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Iran Parliament Dismisses Another Minister In Scramble To Face Sanctions

Masoud Karbasian, Rouhani's economy and finance minister, in parliament as he was impeached on 26 Aug 2018.

The Iranian Parliament has impeached and dismissed a second minister from President Hassan Rouhani’s cabinet on August 26, in another blow to his government in less than a month.

Iranian media reported that 137 of the 290-member parliament voted for economy minister Masoud Karbasian's dismissal, while 121 MPs supported him. The other 12 abstained or were absent.

As Iran’s economy faces serious challenges and the country braces for the full impact of U.S. sanctions, the ruling elite scrambles to find solutions or at least appear to be addressing the country’s problems.

The parliament had announced 17 reasons for the impeachment including "inability to run the economic affairs of the state," as well as "lack of prudence, not paying attention to the 'resistance economy,' and failure in privatization and not being able to make the economy heathy and transparent."

As was the case with the impeachment of labor minister Ali Rabiei, Rouhani decided not to be present at the parliament. Instead, his first deputy president, Es’haq Jahangiri, as well as a number of Rouhani's cabinet members accompanied Kardashian to the Parliament.

The impeachment of the economy minister took place within only three weeks of the session in which Rabiei was impeached and dismissed from the administration. During that session, Rabiei's supporters and critics explicitly accused each other of gross financial and administrative corruption in a way that was unprecedented.

Parliament Speaker Ali Larijani at the time promised that the accusations would be investigated within two weeks, but so far there has been no evidence to indicate an investigation.

The MPs speaking against Karbasian, who were known to be affiliated with both the reformist and conservative factions, criticized the minister for his "inability to control inflation and prevent a recession that has paralyzed industries, businesses, and the bazaar," as well as for "not being able to coordinate the government's economic team, not having a clear economic strategy and even a plan to run his ministry, and widespread corruption at the Iranian Customs Administration."

In his defense, Karbasian blamed the country's economic problems on "unforeseen developments and emergencies," such as "the psychological impact of sanctions" on the economy.

In an implicit reference to interventions by IRGC and Khamenei's office in economic affairs, Kardashian added that "some of Iran's economic problems have occurred in areas not under the administration's control," and referring to the U.S. withdrawal from the nuclear deal with Iran, he said, "Other problems were created after the United States ceased to respect its commitments."

Iran’s economic system is a labyrinth of various official and semi-official actors who control most of the economy without really being accountable to either free market rules or to a central planning authority. Most receive subsidies from the country’s oil income and are rarely efficient.

While the executive branch itself owns many nationalized industries, the Islamic Revolution Guard Corps (IRGC) and a maze of religious foundation also own vast businesses, without any transparency. This has stifled the private sector and discouraged large domestic or foreign investments.

The dramatic devaluation of the Iranian currency, the rial, and the chaos gripping the forex market, as well as the rising cost of living during the past year, have led to several waves of protests that have had both economic and political motives, including opposition to the government's regional ambitions, discrimination, suppression of minorities and human rights activists, and strict limitations on freedom of expression.

The renewed sanctions that followed the U.S. pull-out from the nuclear deal with Iran has made controlling the economic chaos even harder for the Islamic government.

Iran's parliament, prompted by pressures from conservatives, has been demanding major changes in Rouhani's economic team, but Rouhani limited the changes to the appointment of a new central bank governor. It appears that with the impeachment of Rouhani's labor and economy ministers, the parliament has taken the lead in bringing about a change in the Rouhani administration's economic policy.