Iran Moves Towards Greater State Control of Economy as US Sanctions Loom

Week of October 22, 2018 | Iran Unfiltered is a weekly digest tracking Iranian politics & society by the National Iranian American Council | Subscribe Here

  • Leading pro-free market ministers and advisors leave Rouhani administration
  • Limited Entry of Women to a Soccer Match met with Support and Backlash
  • Officials Break Two-Week Silence on Khashoggi murder
  • 12 Iranian Border Guards Kidnapped by Pakistan-based militants
  • Detained Environmentalists Charged with Capital Offense
  • Teachers Stage Sit-in Protests Across Iran

As hard-hitting U.S. sanctions are set to be reimposed on November 5th, President Hassan Rouhani is reshuffling his ministers and advisors and fundamentally altering his administration’s economic policy. Long a staunch advocate of liberal market reforms and increased privatization, the economic crisis brought on by foreign sanctions is compelling Rouhani to bolster social safety nets and pursue greater state intervention in the economy to control the Rial’s depreciation and rising inflation. In other news, the entrance of women into a recent soccer match at Azadi stadium spurred support from vast swathes of Iranian society, but backlash from some senior officials. Iranian officials also broke their two-week silence on the murder of Saudi journalist Jamal Khashoggi, condemning the killing and Saudi Arabia in vociferous terms.

 

Women Allowed Inside Azadi Stadium for a Soccer Match

On October 16th, a small number of women were permitted inside Azadi stadium to watch a soccer match for the first time since the 1979 Iranian revolution. Roughly 200 women were allowed to enter the stadium. Fararu notes: “Specific measures were taken for the women to be present in the stadium, including a specific female-only section for them, a separate entrance, and female police to guard their entrance and exit.”

The decision to permit women to watch the game was made by the Sports Ministry and the Iranian Football Federation. Sports minister Masoud Soltanifar said in a tweet after the match: “The presence of women and families in the friendly match of our national team against Bolivia allowed our women to share in a moment of pride for our country’s athletics while preserving our Islamic and moral values.”

However, the decision to allow women into the stadium was harshly rebuked by Iran’s attorney general. Mohammad Jafar Montazeri stated: “The presence of women in Azadi stadium is damaging and has no basis in Sharia law. Why are we opposed? Because sins will occur. Watching a game is not an issue, but the sins that occur are the problem.”

Montazeri also threatened to act against officials who take steps to allow women into stadiums. He declared: “We will confront any managers trying to create a platform for the presence of women in stadiums. It cannot be that four people with whatever aims break the [people’s] privacy and we remain silent. First, we will give them advice, then we will confront them.”

Montazeri’s comments were criticized by figures from all sides of Iran’s political spectrum.  Fararu wrote of Montazeri’s comments: “The warning of the attorney general shows that the decision to have women present in Azadi Stadium was a [Rouhani] administration decision and did not reflect the opinion of the entire system. As a result, we cannot be too optimistic of what will happen in the future, at least in the short term.”

Principlist politician Ezzatollah Zarghami, a former head of state TV (Islamic Republic of Iran Broadcasting) wrote in response to Montazeri’s comments: “In soccer, the athletes are not half naked, so the presence of women in stadiums does not break people’s privacy. Don’t claw at women and families who already don’t have enough pastime activities! Threatening athletic managers with legal charges is not worthy thing to do!”

Masoumeh Ebtekar, vice president for women and family affairs in the Rouhani administration, also said in response: “There are different views. But what is important is that we don’t have any laws on this issue (on the presence of women in stadiums). It is also not against Sharia and all religious rules are observed.”

Fatemeh Zolghadr, an MP representing Tehran, also stated: “On this issue, it has been planned to gradually prepare the infrastructure for the presence of women in stadiums.”

Meanwhile, Deputy Judiciary Chief Hadi Sadeghi said that a path could be created for women to be present in sports stadiums, but certain criteria would have to be met. He opined: “Some people challenge God’s law, or enter this arena with inappropriate methods, while we can address this in a rational way in line with Sharia law.” He added: “The solution for women to be freely present to watch sports competitions is not by fighting against God’s laws, but for officials and managers to wisely create an environment for their presence which is not at odds with Sharia and morality.”

