Two leading economists in Iran say that five weeks after President Masoud Pezeshkian's election, there is still no sign of a clear plan for addressing economic challenges or any strategy for changing the current ineffective system.
In their third letter to Pezeshkian in less than a month, Farshad Momeni and Hossein Raghfar stated that their previous letters to President Pezeshkian have gone unanswered, despite being among the economists he initially consulted for ideas on addressing Iran's economic problems.
They expressed disappointment in the president's actions so far, but still offered criticism and guidance to the new administration. They urged Pezeshkian to distance himself from the economic policies of the past 35 years, which have caused significant hardships for the Iranian people.
Iran has a government-dominated economy, where almost 80 percent of enterprises are either directly or indirectly owned and controlled by state entities. This, coupled with a lack of democratic accountability and transparency has led to increasing corruption in the past three decades.
Meanwhile, the Islamic regime's confrontational foreign policy and its contentious nuclear program have triggered international sanctions, which have severely hindered foreign investment, the import of technology and expertise, and overall economic growth.
The two economists emphasized that only a fundamental "change of course" in economic policy can create opportunities for growth and improvement in Iran. They criticized Pezeshkian’s selection of cabinet ministers and state officials, noting that many informed scholars, including some of his own supporters, have questioned the validity of these choices. They warned that collaborating with individuals responsible for previous policy failures, particularly in agriculture and industry, would undermine public trust in Pezeshkian and his promises.
Momeni and Raghfar also cautioned Pezeshkian that despite his promises and the public’s expectations, he has yet to take steps to involve the people in determining their political and economic future. They argued that the first step to reversing Iran's counterproductive policies is to implement technology-friendly development plans, productive employment policies, and social justice initiatives—areas where no progress has been made so far.
The economists offered several specific suggestions, calling for greater transparency in Pezeshkian’s selection of cabinet ministers and other officials. They advised against making decisions "behind closed doors" and warned Pezeshkian to avoid working with those responsible for the failed policies of the past 35 years.
They further emphasized that revenues from the country's natural resources should be used to invest in infrastructure, human resources, communications, energy, and improving livelihoods, rather than being diverted to benefit a select few. The economists also suggested reforming the tax system to prevent the undue influence of powerful and wealthy individuals, recommending that it be brought under the direct supervision of the President.
Additional recommendations included reforming the monetary system to channel funds toward productive sectors, removing military and security forces from economic activities, encouraging the private sector, promoting social justice, and prioritizing national interests over those of a minority.
Despite these suggestions, the economists noted that Pezeshkian has ignored similar advice in the past. They also warned that it may be too late for some of these recommendations, as rumors suggest that decisions about key government appointments have already been made, even if not yet announced.
On July 31, Senator Tom Cotton (R-Arkansas) and Congresswoman Elise Stefanik (R-New York) sent a letter to Vice-President Harris, inquiring about her national security advisor, Philip H. Gordon, and his possible ties to Iran’s influence network in the US, known as the Iran Expert Initiative. This network was exposed in a joint investigation by Iran International and Semafor last September.
The letter from Cotton and Stefanik followed a similar letter by Senator Jim Risch (R-Idaho) and Congressman Michael McCaul (R-Texas) on July 30 to Secretary of State Anthony Blinken, expressing concerns about Iran's influence operations in the US and threatening to subpoena the State Department if it failed to respond to their May 6 requestregarding Robert Malley’s alleged sharing of classified documents.
These efforts to verify the relationship between Iran’s Expert Network and a senior advisors like Philip Gordon are part of a broader investigation that began in October 2023 and cannot be dismissed as mere partisan rabble-rousing.
Until the Cotton-Stefanik public letter, Gordon's career and influence were mostly unfamiliar to those outside Washington, DC. On August 2, 2024, Politico article offered some background on Gordon for European readers, yet it failed to offer a thorough account of his career and national security vision.
Gordon’s influence on Harris’s policy is evident in her televised remarks after meeting Prime Minister Benjamin Netanyahu on July 25, where she condemned the humanitarian crisis in Gaza and urged Israel to accept the US-backed ceasefire plan. This aligns with Gordon’s long-standing advocacy for de-escalation and multilateral engagement in the Middle East. However, skepticism persists around Gordon’s recent post on "X," where he reassured the public of Harris’s unwavering support for Israel against Iran and its proxies, reflecting doubts rooted in his extensive diplomatic history.
Given Harris's limited foreign policy experience before becoming vice president, intense scrutiny of Gordon's background is essential for both the press and politicians. Analysts viewed Harris as a “neophyte” in foreign policy as she prepared for the vice presidency. Over the past four years, Gordon likely offered the vice president strategic counsel and education on US diplomacy's nuances. Assessing how Gordon’s perspectives might have shaped Harris’s approach and how they might influence her policies if she becomes president—and potentially appoints him as her national security advisor, a role not requiring Senate confirmation—is vital.
