Sunday, May 07, 2006

Central Bank vs. Government

Meysam Salehian, Rooz Online:
While only a few days have passed since the speculations about the removal of the governor of Iran’s Central Bank, Sheibani the differences between him and the president have been growing. The most recent differences are about Iran’s foreign exchange reserves in the international banking community.

With heightening conflict between Iran and the international community over Iran’s nuclear program and fearing that the West may freeze Iran’s foreign assets, president Ahmadinejad had instructed the governor of the Central Bank to transfer the country’s foreign exchange deposits into the personal accounts of selected trusted individuals identified by the president in an effort to keep the money in private rather than state accounts which could be subject to a freeze. As a result of such a transfer, the private accounts would be immune from the problems the state has with foreign governments. Sheibani has strongly opposed this idea thus has not implemented the presidential instructions. READ MORE

It is reported that he may resign his post because of this pressure and the decree. With Sheibani’s opposition, president Ahmadinejad is reported to have change his initial decree and requested that part of the foreign exchange holdings be transferred to identified to accounts of friendly states, some amounts be brought into the country, and the remaining be put at the disposal of multinational projects. The president had warned that should Sheibani refrain from implementing the decree, he would fire the governor.

Sheibani who opposed this second idea too personally appeared before the head of state, ayatollah Khamenei and explained the situation to him. The ayatollah is said to be against any sudden changes in the country foreign exchange situation, thus supporting Sheibani’s rationale and objections. Consequently, the president failed in his initial decision to remove Sheibani from his position.