Ceremonial Minister of Economy
It has been more than two and a half years since Seyed Ehsan Khandoozi began his role as the Minister of Economy, yet it is nearly impossible to find an economist who not only defends his performance but also, there isn’t an economist in the public sphere who refrains from harsh criticism of Khandoozi and his policies in the Ministry of Economy.
Among the faculty members of the Economics Department at Sharif University, it is well-known that Khandoozi was one of the weakest members of the university’s Governance Think Tank. This theoretical and even managerial weakness was so evident that when the think tank members intended to elect periodic managers, not only did they not consider him, but they mockingly imagined Khandoozi in the position of the think tank’s presidency.
However, less than a year after these events, Ebrahim Raisi decided to introduce Khandoozi as the Minister of Economy for the thirteenth government to the parliament. Perhaps even Khandoozi’s close associates did not expect that he would one day hold the highest position in the country’s economic policymaking and be the executor of those policies. Now, more than 30 months have passed since Khandoozi’s ministry in Ebrahim Raisi’s government, and his weak record is on the critics’ table. This report examines the record of the Minister of Economy of the thirteenth government.
How to Satisfy Everyone
From the very first days of Khandoozi’s appointment as Minister of Economy, the deputies and staff of this ministry spoke of the new minister’s weak management in internal relations of the organization. But as time went on, this weakness of Khandoozi became more apparent because his positions and statements indicated that the Minister of Economy in Raisi’s government lacked even the minimum authority in dealing with various executive, legislative, and judicial elements.
In fact, it is said that there is no one who enters Khandoozi’s office and receives a clear opposition or support from him regarding a specific issue. In other words, Ehsan Khandoozi’s shortcomings are due to weakness and lack of authority, which can be the starting point for the minor and major problems of a senior executive manager.
This problem is so serious that it is said Khandoozi, even in face-to-face encounters with Mohammad Reza Farzin, with whom he has many disagreements, is unable to defend his position. It is reported that the Governor of the Central Bank has always directly and indirectly accused him and his team of academic and executive weakness in meetings with the Minister of Economy.
What is Khandoozi’s Main Duty?
One of the most important duties of the Minister of Economy is to create balance and equilibrium between the country’s budget and treasury. In practice, it is the Minister of Economy who must execute the annual budget of the country considering the state of the treasury and work in coordination with the country’s Planning and Budget Organization. To establish such a balance among the mentioned economic pillars, the Minister of Economy needs to have the necessary ability to collect government revenues and claims and, on the other hand, have the power to manage and execute the country’s budget law.
Of course, these matters depend on many variables, the most important of which is how the budget is set and the quality of this important governance document. However, it should not be forgotten that the Ministry of Economy also has a direct influence on the budget planning in the Planning Organization, meaning that not only in execution but also in budget policy-making, the Minister of Economy has full freedom.
But for the Minister of Economy to execute such a heavy commitment, he needs to possess complete authority and a kind of leadership. As previously mentioned, Khandoozi lacks this essential feature for managing the most important economic artery of the country, and this has caused the Ministry of Economy to be unable to carry out its most fundamental inherent duty.
The result of this inability is specifically the government’s encroachment on banking resources, resources that are naturally funded through money printing and monetary base expansion due to the lack of economic backing. In simpler terms, it can be said that Khandoozi’s weakness in managing the Ministry of Economy has led to the exacerbation of heavy inflation, which has made people’s livelihoods increasingly difficult day by day. In fact, Khandoozi has turned the Ministry of Economy into an engine driving inflation, an engine that has continuously reduced the value of the rial and shrunk the purchasing power and consequently the daily meals of ordinary people.
Bank and Stock Market on the Populism Track
One of Khandoozi’s main slogans and media maneuvers over the past 30 months has been to increase the amount of lending by banks and to create a lively atmosphere in the Tehran Stock Exchange. However, statistics and figures show that not only has this not been achieved, but the stock market situation has become much worse than in 2021, and the rial value of bank loans provided to ordinary people has also decreased compared to two years ago. Although numerically, this amount has increased significantly, when the variable of purchasing power is also considered in calculating the value of bank loans, the regression of the banking system in the value of loans paid to applicants in Raisi’s government becomes apparent.
The stock market also has a similar situation, such that the overall index surpassed the 2.5 million mark in the first half of 2023 but subsequently faced a heavy fall. However, the government, by emphasizing that the stock market has managed to regain the 2 million range, tries to build a resume for itself.
Corruption in State and Semi-Private Enterprises
One of Ebrahim Raisi’s government’s most important slogans is fighting corruption. Ehsan Khandoozi, from the very beginning of taking office, has always emphasized anti-corruption in the Ministry of Economy. For example, in an unprecedented move, he revealed the list of all bank debtors in the country, an action that led to the government being introduced to the public as the country’s biggest debtor, but the absence of many individuals involved in major corruptions was clearly felt in this list.
These actions by Khandoozi were carried out under conditions where Mohammad Reza Farzin had not yet taken office, and the heavy pressure the government exerted on banks to lend was completely neutralized with Farzin’s entry into the building on Mirdamad Street. On the other hand, during the year since Farzin’s presidency at the Central Bank, we have witnessed the disclosure of significant corruption cases in the allocation of preferential currency at various prices.
To the extent that the Debsh Tea case, considering the large amount of corruption involved, took on extensive political and social dimensions. The main defendant in this case is the Ministry of Economy and the Central Bank, and it is unclear with what justification nearly 4 billion dollars of preferential currency was allocated just for importing tea to a single non-governmental company over three years.
It seems Khandoozi’s managerial weakness has allowed profiteers to exert pressure on him and use various levers, including lobbying in parliament for his impeachment, to their maximum advantage. Meanwhile, the government, to provide the country’s needed currency, has been forced to sell oil with unprecedented and heavy discounts to the Chinese, and these dollars have not easily reached the Central Bank, which is now falling victim to Khandoozi’s lack of prudence and economic management.