Tehran, Iran, May 25
By Mehdi Sepahvand – Trend:
President Hassan Rouhani received Iranians’ vote of confidence on May 19 to stay in office for another four years. No doubt part of his favor is owing to the improvement he brought about to the economy in his first term, a main chapter of which was the lifting of international sanctions through a deal with world powers. However, the removal of sanctions has not yet borne full fruit, the causes of which he seems to be seeking at home.
The reelected Rouhani started his first press conference last Monday with a fiery speech that largely addressed the hindrances that had been preventing the full implementation of his plans during his first administration, a show of strong determination to uproot the obstacles, probably his biggest item on agenda in the four years ahead.
Rouhani critics say the nuclear deal has been a failure. They say although most sanctions have been removed, the Rouhani administration has not really succeeded in attracting foreign investment.
The fact is that a big obstacle discouraging foreign companies and banks from establishing ties with Iran, even while sanctions have been removed, is their concern with the transparency of the economic data of their potential Iranian partners. Foreign partners have preserved their fear that if they start business with an Iranian company, they may face US-imposed penalties on the grounds that their Iranian partners have had relations with entities under sets of US sanctions that are not subject to the nuclear deal and remain binding.
Iran will need $650 trillion rials (about $17 billion) foreign investment each year to meet the requirements of a master plan called the 6th Development Plan that outlines the country’s progress in the years 2017 to 2022.
In his Monday speech, Rouhani explicitly addressed the transparency problem, saying the obscure status of some enterprises should be dealt with. He even announced that his cabinet had already drafted bills that would help improve transparency with these companies.
“Transparency is a key issue to be addressed. It should be made clear who pays taxes and how much,” Rouhani said. He pointed out that the companies of concern do not come under any of the three types of economic enterprise (cooperative, governmental, and private) recognized by the Iranian law.
In practice, the Rouhani administration has already shown determination to solve the transparency issue. Governor of Central Bank of Iran Valiollah Seif said on May 15 that a new regulation on the country’s financial policies to fight money laundering had been prepared. He expressed hope that the implementation of the new regulation would help Iran enjoy the benefits of the nuclear deal.
Iran’s financial policy-makers also seek to join the Financial Action Task Force, a global anti-money laundering standard-setting body. Iran’s banking system needs to cooperate with the FATF in order to reintegrate into the global financial system following the implementation of the nuclear deal.
“It should be made clear how much profit is made [in these companies], where they have invested, and how much salary [the managers] receive,” the president stressed, adding he will keep secret much information that he has about the companies’ financial records “only not to disturb society”.
The interesting point about the companies of Rouhani’s concern is that as president, he has been most severely criticized by their directly or indirectly affiliated organs throughout his first administration term. These opponents have criticized the administration for its plans to cooperate with the FATF, suggesting that such cooperation would lead to imposing restrictions on the activities of several domestic entities.
In his speech, Rouhani showed to have made his mind to abandon his past policy of forbearance and bring his economic improvement project full circle by healing this nagging transparency sore. It is therefore expected that, to defend the reputation of his landmark nuclear deal, which took two dear years of his time, Rouhani would have to fix economy’s missing links at home, something he is well aware of and determined to do.