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Iran faces challenges in privatization plans

For privatization to succeed in Iran, the government must empower the real private sector as opposed to semi-state entities.
An investor looks at a tablet supplying stock market information about listed companies on the Tehran stock exchange in Tehran, Iran, January 17, 2016. REUTERS/Raheb Homavandi/TIMAATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. FOR EDITORIAL USE ONLY.  - GF20000097649

One of the impacts of the current US sanctions on Iran is the loss of income as a consequence of lower oil export revenues. To make up for the lost inflows into the state budget, the government has increased its efforts to sell its shares in large Iranian enterprises. Since most of the shares sold on the capital markets end up in the hands of semi-state entities, the process will have both economic and political consequences.

Privatization has been on the Iranian government’s agenda since the early 1990s, but it faced major legal obstacles until the mid-2000s. Indeed, Article 44 of the Iranian Constitution, which calls for all major industries to be dominated by the government, impeded the process. 

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