Corruption Charges Roil Tehran and Threaten Rouhani's Reelection

By Alex Vatanka | Senior Fellow - Middle East Institute | Jan 08, 2017
Corruption Charges Roil Tehran and Threaten Rouhani's Reelection

According to Transparency International, the Islamic Republic of Iran has a serious corruption problem. It ranks 130 out of 168 countries surveyed.  Previously such international assessments rarely made headlines among the Iranian population who are busy trying to make a living.  But the issue of large-scale institutional corruption involving top regime figures has recently exploded as a daily topic of conversation.

The disclosures are a result of a nasty intra-regime struggle for power. The latest revelations are deeply embarrassing to the entire regime that likes to sell itself as the defender of the downtrodden at home and abroad and a paragon of integrity and virtue. 

Latest Moves

In the first week of January, forty-six members of the Iranian parliament warned President Hassan Rouhani about corruption among his inner circle. In a letter to the president, the parliament (Majlis) members specifically urged Rouhani to accept the “necessity to have to deal with Hossein Fereidun and to refer him to the judicial authorities" to be investigated. The letter alleged Fereidun to be implicated in banking fraud and abuse of his government position. Fereidun is the younger brother of President Rouhani (who changed his family name when he was younger) and acts as a key gatekeeper to his brother.  

Meanwhile, Rouhani has lashed out against his critics who charge that corruption is rampant in his government. Rouhani and Sadeq Larijani, the head of the judicial branch, are each accusing the other of massive financial corruption.

In the latest twist, the president’s opponents have even sought to link Rouhani to Babak Zanjani, a controversial businessman who in 2013 was sentenced to death for defrauding the state of $2.7 billion. The Rouhani team has strongly denied the allegation. And yet, to this day, what really happened to the missing billions is still an unresolved mystery.  

These latest disclosures are coming to light as part of a fight for political control in the ranks of the Islamic Republic.  Take the case of Hossein Fereidun.  Rouhani’s rivals have for some time targeted his younger brother Fereidun for a number of reasons. First, his appetite for financial gain from political office is a narrative that refuses to go away. He once allegedly pretended to be his brother when speaking to a commercial party interested in the Iranian market.  Fereidun’s open and warm attitude toward the resumption of diplomatic ties between Tehran and Washington has also enraged the hardliners in Tehran.

A Real Problem

Rampant corruption has reached such heights that even reformists - who in 2013 in large percentage backed Rouhani – are asking the president to act. A leading reformist politician, Mostafa Kavakebian, recently warned that “systematic corruption” inside the Iranian regime is the greatest of dangers.

A former member of the hardline paramilitary force, the Basij, Kavakebian is today one of Iran’s most prominent reformist members of the parliament. In denouncing widespread corruption, Kavakebian made it clear that he is not tapping into the issue as a way of weakening the Islamic Republic or the preeminence of its Supreme Leader, Ayatollah Ali Khamenei.

In contrary, Kavakebian and other political voices are simply arguing that if left unaddressed the issue of corruption can mobilize a disgruntled Iranian public against the regime as a whole irrespective of the moderate and hardline tendencies found within it.

Interestingly, Kavakebian’s comment on “systematic corruption” in the Islamic Republic is a direct criticism of those people who deny there is such a problem in Iran. For example, the head of the judiciary, Sadegh Larijani (whose family members have been implicated in a number of financial scandals in recent years) has accused Rouhani and his circle of corruption, but has repeatedly asked for evidence of “systematic corruption.”

Politically, Kavakebian’s comments are in nature both defensive and offensive. On the one hand he is saying that Supreme Leader Ayatollah Ali Khamenei does not need to fear today’s reformists. As he put it, today’s reformists are “very different” from those in the 1990s and will “only operate within the parameters of the Islamic Republic.” In other words, reformists will not challenge Khamenei’s powers and will cooperate with him to marginalize the corruption issue in order to prevent further public anger. This is tantamount to a defensive political posture. It also shows that the reformists know their best chance of success is if they do not turn Khamenei into an enemy and paint him as someone who has been incompetent in the face of prolonged and deep institutional corruption within the regime.

At the same time, Kavakebian and political voices from his camp are making a political bid to sell the so-called reformists as better equipped to tackle corruption. It is, however, unlikely to make much of an impression on ordinary Iranians. They have become accustomed to large-scale financial scandals irrespective of the faction that controls the Presidential Palace or has the majority in the Majlis. Iran’s institutional corruption, nepotism and economic mismanagement have become fixtures since the coming of the Islamic Republic in 1979. For now, Rouhani prepares to seek reelection in May 2017, his government’s problems with corruption will be one of his weakest points that his opponents surely will seek to exploit.

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