Arash Aramesh,

Conservative allies of Iranian Speaker of parliament Ali Larijani passed a bill this week that removed President Mahmoud Ahmadinejad from his influential post as Chairman of the General Assembly of Iran’s Central Bank.

According to Tabnak, a conservative website with ties to Mohsen Rezai, the former commander of the Revolutionary Guards, the Iranian parliamentarians made major changes to the composition of the Central Bank’s General Assembly in order to deprive Ahmadinejad’s administration of the ability to unilaterally influence monetary policy. In the words of conservative news site Khabar Online, “This issue will become a new point of contention between the executive and legislative branches.”

In previous parliaments, members tried unsuccessfully to introduce bills separating the Central Bank from the administration. Proponents of separation argue that the Central Bank of the Islamic Republic of Iran is the largest monetary institution in the country, overseeing the supply of currency and gold into the market; therefore, the Bank must remain independent, both from political windstorms and ideological earthquakes resulting from infighting or elections. Thus, according to the new bill, seven professional economists with years of experience in the field will be appointed as members for ten years in order to reduce the influence of career politicians.

Current Chairman of the Central Bank, Mahmoud Bahmani, has threatened to resign his post if he finds out that his bank’s “independence and decision-making abilities” are going to be taken away by the new bill.

Moderate conservatives in Iran, including Mohammad-Reza Bahonar, the influential author of this bill, have been very uncomfortable with President Ahmadinejad’s economic policies. For months, the two sides fought over the so-called “subsidies reform” bill. Last summer, the conservative bazaar went on strike to protest the government’s new tax laws, an unprecedented move by one of the most loyal bases of the Islamic Republic.

Moderate conservatives argue that President Ahmadinejad’s economic policies are not based on a realistic assessment of society’s needs and are instead influenced by Ahmadinejad’s populist approach to fiscal matters. They warn that the consequences of these policies can cause a major backlash in society and damage the already narrowing base of support for the government.