Understanding Gordon’s extensive intellectual and diplomatic career requires piecing together his various roles, interviews, articles, op-eds, and books, as no comprehensive biography of his exists. This thorough examination is essential to grasp his current national security stance, which notably aligns with pro-Iran “engagement” and “incentives” advocates.
Philip H. Gordon: From a Europeanist to an expert on Middle East
Philip H. Gordon is a distinguished diplomat and scholar, a European languages polyglot, with a PhD from Johns Hopkins University (1991) on Gaullist Legacy and France’s Security Diplomacy (1993). Known for his mild-mannered demeanor, Gordon has held key diplomatic roles under Presidents Clinton, Obama, and Biden. Unlike many diplomats who maintain a nonpartisan approach, Gordon is noted for his strong partisan alignment in foreign policy. This contrasts with figures like Victoria Nuland and Brett McGurk, who have served across party lines while maintaining a more neutral stance in their careers. For instance, McGurk, now serving as the White House’s Middle East Coordinator—a position Gordon once held under Obama—has worked under both Republican and Democratic presidents. He resigned in protest during the Trump administration, showcasing his commitment to his principles despite political pressures and accusations of "careerism."
Gordon acquired much of his expertise on the Middle East during his sabbaticals from the Bush and Trump administrations. In a 2004 interview promoting his book “Allies at War,” he argued against military confrontation with Iran and advocated for a mix of sanctions and incentives to encourage Iran's cooperation on its nuclear program. He also contributed to the “2005 US Compact with Europe,” which proposed a US commitment to allow EU investment in Iran in exchange for halting its nuclear fuel cycle. Mentioning Iran 24 times, the document can be seen as a precursor to shaping Obama's policy toward Iran. In his 2007 book “Winning the Right War,” Gordon proposed a “New Deal for the Middle East,” advocating withdrawal from Iraq and Afghanistan, an Arab-Israeli détente (distinct from Trump’s Abraham Accords), and engaging Iran through sanctions and incentives.
After Obama's election, Gordon served as Assistant Secretary of State for European and Eurasian Affairs from 2009 to 2013. The May 2010 National Security Strategy closely mirrors many ideas from Winning the Right War, particularly on engaging Iran, though it is not easy to fully assess his influence on the document.
During the Arab Spring and the Iran nuclear negotiations, Gordon was appointed Special Assistant to the President and White House Coordinator for the Middle East, North Africa, and the Gulf Region. While the specifics of his role in the 2013-2015 negotiations remain unclear, his expertise in European diplomacy, Middle Eastern affairs, and intelligence was probably helpful. Gordon excelled at processing piles of detailed daily briefings from the CIA, Pentagon, and State Department and was an effective liaison between the White House and negotiators in Oman and Vienna, leveraging long-standing relationships with key figures like Anthony Blinken and Rob Malley; his colleagues and soccer buddies from the late 1990s. His policy recommendations on Iran, outlined in Winning the Right War, influenced the November 25, 2013, “Joint Plan of Action,” which later became the framework for the 2015 Iran nuclear deal(JCPOA).
During his busy sabbatical from government service, Gordon researched and authored "Losing the Long Game: The False Promise of Regime Change in the Middle East" (Macmillan, 2022), a work that mirrors the arguments and tone of his earlier book, "Winning the Right War." Revising US foreign policy from 1945 onwards, with specific emphasis on the confrontational approaches adopted by both the Bush and Trump administrations, "Losing the Long Game" underscores Gordon's concerns about "escalation," "American credibility," and the necessity of "engaging" with various Middle Eastern actors, regardless of their rogue status from the US perspective. The book in effect consolidates the vision previously articulated in "Winning the Right War," advocating for a more innovative foreign policy that emphasizes diplomatic engagement and de-escalation.
The similarities between the vision outlined in Gordon's "Losing the Long Game" and Biden’s 2022 National Security Strategy are striking. Both emphasize de-escalation and diplomatic engagement, contrasting sharply with Trump's confrontational approach to the Middle East. Gordon's vision, as detailed in "Losing the Long Game," aligns closely with the principles in Biden's strategy, highlighting the need to avoid unnecessary escalation and maintain American credibility through engagement.
When Biden assumed office in 2021, several Iranian Revolutionary Guards-affiliated national security strategists publicly discussed how Iran could exploit the Biden administration’s de-escalation approach, characterized by reluctance to confront Iran directly, to the advantage of the Islamic Republic.
