Iran’s startups promise paradise for the country’s unemployed youth

Iran’s self-proclaimed Silicon Valley stands on the road to mount Damavand, the tallest mountain in the country. Set up in 2005, its name is ambitious: Pardis, a “paradise” for technology.

Pardis is where Tehran just hosted the 6th International Innovation and Technology Exhibition (INOTEX2017) which opened on May 23.

More than a year after sanctions imposed on the country by the West for its nuclear program were lifted, technology and innovation may well be the key to Iran’s economic recovery.

Resetting the economy

On July 14, 2015, Iran and the P5+1 group of world powers (the United States, United Kingdom, France, China, Russia and Germany) signed the historic nuclear agreement that led to the lifting of sanctions.

A day after the so-called “implementation day” of the deal – January 17, 2016 – President Hassan Rouhani, who recently secured a second term announced his number one objective was to cut the Iranian economy’s “umbilical cord” to oil revenue.

The president’s main challenge 16 months later is the nation’s high unemployment rate. It stands at 12.7% overall but is 27% for youth and more than 44% among women.

Reducing unemployment means boosting the economic agenda. Rouhani’s pledge to look beyond oil as the main source of government income is the first step to diversifying the economy and giving impetus to job creation in the country, especially among young educated Iranians.

In fact, during his 2017 presidential campaign, Rouhani pledged to create 900,000 new jobs a year.

Highlights and lowlights

Iran is a nuanced start-up incubator, with a range of companies such as Takhfifahn, the local version of Groupon; Digikala, the Iranian version of Amazon; ZarinPal, the Paypal twin in Iran; and Expedia’s Iranian model Zoraq.

Local hi-tech firms and entrepreneurs, specialised in software creation or online app services, such as Tap30 (the Persian Uber), could become the connection between the government’s openness to innovation and tangible results in terms of jobs for the youth.

But this rosy picture overlooks several obstacles. Even though sanctions have been removed, Iran’s economy has yet to deal with structural problems.

Rouhani has promised to reform the management of oil export revenues, so its proceeds can be used for long-term investments. But how he intends to do this is not yet clear.

Despite the president’s rhetoric, program for improving internet infrastructure and insistence on expanding 3G and 4G services (together with broadband connections for homes), start-ups face connectivity issues, mainly due to access restrictions and internet filters.

And even though the Iranian communication ministry’s 2015 budget was its largest ever (well over US$80 million), the overall amount may be cut by 16.5% this year.

What’s more, the country’s ultraconservatives fear too much internet freedom. Supreme leader Ali Khamenei fosters the idea of enlarging the local knowledge-based industry (and support for Iranian high-tech companies) because it chimes with his idea of the so-called “resistance economy” (a term that emerged as a response to the Western sanctions with the objective to strengthen the Iranian economy).

But free internet with connections to global social media is seen by hardliners as a threat to the moral values of the Islamic republic, in a country where about 60% of the population uses the internet.

Currently, about 57.7% of Iranian families have a laptop or tablet, although there’s a significant difference between cities (64.8%) and rural areas (36.1%).

The fear of the ultraconservatives about losing control of the people may well be justified. During last February parliamentary elections, for instance, Aparat, the Iranian version of YouTube, featured a video showing the former reformist president Mohammad Khatami, who has been prohibited from speaking in public since 2009 because of his support for the leaders of the Green Movement.

In it, Khatami asked Iranians to vote for reformist candidates. The authorities tried to stop the circulation of the video but failed to do so because the video was already viral.

Breaking more barriers

Before the lifting of international sanctions, Iran’s hi-tech industry was strongly undermined by the lack of access to advanced technology. Many companies could not buy necessary components for their work and exports of Iranian products were prohibited.

But, as underlined by researcher Mahmoud Pargoo, the sanctions also meant that Iranians started to purchase an increasing number of domestic products – from software to electronics.

Stopping relying exclusively on oil revenues and opening up to innovation and technology will require accepting changes in civil liberties and transformations across the society, trusting local entrepreneurship, and breaking the legal barriers on civil rights and freedoms, internet access and filters. Iranian start-ups would benefit from these changes.

In 2013, Rouhani told an Iranian magazine that “in the age of digital revolution, one cannot live or govern in a quarantine”. Although the country has taken a few steps forward, Iranians are still waiting for a real, free digital revolution.

But a cautious approach is needed because there are a number of consequences from fostering and embracing a technology industry, within the framework of Rouhani’s neoliberal economic policies. The labour market may be affected in terms of more short-term contracts, precarious work conditions, and also overall impact on the other sectors, potentially affecting working class identities.

Another dilemma may be the management of tech-related activities and their privatisation. Would this be done at the expense of Iran’s public sector companies, as intensively happened in the past 15 years, together with semi-public entities?

Young Iranians seem to be ready for a domestic technological upheaval. But are local policymakers prepared to allow the resulting process of social transformation?

Stella Morgana, PhD candidate, Iranian Studies, Leiden University.

This article first appeared on The Conversation.