What is Raisi’s Issue with Hemmati? Part One
What is Raisi’s issue with Hemmati? Abdolnaser Hemmati, the former governor of the Central Bank, has recently become the biggest critic of the performance of the thirteenth government and the Central Bank. Hemmati’s criticisms of Ebrahim Raisi’s government are not limited to the economic team’s performance; he has also raised sharp criticisms regarding internet speed, mandatory hijab, the approach to nuclear negotiations, and more.
However, given his managerial background in the field of economics, naturally, the abundance of criticisms surrounding the economic team’s record is more than in other areas. These criticisms have often gone beyond social media and have even become the headline of state media and national television.
Iran Gate decided to fundamentally investigate these media disputes and determine their connection to the current living conditions of the Iranian people. The present report is the first part of a three-part series titled ‘What is Raisi’s Issue with Hemmati?’ In the first part, the roots of these differences have been examined, and their transition to Ebrahim Raisi’s presidency has been reviewed.
Where Did the Story Begin?
Abdolnaser Hemmati, as one of the experienced and well-known economists and banking managers, accepted the governorship of the Central Bank at a time when Hassan Rouhani’s government was facing the challenge of Trump’s phenomenon in foreign policy. This issue caused the thirteenth government to face serious problems and obstacles in managing the country’s economy.
In such conditions, Hemmati became the leader of the largest economic policy-making institution in the country. The twelfth government, following the long-standing managerial tradition of the country, expected the Central Bank to cooperate and collaborate with the government. A look at the history of the Central Bank also shows that, except for short periods, the vast majority of Central Bank governors have been fully compliant with the government’s directives.
However, Hemmati’s tenure at the Central Bank was one of the few periods that can be considered relatively acceptable in maintaining the independence of the country’s monetary and banking policy-making institution. But the all-out pressure policy of Trump caused the government to even face difficulties in securing its current necessary resources. As mentioned earlier, traditionally, governments, when facing budget deficits, have resorted to borrowing from the Central Bank.
The twelfth government, due to the unprecedented drop in oil exports, was forced to seek assistance from the Central Bank. The problem started from here. Hemmati, with his independent spirit, tried not to appear as a yes-man manager. Although at times he was forced to follow orders, generally, disputes arose between the Central Bank and the twelfth government’s Program and Budget Organization, peaking in the years 2020 and early 2021.
Nobakht-Hemmati, a Fundamental Dispute
Many experts believe that the 2021 budget, after the 2022 budget, was the most inflationary bill presented to the parliament by the governments in recent years. The reason for this claim was a structural budget deficit of more than 400 trillion tomans. This issue, given the reduction in the government’s oil revenues, meant nothing other than the government’s borrowing from the Central Bank.
Although, as mentioned, the 2022 budget was closed with a deficit of more than 1,000 trillion tomans. Therefore, experts believe the 2022 budget was the most inflationary of its kind. However, Hemmati, in reaction to the approval of the 2021 budget bill, began a media maneuver and revealed the government’s indebtedness to the Central Bank. This action by the then governor of the Central Bank led Mohammad Bagher Nobakht, the head of the Program and Budget Organization in the twelfth government, to react strongly against him. Hemmati, who claimed the government was indebted to the Central Bank, faced attacks from Nobakht, turning the media into a battlefield for these two.
Nobakht claimed that the government had not borrowed from the Central Bank, but Hemmati insisted that the government’s borrowing was done indirectly, yet it had the same inflationary impact on the economy. Documents and evidence supported Abdolnaser Hemmati’s statements, although the thirteenth government did not learn from this and prepared a budget with more than a 150% larger deficit.
The 2020 Election and the Raisi-Hemmati Duality
Hemmati and Raisi entered their election campaign in the spring of 2020, with Abdolnaser Hemmati having resigned from his position at the Central Bank just a few weeks earlier. However, Ebrahim Raisi, who saw Hemmati as his most serious competitor, began accusing him of being involved in causing inflationary surges. Although Hemmati constantly provided explanations about the budget deficit and the government’s borrowing methods during that time, Raisi portrayed him as the cause of the current situation.
The election ended, and Ebrahim Raisi became president. Despite his promises, the new president presented a budget bill to parliament that contained a colossal budget deficit of 1,000 trillion tomans.
This policy was a clumsy imitation of the 2021 budget, while Raisi continuously blamed the previous government and its policies for the current state. Hemmati, however, did not remain silent and repeatedly emphasized the continuation of inflationary policies by the thirteenth government. He often predicted the current year’s inflation on social media. Many experts also warned of an economic disaster in 2022, but Raisi and his government dismissed such claims as baseless and assured the public that there would be no price hikes.
You can also read Iran Gate’s report and analysis on Raisi’s government’s failure in the currency market.
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