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Published online by Cambridge University Press:  05 March 2013


Since 2009, analyses of Iran have stressed the centralizing takeover of the country's economy by a single state institution, the Islamic Revolutionary Guards Corps. At the same time, however, Iran's factionalized political elite uniformly advocate for rapid privatization of state-owned enterprises. Underneath this puzzling contradiction is a complex shift of economic ownership away from the state toward a variety of parastatal organizations including banks, cooperatives, pension funds, foundations, and military-linked contractors. The result is not a praetorian monolith but a subcontractor state. This article draws on interviews conducted in Iran during 2009 and 2010, primary data from parliamentary and governmental reports, and secondary sources to show how intraelite conflict and nonelite claims have structured the process of privatization. Framed comparatively with privatization outcomes in other middle-income countries, Iran's subcontractor state can be seen as a consequence of the way in which politics and society shaped the form of capitalism that has taken root in the Islamic Republic.

Copyright © Cambridge University Press 2013

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Author's note: My thanks to Ben Scully, Dan Pasciuti, Şahan Karataşlı, Farideh Farhi, and Ali Reza Eshraghi for comments and suggestions on this article. The research was assisted by a fellowship from the International Dissertation Research Fellowship Program of the Social Science Research Council, with funds provided by the Andrew W. Mellon Foundation.

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