Energy Policy in Iran. Domestic Choices and International by Bijan Mossavar-Rahmani

By Bijan Mossavar-Rahmani

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Whether this picture will now change in the wake of the revolution is uncertain. For the next several years and perhaps longer, the country will be xenophobic in its com­ mercial relations and nationalistic in its economic planning. Imports will be restricted to such basic staples as food­ stuffs. Self-reliance will be emphasized. Ventures with foreign companies, in and outside Iran, will be few. The role of the state in the economy will become larger still, reducing that of the private sector, particularly in industry.

There is no development of a nuclear power program in the low growth scenario. 3). 3. 4 ENERGY DEMAND PROJECTIONS 45 The low growth projections for oil consumption for 1977-82 more accurately reflect the situation as of mid1981, but only because oil consumption has not increased noticeably in the three years since the revolution due to the economic slowdown and damage to the country's refineries—most notably the Abadan Refinery—as a result of the war with Iraq. However, once the country's refining capacity is restored, the rate of domestic oil consumption may again rise rapidly with economic recovery or with a focused government effort to make more oil products available to users in poor urban and rural areas.

The import substitution industries, many owned by businessmen close to the government or to the royal family—if not by the royal family itself--enjoyed substantial protection from outside competitors. As a result, domestic prices for most products manufactured in Iran were relatively high and quality very low. For most, handsome profits precluded any real in­ centive to improve efficiency and quality, while at the same time, the government did little to encourage exports, especi­ ally of industrial products that could be internationally competitive.

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