Sanctions push Rouhani to boost state involvement in Iran’s economy

Al-Monitor | : The United States has entered a new phase in its containment strategy against Iran by re-imposing all sanctions against the Islamic Republic. Tehran is continuing to abide by its commitments under the Joint Comprehensive Plan of Action (JCPOA), thereby securing the economic support of China and Europe and defining a more prominent role for the government in the country’s economy. President Hassan Rouhani’s recent cabinet reforms can be viewed as an important step in this regard.

With Washington pulling out of the JCPOA in early May, the debates over Iran’s political economy changed focus from gradual structural reform centered on market forces to crisis management and preserving economic security under sanctions. Iran’s economy experienced an unexpected shock in the initial months following the US withdrawal from the nuclear deal, sparking intense debates within Iranian society and among political elites about the government’s policies and whether cabinet ministers would be able to deal with the crisis at hand. These debates centered on the need for change in the Ministry of Industry, Mine and Trade, the Ministry of Cooperatives, Labor and Social Welfare, the Ministry of Economy as well as the Ministry of Roads and Urban Development — four entities that make up the government’s economic core and are quickly affected by sanctions. Agreeing that the situation was critical, the Rouhani administration supported the need for cabinet reforms and tried to cooperate with its critics, especially in parliament, to achieve this goal.

However, it took more than three months to instigate changes in the cabinet as a result of negotiations between the relevant parties, difficulties in finding suitable managers who were in tune with the administration while at the same time capable of dealing with a multilayer economic crisis, as well as the government’s reluctance to replace some ministers. In the end, two of the four key ministers mentioned above were impeached and the two others stepped down as they were about to be. Meanwhile, the parliamentary votes of confidence in the new ministers indicated that parliament was ready to compromise with the government following this period of tension and pressure.

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