It may be that Zanganeh’s commitment to this estimate was made possible by the change in leadership, which may represent either a compromise between the two competing factions or a victory of one over the other. Based on initial media reports, it was not immediately clear which side would be victorious if this were the case. However, the Wall Street Journal article did specify that the previous head of NIOC, Rokneddin Javadi, had been criticized by parliamentary conservatives in the past. What’s more, those criticisms were related to differences of opinion over economic relations with foreign powers, with Javadi being accused of negotiating prices that were not sufficiently favorable to the Islamic Republic.
If Javadi’s replacement by Ali Kador represents a victory for traditional conservatives and the notion of restrictive contract terms, it will be a setback to the policies set in motion by President Hassan Rouhani and the nuclear agreement that was concluded last July. While staunch critics of the Iranian regime insist that there is no serious ideological difference between Rouhani and hardliners like Supreme Leader Ali Khamenei, it is nevertheless true that the president’s policies have been based on the notion of relative compromise at least in the economic sphere.
This has in turn contributed to speculation that the Iranians may offer more favorable oil investment contracts to the European Union, thereby helping to develop the sanctions-damaged oil sector and move Iran toward its stated goal of increasing exports to Europe to about 100,000 barrels per day more than its pre-sanctions level of 600,000.
The competing faction is presumably willing to allow some of these improvements and expansions to go unclaimed, in order to retain economic distance between Iran and its traditional enemies in the West. After the conclusion of nuclear negotiations, Supreme Leader Khamenei warned Iranians to be on guard against political, cultural, and economic “infiltration,” which he claimed the US and its allies would use to try to undermine Iran’s Islamic identity.
In the interest of interfering with a plan that they apparently expect would lead to such “infiltration,” hardliners may be attempting to discredit the Rouhani administration itself. An IranWire report that was published on Monday implies that Rouhani’s rivals are pursuing this goal in part by portraying the administration as economically corrupt. Toward that end, hardline media outlets have recently taken to reporting upon the salaries of leading government officials and businessmen.
These reports have found monthly compensation exceeding 76,000 dollars in a country where the average monthly income is about 500 dollars. Persons whose salaries have been thus exposed have also been shown to in some cases to have close connections to President Rouhani or his leading officials. Presumably, the desired implication is that these figures could stand to personally benefit from the economic enrichment that would come from economic openings with the West.
But naturally, what these hardline reports do not point out is that continued isolation of the Iranian financial system would provide well-known benefits to hardline entities like the Iranian Revolutionary Guard Corps, which allegedly controls a majority of the Iranian GDP through a variety of government agencies and shell companies. Supreme Leader Khamenei has urged an economic plan that differs from Rouhani’s by focusing on the “resistance economy” that emerged under US-led sanctions and led to the development of domestic industries that were overwhelmingly controlled by government authorities linked to the IRGC and Khamenei himself.
Such observations arguably lead to the conclusion that there is corruption on both sides of the factional divide, albeit of different kinds. And indeed, the current government has previously benefited by exposing corruption that was predominant under the hardline presidency of Rouhani’s predecessor, Mahmoud Ahmadinejad. The efforts to root out instances of government theft and embezzlement have even let to some former affiliates of the Ahmadinejad administration receiving highly publicized death sentences.
It is certainly possible that the competition between these two narratives of corruption could lead to the reversal of recent setbacks for Rouhani’s economic policies. But as mentioned above, many of those who oppose the regime as a whole are keen to point out that such a victory would almost certainly not equate to a victory for genuine reconciliation between Iran and the West.
Rouhani’s Foreign Minister Mohammad Javad Zarif recently delivered a speech to the Iranian parliament in which he effectively reiterated many of the supreme leader’s comments about the impossibility of trusting the United States or working together with the West on anything other than the JCPOA.
“We never trust the US and the basis of our power is our fight against hegemony,” he said, adding, “The nuclear agreement doesn’t mean that the other side’s hostilities have ended since they always consider the Islamic Republic of Iran as an obstacle on their way; also it doesn’t mean that they have withdrawn from their stonewalling.”
Zarif and Khamenei have both blamed the US for the slow pace of Iran’s reentry into foreign markets, even as hardliners have made clear efforts to make that reentry less desirable for would-be foreign investors. If the change of leadership of the National Iranian Oil Company does indeed represent a victory for the hardline faction, it can be expected to make foreign investors even more uncertain about the potential value of testing the limits of relief from US-led sanctions.
Whereas nuclear-related sanctions were lifted under the JCPOA, other sanctions remain in place, related to Iran’s record of human rights abuses, money laundering, and support for terrorism. Global banking rules require safeguards against these sorts of threats before a country may enter the international system. But Khamenei has disregarded the need for reforms, saying in a speech early this month that the US and its allies are only using terrorism and human rights as “pretexts” for maintaining constraints on the Iranian economy.