China. This
was emphasised by the trade and political deal with China announced
in July 2020, a purported text of which was ‘leaked’, but which originated with Chinese President Xi Jinping’s visit to Tehran in January 2016.
However, these countries are not willing, and Russia is not able, to replace
Europe as a trade partner. The new Islamic Republic of Iran inherited
after the revolution a large state-dominated energy sector. Its constitution, adopted in December 1979, has a statist orientation, with socialist
influences. 4 It states (Article 44): ‘The economy of the Islamic Republic
of Iran is to consist of three sectors: state, cooperative, and private,
and is to be based on systematic and sound planning. The state sector
is to include all large-scale and mother industries, foreign trade, major
minerals, banking, insurance, power generation, dams and large-scale irrigation networks…’ [Author’s emphasis]. Tavanir, the Iran Generation
and Transmission Management of Electric Power Company, had been
established in 1970 as a vertically-integrated, monopoly state utility, and
continued in that role after the revolution.
This orientation changed somewhat following the Iran-Iraq War, in
which 2210 MW of generating capacity was damaged, and under the
administrations of then President Ali Akbar Hashemi Rafsanjani (1989–
1997). Foreign investment in the upstream oil and gas sector, though not
ownership of reserves or production, was allowed by a creative interpretation of the constitution and the introduction of ‘buyback’ contracts from
1997, 5 effectively a service contract. Widespread blackouts in the early