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Iran braces for harsh times under new budget

Iranian President Hassan Rouhani presented a draft budget to parliament.
Cars queue at a petrol station, after fuel price increased in Tehran, Iran November 15, 2019. Nazanin Tabatabaee/WANA (West Asia News Agency) via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY - RC2LBD9HH69K

President Hassan Rouhani presented his administration’s proposed budget to parliament on Dec. 8, and while Rouhani’s subsequent speeches after the budget presentation were upbeat, they belie difficult economic times ahead.

The administration appropriately named the budget for the following calendar year “Standing and persevering in the face of sanctions.” Rouhani said that this time last year, when the previous budget was presented, Iran was “under the most challenging conditions of sanctions.” He added that Iran’s enemies, primarily the United States and Israel, felt that Iran would be unable to run the country under sanctions, but “from the day of implementing the approved budget until today, [Iran’s enemies] are now disappointed and will be so in the future.” He continued, “We will continue to run the country.”

US President Donald Trump exited the 2015 nuclear deal known as the Joint Comprehensive Plan of Action and reinstated oil and banking economic sanctions on Iran in 2018. While Rouhani said they were able to run the country in the nine months of this calendar year under severe economic sanctions, he conceded that “the situation was unfavorable.” He said “maximum pressure and the sanctions would continue,” and Iran would strive to lower its dependence on oil.

Since the reinstatement of US sanctions, Iran has dropped to the bottom of the OPEC oil exporters list. Before the sanctions, Iran was exporting 2.5 million barrels per day. Currently, it is exporting 346,000 barrels per day. Others have put Iran’s oil exports to 213,000 barrels per day.

While Rouhani maintained his normally upbeat demeanor, his administration is facing a number of issues. Rouhani’s oil minister, Bijan Namdar Zanganeh, is facing a possible impeachment hearing in parliament. According to Hedayatollah Khademi, a member of parliament’s energy commission, Zanganeh’s answers Dec. 9 to the commission failed to “satisfy members of parliament.” Therefore, an impeachment plan will be sent to parliament’s board of supervisors.

Zanganeh has been Rouhani’s oil minister since the president took office in 2013. To impeach Zanganeh while the administration struggles to deal with the impact of sanctions and with a year and a half left in office would be a major blow for Rouhani.

Rouhani is also now facing the February 2020 parliamentary elections. Conservative media has continued to blame Rouhani for the mishandling of fuel subsidy cuts that led to mass protests in which over 200 people were killed. According to hard-line Jahan News, quoting Kayhan, Rouhani intentionally made the abrupt fuel subsidy cut announcement in the hopes that it would stir public anger about the economy. Rouhani’s plan, according to the Reformist politician quoted in the article, was to use the leverage of public anger to strengthen his case that negotiations with the United States are necessary. The article even claims that Rouhani’s intelligence minister, Mahmoud Alavi, had even warned the president that cutting the fuel subsidies would lead to such problems.

Whether such reports about Rouhani’s handling of the fuel subsidy cuts are accurate, they will certainly continue to be used by his political rivals. Former hard-line parliament member Alireza Zakani vowed that the next parliament will “change the administration’s fuel plan” toward one that is in favor of the people.

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