The Arrangement of Economic Ministers in the New Cabinet and Its Impact on Iran's Economic Outlook

Members of the Islamic Consultative Assembly voted to approve 16 out of 17 proposed ministers by Hassan Rouhani. Habibollah Bi'tar, the proposed Minister of Energy, was the only one who did not receive a vote of confidence, while the proposed Minister of Science has not yet been introduced to the Assembly. However, what has drawn the most attention is the changes made in the arrangement of the economic ministers of the cabinet. Among the eight economic ministers of the twelfth government, four have been with Rouhani during his first presidential term. Mohammad Shariatmadari has served as the Executive Vice President, and the Minister of Economy in the eleventh government held the presidency of Iran's Customs. Valiollah Seif, the Governor of the Central Bank, Mohammad Baqer Nobakht, the head of the Planning and Budget Organization, Ali Rabiei, the Minister of Cooperatives, Labor and Social Welfare, Abbas Akhoundi, the Minister of Roads and Urban Development, and Mahmoud Hojjati, the Minister of Agricultural Jihad, continue in their roles. Despite months of attacks by conservatives on Bijan Namdar Zanganeh, the Minister of Oil, due to the Islamic Republic's oil contract with the French oil company Total, Mr. Zanganeh remains in his position. The changes in half of the economic ministers occur while the most significant economic problems, namely unemployment, severe investment shortages, alongside a significant simultaneous increase in liquidity, and political issues hindering the expansion of economic relations with the outside world, have paralyzed Iran's economy. Masoud Karbasian, the current Minister of Economy, is stepping into the shoes of Ali Tayebnia, a well-known figure who began his executive career with a deputy position in the Ministry of Heavy Industries and later served as Deputy for Foreign Trade and Deputy Minister of Oil before moving to the Ministry of Commerce. Mr. Karbasian became the head of Iran's Customs in Mohammad Khatami's second cabinet. After Mahmoud Ahmadinejad took office, he became the Deputy Mayor of Tehran, and Hassan Rouhani appointed him as the head of Iran's Customs in the eleventh government. Masoud Karbasian has previously stated that if he becomes Minister of Economy, he will support lowering interest rates, maintaining single-digit inflation, unifying the exchange rate, and implementing a banking system reform plan. The retention of Valiollah Seif, the Governor of the Central Bank, indicates the continuation of the financial and monetary policies of the eleventh government. Fereydoun Khavand, an economic expert in Paris, tells Radio Farda that 'the change of the Minister of Economy is an important event whose exact reason is not clear. However, it is said in Tehran that the reason for this change is partly the lack of coordination between Mr. Tayebnia and the President and his economic advisor, Masoud Nili, and on the other hand, Mr. Tayebnia's possible inclination towards conservatives, as he was seen visiting the campaign headquarters of both Mr. Rouhani and his rival, Ebrahim Raisi, during the presidential elections.' On the other hand, the retention of Valiollah Seif, the Governor of the Central Bank, indicates the continuation of the financial and monetary policies of the eleventh government. The Central Bank has key responsibilities in Iran's economy due to its agenda, such as reducing interest rates, decreasing liquidity, and providing banking facilities for production units, while also addressing the limitations imposed by past financial and monetary sanctions and expanding financial and monetary cooperation beyond Iran's borders. Conservatives opposing Hassan Rouhani's government continue to resist Iran's joining the Financial Action Task Force (FATF) more than two years after the signing of the JCPOA. Accepting the standards of this organization in combating money laundering is one of the crucial prerequisites for normalizing the financial and monetary relationships of the Central Bank with Western banks. After the implementation of the nuclear agreement, the FATF, on July 4, 2016, suspended its request for countries to take countermeasures against the Islamic Republic for one year. However, financial and monetary sanctions against the Islamic Republic have not been completely lifted, as one of the prerequisites for normalizing the Central Bank's relations with the world's banks is Iran's commitment to combating money laundering and terrorist financing. Meanwhile, the manner of support for Hamas, Hezbollah, and other Islamist groups, some of which are listed as terrorist organizations by the anti-money laundering task force, continues to be a point of contention among government factions. In the Ministry of Industry, Mohammad Reza Nematzadeh, who has been attacked by conservatives highlighting his age in recent years, has been replaced by a younger figure, Mohammad Shariatmadari. Mr. Shariatmadari is among those who have held various positions since the revolution, from the Rajai government to the cabinets of Mohammad Khatami and Hassan Rouhani. He served as Deputy for Revolutionary Affairs in Mohammad Ali Rajai's government and was the Deputy Minister of Commerce in Akbar Hashemi Rafsanjani's first cabinet. He was then tasked with establishing the Office of Supervision and Auditing in the office of the Supreme Leader, and in 1994, while retaining his position, he took over the Executive Headquarters of Imam's Order. Kamran Dadkhah tells Radio Farda that the new economic cabinet composition does not signal any fundamental change, as the government does not have oversight over significant economic institutions in society, which are instead under the control of institutions overseen by the Supreme Leader. Mr. Shariatmadari later became the Minister of Commerce in 1997 and eventually received the Executive Vice Presidency from Hassan Rouhani in the eleventh government. Some of Mr. Shariatmadari's most significant achievements during his management may include Iran's observer membership in the World Trade Organization, the new e-commerce law, the new customs law, the new consumer protection law, and the new digital signature issuance law. However, how can the replacement of half of the economic ministers be evaluated? Kamran Dadkhah, a university professor and economic expert in Boston, tells Radio Farda that the new composition does not signal any fundamental change, as the government does not have oversight over significant economic institutions in society; rather, important economic institutions are under the control of the IRGC, foundations, and institutions overseen by the Supreme Leader. According to Mr. Dadkhah, 'the retention of many ministers, such as the Minister of Oil, in their positions indicates that the current situation will continue to be precarious, and given the decline in oil revenues, it can be predicted that money printing in Iran will continue.' Overall, Kamran Dadkhah does not foresee a 'bright future' for Iran's economy and, pointing to Iran's need for investment, tells Radio Farda that the political structure in Iran and verbal attacks on the United States and tensions in the region will not serve to create conditions for investment in Iran.