Iran's government operates like a mafia, creating a layered society where economic benefits are distributed based on an individual's loyalty to the regime, not their rights as a citizen. A loyal foreign proxy can receive more resources from the state than a domestic professional.
Systemic corruption, like the creation of 'invisible ports' for smuggling, evolved from initial, seemingly noble goals. Religious foundations were granted special privileges to bypass bureaucracy for charitable acts (like importing wheelchairs for war veterans), establishing a precedent that they were above the law, which was later exploited.
Because sanctions barred major American tech companies like Amazon and Uber from entering Iran, a protected 'green field' ecosystem emerged. This created a unique opportunity for domestic entrepreneurs to build localized versions of popular apps for a large, underserved population of 85 million people.
Doing business in Iran is perilous not just because it's an authoritarian state, but because it's a chaotic one with competing internal power centers. Like appeasing multiple, rival Greek gods, securing an agreement with one faction offers no protection from another, creating crippling uncertainty for businesses.
Once an Iranian startup becomes successful, it crosses a threshold where it attracts the attention of the security state. To survive, founders are often pressured into giving up equity to middlemen connected to powerful entities like the Revolutionary Guards, who offer 'protection' from state-sponsored harassment.
The Iranian regime consistently treats its economy as a means to an ideological end (e.g., self-sufficiency), not as an end in itself. This explains why Western diplomatic strategies based on economic incentives often fail; the leadership is unwilling to compromise its ideology for popular prosperity.
The Revolutionary Guards leverage their military power for economic gain. In one instance, after losing a bid to operate a new airport, they drove armored vehicles onto the runway and scrambled a fighter jet to prevent planes from landing until the foreign contract was cancelled and state firms took over.
To consolidate power during the 1979 revolution, Ayatollah Khomeini strategically adopted the language of leftist and anti-imperialist movements. He reframed concepts like the struggle between the 'bourgeoisie vs. the proletariat' with an Islamic tinge to attract their young, energetic supporters to his cause.
When Iran attempted to privatize major industries, it was not a genuine market reform. Instead, state-owned assets like factories were sold at very low prices to individuals connected to the security forces. Many of these new owners then stripped the assets for cash rather than running the businesses.
The Islamic Republic, which views conflicts as a fight for its very survival, can tolerate far greater economic hardship and military casualties than the U.S. While American politics is sensitive to minor gas price hikes, Iran's regime withstands triple-digit inflation and significant casualties, giving it a strategic advantage in prolonged conflicts.