Gordon's vision, as articulated in his writings and public statements, emphasizes diplomatic engagement and multilateralism. Gordon has been part of an exclusive group of advisors to "democratic" presidents. Judging by his writings before and after assuming high office, one can infer that he advocated for restraint and multilateral diplomacy over unilateral military intervention, particularly in the cases of Syria and Ukraine. However, this approach may overlook the possibility that hardline strategists within Iran's regime could interpret such diplomacy as a sign of weakness. Many observers argue that the U.S. withdrawal from Afghanistan, guided by a similar vision, was perceived by adversaries like Russia’s Putin and Iran’s Khamenei as a sign of American weakness. Historians, perhaps thirty years from now, may be able to establish from the archives the pivotal role Gordon played in shaping Obama’s response to key events such as Putin’s annexation of Crimea in 2014, or Obama’s strategy in addressing the rise of ISIS and Russia’s intervention in Syria, or Biden’s policy towards the Taliban and the regime in Tehran.
As Kamala Harris is now in a tight race with Donald Trump, the prospect of Philip H. Gordon becoming her administration’s national security advisor warrants scrutiny. The scrutiny over Gordon's connections and influence is amplified by the current political climate, with Kamala Harris's presidency a distinct possibility and the broader implications of U.S. foreign policy decisions in a volatile global landscape. Republican lawmakers' inquiries and demands for transparency reflect a broader concern about ensuring that U.S. national security policies are not unduly influenced by foreign entities, particularly those linked to adversarial regimes like the Islamic Republic of Iran.
Philip H. Gordon’s Work History
The country face severe power shortages every summer and gas shortages every winter. Each year, policymakers opt to cut industrial power to keep household lights on. The shortfall reaches up to 14,000 MW, or 20%, during the summer.
Iran International reported last month that due to high summer temperatures, Iran faces a huge energy deficit, but the situation has not improved since early July.
Industrialists argue that it is truly perplexing for energy policymakers to choose the easiest route of cutting power to factories and steel plants rather than developing infrastructure or purchasing electricity to meet the country’s shortfall. They question how policymakers plan to compensate for the lost production, cover the insurance and costs incurred by power outages, and address customer commitments and the financial losses due to production delays.
Hamidreza Ghaznavi, Secretary-General of the Entrepreneurs Association, reacting to the frequent power cuts, told Khabar Online on Thursday, "The Ministry of Industry, Mine, and Trade (Ministry of IMT) must resolve the power cuts affecting industries. However, there is no vocal support for the industrial sector."
Varied impact on different sectors
In response to how much current capacity is affected by power cuts, Ghaznavi noted, "Some industries have been shut down for two months. Others operate only at night, and some alternate between two weeks of operation and two weeks of shutdown." He explained that while different industries face varying challenges, the steel and textile sectors are particularly hard-hit. He stressed that although all manufacturers are struggling, these sectors are in worse conditions.
Policy failures and economic consequences
Ghaznavi criticized the Ministry of IMT for not sufficiently protecting production. He noted that reducing electricity consumption in the public sector could increase the supply to the industrial sector, but this approach has not been effectively implemented. He pointed out that there are many ways to reduce power consumption, such as implementing penalties, but these measures are not being enforced to prevent the deteriorating conditions in factories.
To prioritize residential energy needs, the government has imposed limits on energy supplies to the industrial sector, causing annual losses estimated at $6-8 billion.
Official statistics reveal that 13% of Iran's generated electricity is lost during transmission and distribution due to an outdated grid. Experts belive losses reach 30%. This loss is equivalent to the total electricity consumption of the steel industry, which generates export revenues. Moreover, many of Iran's power plants are inefficient gas or steam types. Rather than modernizing the grid or converting to more efficient combined-cycle plants, the government has opted for measures like adjusting office hours or imposing restrictions on industrial power supply.
Dire outlook for Iranian economy
Ghaznavi emphasized the dire situation, urging the Ministry of IMT to take more action on power cuts and support investments. He noted that a resolution was passed to encourage factories to adopt solar power and clean energy, but this has yet to be implemented. There has been little support for factories to transition to solar energy, and no immediate actions have been taken to facilitate this shift.
Despite the recurring power cuts to industries, the CEO of the Iran Power Generation, Transmission, and Distribution Company recently announced that the country’s electricity consumption demand reached an astonishing 79,872 megawatts, a record-breaking figure in Iran's electricity industry history. According to Mostafa Rajabi Mashhadi, only 128 megawatts shy of breaking the 80,000 megawatt mark, the figures are astonishing. This level of demand is equivalent to the electricity consumption of both Egypt and Spain combined.
Instead of addressing the fundamental energy imbalance, authorities have resorted to cutting off electricity and gas to industries—a short-term solution that fails to resolve the country's energy deficit. Ghaznavi stressed that people need jobs for their livelihoods, and factories need to operate to meet market demands. If prices rise due to shortages, those who have had reliable power might find themselves unable to afford necessities, he added.