Ahmadinejad versus the Technocrats

Iranian president Mahmoud Ahmadinejad won the presidency in 2005 by promising to "bring the oil money to the tables of the people." Despite record oil revenue, his promises remain unfulfilled. As inflation soars and quality of life deteriorates--especially among the downtrodden (mostaz'af) whose interests Ahmadinejad claims to represent--Iranian politicians argue over responsibility. Ahmadinejad blames "foreign hands," "internal enemies," and even his own cabinet ministers. His political competitors and even some clerical supporters, however, attack the president's policies. As the blame game escalates and Ahmadinejad shuffles his cabinet and consolidates his supporters, he may believe himself in a better position to enact his agenda. The immediate winners may be the Islamic Revolutionary Guards Corps (IRGC), but the disputes may also signal the beginning of the end for the controversial president. 

On April 8, 2008, amid rising food and housing prices[1] and what Iranian economic journals call the terminal phase of "Dutch disease,"[2] Ahmadinejad used his blog to announce a change in the composition of his government. The blog post, along with other official commentaries, alluded to the replacement of Economy and Finance Minister Davood Danesh-Ja'fari and Interior Minister Mostafa Pour-Mohammadi, one of the two clergymen remaining in Ahmadinejad's cabinet.[3] Hossein Semsami Mazra'e-Akhound and Mohammad-Reza Rahimi will serve as acting ministers. Ahmadinejad's action startled even his closest allies. At the time of his announcement, the ministers involved, as well as Gholam-Hossein Elham--the spokesman of the Iranian government who also serves as minister of justice--were unaware of the impending changes.[4] The reshuffle marked a further step in the con-solidation of IRGC and security service control in Iran. If Pour-Mohammadi is dismissed by the president, Minister of Intelligence Gholam-Hossein Ezheh-i will be the only remaining clergyman in the cabinet, and twelve of the twenty-one cabinet ministers have experience in the Revolutionary Guards or the Basij paramilitary (see table 1 below).

Round One: Ahmadinejad's Speech in Qom

Ahmadinejad's shuffle may have surprised the Islamic Republic's elite, but it was just the opening shot of a continuing public polemic that has embroiled the hard-line factions in a debate over accountability and management. On April 16, during a major speech in Qom, Ahmadinejad denounced his own ministers and senior public servants. He began by blaming "foreign hands," a usual staple of Iranian political discourse, and then shifted to another favorite theme: the "internal enemies" who sabotage the work of his government.[5] Internal enemies, he said, were engaged in a conspiracy against the government and plotted to raise inflation to 80 percent. "There were those--and there still are some--who acquire special [legal] concessions and enrich themselves with such privileges," Ahmadinejad explained. "This problem has been solved to a degree, but there are still those who abuse their [insider's] insight and concessions to hoard wealth."[6] Ahmadinejad singled out law enforcement forces' involvement in cigarette smuggling to bypass customs.

Ahmadinejad then turned on ministers he himself had appointed. "We struggled to computerize the taxation system of the country in order to register the income of each person and extract taxes upon this basis, but whenever we tried to implement the scheme, a lot of hands opposed it," he complained.[7] Relating the issue to his minister of economy and finance, the Iranian president asked, "minister of economy, how come two factories producing the same commodity and selling the same amount pay different taxes? One factory paid 300 million toman [$328,000] in tax, while the other company barely paid 3 million toman," suggesting he was interested in fairness and social justice, but his finance and economy minister was not.

Ahmadinejad continued to accuse state banks of malfeasance. They made exorbitant and unwarranted loans to "certain individuals," while ordinary Iranians suffered. The Central Bank was especially problematic, the president complained. "In an attempt to control the savings in the interest-free [Islamic] banking system, the government passed regulations so the banks can't do as they please with the savings of the people," he explained. "After hoarding the savings of the people," the banks can [independently] decide to whom they want to lend the money and to whom not. This is an act of discrimination," he declared, and one that he had tried to rectify. "[We] passed regulations according to which the savings could be directed to loans for agriculture, commerce, housing, and industry. But there were some protests, and the regulations were abolished," he complained.[8]

