Parts of the Tehran Grand Bazaar, a traditionalist bastion in the heart of the Iranian capital, shuttered on June 25 in the wake of the significant currency devaluation and resulting high prices. The strike comes amid demands from mainly conservative political figures that President Hassan Rouhani resign due to his “inefficiency” and “mismanagement” of the economy. Yet, while the calls and speculation have continued, there are several reasons conservatives, at least for now, are not really seeking the president’s ouster.
First, Supreme Leader Ayatollah Ali Khamenei strongly opposes Rouhani’s resignation on the basis that such a move could set a precedent that could be damaging to the stability of future administrations. In a June 27 speech, the Iranian president vowed that he will not resign and that Khamenei would henceforth by default endorse any decision made in the meetings of the three heads of government branches. The supreme leader recently softened his direct criticism of the president and has reportedly instructed the president to communicate such decisions before seeking his approval.
Second, Rouhani’s resignation could aggravate the economic and political situation in Iran, which has led to discontent over financial difficulties among both ordinary people and businessmen. Recognizing these dynamics and the dangers that could result from the government’s rivals seeking to capitalize on them, Foreign Minister Mohammad Javad Zarif, addressing Iran’s Chamber of Commerce on June 24, warned conservatives “not to assume they would win if President Rouhani leaves office,” saying that the enemies of the Islamic Republic are not targeting the administration or the political establishment but rather Iran as a whole.
Third, Iran’s economic problems are rooted in sanctions and foreign challenges as well as mismanagement and corruption. Given the complexity of these circumstances, it will be highly unlikely that a new president could resolve Iran's issues in a short time. Accordingly, any conservative and establishment-aligned president replacing the incumbent would end up facing the same situation that Rouhani is facing. The whole establishment could be held at fault, unable to blame the administration for mismanagement and inefficiency.
Fourth, in the aftermath of the US withdrawal from the nuclear deal and its impending reimposition of sanctions on Iran, Rouhani has opted not to challenge conservatives on foreign policy and domestic issues, rather adopting a milder position toward his critics and opponents. At a conference of senior government managers on June 27, the president said that he is “ready to bow to the opposition and all critics and kiss their hands for unity and cooperation.” His words were highly welcomed by conservatives. The managing editor of the conservative Kayhan, Hossein Shariatmadari, called the president's recently expressed positions "fortunate and auspicious,” indicating that any insistence on the president’s resignation at a time when Iran needs unity the most and while Rouhani is cooperating with the broader establishment would be an unnecessary cost for the Islamic Republic.
Fifth, as the United States works to eliminate Iran’s oil revenues, Tehran more than ever before needs engagement with its partners to thwart Washington’s efforts to politically and economically isolate it. Rouhani, who has a long history of leading dialogue — including with Europe — can still be the right man for the job, at least in comparison with anti-West conservatives. On July 4, Rouhani wrapped up a tour of Switzerland and Austria that will be followed by a ministerial meeting in Vienna among remaining signatories to the nuclear deal on July 6.
There are other dynamics to consider as well. Beyond the conservatives, some Reformists and other pro-administration figures have also recently called for the resignation of the president. However, their argument and reasoning have a different basis. This group believes that he does not have enough authority to resolve foreign policy and domestic challenges. The secretary-general of the newly established Reformist National Development Party, Sadegh Norouzi, warned, “The lack of authority of the administration must not be ignored. We need to know that we do not have an independent Ministry of Foreign Affairs and higher authorities intervene in its decisions. The Ministry of Finance is also facing intervention by the military and, naturally, in this critical situation, the administration needs to have different tools.”
Meanwhile, Hossein Mousavian, the former spokesman of Iran’s nuclear negotiating team, noted in a recent interview with Hamshahri the sharp political divisions within Iran, saying, “The elders of the establishment must deal with this in the first place, even at the expense of a major reshuffle in the Cabinet or even the resignation of the current government and holding early elections, because the continuation of the current situation for another two years may cause irreparable damage.”
These comments do not appear geared to genuinely seek Rouhani’s resignation, which might lead to a loss of the presidency as a center of power in the hands of pro-reform forces, but should rather be assessed as leverage to gain concessions from the establishment or more authority for the president on some foreign policy and domestic issues. Well aware of the systemic pressure created by a potential resignation, they might use its prospects as a bargaining tool.
As such, a reshuffle in Rouhani’s economic team is a much more likely prospect. Indeed, Tehran Friday Prayer leader Kazem Sediqi said June 29, “If any official does not act successfully and does not spend enough time [on the job he needs to do], and if there is need for a change in a part of the Cabinet, that needs to be done.” Reformist sociologist Hamidreza Jalaeipour has also written, “If the economic team of Rouhani is reshuffled, Iranian society can manage its economy better in siege conditions.”
While the currency devaluation has caused protests in the Tehran Grand Bazaar, the change in Rouhani’s economic team can start with widely criticized Central Bank Governor Valiollah Seif. Some reports have indicated that Rouhani is already in talks over Seif’s replacement. Meanwhile, Mohammad Bagher Nobakht, the government spokesman and head of the Management and Planning Organization, could also be axed. Replacing Seif and Nobakht would not need the parliament’s approval, but lawmakers will need to confirm replacements for Minister of Economic Affairs and Finance Masoud Karbasian as well as Minister of Industry, Mining and Trade Mohammad Shariatmadari. Thus, the question is no longer if but rather when a Cabinet reshuffle will take place.
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