Mo’ Rials, Mo’ Problems
Iranian President Hassan Rouhani is eager to open up the country's economy. Iranian hardliners are eager to stop him.
Two weeks ahead of critical elections, President Hassan Rouhani can boast of achieving two of his key election pledges from 2013: He secured a groundbreaking diplomatic nuclear deal with world powers and has removed crippling sanctions on the country. Rouhani should, therefore, feel confident ahead of the Feb. 26 vote and see himself as well on course to winning re-election in 2017.
Unfortunately, not all in Iran have welcomed the president’s political ascendance. Now, they are rushing to put the brakes on Rouhani’s vision to open the country up economically and politically.
Iranian hard-liners, mostly connected to the Islamic Revolutionary Guard Corps (IRGC), have launched a relentless campaign attacking Rouhani’s every step ahead of the Feb. 26 parliamentary and Assembly of Experts elections. They will do anything to make him the first one-term president in the history of the Islamic Republic and are banking on a strong showing this month to mark the beginning of the end of his reign.
While there are no dependable public opinion surveys on the question, popular support for Rouhani is by most accounts still solid, despite plenty of frustration among ordinary Iranians about the slow arrival of the economic benefits promised at the time of the nuclear agreement.
If he has a weakness, it’s in his questionable ability to maintain the cross-factional consensus that enabled Tehran to make nuclear concessions in order to bag a deal.
When Rouhani was elected president in June 2013, all three main interest groups in the regime — the presidency, the Office of the Supreme Leader, and the IRGC generals — were in agreement that a nuclear compromise was needed to save the economy from collapse. It is now apparent that this was a temporary alignment: With the lifting of sanctions achieved, Supreme Leader Ayatollah Ali Khamenei and his close allies in the IRGC have since shifted to putting the brakes on the rest of Rouhani’s agenda at home and abroad.
As Rouhani has repeatedly warned, his enthusiasm for international engagement has powerful detractors in Tehran. They fear his vision of a new Iran will come at their expense and weaken their influence in the Iranian pyramid of power.
Take the attacks on Rouhani for his recent trip to Europe, a direct dividend from the nuclear agreement. Hossein Shariatmadari, head of the influential Kayhan newspaper who was hand-picked by Khamenei, claimed that Rouhani had “shown contempt for the Iranian people” by letting the French foreign minister greet him at the airport and not President François Hollande.
Iranian Foreign Minister Mohammad Javad Zarif was flabbergasted by hard-liner suggestions that Rouhani had been deliberately humiliated. “By God, that is not true,” Zarif responded angrily on national television.
While the hard-liners’ accusations may seem petty on the surface, they are part of a systematic media campaign to depict Rouhani as someone mesmerized by the West, but who is only sneered at by Western leaders. IRGC-controlled media also belittle Rouhani’s hopes that trade and investment from Western countries will help revive the ailing Iranian economy. As Fars News Agency put it, in reference to Iran’s multibillion-dollar purchase of 118 Airbus passenger aircraft, “new aircraft will not tackle inflation and unemployment.”
Not all the attacks are veiled behind anonymous media commentary — some are highly personal. Mohammad Reza Naqdi, a top IRGC commander and head of the paramilitary Basij force, took the strongest jab at Rouhani. “We cannot change our [revolutionary] foreign policy to become mere consumers of [Western goods] like the Arab sheikhs,” he said, protesting against Rouhani’s outreach to the West.
Fighting over the spoils of the post-sanctions era
Rouhani’s basic premise is that without restoring the economy, Iran’s entire Islamist order could collapse. To that end, foreign trade and investment and access to international technological know-how, particularly in the critical oil and gas sector, are pivotal for regime survival. Unsurprisingly, key projects in Iran’s oil and gas industry were at the heart of his recent negotiations in Rome and Paris. Rouhani has set ambitions targets, including the creation of 900,000 to 1 million jobs per year and a GDP growth of 5 to 8 percent for the upcoming Iranian year (March 2016 to March 2017).
The Rouhani government is undeterred by current low oil prices. In the latest national budget, oil export revenue is projected to make up only 23 percent of the government’s income, the lowest ever. Thanks to years of sanctions, Iran is one of the oil exporters best placed to deal with significantly less oil income. Still, Bijan Namdar Zangeneh, Iran’s oil minister, aims to find new markets for the country’s abundant natural gas and oil reserves, which would allow it to regain its pre-sanctions position as OPEC’s second-largest exporter.
The question is whether Rouhani can overcome the objections of hard-liners who see foreign investment as benefiting economic interest groups tied to the Rouhani government and at the expense of companies that are affiliated with the IRGC, which saw their fortunes rise exponentially during Mahmoud Ahmadinejad’s rule.
Former President Ali Akbar Hashemi Rafsanjani is another frequent victim of attacks by the hard-line media. The hard-liners rightly see Rouhani as Rafsanjani’s disciple, as both call for Iran to be part of the global economy and not just operate at its margins. They are accused by their rivals of prioritizing foreign trade and investment over the doctrine of “self-sufficiency,” the concept of emphasizing domestic production over reliance on the outside world that Khamenei coined at the height of sanctions in February 2014.
In his public remarks, Rouhani says Iran’s nearly $500 billion economy is big enough to allow for a “win-win” formula, where “there will be money for everybody.”
His rivals are not so sure. As soon as Rouhani and Zangeneh returned from Europe, the Oil Ministry came under an unusual physical attack by a mob in Tehran. Forces within the IRGC are the most likely culprits behind the assault. The attack came at the same time as concerns were being raised within IRGC circles that the new Iran Petroleum Contract (IPC) that the Rouhani government is using to attract foreign oil and gas firms will undercut their interests in the lucrative sector. Billions of dollars are at stake.
The attack on the ministry is a stark reminder both to the Rouhani government and potential foreign investors that there are groups in Tehran able to disrupt realities on the ground, unless their interests are incorporated.
It’s clear that hard-liners are anxious about losing out in this new post-sanctions chapter in the Islamic Republic’s history. What is also clear is that they have no real blueprint to fix Iran’s deep economic challenges. While Khamenei coined the idea of a “resistance economy” at the height of sanctions, the concept had no discernable effect on the country’s deteriorating finances. But lacking a vision for a better future does not mean that hard-line circles around the supreme leader and the IRGC generals will not defend the status quo, if that best serves their interests.
Ahead of this month’s elections, hard-liners on the Guardian Council, the regime’s top vetting organ, made their presence felt through mass disqualifications of moderate candidates. They then fumed when Rouhani complained to the European press about the disqualifications, accusing the president of turning to the world to strengthen his hand against his rivals at home.
By disqualifying moderates, the clerical-IRGC coalition is hoping to secure control of the Assembly of Experts, which will allow them to pass on the supreme leadership to another hard-liner when the time comes to replace the aged Khamenei. Such an intense race for the top job might seem premature, but the power struggle for the job started five years before Khamenei took over as Ayatollah Ruhollah Khomeini’s successor in 1989. Maneuverings for the next succession are expected to be as intense, and hard-liners are determined to prevent Rouhani and his camp from exploiting the nuclear agreement to claim the ultimate seat in Iranian power.
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