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Iranians Should Set Out Quickly on the Long Road to Reform

By Philip Bowring - International Herald Tribune

TEHRAN - Euphoria over the reformist landslide in last month's legislative elections must soon make way for some harsher realities. That is not to diminish the importance of Iran's effort to combine democracy and a market economy with its Islamic identity. The momentum is so strong that optimism is justifiable. But the political and economic challenges ahead are formidable.

The first unknown is the real character of the newly elected Parliament. The ''reformist'' coalition of factions covers a wide spectrum of demands for change ranging from liberal clerics to young technocrats, old quasi-secular leftists andassorted intellectuals.

In the broadest terms, they have been elected to help President Mohammed Khatami push through his reform agenda, frustrated by the previous Parliament, of advancing a law-based civil society in which individuals gain power at the expense of both church and state. But it remains to be seen how cohesive they are and whether on specific issues they frustrate the executive.

The old left is suspicious of economic reforms such as privatization, reduction of subsidies and a welcome to foreign investment, which are generally favored by the moderate conservatives led by former President Hashemi Rafsanjani. He fared badly in the election because of association with more conservative clerics, but he remains a powerful force.

He continues to head the Expediency Council, which performs a key role in balancing the views of Parliament and of the Guardian Council, the cleric-dominated body which determines whether laws are constitutional and Islamic, and vets candidates for elected office.

Parliament is likely to focus first on social and political issues, on which it may prove more radical in its demands for change than Mr. Khatami, who seeks gradual, consensus-driven change, wants. If it tries to force the pace, it could provoke a rightist backlash, or at least prevent the emergence of a consensus on economic issues. More use of clergy courts to jail reformers is quite possible.

Conservatives, behind Supreme Leader Sayed Ali Khamenei, will be sure to use the levers of power that they control - the Guardian Council, the judiciary, the military, special courts etc. Iran's convoluted constitution gives entrenched interests (economic as well as clerical) plenty of opportunities to frustrate change.

They cannot do so indefinitely. Conservative domination of the Guardian Council will be diluted by this election. Next year Mr. Khatami will be up for re-election, and the following year will come the turn of the mostly clerical Assembly of Experts, which is supposed to supervise the supreme leader.

The constitution can be changed by referendum. So constitutional means are available to shift Iran from clerical domination to a more liberal as well as democratic Islamic republic in which religious observances are a matter of free will, not state imposition, and the supreme leader is more a symbol than a wielder of power. But it will take time and patience.

Time, however, is not entirely on the side of an Iran in which 55 percent of the population is under 21 and the labor force is growing at nearly 4 percent a year. Social freedoms may satisfy the middle classes, but lower-income youths need jobs if drug abuse and urban crime are not to keep growing.

The economy has been growing more slowly than the population, inflation is at 20 to 30 percent, industry is mostly government-owned and inefficient, the currency bounces in a confusion of exchange rates. A large chunk of the economy is in the hands of religious foundations that have become a gravy train for the new elite.

Official policy is to privatize, allow foreign investment, cut subsidies that cause government deficits and inflation, reform the price structure and unify the exchange rate. But implementation has been painfully slow and it remains to be seen whether, with Parliament at its back, the executive can make these things happen.

There are plenty of parallels, including China and India, to suggest that changing these structures is a long haul.

Iran has the advantage for now of a recovery in the oil price and a surge of foreign interest in investing in a country of 60 million people with good infrastructure, good educational standards and a strategic geographical position.

It has overseas an educated, well-off expatriate community 3 million or so strong, tens of thousands of whom would return if social conditions were relaxed and private sector economic opportunities were greater. Money and people are trickling back, but Iran needs a flood of it, plus domestic economic reform, if it is to make the economic progress it needs to underpin its political advance.

For now, Mr. Khatami probably has the prestige to define the course of reform, overruling socialists and nationalists in the reform camp, but he will need to move fast.