The landed trust, waqf, has historically been the chief, indeed the only, institution in Islamic law protecting accumulated wealth from encroachment by arbitrary state power and to ensure inter-generational unity of purpose. We can compare this largely static instrument with the dynamic development of the landed trust in Western law, from whence the modern ideas of legal personality, the corporation and corporate governance standards evolved. These ideas were subsequently imported wholesale into Muslim societies through legal transplants, here in the form of the trust. In Iran, both instruments –waqf and bonyad– thus came to coexist and became centrepieces of the economic transformation after the Islamic revolution. What remained underdeveloped in both, however, was the implementation of accountable corporate governance. These shortcomings have vastly facilitated corrupt capture and led to chronic underperformance in an economy based on ostensibly charitable foundational holdings.
The failure of the expected economic boom to materialise after the 2015 Nuclear Deal has many reasons, both external and domestic. Apart from regional and international factors (e.g. the withdrawal of the USA from the agreement and the imposition of further sanctions) that combined to negatively affect Iran’s prospects in this crucial period, a number of domestic factors prevented the realisation of the Deal’s economic promise, both cultural and structural. This presentation focuses on some practical obstacles arising from a complex domestic regulatory framework. At the same time, it sheds light on various opportunities Iran could have or has already exploited in this regard.
Economic development requires insurance as it makes risks more manageable and thereby permits resources to be allocated more productively. European in origin, the concept of insurance does not have a genuine counterpart in classical Islamic law, so its reception has been haphazard in the Muslim world. Some countries, such as Sudan, have completely Islamized their insurance sectors, prohibiting conventional insurance. Others, such as those in the Gulf, have embraced Western regulatory practices. Iran’s economy, in particular, has suffered from the underperformance of its domestic insurance sector and its exclusion from international insurance markets through sanctions, especially maritime insurance for hydro-carbon shipments. Examining the role of the undersupply of insurance services, this presentation seeks to shed light on some of the underlying regulatory causes of the current economic malaise, especially the role public law has for the development of the private sector.