Ahmadinejad's Qom fusillade did not go unanswered. Ayatollah Mohammad-Reza Mahdavi Kani, the seventy-seven-year-old general secretary of the Society of Combatant Clergy and a member of the Assembly of Experts, urged the clergy not to "fear a single man and say the truth for the sake of God."[9] He warned Ahmadinejad that even if the clergy did not involve themselves in intragovernmental policy disputes over the economy, the president should not consider their silence an endorsement or ever consider the clergy to be his yes men. Mahdavi Kani explained, "We are not allowed to blame others for the ills of the society. . . . I have . . . told Mr. Ahmadinejad . . . not to consider us [the clergy] as an instrument." He warned that "we are not the preachers of the Sultans of the past, and that he [Ahmadinejad] should not expect praise from our side."[10]

Pointed criticism from such a senior theologian opened the door for others to criticize Ahmadinejad for economic mismanagement. Other clerical voices, including Ayatollah Naser Makarem Shirazi; Ayatol-lah Abdolkarim Mousavi Ardebili; and, most signifi-cant, Ayatollah Mohammad-Taqi Mesbah-Yazdi, Ahmadinejad's own spiritual mentor, joined in.[11]

Semiofficial newspapers and news agencies also critiqued the president in the wake of his Qom appearance. Many focused on Ahmadinejad's allegations of internal subterfuge and enemy cabals within the Iranian power structure. The online news agency Asr-e Iran asked both why Ahmadinejad had "never mentioned the names of such elements now that he claims to know them so well" and why Ahmadinejad did not identify the specific banks that make the lives of Iran's youth so miserable. The editorial continued by asking how it is possible for "the name of a simple thief, a wallet snatcher [to] appear in the press, but not the names of über-criminals who live the good life without punishment. How come the president, who is the chief of the Supreme National Security Council and who employs the minister of intelligence cannot mention the names of such criminals?"[12] Mehdi Karrubi, a former parliamentary speaker and presidential candidate, sounded a similar theme when he said, "For the past three years you have claimed that the mafia of wealth and power has prevented you from doing your job," and then asked the president, "could you please tell who these people are?"[13]

Other officials called Ahmadinejad's bluff more directly. Hojjat al-Eslam Mohammad Niyazi, head of the Supreme Investigative Organization, demanded more details about the economic mafia so he could start a legal process.[14] Hossein-Ali Amiri, head of the National Organization of Notaries, also challenged Ahmadinejad to provide necessary details so he could launch a formal investigation.[15]

Technocrats were especially angry. Tahmasb Mazaheri, general director of the National Bank, remarked that "the national bank is not a charity" and warned against distribution of money to other banks from its coffers.[16] Ridiculing Ahmadinejad, the financial newspaper Sarmayeh (Capital) asked if "the Iranian president is representative of the government or of the opposition?"[17] Striking a more serious chord, Donya-ye Eqtesad (Economy World) warned against amateur economic planning and drew parallels between Ahmadinejad's expenditures and the mismanagement that hastened the collapse of the shah's regime.[18]

Vengeance of the Vizier

On April 20, Danesh-Ja'fari, the deposed economy and finance minister, gave a blistering farewell speech in which he spoke of internal disputes and shed light on economic decision-making.[19] He criticized "pressure groups" inside the government that "tried to change the direction of affairs by misinformation campaigns . . . and which damaged the economy" and hinted that all the internal backbiting undercut Iran's geopolitical strength. He complained, for example, how interference and second-guessing from the Expediency Council, the official state press, and a number of former and potential presidential candidates interfered with economic management during "an exhausting chess battle with the U.S. Treasury [and] its Zionist undersecretary Stuart Levey."[20]

He saved specific ire for Ahmadinejad, his former ally, who he said erred by dissolving important checks and balances within the bureaucracy. "When it comes to dissolution of the Planning [and Budget] Organization, one must say that this move was uncalculated, and brought nothing but defeat and hopelessness to the employees of this great institution."[21]

Danesh-Ja'fari further accused Ahmadinejad loyalists of causing irreparable harm to the Islamic Republic's international credibility:

One day Dr. [Mohammad-Reza] Rahimi, director general of the Supreme Audit Court [whom Ahmadinejad would later appoint acting interior minister], announced in an interview that one oil contract signed under the previous government was problematic and that this contract which entails $20 billion liability should be declared null and void. The petroleum minister and I talked to him and stressed that such a behavior with regard to international contracts damages our international credibility and people would not trust us anymore.[22]

Indeed, it has been such failure by Iran to honor its own contracts and commitments that has undercut Indo-Iranian trade.