 

Environmentalists Charged with “Sowing Corruption on Earth”

Several environmental activists detained last January on espionage charges have been charged with “sowing corruption on Earth,” a capital crime inside Iran. The case of the environmentalists has divided Iran’s political and security institutions, with the Rouhani administration’s intelligence and interior ministries dismissing the espionage charges and the judiciary and Revolutionary Guards upholding them [as explained in a previous Iran Unfiltered].

On October 22nd, the head of Iran’s Environmental Agency, Abbas Kalantari, who has pushed back on the charges against the environmentalists, said that the new charges had still “not been officially announced.” He added: “This charge is not certain and there is a possibility for it to be reconsidered so it is better for us to wait a little bit for official announcements to be made. These are still rumours.”

However, on October 24th, Tehran’s public prosecutor Abbas Jafari Dolatabadi stated that the charges against four of the accused have been changed by the lead investigator on the case. Dolatabadi asserted: “Eight people are being pursuing in this case and the indictments against them have been sent to the court, and the charges against four of them is ‘sowing corruption on Earth.'” He added: “The charges against four of the accused have been changed by the investigator of this case. Those who have made criticisms on this should know that the investigator has the authority to decide on the charges.”

 

Iran Reacts to Jamal Khashoggi Killing

After Saudi journalist Jamal Khashoggi went missing on October 2nd and was later confirmed to have been killed in the Saudi consulate in Istanbul, Iranian officials were uncharacteristically silent on the issue.

This silence broke on October 22nd, with Iran’s Judiciary Chief Sadeq Larijani denouncing the killing. This was followed by remarks by President Rouhani and other officials. Larijani stated that the Khahoggi’s killing represented the “terrorist-producing nature” of the Saudi government. He added that the killing was a “heinous murder” and stated: “The Saudis from the beginning with help from the West took steps to cover up this crime, and now that they have had no choice but to admit the killing they claim the crime was carried out by a number of people acting independently.”

Larijani accused Western countries of having “double standards” on human rights, stating: “On the death of this journalist, many Western countries are showing sensitivity and are superficially pursuing the matter, but on crimes such as what is happening in Yemen, they are silent.”

Rouhani also lambasted the murder and presented the United States as complicit. He proclaimed on October 24th: “No one thought that in today’s world and in this new century we would witness such an organized murder, and for institutions to plan for such a heinous murder. I don’t think that without America’s support any country would dare commit such a crime.” Rouhani added: “The tribal group that rules this country has marginal security and to commit this crime relies on a superpower which supports them and doesn’t allow international courts that deal with human rights abuses to take actions against them.”

Radio Farda said of the weeks-long silence of Iranian officials on Khashoggi’s murder: “Islamic Republic officials, despite the severe differences between Tehran and Riyadh, did not express any opinions on this issue. Even Bahram Ghassemi, the spokesman for the foreign ministry, did not reply to journalists’ questions about this issue.”

 

Rouhani Reshuffles Cabinet Away from Free Market Proponents

On October 20th, Rouhani accepted the resignation of Abbas Akhoundi as the Minister of Roads and Urban Development and Mohammad Shariatmadari as the Minister of Industry, Mines and Business. Shariatmadari was subsequently appointed as Minister of Cooperatives, Labour and Social Welfare.

In his resignation letter, Akhoundi—a staunch advocate of the free market—cited differences over economic policy as his key reason for leaving the administration. He wrote: “It does not appear that I can do impactful work on advancing urban renewal plans in line with my views … I cannot align with the policies of maximum government intervention in the market and the approach to organizing economic affairs in country’s current climate.”

Akhoundi stressed that free-market principles shouldn’t be abandoned. He opined in the letter: “I believe that the three principles of rule of law, property rights, and an economic policy of market competition should not be abandoned under any circumstances.”

The reformist Fararu notes that Rouhani is turning towards individuals who favor greater state intervention and welfare. Fararu notes: “This resignation [of Akhoundi] can be seen as confirming Rouhani turning from Masoud Nili, an economist who believes in the free market, towards Mohammad Bagher Nobakht, the head of the Planning and Budget Organization.”

Political analyst Ahmad Shirzad tells Fararu that there is not yet uniformity within the administration on ceasing free market reforms. He states: “But on this issue right now there is not uniform consensus among Rouhani’s allies. Institutionalist economists [who favor greater state intervention], such as the 50 economists who wrote a letter to Rouhani, believe that the government should intervene in the currency market to bring down the cost of currency and the inflation rate.”

Shirzad notes that Akhoundi’s policy prescriptions would have worsened Iran’s economic conditions: “If we wanted to follow Mr Akhoundi’s prescriptions in these conditions, naturally any kind of state intervention would have been avoided and we would have been facing a dollar that costs 50,000 tomans.”

Shirzad states that Iran is being forced now to pursue greater state intervention in the economy due to foreign pressure. “Mr Akhoundi’s words are helpful and worthwhile at the appropriate time and place … However the current conditions, in which we are facing an economic war, give us no choice but to turn towards state control [of the economy].”

Shirzad adds that former Prime Minister Mir Hossein Mousavi was similarly compelled towards central economic planning during the Iran-Iraq War: “In the administration of Mir Hossein Mousavi, because of the war with Iraq, we had no choice but to turn to a coupon distribution system. For this reason, Mousavi’s reputation was intertwined with the coupon system and state distribution of goods. This is while Mousavi had no choice to pursue these policies given the conditions of the period he served.”

Shirzad states that Rouhani is a supporter of the free market, but has no choice now but to pursue greater state intervention in the economy. He states: “Mr Rouhani is not inclined towards institutionalist and leftist economists. He is more a supporter of the free market. He is not far from what Mr Akhoundi said in his resignation letter, but the current conditions and the political pressures that have been imposed on the country leave the administration no choice but to intervene more in the economy.”

 

Vice President Jahangiri Comments May Divide Rouhani & Reformists

On October 21st, Rouhani’s first vice president and key economic advisor, Eshaq Jahangiri, spurred controversy by saying he lacked the authority to even replace his secretary. Jahangiri said in a speech at a ceremony marking the national day of exporters: “I have repeatedly said that, given the current situation, I want [state] managers that are risk takers. In response to me, some ask why I don’t replace managers. They think that I have a paper and pen in my hand and that I can replace a manager on the path I’m on. Up to now, I haven’t been given permission to replace my secretaries, much less lawyers, and ministers, and so on.”

Jahangiri’s comment led to speculation that he would leave the Rouhani administration. Elias Hazrati, a reformist Tehran MP, said after Jahangiri’s remarks: “In my view, the song is the song of Jahangiri leaving. My analysis is that he will leave the administration.”

However, many contend Jahangiri will remain in the administration as he is Rouhani’s strongest reformist ally. Sadegh Javadi Hesar, a reformist political analyst, tells Fararu: “If Jahangiri separates from the administration, a serious cleavage would be created between reformists and Mr Rouhani. Reformists would not follow along or cooperate with the administration anymore and will become radicalized with respect to the administration.”

Reformist political analyst Abdollah Nasseri explains that Jahangiri’s remarks are rooted in his increased marginalization in the administration during Rouhani’s second term. He states: “In Rouhani’s second term it became clear that Jahangiri was consulted less for many decisions and appointments.” He adds: “Jahangiri with these words wanted to tell society, elites, and activists that we shouldn’t have the same expectations of him as we did of the past Jahangiri [during Rouhani’s first term]. He wanted to say that Mr Rouhani and those close to him like Nobakht [Mohammad Bagher Nobakht, vice president and head of Planning and Budget Organization] and Vaezi [Mahmoud Vaezi, Rouhani’s chief of staff] have created disarray in the administration.”

In response to the controversy, Jahangiri released two videos on Instagram addressing his critics. He defended his track record in the administration in the first video, proclaiming: “The reality is that in the 11th administration [Rouhani’s first term], we were able to bring stability back to the economy. We made the inflation rate single digit. The international environment became favorable. For 18 months, we engaged in hard negotiations with foreigners to reach an agreement. We broke many taboos to allow these negotiations to reach a result. It happened. Many friends share clips of me defending [this track record] with passion. I indeed passionately defend this work that was done.”

In the second video, Jahangiri sought to distance himself from the economic policies pursued by Rouhani in his second term. He declared: “The top priority of the president in his first term was to reach the JCPOA. Perhaps I spent more time on economic issues. In this term, the president is placing more time on economic issues … he has created an economic advisor post, who is also the head of the chamber of commerce. So we should have let Mr Nahavandian [Mohammad Nahavandian, current vice president for economic affairs] talk about these issues …”

Fararu analyzed Jahangiri’s video remarks thusly: “Jahangiri not only discusses his decreased authorities in the economic domain, but he implicitly lays responsibility at the feet of the president [for economic issues].”

However, after Jahangiri’s video remarks, Gholamhossein Karbaschi, the head of the centrist Kargozaran political party and a former mayor of Tehran, said he didn’t believe Jahangiri would resign. Karbaschi told ILNA: “I have heard nothing about the issue of Jahangiri resigning and I don’t think it’s real. Definitely the absence of Jahangiri in the administration will be a blow to the forces allied with the administration, especially the reformist movement. But an even worse blow is if Jahangiri is not able to carry out his responsibilities and is unable to even replace a secretary.”

 

Kidnapping of Iranian Border Guards on Pakistan Border

On October 16th, 12 Iranian border guards in southwestern Sistan-Baluchistan province were kidnapped by militant groups based in Pakistan. On October 22nd, Shahriyar Heydari, the manager for border affairs in the Interior Ministry, stated: “The kidnapped border guards are healthy and are being held by a terrorist group.”

Heydari added that Tehran was negotiating for the guards’ release: “The necessary steps are being taken by the government of the Islamic Republic of Iran through the foreign ministry and interior ministry and we are hopeful that this problem will be resolved through diplomacy.” He added that Iran was in talks with Pakistan to help ensure their release: “The interior minister has made his protests to the Pakistani government and asked this country to take every necessary action for the freedom of the border guards.”

Ramezan Sharif, spokesperson for the Revolutionary Guards, said that militants have increased their attacks on Iranian border bases in recent years. He stated: “In the past few years, they have attacked our border bases over 50 times and one method they’ve used is to infiltrate the bases with their people. They have always met failure but on this occasion were able to implement their plan.”

 

Teachers Stage Sit-in Protests

On October 14-15th, teachers in different Iranian cities engaged in a planned sit-in protest and did not go to their classes. BBC Persian notes: “According to images posted in Telegram, teachers engaged in the sit-in protests in the provinces of Fars, Tehran, Kermanshah, North Khorasan, Elam, Hamedan, Esfahan, and East and West Azerbaijan, Kurdistan, and Bushehr.”

The protest was called for by the “Council for Coordination of Teacher Unions.” The group’s statement calling for the protests read: “The security and judiciary institutions instead of confronting criminals and corruption in society, threaten, expel, fire, or imprison teachers who seek justice.”

The statement added: “As representatives of wide part of the educational workforce, we have pursued all paths to change this terrible situation. Teachers have many times pursued different methods such as talking with officials, writing letters, releasing statements, starting campaigns, and holding [non-political] union demonstrations, to express our demands, but the state and administration have not taken a positive step to resolve the problems.”

Based on reports, Abdol Reza Ganbari, a teacher, poet, and literary critic, and Mohammad Reza Ramezanzadeh, the head of the “Council for Coordination of Teacher Unions,” were arrested on Saturday and Sunday (October 13th and 14th).


 

 

About Author

Sina ToossiSina ToossiSina Toossi joined the National Iranian American Council as a Research Associate in July 2018. In this role, Sina conducts research and writing on U.S.-Iran relations, Iranian politics, and Middle East policy issues. Sina has been published in Newsweek, The National Interest, The Huffington Post, The Atlantic Council’s IranSource, ThinkProgress, and The Washington Quarterly.
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