The Iranian Bazaar does not rebel

Although the traditionally powerful Iranian merchants have lost influence and seen their economic privileges decline under Ahmadinejad, they do not challenge the status quo. Ali Hedayat explains why
Ali Hedayat
20 December 2010

The uprising of the Iranian opposition in 2009 has been compared with the turmoil in the Iranian society in 1979 and the end of the Shah regime. Many analysts regard both the cleric community (Ulama), as well as the economically disadvantaged market merchants of the old Iranian market (Bazaar) as pivotal to any efforts to reform the Islamic Republic. Accordingly, the Bazaar has played a crucial role in the Islamic revolution in 1979. Back then, general strikes across the whole country crippled several economic sectors. Unified in their opposition against the Shah, the Bazaar and the clergy created a powerful coalition across all social groups, forming the backbone of support for the revolutionary leader Ayatollah Khomeini. This was neither the first time that tradition-oriented merchants and turban-wearing clerics joined forces to protest against the ruling power, nor was it by accident.

Traditionally, the Bazaar has been more than a simple market with merchants and craftsmen. Being a place for work and commerce, the Bazaar fulfilled a central function in the Iranian society. It was a space for social interaction forming a communicative network that functioned as a bridge across several social classes and groups of society. The Bazaar consisted of a vast and diverse set up of people, including street vendors, shopkeepers, money lenders and traders. Representing the conservative traders, the Bazaar had its own structures, norms and culture with a close connection to the clergy. Marriages between Bazaari families and families of the clergy enforced this bond.

Protests between tradition and modernity

In constant conflict with the reign of the Shah dynasty, the Bazaar represented a respectable amount of disaffected Iranians who perceived the state as a weak puppet of foreign powers whose very interest would be the exploitation of Iranian resources. The Bazaari had been marginalized by the political regime as their social and political rights were restricted in favor of larger, more powerful merchants, who were allowed to own land and trade with foreign powers such as Great Britain.

Until the first decade of the 20th century, the large merchants were benefiting from their loyalty to the Shah regime. They possessed first hand access to foreign trade partners through a selective commercialization of some economic sectors, such as agriculture, transport and food production. Led by a growing feeling of dissatisfaction, the Bazaari formed an alliance with high-ranking clerics based in the religious power centers of Shiraz and the holy Shiia city of Qom. The constitutionalist revolution in 1906 was a direct consequence of this. Although a small group of larger merchants retained its influence in the newly elected parliament, their power had shrunk dramatically. Being represented in the legislature for the first time, the Bazaari gained political and economic power, which enabled them to extend their influence over most economic sectors. 

Subsequently, bazaar and clergy forged a coalition based on mutual interest and their common opposition against the ruling Shah Mohammad Reza Pahlavi. In 1962, Ayatollah Khomeini asked the bazaar to use this coalition to establish the Islamic party of coalition (Motalefeh Party). The Motalefeh Party would represent the interests of the “clergy, faithful merchants and deprived people”. The clergy was financially supported by the Bazaar, which ensured its supply with material goods. These would include the costs for building constructions such as mosques, religious schools (madrasas) or simply living expenses for the local Muslim community. For its political and cultural interests, the Bazaar was dependent on the clergy. The clergy had the religious legitimacy and an overwhelming support within the rural and poor urban parts of Iran. Finally, it was the Bazaar which supported Khomeini with financial aid during his Iraqi exile in Najaf and later in Neauphle-le-Château, France. 

The Baazar in the Islamic Republic

After the Islamic revolution in 1979, the Bazaar underwent different phases of socio-economic and political change. Ayatollah Khomeini privileged the traditional merchants with generous support to demonstrate his gratitude for their long-term support. Being represented in the parliament, members of the Motalefeh party were given positions in the Ministry of the Economy, access to manufacturing and industry, as well as import and export trade. They also benefitted from an increased volume of credits granted by the industrial credit bank of Iran. But the most significant benefit for the Bazaari was the creation of the charitable trusts (Bonyads) by Khomeini. They include major economic assets left by the Shah regime, such as hotels, factories and farm lands and dominate the Iranian non-petroleum economy.

During the Iran-Iraq war (1980-1988) different actors shared power in a defined order. The military was controlled and led by the Islamic Revolutionary Guard Corps (IRGC), whereas the political institutions were ruled by the clergy and the Bazaar was in charge of the economy. This fairly balanced trichotomy started to undergo major changes when Ayatollah Khomeini died in 1989. The average population had struggled with an economic malaise as a consequence of a resource exhausting war, economic sanctions and the lack of clear government policies to boost the weakening economy. At the same time, a few privileged, mainly elites in the IRGC, had benefited from Iran’s resource wealth and the Bazaari were able to sustain their political and economic privileges.

These privileges seem to shrink since Mahmood Ahmadinejad has become president in 2005. Although his government did not touch the basic privileges of the Bazaari such as the exemption from state taxes and custom duties, their situation has worsened. The Persian carpet market which accounts for approximately 40% of all non-oil exports, used to be among the strongest sectors of the Bazaar. In the 1990s it plummeted due to heavy global competition and cheaper duplicates from China and Pakistan. Having spoken with a few Bazaari in south Tehran as well as shopkeepers in Vakil Bazaar in the Iranian city Shiraz before the 2009 elections, their loud and clear complaints about economic policy were apparent. Their common opinion is that Iran´s high oil revenues should be put to better use and the Bazaari, who fought and helped establish the Islamic Republic, should be allowed to participate in lucrative economic sectors and be rewarded through tax and fee releases.

At the same time, the overall power shift has meant that a significant part of the IRGC has become politicians and businessmen. They are deeply involved in politics, the military and control the backbone of the regime, the oil-industry. They have created their own social networks through shared military experiences in the past war and family bondages. They belong to a younger generation which perceives the old Bazaar as a delinquent competitor.

Yet the Bazaar does not rebel

However, despite the rise of the Revolutionary Guards as a set of new elites and their growing power in the economy and politics, the Bazaar neither has disagreed with president Ahmadinejad´s policies nor opposed the religious leader Khamenei. The Bazaari are still represented in, and well connected to, different social classes, building dense networks with clergy and some members of the IRGC. The Iranian state possesses paradoxical features as it claims to be modern but binds its social classes in a traditional way through family ties and friendship networks. Many Bazaari and IRGC members are relatives, holding key positions in new private sectors, the car industry, technology and industrial construction. This may explain why the Bazaar refused to support any oppositional presidential candidates and did not participate in the protests after the controversial presidential elections. Politically, the merchants are still dependent on the clergy.


The title of this article refers to Mehdi Mozaffari's article “Why the Bazaar rebels” (1991)

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