Iran’s Minister of Cooperatives, Labor and Social Welfare Hojjat Abdolmaleki recently resigned amid a collapsing economy and rapidly soaring commodity and food prices. This is the second time that the inexperienced Abdolmaleki had handed in his resignation. For months, the minister’s staff had turned against him because of his incompetence and mismanagement of the ministry, and over the last few weeks internal and national opposition grew against him given his failure to introduce welfare policies to curb the nationwide protests led by guild workers, teachers, and pensioners.
After serving for just 300 days, President Ebrahim Raisi handed Abdolmaleki’s position over to caretaker Labor Minister Mohammad-Hadi Zahedi-Vafa, a Canadian-educated Ph.D. holder in economics. Vafa will need a parliamentary vote of confidence in the next three months to hold on to his ministerial post. But it remains to be seen if Iranian lawmakers who vociferously questioned his predecessor’s poor credentials are ready to back Vafa. Local economists believe that a change in ministers is pointless if President Raisi fails to accept the terms of a new nuclear deal with world powers to help lift the US-led international sanctions on Iran.
Economists are also warning that the country’s corruption levels are extremely high. Iran ranked 150 out of 180 countries in the 2021 Corruption Perception Index, and 127 out of 200 in terms of governance. Public satisfaction has shrunk to less than 20 percent in the country. Unemployment in underdeveloped Iranian provinces stands at higher than 15 percent. Average inflation rates are more than 35 percent and the average destitution rate has risen to above 50 percent over the past three years.
Iran’s government spokesperson Ali Bahadori blames the economic problems on previous governments, claiming that President Raisi inherited an inflation rate of 60 percent. In recent weeks, at least 40 protestors were arrested across Iran in government-led crackdowns against underpaid unionized workers such as teachers, laborers, and labor rights activists. Bus drivers were harshly silenced to prevent strikes that would cripple Iran’s public transportation system. Yet, crackdowns have failed to silence the protests by pensioners which started when the Iranian government increased pensions by 10 percent rather than its promised 38 percent and failed to even pay them. Consequently, protesters are calling on President Raisi to step aside and they have vowed not to submit to undignified treatment by the government, even if it means dying for their cause.
Still, the refusal by Iran’s current government to accept accountability for the economic collapse means that it is not even quite clear why Abdolmaleki resigned. His resignation could have been for several reasons. A few analysts believe that Abdolmaleki, as disliked as he was, fell victim to a massive corruption coverup. He once claimed that out of some 2,000 officials in his ministry, half had to be removed for lacking financial integrity. He also took steps to lay off or force into early retirement some 350 of those officials in his first few months in office. But it is also believed that Abdolmaleki suffered from a lack of integrity himself, and spent his time in the ministry appointing unqualified family members to key posts.
Additionally, Abdolmaleki was criticized for uttering useless rhetoric rather than working hard. In one statement, he claimed that President Raisi would build a revolutionary economy to supply weapons in order to destroy Israel. To address the rapid devaluation of the Iranian rial against the US dollar, he also bragged that Iran could fix the problem quicker than the time it would take to sip a cup of water by pouring $300 million into its markets. As Iranians formed long lines to purchase food items before prices soared, Abdolmaleki claimed that they were building ranks to help the United States restore the Pahlavi regime, in reference to the Iranian monarchy which was ousted from power following the revolution in 1979.
Not surprisingly, it is widely believed in Iran that Abdolmaleki’s resignation alone is unlikely to fix the Iranian economy which suffers from deeper problems. Economists are now calling for the removal of the head of the Central Bank Ali Salehabadi. In 2021, Salehabadi was the third governor to be appointed as head of the Central Bank of Iran in one year, given the rial’s devaluation and widespread financial corruption at the bank. Despite Iran’s economic challenges, Salehabadi has claimed that public revenues are flowing in irrespective of the sanctions against the country.
But what is clear is that Iran’s economy is spiraling downward so fast that it may hit rock bottom soon. According to Iran’s economists and Raisi’s political opponents, the country could soon face three-digit inflation rates, while the new president appears to be lost, lacks plans and a vision to run the country. The current pattern of cyclical protests in Iran meanwhile is very unlikely to subside, whether or not more ministers resign, or central bank governors are sacked.