Iran’s economy minister impeached as inflation rises, currency falls

The Iranian parliament has voted to impeach Economy Minister Abdolnaser Hemmati due to rising domestic inflation and currency devaluation. Out of 273 lawmakers, 182 voted against Hemmati, with the result announced on Sunday by conservative speaker Mohammad Bagher Ghalibaf. This impeachment comes just six months into the tenure of the centrist President Masoud Pezeshkian's government, reflecting growing dissatisfaction.

In 2015, the Iranian rial traded at 32,000 to the US dollar. However, by the time Pezeshkian took office in July, the black market rate had plummeted to around 600,000:1. Recently, with escalating regional tensions, the rial has further depreciated, trading at approximately 950,000 rials to $1 in Tehran's exchanges and on the streets. The rial's devaluation has led to widespread public discontent, rising living costs, and increased inflation, especially with the upcoming Persian New Year, Nowruz.

Pezeshkian attended the Majlis session on Sunday to defend Hemmati, who previously served as the governor of the Central Bank of Iran and as a presidential candidate. "We are fighting a full-fledged [economic] war with the enemy… we must adopt a war posture," Pezeshkian told lawmakers. He also added, "Today's economic problems in society are not related to one person, and we cannot attribute everything to one individual," highlighting the complexity of the situation.

During the impeachment proceedings, Mohammad Qasim Osmani, a lawmaker supporting Hemmati, argued that inflation and rising exchange rates were not the fault of the current administration. He pointed out that the budget deficit left by the hardline President Ebrahim Raisi's government was one of the causes of economic instability. Conversely, hardline lawmakers, who have been attacking Pezeshkian's government since its inception, argued that Hemmati was the main culprit for Iran's economic instability and that allowing him to remain in office could "pose a danger" to the country.

Longtime hardline lawmaker Hossein Ali Haji-Deligani accused Hemmati of deliberately devaluing the national currency to fill government coffers with short-term profits and compensate for the budget deficit, at the expense of harming the economy and ordinary Iranians. Hemmati dismissed these accusations, pointing out that the inflation rate had decreased by 10 percentage points. He acknowledged that the inflation rate remained high, at 35%. He told lawmakers that his team was working to address the issue, but cautioned that the process would take time, needing comprehensive solutions.

Hemmati emphasized that the nuclear agreement reached between Iran and world powers in 2015 was at a critical juncture. US President Donald Trump unilaterally abandoned the agreement in 2018. Western powers involved in the agreement could only trigger its "snapback" mechanism, which could restore all UN sanctions against Iran, by October. Supreme Leader Ali Khamenei has emphasized that Tehran will not negotiate under Washington hawks' "maximum pressure" policy. Pezeshkian told parliament on Sunday that he had originally wanted to negotiate but changed his position after the Supreme Leader's speech, indicating the influence of higher authorities on policy decisions.

The economy minister's plea for solidarity was ultimately ignored, and the vote against Hemmati marks the first successful impeachment of a senior official in the centrist Pezeshkian government by hardline lawmakers. However, Hemmati is unlikely to be excluded from the government, as impeached ministers have previously been appointed as special advisors to the president on multiple occasions. Some lawmakers are continuing efforts to oust former Foreign Minister Mohammad Javad Zarif from his position as a strategic advisor to the president, aiming to challenge and influence the government's policies.

Rampant local mismanagement and corruption, coupled with decades of US-led sanctions, have severely impacted the Iranian economy. With Israel's war on Gaza continuing to escalate and recent strikes against Iran-led "axis of resistance," public concerns about further economic instability are only increasing. Over the past three months, Iran has been forced to shut down critical services across the country due to an ongoing energy crisis, highlighting the multifaceted challenges it faces.

US and Israeli officials, including Trump and Israeli Prime Minister Benjamin Netanyahu, continue to regularly threaten to bomb Iran and its nuclear and energy facilities, citing Tehran's advancing nuclear program. These threats add another layer of uncertainty and pressure on the Iranian economy, potentially exacerbating existing vulnerabilities.