Nor did Danesh-Ja'fari avoid criticizing Ahmadinejad directly. He systematically went through Ahmadinejad's Qom speech and rebutted most of the president's points:

One can easily detect the origins of unprofessional reports passed to the more senior positions. To begin with, none of the executives of the customs, taxation or tobacco directories were aware of the matters [raised by Ahmadinejad in his speech] and most of the matters raised are not valid. Just to mention an example: cigarette imports to this country are free; no concessions have been given to anyone. Twenty-one companies, both big and small, are involved in the import of cigarettes, a trade worth 300 million Euros over the past year. Now, how can anyone be ready to pay five billion U.S. dollars to buy the concession for cigarette import [as Ahmadinejad charged]? This discussion is illogical.[23]

He then addressed Ahmadinejad's complaints about uneven taxation. With regard to the discrepancy in taxes cited by Ahmadinejad, Danesh-Ja'fari said:

Investigations show there are no such cases registered by the taxation authorities of the Islamic Republic. Aside from this, our taxation system is not based upon sales, and we can't expect the two firms to pay the same tax. Our taxation system is based upon income. . . . It is possible that the two factories have the same sales, but they do not necessarily share the same production costs.[24]

With regard to inflation, he asked rhetorically, "Is it possible to decrease liquidity when the National Bank converts $60 billion into rials? Inflation is the inevitable result of such a policy and one can't escape from this reality." He cautioned, "If we want to succeed in economic matters we must master and be truthful to the fundamentals of economics. . . . Both myself and the Director General of the National Bank were against lowering of interest rates."[25]

Round Two: Ahmadinejad's Speech in Hamadan

Ahmadinejad responded to the growing criticism during an April 23 trip to the western Iranian city of Hamadan. He criticized former speaker Karrubi for condescension toward ordinary people for saying Iranians "jumped up and down like dolphins" at Ahmadinejad's rallies.[26] "If any authority, minister or parliamentarian does not work for God," Ahmadinejad said, "it becomes clear after his term end[s] that during his long tenure he has not worked to the benefit of the people, but to serve his own interests. Such a person will end up considering the nation indebted to him and when the people put him aside, he calls the people ignorant."[27] Nor did he refrain from attacking Ali Akbar Hashemi Rafsanjani, a former president and one of the most influential politicians in the Islamic Republic, whose extensive business interests made him, according to Ahmadinejad, antonymous with the social justice that Ahmadinejad sought to pursue.  

Ahmadinejad derided Danesh-Ja'fari for resisting any easing of restrictions on loans. "Some declared their resistance to such policy and claimed this would be unscientific and against expert knowledge," Ahmadinejad explained, "but we tell this to them: If they don't want justice they should stay away from our path and know that the people are here and will do it themselves."[28] Technocrats might take issue with his emphasis on social justice, Ahmadinejad argued, but if economic ills struck Iran, then the Iranian people could find solace in "the culture of martyrdom."[29]

The Hamadan speech provoked another wave of ridicule in the Iranian press. Donya-ye Eqtesad suggested sarcastically, "Why don't we make the interest rate [of the nationalized banks] zero?!"[30] Ahmad Bozorgian, a member of Iran's tobacco regulatory body, demanded that Ahmadinejad present information on illegalities in tobacco importation to him.[31] Having smelled blood, Eshaq Jahangiri, Ahmadinejad's former minister of industry and mining, said Ahmadinejad had once ordered him to falsify the published economic growth rate, doubling it from 4 percent.[32] If the economy was as healthy as Ahmadinejad claimed, the Islamic Republic Federation of Electrical Industries suggested that the time might be right for the "government to . . . pay its debts to us."[33] Eliyas Naderan, member of the parliament's economic committee, announced that the Iranian government had made an "unauthorized withdrawal of $840 million" from the foreign exchange reserve to import fruit ahead of the March 2008 Iranian new year festivities.[34]  

