In Parliament on Wednesday, Iranian President Masoud Pezeshkian appealed to Ayatollah Ali Khamenei's authority. AFP
In Parliament on Wednesday, Iranian President Masoud Pezeshkian appealed to Ayatollah Ali Khamenei's authority. AFP
In Parliament on Wednesday, Iranian President Masoud Pezeshkian appealed to Ayatollah Ali Khamenei's authority. AFP
In Parliament on Wednesday, Iranian President Masoud Pezeshkian appealed to Ayatollah Ali Khamenei's authority. AFP


Pezeshkian's cabinet picks don't match his call for change in Iran


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August 22, 2024

Less than a month in office, Iranian President Masoud Pezeshkian has already found ways to disappoint his legion of supporters. One such instance was when he unveiled his cabinet on August 11.

Dr Pezeshkian had explicitly and repeatedly promised that youth, women and Sunni Muslims would be adequately represented in his team. It was an attempt to make up for the fact that Iran has had zero Sunnis and just one female minister since the 1979 revolution.

Despite his pledge to right this wrong, the President has picked no Sunnis and just one woman. At 48, Farzaneh Sadeq, who is due to take over the roads and urban planning portfolio, is also the youngest among his 19 picks. The average age of the cabinet is 60, making it the oldest since 1979.

What’s worse from the reformists’ viewpoint is that it also includes a number of conservatives, including three men who served in the late Ebrahim Raisi’s administration.

Former foreign minister Mohammad Javad Zarif, who headed the President’s transition team, has resigned in protest. The spokesperson of the Iranian Reformist Front, an umbrella of reformist parties whose endorsement helped Dr Pezeshkian secure his election victory, has expressed disappointment.

But the rationale behind these picks became clear on Wednesday, when the President went to the hardliner-dominated Parliament to seek its confirmation. While there, he repeatedly told MPs that his picks had the approval of the country’s supreme leader, Ayatollah Ali Khamenei, the powerful Islamic Revolutionary Guard Corps and the intelligence authorities.

In essence, the make-up of the cabinet wasn’t his choice alone.

He pointed out that Mr Khamenei had approved several of his choices, including those critiqued by many MPs, such as Abbas Araghchi who is due to take over as foreign minister. He also insisted that his cabinet included people who had served under the centrist Hassan Rouhani as well as those who had worked with conservatives such as Mahmoud Ahmadinejad and Mr Raisi.

In other words, he claimed, his was a “national consensus” cabinet.

Farzaneh Sadeq, due to take over the roads and urban planning portfolio, is the only woman in Masoud Pezeshkian's cabinet. AFP
Farzaneh Sadeq, due to take over the roads and urban planning portfolio, is the only woman in Masoud Pezeshkian's cabinet. AFP
The inability of the hardline MPs to block any of Pezeshkian’s picks is a source of frustration for them

Several MPs protested against the lack of representation. “Can you realise your promise of national consensus while excluding 15 million Sunnis – including Kurds, Baluch and Turkmens?” a Sunni Kurdish MP quipped. Dr Pezeshkian, in a nod to his base, acknowledged that many Iranians were unhappy with the status quo.

That said, there are notable reformists in the cabinet. Incoming finance minister Abdolnaser Hemmati and culture minister Abbas Salehi, both of whom also served under Mr Rouhani, are prominent figures. There are others, too.

Ahmad Meydari, the incoming labour and welfare minister, was labelled by one MP as an extremist for his controversial past as a legislator and for co-signing a harshly critical letter to Mr Khamenei in 2002. The appointment of Hamidreza Zafarqandi, the new health minister, was also met with harsh criticism from some circles for his protest against the disqualification of reformist candidates in the run-up to this year’s parliamentary election.

In the end, Parliament confirmed all the reformists. In fact, it approved all 19 names – for the first time since 2004, when the reformist Mohammad Khatami’s picks got full backing from a reformist-dominated Majlis.

