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

Yoshie Furuhashi critical.montages at gmail.com
Sun Sep 2 00:21:37 MDT 2007

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.

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

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

Replaced Iran minister lambasts Ahmadinejad
Salim Yassine
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

"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

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

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


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.

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