Ahmadinejad's New Strategy

Unable to manipulate the laws of economics to support his domestic agenda, Ahmadinejad now seeks to elevate loyalty. To replace Danesh-Ja'fari, he appointed Hossein Semsami Mazra'e-Akhound, a doctor of economics (and student of first vice president Parviz Davoodi) who has spent his academic life on the faculty of economic and political sciences at Shahid Beheshti University.[35] Semsami wrote his dissertation, "A Model for Foreign Exchange Rates Pricing," under the supervision of Mohammad-Naser Sherafat-Jahromi, dean of the faculty for the past twenty-five years. Semsami's views on economics reportedly mirror Ahmadinejad's. He also seeks greater government regulation to gear up for a fight against social injustice.[36]

There have been conflicting reports about whether Pour-Mohammadi will be able to salvage his position. Even if his allies convince Ahmadinejad to grant him a reprieve, Pour-Mohammadi's future in Ahmadinejad's cabinet, at least as interior minister, will be tenuous at best.[37] Ahmadinejad's designated successor is Mohammad-Reza Rahimi, born in the village of Serishabad in the Iranian Kordestan province around 1948. A graduate of the University of Tehran's law school, he served as a public prosecutor in Gharaveh and Sanandaj and was for a time also chairman of the Sanandaj city council. He also taught law at Iran Azad University, where, for a short time, he was head of the law faculty. In 1993, the Rafsanjani administration appointed him governor of Kordestan. As governor, he instituted a Kurdish language course at Iran Azad. He stepped down, however, upon the accession of Rafsanjani's successor, Mohammad Khatami, whose supporters accused Rahimi of seeking to manipulate the balloting in favor of Khatami's hard-line rival.[38]

Ahmadinejad's accession revived Rahimi's political career. He mysteriously achieved the title of doctor--reportedly from an unnamed French institute--and won appointment to head the Supreme Audit Court. His conduct, however, caused the court some trouble. Aside from the arbitrary cancellation of foreign contracts, Rahimi appointed an executive fired from the Iran Insurance Company to investigate the company. After receiving the score-settling report, Ahmadinejad fired its director and board members by presidential decree, leading to a conflict with Danesh-Ja'fari and his ministry. Ahmadinejad reinstated the fired director and board, but left Rahimi in place.[39]

The reformist press often depicts Rahimi as a sycophant. It is a charge not without merit. Standing before Ahmadinejad, Rahimi likened the president to the Prophet Muhammad: "In Syria, in the historical city of Basra which may be unknown to some, a Muslim told me that he believes that if there was to be a prophet after the prophet, this should be Ahmadinejad!"[40] Ahmadinejad seems to be cultivating this kind of blind loyalty in his cabinet as the Iranian economy enters a difficult period.

Conclusions

Blaming sabotage--even from within his own cabinet--for inflation, high housing costs, and other economic woes of his administration may be the only way Ahmadinejad can salvage his political fortunes ahead of his 2009 reelection campaign. Perhaps such motives explain Danesh-Ja'fari's ouster, but why fire Pour-Mohammadi?

There are several explanations. As he consolidates control, Ahmadinejad seeks to undercut strong personalities with their own independent networks. Because Pour-Mohammadi's resume includes stints as a public prosecutor in Khuzestan, Hormozgan, Kermanshah, and Khorasan; chief of external intelligence; deputy intelligence minister; and a political adviser in the supreme leader's office,[41] Ahmadinejad may distrust Pour-Mohammadi for the unwelcome juxtaposition of their experience and because it appears Supreme Leader Ali Khamenei had imposed his initial nomination upon the new president.

The supreme leader may not intervene for tactical reasons. As Iran's economy sours--despite record oil revenue--and after Ahmadinejad's Qom speech, the Iranian president increasingly appears an outcast if not a lame duck. As Ahmadinejad's own appointees turn on him, the supreme leader may simply wish to protect his more promising protégés from Ahmadinejad's taint. The same logic may explain the supreme leader's failure to intervene on Danesh-Ja'fari's behalf. As he consolidates his circle of yes men, Ahmadinejad must bear full responsibility for his failures.

Ali Alfoneh ([email protected]) is a doctoral candidate in political science at the University of Copenhagen.

Mr. Alfoneh thanks the Royal Danish Defense College for its support of his research and Ali Afshari and Arash Sigarchi for their insights. AEI resident scholar Michael Rubin and associate editor Christy Hall Robinson worked with Mr. Alfoneh to edit and produce this Middle Eastern Outlook.

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