Iran may shift economic capital to Makran coast

Iran may shift economic capital to Makran coast
Makran coastline on the Gulf of Oman is the least populated area in Iran's large landmass / CC: bne IntelliNews
By bne Tehran bureau January 9, 2025

Moving Iran's capital from Tehran is not feasible, but the country could relocate its economic centre to the Makran coastal region if proper infrastructure is developed, the head of Iran's Supreme Council of Provinces said on January 9 in response the presidency’s plan to move the bulk of the country’s economy to the coast.

A plan to move the economic and political capital away from Tehran of more than 9mn people in the main metropolitan area has been on the card for decades, but thanks in part to poor planning, overuse of resources and climate change, the plan to shift the bulk of the population away from the foot of the Alborz mountain range is gaining momentum backed by the presidency.

Tehran, like several major conurbations in the country has suffered from repeated power cuts in 2023/24, with the city’s industrial periphery significantly affected by the blackouts and water shortages due to failing infrastructure and climate change. This has prompted the current administration to streamline plans to shift the capital but are now predictably hitting opposition from across the board.

Speaking to reporters at a national council meeting, Musa al-Reza Haji-Begloo said temporary closures were not the solution to Tehran's pollution problems, calling instead for a fundamental shift in management approaches and clean energy adoption.

"We need to examine how China managed its pollution while we haven't. This model shows we haven't conducted proper studies or fieldwork, and haven't pursued new energy solutions," Haji-Begloo said, noting that China has successfully transitioned to clean energy despite being among the most polluted countries.

Despite housing 10-12mn people, Tehran's pollution levels are lower than some countries with populations of 50-60mn, he noted, stressing the need for management reform rather than relocation. The official pointed to other countries that struggled with capital moves for 40-50 years after implementation.

Public transportation remains a critical challenge in addressing air pollution, Haji-Begloo said, with municipalities hampered by funding constraints. "No municipality can solve transportation and air pollution problems alone. We need to establish an economic model for this sector to enable municipal action," he said, noting that management issues have led to buses either not being imported or remaining stuck in customs.

The official outlined several priorities including shifting the automotive industry toward reduced-emission vehicles, increasing electric and hybrid vehicle imports, accelerating metro car manufacturing with government support, and improving energy consumption patterns to address current imbalances.

"Iran ranks first in energy consumption but lacks proper consumption culture. We must change this model, and the government needs to act more powerfully and systematically in this area. We're not utilising clean energy and are wasting our current energy resources," Haji-Begloo said.

Regarding coastal development, he suggested establishing economic and tourism pilots in the Makran region with support from local councils. The official also called for increased investment in strategic areas like Abu Musa island.

"We can't just claim Abu Musa belongs to Iran while keeping it inactive. We need to invest, build housing and develop the area," he said.

In a press conference on January 7, government spokesperson Fatemeh Mohajerani reiterated plans to relocate Iran's capital to the southern part of the country. "The new capital will certainly be in the south, specifically in the Makran region," Mohajerani stated.

She added that two councils headed by the “First Vice President” Mohammad Reza Aref is developing the plan, adding the Makran coastline on the Gulf of Oman, to create a new city like Dubai.  

Throughout its history in various guises, Iran has hosted over 30 different capital cities. Each capital city marks a distinct chapter in Iranian history from the Achaemenids' golden city of Persepolis to the Safavids' architectural marvel Isfahan to 20th-century urban Tehran. This new capital in theory would potentially act as a counterweight to Persian Gulf Arab cities such as Dubai, Abu Dhabi and Doha, which have built modern metropolises partly thanks to using desalination of the sea as their water source.

The conservative daily Javan newspaper criticised the suggestion, pointing out that both the "Makran development" initiative and plans to relocate the capital have remained merely theoretical for years, with no concrete progress made by successive governments.

Aref, who served under former President Mohammad Khatami and given the effective role of prime minister under the Pezeshkian administration, suggested that Makran could serve as an ideal location for Iran's new political centre, citing the region's lack of limitations compared to other proposed sites which face water scarcity and infrastructural challenges.

However, security experts have raised concerns about the proposal, noting that moving the seat of government approximately 2,000 km from Tehran to a border region could pose significant strategic vulnerabilities, particularly given Iran's current security challenges along its northern and eastern frontiers.

"Relocating the political power centre to the southernmost border point, where threats are more diverse, would be an entirely mistaken decision," said one political analyst, speaking on condition of anonymity. The analyst drew parallels with the United States, where the United Nations headquarters was deliberately sited in New York rather than Washington, DC to mitigate potential political and security challenges.

Critics also highlighted that while developing the Makran region and encouraging population growth there could benefit the country, this should not be conflated with suitability for a capital city. The Javan newspaper suggested that if the government is serious about such proposals, it should establish clear timelines and provide transparent progress reports to the public.

Earlier in September, the president said: "We have no choice but to move the country's political and economic centre closer to the southern waters," Pezeshkian said during a visit to infrastructure projects on September 7. He said that continuing the current trend of development in Tehran is unsustainable, particularly given the water scarcity.

The president highlighted the inefficiency of transporting raw materials from the south to the centre for processing, only to send finished products back south for export. "This severely depletes our competitive power," Pezeshkian stated.

Mehdi Chamran, chairman of Tehran City Council, also weighed in on the debate. "Various governments have raised this issue, but it hasn't led to a specific outcome," Chamran told reporters on September 8. He stressed the need to distribute the country's affairs across all provinces and cities, acknowledging that while Tehran's problems are significant, issues like water scarcity affect other regions as well.

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