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How Iran’s President Rouhani Can Turn Crisis into Opportunity
How Iran’s President Rouhani Can Turn Crisis into Opportunity
People gather to protest against the high cost of living in Tehran, Iran, on 30 December 2017. ANADOLU AGENCY/Stringer

How Iran’s President Rouhani Can Turn Crisis into Opportunity

Daily street protests across Iran since 28 December 2017 have pitted many young Iranians against the government, but the state’s response is revealing deep fractures in the political establishment. To outflank both the unrest and his political opponents, President Rouhani’s best option is to address head-on the drivers of the protests and pursue popular reform.

Manifold reasons lie behind Iran’s ongoing protests, but the immediate trigger appears to be widespread disgruntlement over the country’s economic performance, especially cuts in President Hassan Rouhani’s new budget. Neither a revolution nor a political movement, the crisis is an explosion of the Iranian people’s pent-up frustrations over economic and political stagnation.

Beyond a struggle between state and society – or a standoff between security forces and political figures on the one hand, and young, working-class, unemployed citizens on the other – the demonstrations are putting on full display the fault lines that also divide Iran’s political establishment.

That the protests originated on 28 December in Mashhad, a bastion of Rouhani’s opponents and Supreme Leader Ali Khamenei’s hometown, is highly significant. Hardliners and conservatives initially welcomed the unrest in the holy city, showcasing the way that elite factionalism has worsened to the point that some of Rouhani’s opponents favour instability over siding with his political agenda.

[President Rouhani has] a unique opportunity to pivot himself away from being the demonstrators’ target to becoming their champion for reform.

The lack of uniformity in the government’s response to the protests has also highlighted these divisions. Rouhani initially struck a much softer tone than many other establishment figures, asserting people’s right to peaceful protest, and admitting that protesters are not lackeys of foreign powers but people who are suffering economically and seeking a more open society. In stark contrast, others – including Khamenei – have publicly blamed unrest on undefined external forces rather than legitimate grievances.

A Champion for Change

In part, the unrest stems from widespread discontent directed at Rouhani’s inability to activate the economic dividends of the Joint Comprehensive Plan of Action (JCPOA), Iran’s 2015 nuclear deal with the P5+1/E3+3. It may seem counterintuitive, but the clear new distance between Rouhani and his conservative critics offers the former a unique opportunity to pivot himself away from being the demonstrators’ target to becoming their champion for reform.

Rouhani can leverage public discontent to push the political establishment toward structural changes so fervently desired by the population. The chance that he can successfully take advantage of this dynamic is made greater by the way many Iranians are wary of taking part in the protests, even though sympathetic to the demands raised in them. Specifically, he could submit to parliament a package of major reforms, including constitutional amendments to empower elected institutions and a timetable for implementing them. If his reform package is blocked, it will be clear to the Iranian people where the problem lies, positioning Rouhani as a motor for change rather than a bulwark against it.

Rouhani has nothing to lose by taking a bold step.

Getting there will require resisting the temptation of pursuing superficial reforms. Shy steps, like the ones reformists are suggesting at present, are not going to cut it with the protesters. Rouhani has nothing to lose by taking a bold step. Without empowering the government and the parliament, and reining in tutelary bodies, like the unelected Guardian Council, vested interests in the status quo are bound to thwart structural economic reforms that are needed to fight corruption and open Iran up to the world market.

The reality is that Rouhani over-promised and under-delivered on the July 2015 nuclear agreement, which many Iranians hoped would bring speedy economic rewards. Five months after the JCPOA was signed, Crisis Group warned that rapid economic transformation was unlikely, as foreign firms and financial institutions were always likely to find it difficult to overcome deeply-entrenched hesitancy regarding doing business with Iran. Despite a number of marquee deals and recovering oil sales, the government has failed to significantly redress issues of unemployment, corruption and income inequality.

