April 8, 2014 | Policy Brief

Iran’s Central Banker Heads to IMF and World Bank

April 8, 2014 | Policy Brief

Iran’s Central Banker Heads to IMF and World Bank

Dr. Valiollah Seif, governor of Iran’s Central Bank, arrived in Washington today to attend the spring meetings of the International Monetary Fund and the World Bank. His stated goal is to “increase banking and economic relations with delegations from other countries.”

The visit is inextricably tied to the latest round of nuclear negotiations between the P5+1 and Iran. After all, the sanctions relief offered in Geneva in November 2013 included Iranian access to international loans and economic development. Thus, the fate of the nuclear negotiations and Iran’s prospects for stabilizing and improving economic conditions through integration in the international financial system are intertwined. 

As he labors to breathe life into the moribund economy he inherited from his predecessor, Iranian President Hassan Rouhani undoubtedly understands the importance of Seif’s visit.  However, other actors in Iran seem to have a less clear understanding.

For example, Supreme Leader Ali Khamenei used his March 21, 2014 new year speech to thunder against the West from the pulpit and boost the self confidence of Iranian decision makers: “We should not look at the hands of the enemy to remove the sanctions. To hell with it! We must see what we can do ourselves!”

Similarly, Hojjat al-Eslam Ali Fallahian, former minister of intelligence, prescribed “fasting” as a means of countering the sanctions regime instead of giving nuclear concessions in Geneva.

Rasoul Sanaeirad, Islamic Revolutionary Guards Corps (IRGC) Political Directorate chief, demands Iran’s isolation from the world economy altogether. “We are concerned that some [the Rouhani government] do not consider dependency a taint and dishonor and are using the pretext of globalization for cooperation with other countries,” he said. In the same speech, Sanaeirad declared the IRGC’s readiness to develop Iran’s oil and gas sector in the face of continued sanctions.

The IRGC has a corporate interest in maintaining Iran under the sanctions regime. The sanctions afford the Guards, who currently hold a monopoly on developing the energy sector, the opportunity to plunder what is left of the country’s oil wealth.

Khamenei, who relies on the IRGC as a power base, is now weighing the benefits of what he calls the “resistance economy” and the prospect of economic stabilization through sound economic practices. This can also be viewed as a choice between moving toward a final nuclear deal or spurning one.  In this way, the IMF and World Bank meetings hold greater importance than many realize.   

Ali Alfoneh is a senior fellow at the Foundation for Defense of Democracies.


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