Four major economic factors which prevent Iran from moving capital from Tehran

Business Materials 25 December 2013 17:19 (UTC +04:00)

Baku, Azerbaijan, Dec. 25

By Umid Niayesh - Trend:

Iranian parliament has approved an MP-proposed document for picking another city for country's capital and move the government from Tehran on Dec. 24.

While the parliament has accepted the document in general, it still has to study the details of the proposal, and if approved, the document will be forwarded to Iran's Guardian Council, which looks into the document, to see whether it violates the Constitution and the Islamic laws.

The idea for the change of capital isn't new. Whenever there's a traffic problem, or a heavy pollution issue, the idea was always brought up. But this time, it is different.

The proposal reads that a council headed by president or vice-president should be set up and spend the next two years studying which alternate location would be best for the capital.

The official process to change Iran's capital has started when the parliament approved the document. However, the process promises to be long-lasting, because, some stand against the idea, namely, the current Iranian government.

The administration of Hassan Rouhani believes that if the document is approved, then the actual moving of the capital to other city, would impose high expenses to the administration.

The administration says that such grand changes should be approved by only the Supreme Leader, Ayatollah Ali Khamenei.

Some officials in Iran believe change of capital is not realistic, as country's vice president for legal and parliamentary affairs, Majid Ansari said that even if approved, the execution of the plan wouldn't be realized even in 20 years.

There are some major reasons of concern why the capital should be moved from Tehran. One of such reasons is frequent earthquakes. The overpopulated city's location is prone to strong quakes. Tehran experienced its last major earthquake in 1830, when an estimated 45,000 people were killed. Experts say the fault lines around Tehran have been slipping and gathering energy ever since.

The probability of an earthquake above 7 on the Richter scale hitting Tehran in the next 10 years currently stands at around 65 percent, according to the head of the International Seismographic Research Center of Iran's Ministry of Science.

Another big problem in Tehran is air pollution. City's commercial and academic life has been shut down due to air pollution repeatedly in recent years. Government offices, universities, and schools have been closed several times. Back in 2011, the World Bank put the cost of air pollution in Tehran at about $3.3 billion. Obviously, the cost has increased since then as air pollution has been getting worse from year to year.

The traffic problem in Tehran has not yet been solved as well. Along with that, approximately 150,000 people add up to the total population of Tehran, which now stands at about 15 million people.

On the other hand, Tehran has several major economic factors that simply cannot be discarded. Last year's report from Iran's Statistical Center said Tehran shared the most of the country's total GDP in 2010 at 34 percent (11 percent of country's total population).

Another factor is that some 50 percent of country's tax revenues come from Tehran, according to December 2013 statement from Iranian MP Hossein Garousi.

Third factor brings us back to air pollution. With heavy air pollution hitting Tehran once in a while, the government is forced to announce days-off, which force various institutions, companies and other structures to shut down. Such shut downs impose 6 trillion rials (approximately $242 million based on official rate of 24,779 rilas per each USD) of costs to the country's economy per each day, according to the Iranian MP, Mohammad Reza Tabesh.

The fourth factor has to deal with car manufacturing. Iran's car manufacturing industry which is the second most active industry of the country, after its oil and gas industry, accounts for 10% of Iran's GDP, is mainly located in Tehran. Moving the capital might eventually force some car manufacturers move along, to other cities.

If the capital is to be moved from Tehran, there are several cities of Iran that can be considered as possible options. Tabriz and Arak are possible alternative capitals, although they also suffer from air pollution and traffic, yet to a lesser extent than Tehran.

Another city that should be mentioned is Semnan, which is in central Iran. Iranian Mehr news agency reported on Dec. 24 that the project of transferring water from the Caspian Sea to Semnan which is scheduled to be completed by March 2016 may be the reason behind Semnan not being the best option for relocating the capital there.

These are all estimates, and the relocation of Iran's capital still has to go through a number of barriers and approvals, before the idea actually becomes a reality.

Editing by S.I.