An Islamic-ruled society–like rule by the people in a communist state–may sound nifty in theory but it CANNOT run an economy, regardless of available resources. Mullahs with a narrow religious education lack the skills yet for political reasons fear to hand the job over to the best qualified (a private middle class).
Khamenei knows how greatly a nation’s military capacities are affected by improved economic performance but he fears the historical risks in doing what’s necessary. The middle class that made medieval states become more powerful and wealthy demanded in return a share of political power proportionate to its contributions. That share could only come from the ruling aristocracy. Today the ruling mullahs won’t share power either despite the fact they too offer nothing at all of social value–no more than ancien regime aristocrats in 1789 or Soviet politburo members in 1989. Indeed all three had “negative value,” hindering prosperity and success so long as they could stick around.
To run the economy ruling clerics have turned to the Third Option–IRCG generals as unskilled and prone to corruption and incompetence as the clergy. The missing cure for such ills is a free press that can expose what works badly and thereby discourage it. Unfortunately, to tell unwelcome truths in the Islamic Republic is to “undermine national security. Meanwhile Khamenbei is free to commit heinous crimes and tell brazen lies he wants but it can’t make people love him or believe him anymore. The same tactics which have backfired in other Arab Spring countries backfire now in Iran. Khamenei probably knows that but, having burned too many bridges, what option does he have now?
Life in Iran can only get worse at this point–day by day, year by year, decade by decade unless the existing system is ditched completely. No more than the Soviet Union by Brezhnev’s time, can it offer a political or economic model that anyone with half a brain would want to imitate.
For a fine analysis of the awful job the IRCG has done when it comes to the economy see: