[lbo-talk] IRAN: New IRGC Chief, Central Bank Governor, Oil and Industry Ministers

Yoshie Furuhashi critical.montages at gmail.com
Sat Sep 1 23:22:20 PDT 2007


<http://www.stratfor.com/products/premium/read_article.php?id=294801> Iran: New IRGC Chief September 02, 2007 00 46 GMT

Iranian Supreme Leader Ayatollah Ali Khamenei on Sept. 1 replaced the commander-in-chief of the country's elite military corps, choosing someone from within the Islamic Revolutionary Guard Corps (IRGC). Brig. Gen. Mohammad Ali Jaafari also was promoted to the rank of major general. Khamenei appointed outgoing IRGC chief, Gen. Yahya Rahim Safavi, as his senior military affairs adviser. Safavi had led the IRGC for 10 years.

Jaafari has had an illustrious career within the corps. He was an IRGC commander during the 1980-88 war against Iraq, and has commanded its ground forces. Jaafari also has served as a deputy to Supreme National Security Council Secretary Ali Larijani. Jaarafi participated in talks between Iran and the United Nations' International Atomic Energy Agency as well as in the negotiations Tehran and Washington held on Iraq. He also is the founder and former head of the IRGC's Strategic Centre, which was created in 2005.

The background of the new IRGC commander, and the timing of his appointment, indicates that the Iranians are preparing to fill the vacuum in Iraq once the U.S. military effects a drawdown/pullout. That the Iranians have placed their top Iraq hand in charge of the elite corps shows that Tehran is planning for operations in Iraq. It also should be seen as diplomatic move to convince the United States that they are serious -- they want Washington to know that if the United States conducts airstrikes against Iran, they are prepared to unleash havoc in Iraq.

<http://www.ft.com/cms/s/0/91f04328-53f9-11dc-9a6e-0000779fd2ac.html> Reshuffle displaces Iran bank governor

By Najmeh Bozorgmehr in Tehran

Published: August 26 2007 18:32 | Last updated: August 26 2007 18:32

Ebrahim Sheibani, Iran's central bank governor, resigned on Sunday as part of a continuing cabinet reshuffle that has included the oil and industry portfolios.

Analysts said the reshuffle appeared to be an attempt by President Mahmoud Ahmadi-Nejad to take advantage of higher oil revenues to speed up implementation of his populist policies, including the lowering of bank lending rates.

Mr Ahmadi-Nejad's pledge to offer cheap loans to lower-income people during his high-profile provincial visits is viewed as potentially decisive in retaining the electorate's support.

Iranian news agencies repor­ted on Sunday that Tahmasb Mazaheri, a former economy minister, would be appointed the new central bank governor on Tuesday. Mr Mazaheri is believed to be more sympathetic than Mr Sheibani to the reform of bank regulations advocated by the president.

One economist described Mr Mazaheri's appointment as "bad news" for the money market, because of his support for the further lowering of bank rates and wealth re-distribution. "He may even try to run ahead of the government," said the economist.

In May Mr Sheibani opposed the government's policy of lowering bank lending rates to 12 per cent from 14 and 17 per cent by state and private banks respectively. Mr Ahmadi-Nejad directly intervened to enforce the new rate despite strong opposition by bankers that it was two digits below the official inflation rate and much below a real inflation rate estimated to be at least 20 per cent.

Critics argue that banks cannot weather the multi-billion-dollar loans. But those arguments have fallen on deaf ears.

"Our [state] banks are in fact loss-making now," one banking official said. Mr Sheibani opposed the rate cut but "agreed to carry out the policies in order to keep his position", Mansour Bitar­af, the editor of Jahan-e Sanat, a business daily, said. "Yet, that opposition slowed the process," and therefore it was "not acceptable any more".

The change at the central bank is the third cabinet move this month after Iran's oil and industry ministers also "resigned". There have also been some changes at deputy ministerial level and the elimination of several key policymaking bodies.

Iran's president shocked economists by dissolving the Money and Credit Council, a monetary policymaking body, this month. That followed the scrapping of the Management and Planning Organisation, the backbone of planning and budgeting for six decades, last month.

Analysts see the moves as aimed at overcoming opposition within government to excessive spending of Iran's oil income.

Iran earned $54bn (€39bn, £27bn) in oil revenues during the last Iranian financial year that ended on March 20. The deputy central bank governor, Mohammad-Jaafar Mojarrad, told the FT last week that oil windfalls collected in a contingency fund would surpass last year's $9bn by the end of this Iranian year.

"This government is getting richer every hour," said one western diplomat.

Some economists suspect the government is trying to win back popular support dented by moves to ration petrol in June and by continuing high inflation, unemployment and liquidity rates.

"It does not really matter who are the new figures and it is hard to detect a new trend or strategy," said Saeed Shirkavand, a former deputy minister of economy. "The recent changes represent the government's admission of failure and effort to find the ones to blame.

<http://www.metimes.com/storyview.php?StoryID=20070815-032914-4148r> Replaced Iran minister lambasts Ahmadinejad Salim Yassine AFP August 15, 2007

TEHRAN -- Iran's former industry minister, replaced in a government reshuffle this week, has launched a stinging attack on the economic policies of President Mahmoud Ahmadinejad, the Fars news agency reported Wednesday.

Ali Reza Tahmasebi complained in his resignation letter that prices had been frozen artificially, industrial plants suffered from under-investment, and the ministry was enduring damaging personnel changes.

"I submit my resignation to my brother [Ahmadinejad], so he can choose someone who is more [in] line with his own views," said the letter.

The ex-minister's unvarnished attack on the president's economic polices is highly unusual in a country where political exchanges, even between foes, are often marked by the utmost restraint.

In another unusual move, Tahmasebi made his feelings clear by not even bothering to turn up to Tuesday's handover ceremony attended by Vice-President Parviz Davoudi and acting industry minister Ali Akbar Mehrabian, media reported.

Tahmasebi was replaced Sunday along with oil minister Kazem Vaziri Hamaneh in an unexpected reshuffle, seen as aimed at increasing the president's control over his widely-criticized economic policy.

Ahmadinejad has been criticized across the political spectrum in Iran for the country's high inflation, and for ploughing extra revenues from high crude oil prices into high-spending infrastructure projects.

In his letter, Tahmasebi cited an "emphasis on the freezing of prices of industrial goods such as cement, sugar, dairy products, vehicles, and home appliances, while the cost of all the other elements in their production has increased."

He also complained that "the ministries of energy and oil could not give factories the necessary water, electricity, and gas. This emanated from a lack of investment in their expansion."

He added: "There is an emphasis on some changes in the structure of some bodies of the ministry of industry, which I think will worsen the current management profile in this sector."

Since coming to power, Ahmadinejad has removed several officials in sensitive ministries and appointed his allies, to the outrage of opponents who would prefer to see more technocratic nominations.

The clear disagreement between the ex-minister and the president was emphasized by the fact Tahmasebi was not offered any other post in the reshuffle.

Vaziri Hamaneh, however, was made the president's special advisor on oil and gas affairs.

<http://www.economist.com/agenda/displaystory.cfm?story_id=9642293> Getting a grip in Iran

Aug 14th 2007
>From the Economist Intelligence Unit ViewsWire

The president wants control of the economy

The Iranian president, Mahmoud Ahmadinejad, has engineered the removal of Iran's oil and industry ministers in a move widely interpreted as signalling his push to impose his will and control over core areas of the economy in the lead-up to the parliamentary election scheduled for March 2008.

The oil minister, Kazem Vaziri-Hamaneh, and his industry colleague, Alireza Tahmasebi, were both reported to have tendered their resignation, but it has been widely assumed that Mr Ahmadinejad ordered their removal. That Mr Vaziri-Hamaneh was the president's fourth choice as oil minister (after Mr Ahmadinejad's initial nominations were blocked by parliament soon after his election in 2005), and Mr Tahmasebi was increasingly identified as opposing the president's industry reform plans, certainly made their departures that much more likely. However, the impromptu dismissal of these two senior ministers is still surprising and focuses attention once more on the internal political power-play currently underway within the government and the ruling conservative elite.

