Sunday, January 04, 2015
The Missing $4.1 Bn from the National Development Fund
Rouhani's cabinet members at first flatly and explicitly denied the recent accusations by Iran's Majlis over the illegal withdrawal of $4.1 Bn from the National Development Fund. The row between the two bodies got so heated up that each side threatened the other with legal action.
What further added to the confusion and unclarity of the situation was the different and at times, conflicting statements by two of Iran's supervisory bodies, the Audit Institution and the General Inspection Organisation.
The threats of legal action however, now seem to have subsided to reach a compromise instead, with the government no longer denying the withdrawal, as it did so explicitly to begin with, but claiming that the withdrawal from the fund did take place although it was not illegal.
The government spokespersons now use words like"secret" and "special" to justify the legalities of the withdrawal without giving more specific details.
It is clear for Iran observers however that the government finances, after the falling price of oil, are in deep trouble. The entire budget of Rouhani's administration was based on two assumptions that sanctions will be lifted and the oil price will remain above $100 per barrel.
This "secret" and "special" withdrawal from the National Development Fund to make ends meet follows other recent unprecedented measures by the government to bring in much needed cash, such as the %30 rise in price of bread, conscripts being able to buy their National Service and IRGC affiliated companies including the holdings and foundations under the Supreme Leader's control having to pay taxes.
For more than three decades, the Islamic Republic's closed and uncompetitive economy has managed to survive on the huge windfalls of petro-Dollars, now it seems finally the good old days are over and unless some drastic changes take place, Iran's rule of theocracy will face a similar collapse to that of the Soviet Union.