$35 BILLION missing from Iranian coffers?

Mega-Scandal in Iran: $35 Billion in Oil Money Missing from State Coffers

In a shocking report, the chief auditing office of the Iranian parliament says that tens of billions of dollars in oil revenues from 2006-2007 have vanished.

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In what appears to be the biggest case of corruption in Iran, and perhaps in the Middle East, the Tehran-based Shahab News reported that the chief auditing office of the Iranian parliament (Majlis) has revealed that close to $35 billion of oil income from the financial year 2006-07 is missing.

According to Iranian law, this money should have been paid by the government of President Ahmadinejad into Iran’s central bank. Once there, the government can request the withdrawal of funds for projects, depending upon the approval of the Majlis. However, the new investigation shows that the government never paid the money into the central bank, and no one knows what has happened to it. Although it has not yet been proven, many suspect that the money has been used to finance corrupt activities of politicians surrounding the president, or the president himself. After all, it is very unlikely that this could have happened without his knowledge.

This is a serious allegation, as this amount constitutes almost half of Iran’s total oil income for that year.

To make matters worse, this is not the first time since the start of the presidency of Mahmoud Ahmadinejad that money has been used without the Majlis’ knowledge. One other famous case took place during the 2007-08 financial year. It was revealed later that $2 billion was used to import gasoline, without any consultation or approval of the members of the Iranian parliament.

It would be an understatement to say that President Ahmadinejad had a rocky relationship with the previous Majlis, whose term ended on May 27. Members were so fed up with the president’s efforts to sideline them that they tried to reduce his presidential term on two separate occasions. Although they failed, such an undertaking had never before been attempted in the history of the Islamic Republic.

As well as Ahmadinejad, the other person whom former Majlis members held responsible for their frustrations was Majlis speaker Gholam Ali Hadad Adel. This powerful Iranian politician, whose son is married to supreme leader Khamenei’s daughter, except on one famous occasion continuously defended Ahmadinejad from the Majlis’ complaints.

The new Majlis, which was sworn in on May 28, decided to take no chances. Realizing that the president is unlikely to change his ways and that they cannot change him, members decided to do what is second best, by choosing a new Majlis spokesman. He is none other than Ali Larijani, Iran’s former top nuclear negotiator. Larijani also happens to be a powerful political rival to the president. He ran against Ahmadinejad in the 2005 presidential elections.

The election of Larijani could pose several problems for the president. First and foremost, the relationship between the two is not good. In November 2007, he resigned from his job because of Ahmadinejad’s uncompromising attitude towards the nuclear program. This made Larijani’s efforts to find a diplomatic solution to Iran’s nuclear program more cumbersome. Eventually Larijani gave up because he could no longer work with him.

Now that he is back in another important political post, it is likely that he will use it to boost his image, and to try and weaken his rival, in order to bolster his chances of election as president. This is already apparent. The news regarding the missing $35 billion came out on the day Larijani was sworn in as speaker.

One year is a long time in Iranian politics. One of Larijani’s weaknesses has been his lack of experience in management of domestic affairs. Unlike Ahmadinejad, he has never been mayor or governor. His new post is likely to strengthen his position domestically. If he plays his cards right and manages to convince Supreme Leader Khamenei that he would be a more suitable replacement for Ahmadinejad, then the international community may find Iran of 2009 an easier country to talk with.

Meir Javedanfar is the co-author with Yossi Melman of The Nuclear Sphinx of Tehran - Mahmoud Ahmadinejad and the State of Iran. He runs Middle East Economic and Political Analysis (MEEPAS).

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