Iran International
Former officials of the Central Bank of Iran (CBI) have opposed a law that would give a clerical council control over the bank’s monetary and economic policies.
In a letter addressed to the speaker of the parliament, Mohammad-Bagher Ghalibaf, former officials pointed out that Supreme Leader Ali Khamenei has twice before “directly or indirectly” stopped the proposed legislation and asked Ghalibaf to remove it from the parliament’s agenda.
The signatories of the letter protested that a provision in the law would set up a clerical council within the central bank that would supersede all other decision-making mechanisms and in fact would set monetary policy. This they argued, would strip the bank of its ability to professionally execute its duties as the guardian of the national currency and protector of the country’s monetary stability.
The letter which was released to the media this week argued that the proposed legislation focuses on transformation of the central bank's structure and monetary policies and fails to offer any new solutions or initiatives that could satisfy high-ranking religious authorities’ and the people’s demand for the elimination of interest and resolving the problem of riba.
Riba, a concept meaning usury or charging unreasonably high-interest rates, is prohibited under Sharia law. Lending money, according to Sharia, should be a charitable act with no interest involved, rather than making profit for the bank that could lead to exploitation and loansharking.
However, this religious concept is incompatible with modern economic realities and bank interests are not only common in Iran but sometimes quite high.
“The purpose of [establishing] clerical councils in [banks in] all Islamic countries is supervising the execution of Islamic-type contracts and elimination of interest from financial and credit facilities, not setting monetary, financial, and economic policies and [dealing with the issues] of inflation and liquidity,” the letter to the parliament speaker said.
The letter was signed by over 130 former officials including former central bank governors Akbar Komijani, Mahmoud Bahmani, Valiollah Seif, Tahmasb Mazaheri, and Mohammad Hossein Adeli, spanning three decades, as well as former bank board members and executives of other state and private banks.
The former banking officials also suggested that the central bank be given 18 months to come up with its own solutions and propose any required legislation through the government.
In recent years the CBI has lost its professional independence, being forced by government to print money and create a huge money supply that has led to 54-percent inflation rate.
After the Islamic Revolution of 1979, the Iranian banking system was altered to accommodate Islamic laws, particularly the ban on interest. Since then, authorities have resorted to various solutions to justify paying and charging interest without being accused of riba.
One of the solutions that banking authorities and high-ranking clerics agreed on was to redefine the contract between the bank and the individual or company taking a loan to conform with the Islamic notion of Murabahah which means cost-plus financing as well as other similar contracts.
In Murabahah contracts, the two sides agree to the cost and markup of the loan, which in essence is interest coated with religious jargon.
Besides banks and finance and credit institutions, there are also Islamic non-profit granting funds in Iran called Gharzolhasaneh (no-interest charity) funds.
All Iranian banks charge interest that is approved by the Central Bank at least once a year in proportion to the inflation rate and demand high value collateral items such as real estate.
Asked if they would go and live in a foreign country given the chance; 49 percent of people aged 18-29 said yes. The percentage among the general population was fully one-third.
Statis Consulting, a US based opinion research outfit focusing on Iran, conducted the poll among 1,246 Iranian residents aged 18 and older in July.
“Based on the sample, there is a 95 percent confidence that the margin of sampling error is within ± 2.7 percentage points,” Stasis said.
Iran’s economic situation has drastically deteriorated since former President Donald Trump abandoned the 2015 nuclear agreement with Iran (JCPOA) and imposed crippling sanctions. But since the election of ultra-conservative Ebrahim Raisi as president in 2021, lifestyle pressures have also increased, with harsher enforcement of Islamic rules.
Seventy-seven percent of those surveyed responded affirmatively when asked if“Iranian youth do not see prosperity in their future.” Only 20 percent disagreed with the statement.
Fifty-three percent of respondents said that “government officials restrict the liberties of Iranian youth by interfering in their lifestyle. This number is even worse among young people aged 18 to 29; sixty-four percent believe this statement to be true.”
Since early June, the government has been cracking down on forced hijab violators, with enforcing tougher restrictions. Thousands have been stopped on the streets by ‘morality police’ and many have been detained and fined. Security forces arrested many women who took part in an anti-hijab civil disobedience action on July 12, when many women came to the streets with no headscarves.
Among the reasons why Iranians have left the country in recent years, the overall state of the economy is the main factor, according to the survey. The economy “was mentioned by fifty-seven percent of respondents, followed by political or religious freedom (twenty-six percent), and hope for a better life (twenty-five percent). Only five percent mentioned looking for higher education is the main reason for Iranians leaving the country.”
Fifty-five percent of respondents did not show confidence in President Raisi regarding issues that matter to young people. Only 35 percent believe that problems facing the youth are among Raisi’s priorities.
“Among young people aged 18 to 29, sixty-five percent say issues concerning young people are not Raisi’s priority. Only twenty-seven percent completely or somewhat agree. Moreover, most Iranians do not believe that President’s Raisi can boost economic opportunities for Iranian youth (fifty-nine percent),” Stasis reported.
The government and parliament dominated by hardliners loyal to Supreme Leader Ali Khamenei have dragged out negotiation with the United States to revive the nuclear agreement for more than a year. Sanctions have stayed in place and the economic crisis has deepened.
Overall inflation stands at 54 percent and food prices have risen by more than 100 percent since Raisi took office last August, according to official figures.
Statis also concluded that “those who reside in urban centers and who hold a college degree are more likely to say that they would prefer to leave Iran than Iranians who live in rural communities and who do not hold college degrees. Forty-three percent of Iranians who have a college degree say they would prefer to live in a foreign country.”
Interestingly, Germany is the top choice (16%) for those who want to leave, followed closely by Canada (15%) and the United States (14%).