Do it my way

The replacement of the oil minister of one of OPEC's leading member states—Iran is the second-largest producer in the group, after Saudi Arabia—would normally be expected to cause ripples in the world oil market. However, the reaction of the oil market has been muted, reflecting the dominant view that these moves have more to do with domestic politics than with oil policy. Mr Ahmadinejad seems to be hoping that with parliament distracted with the impending elections, he will be able to force through his new nomination without too much hindrance. Gaining control over the oil ministry is deemed critical for a president who was elected on a pledge to bring oil revenues to each and every Iranian household. Having failed to live up to such promises after almost two years in power, and with sentiment turning against an administration that recently imposed fuel rationing on an unsuspecting population, Mr Ahmadinejad has made his oil minister a convenient scapegoat. Some Iranian newspapers have suggested that Mr Vaziri-Hamaneh had been seeking clearance to sell gasoline at market prices to drivers that have used up their subsidised rations, but that the president had refused on the grounds that this would stoke up inflation. (Earlier this year he decreed that interest rates should be cut in order to bring down inflation, overruling the central bank, which was inclined to the more orthodox approach of raising rates.)

Mr Vaziri-Hamaneh has also faced harsh criticism for supposedly having agreed to sell gas to Pakistan and India too cheaply. Even though a final agreement in this so-called "peace pipeline" is still a long way off, the controversy that has been whipped up over the pricing undoubtedly helped to hasten the minister's departure.

The president has named Gholam-Hossein Nozari, the head of the National Iranian Oil Company (NIOC), as interim oil minister, and Ali Akbar Mehrabian, the president's representative on the parliamentary fuel consumption committee, as the stand-in industry minister. Mr Nozari was put in charge of NIOC in 2006 in a shake-up of positions within the oil industry. He is thought to favour offering more attractive terms for foreign companies to invest in Iran's upstream oil and gas sector, but it is unlikely that he will be allowed to show much initiative, given the clear signs that Mr Ahmadinejad is intent on maximising his control over economic policy.

The replacement of the two ministers follows moves by Mr Ahmadinejad to order root-and-branch changes in several state institutions. The most significant was the decision in July to reorganise the Management and Planning Organisation (MPO), which has been the backbone of economic planning and budget drafting for the past six decades, by integrating it into the Office of the President. The president argued that the move would streamline the bureaucracy and speed up decision-making, but it shocked many officials and economists already critical of government economic policy, who argued that it would weaken co-ordination between different government departments and organisations. Farhad Rahbar, the head of the MPO, resigned in protest at the move, and suggested that although he agreed with the concept of restructuring, the haste of the change would undermine planning expertise.

Vote FILF

The upcoming parliamentary and presidential elections—Mr Ahmadinejad'sterm ends in mid-2009—provide the political context to these battles within the Iranian administration. The general election is likely to be a closely-fought contest between the dominant conservative camp and a relatively resurgent reformist opposition. Internal dissent within the conservative camp has propelled senior figures to call for the formation of a unified list. These calls acquired a greater sense of urgency following a gathering of the general assembly of the Followers of the Imam and the Leadership Front (FILF), a major conservative faction, in June. The FILF had already established a six-member team aimed at forging unity among the various conservative groups. In December's local elections the conservative vote was split broadly between lists associated with Mr Ahmadinejad and those set up by his critics. The relative success of the reformist camp and of supporters of the former president, Akbar Hashemi Rafsanjani, in both the local and the Khobregan (Assembly of Experts) elections, which were held concurrently, have convinced conservatives of the need for greater co-ordination. Not satisfied by the appeal and performance of his fellow conservatives, Mr Ahmadinejad has reverted to the old maxim whereby "the leader knows best". In seeking to regain control over the government and in bolstering its true conservative credentials (a move aimed at maximising Mr Ahmadinejad's support amongst his core constituency), further cabinet reshuffles cannot be ruled out as the president moves to impose order on his often recalcitrant ministers. The foreign minister, Manouchehr Mottaki, and the central bank governor, Ebrahim Sheibani, are thought to be most vulnerable to the president's whims. -- Yoshie



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