Several names that Dr Pezeshkian put forth even secured more than 90 per cent of the vote, with Brig Gen Aziz Nasirzadeh, the incoming defence minister, getting 281 out of the 288 votes – the most in the Islamic Republic’s history. As a former air force commander who flew sorties during the Iran-Iraq War in the 1980s, Gen Aziz Nasirzadeh is popular across the political spectrum.

The inability of the hardline MPs to block any of Dr Pezeshkian’s picks is undoubtedly a source of frustration for them.

The President’s presentation, especially his appeal to Mr Khamenei’s authority, clearly worked. But his success was possible also because of Speaker Mohammad Bagher Ghalibaf’s efforts – to help identify some of the cabinet picks as well as to marshal the votes in Parliament. By doing so, Mr Ghalibaf has gone from being a one-time election rival of the President to an ally of his. His decision to aid the President stems in part due to his opposition to many of the hardliners in his own camp. This is an interesting development, as both figures appear to have formed an alliance aimed at prioritising good governance over getting caught up in the demands being made by reformists as well as hardliners.

A rally in Tehran last November illustrates Iran's ties to Hezbollah. The new administration wants better relations with the West, but it says it will continue to support its allies across the Middle East. EPA
A rally in Tehran last November illustrates Iran's ties to Hezbollah. The new administration wants better relations with the West, but it says it will continue to support its allies across the Middle East. EPA

Several critics of the hardliners have welcomed this new partnership. “All lovers of Iran should know that this country will only see days of calm when extremists have been isolated in every field,” the centrist news outlet Asr Iran wrote. “Pezeshkian’s government is the last hope for the Iranian nation to free itself from the current adverse conditions.”

Of course, such pronouncements risk being exaggerated, as Dr Pezeshkian faces a tall order.

For example, Mr Araghchi, the new foreign minister, has promised to get international sanctions against Iran lifted and to improve the country’s ties with the world, a goal that is key to the President’s economic vision. And yet the new administration insists on continuing to support the Axis of Resistance militias and pursue a broadly anti-western foreign policy.

In Parliament this week, Dr Pezeshkian provided a list of challenges that the country faces, including corruption, poor relations with the rest of the region and the crippling sanctions. He pointed out that Iran was using less than 1 per cent of its capacities despite being at the “strategic core of global energy resources”.

Beyond pointing out the problems, however, he offered few solutions. But in a recent conversation, the exiled former MP Fatemeh Haghighatjoo told me that she was willing to give the new cabinet a chance.

“I’ll judge this government based on what it will do,” she said. “Let’s see if [for example] he’ll stop the enforcement of the mandatory hijab. We must give the cabinet at least six months to see what it can do.”

Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5

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Who has been sanctioned?

Daniella Weiss and Nachala
Described as 'the grandmother of the settler movement', she has encouraged the expansion of settlements for decades. The 79 year old leads radical settler movement Nachala, whose aim is for Israel to annex Gaza and the occupied West Bank, where it helps settlers built outposts.

Harel Libi & Libi Construction and Infrastructure
Libi has been involved in threatening and perpetuating acts of aggression and violence against Palestinians. His firm has provided logistical and financial support for the establishment of illegal outposts.

Zohar Sabah
Runs a settler outpost named Zohar’s Farm and has previously faced charges of violence against Palestinians. He was indicted by Israel’s State Attorney’s Office in September for allegedly participating in a violent attack against Palestinians and activists in the West Bank village of Muarrajat.

Coco’s Farm and Neria’s Farm
These are illegal outposts in the West Bank, which are at the vanguard of the settler movement. According to the UK, they are associated with people who have been involved in enabling, inciting, promoting or providing support for activities that amount to “serious abuse”.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Three ways to get a gratitude glow

By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.

  • During your morning skincare routine, name five things you are thankful for about yourself.
  • As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
  • In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
Know before you go
  • Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
  • If you’re driving, make sure your insurance covers Oman.
  • By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
  • Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
  • Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.

 

Updated: August 25, 2024, 2:34 PM