Article 44 decision nears

07 August 2004
The Expediency Council is close to revising the constitutional article governing private sector participation in key sectors of the economy, including banking, telecommunications and industry. Under the proposed fourth five-year development plan (FYDP), article 44 of the constitution would be amended to open the sectors. The proposals, which were initially rejected by the Guardian Council, were endorsed a second time by the Majlis (parliament) in May and have been sent to the council for arbitration.

Analysts now expect the council, headed by former president Ali Akbar Hashemi Rafsanjani, to endorse the proposals after making some changes to accommodate hardline concerns. Some reports have suggested placing a 60-70 per cent ceiling on private holdings in state-owned institutions. Banking, insurance, basic industries, aviation, power generation, shipping and roads are all covered by the article. The private sector is already active in most of these areas, but needs the changes to ensure a fair investment climate.

The fourth FYDP was drawn up by the Management & Planning Organisation (MPO), part of President Khatami's reformist government. It was passed quickly by the sixth Majlis, whose term expired in late May. However, the Guardian Council has sent several parts of the plan back to the new conservative-dominated Majlis for reappraisal, where some MPs have demanded major changes.

The new Majlis came to power on a platform of economic growth but its views towards liberalisation have yet to solidify. Some analysts forecast an acceleration in the economic reform programme as the contest between reformists and conservatives weakens. Others say the conservatives are unwilling to make the structural changes needed for privatisation.

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