TEHRAN: Iran’s economy has been limped badly. The government is revising a draft budget that will lower the assumed price of oil to $40 a barrel from $72. The budget for the year ending in March was based on crude at $100 a barrel.
The U.S.-driven sanctions imposed because of Iran’s nuclear program have curtailed its oil exports and cut off its banks from global financial networks.
To make up for lost growth, Iran’s President Hassan Rouhani has called for conglomerates controlled by the Islamic Revolutionary Guard Corps and conservative religious foundations to give up their tax-exempt status and pull their weight. Although the Parliament backs Rouhani, he faces powerful groups including the Guards and Setad, a holding company controlled by the office of the Supreme Leader Ayatollah Ali Khamenei, Iran’s highest authority. Setad holds large stakes in the telecom and petrochemical industries, among others. The businesses run by the Guards and the clerics account for about a third of Iran’s economy. “We are trying to tax everyone across the board, but as soon as we touch this or that institution, they make such a stink about it,” Rouhani told business leaders in a Jan. 4 speech. “Just be aware that in some cases the domestic political lobby is very strong, very strong, more than you think.”
The Revolutionary Guards, created as an ideologically driven militia to protect the gains of the 1979 Islamic Revolution, are a major presence in Iran’s economy and politics. The Guards, who report directly to the supreme leader, entered the economic arena for the first time when their engineering company won government contracts to rebuild the country after its eight-year war with Iraq ended in 1988. Under former President Mahmoud Ahmadinejad, the Guards won thousands of projects valued at $25 billion, according to Kaleme, an opposition news website. The projects range from aerospace and construction to developing oil and gas fields. Ahmadinejad appointed former Guards commanders to key cabinet posts, including the oil ministry, further cementing their position.
Rouhani’s call for an end to tax exemptions is part of a broader struggle between moderate clerics and the Guards, who have acquired power and wealth by aligning themselves with Iran’s most conservative politicians and parties. Rouhani wants to end Iran’s isolation, find an exit from the nuclear maze, and loosen the rigid religious rules that regulate society. Khamenei has backed Rouhani in pursuing nuclear talks but is less supportive of his push for social change. Getting the Guards to disclose assets and pay taxes would be a major victory for the moderates.