Perennial Demands

As the crisis continues, the more violent alternative left open to the Iranian government will not address the underlying causes of unrest. While the state security apparatus might crush the protesters, as it has done at least once every decade since 1979, it cannot eliminate the perennial popular demand for fundamental change, which last reared its head in 2009.

If [Rouhani's] reform package is blocked, it will be clear to the Iranian people where the problem lies, positioning Rouhani as a motor for change rather than a bulwark against it.

Today’s unrest is different from the 2009 protests, not least because protesters are not asking for U.S. help. Demonstrations are more geographically scattered than during the 2009 revolt, and they seem to involve young and unemployed Iranians more than the middle class. One interior ministry official estimated that 90 per cent of those arrested in the first few days of the most recent unrest were younger than 25.

Rouhani’s initial response to the unrest seemed to acknowledge the notion that the crisis offers an opportunity. Whether he will use it is another question. Without real reform, domestic turmoil is likely to continue and will also afford U.S. President Donald Trump a new chance to kill the JCPOA. Trump will have to decide on 12 January 2018 whether he wants to extend sanctions relief and remain party to the JCPOA. A violent crackdown by Iran’s security forces could give him justification for not waiving sanctions, or even imposing new ones.

Ayatollah Khamenei receives Iranian officials, ambassadors of Muslim countries, on 18 May 2015. khamenei.ir
Report 166 / Middle East & North Africa

Iran After the Nuclear Deal

Some in the West hope the nuclear deal with Iran will empower the country’s moderates. But playing Iranian domestic politics directly could backfire. The West should recognise that any change will be gradual, best supported by implementing the nuclear accord, resuming trade, and diplomacy that balances Iranian and Arab interests in the Middle East.

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Executive Summary

With the nuclear accord between Tehran and world powers in force, a chief question is what it means for Iran. The clash between competing visions of the country’s future has heightened since the deal. Many, there and abroad, believe it could rebalance domestic politics. It not only has boosted the profile of those who promoted it, but, more fundamentally, it has opened space for new debates in a domestic sphere that was dominated by the nuclear issue for more than a decade. Yet, the political system, with its multiple power centres and tutelary bodies, inherently favours continuity. As its guardians try to quell the deal’s reverberations and preserve the balance of power, any attempt by Western countries to play politics within the Iranian system – for instance by trying to push it in a “moderate” direction – could well backfire. If world powers hope to progress on areas of concern and common interest, they must engage Iran as it is, not the Iran they wish to see. To start, all sides should fulfil their commitments under the nuclear deal.

The accord comes at a sensitive moment. Over eighteen months, three pivotal elections are scheduled. February 2016 will see polls for parliament and the Assembly of Experts, whose key mandate is to choose the next supreme leader; in June 2017, there will be a presidential poll. With the supreme leader aging, many wonder if the next Assembly (during its eight-year term) will choose his successor, who could reshape the Islamic Republic’s course. President Hassan Rouhani’s competitors are concerned that he and his allies will parlay their foreign policy achievements into electoral victories.

Tensions within the Islamic Republic stem in no small part from its blend of popular sovereignty and religious authority. Theocratic forces seek to maintain the dominance of the supreme leader and other tutelary bodies, while republican forces advocate more clout for popularly-elected institutions. Each camp is further split between pragmatists who seek incremental political evolution and radicals who either resist any change or promote revolutionary transformation. The supreme leader – powerful but not omnipotent – maintains stability by accommodating both theocratic and republican trends. But his affiliation with the former makes for a balancing act that is as complex as it is imperfect.

The precariousness of this equilibrium means that policy shifts when pressure from below is accompanied by substantial consensus at the top. The nuclear talks illustrate this. Rouhani’s election and the sanctions-battered public’s demand for normalcy catalysed the process, but the agreement was not a single man’s achievement. Supreme Leader Ali Khamenei had endorsed bilateral negotiations with the U.S. before Rouhani ran for office. He then supported the new president’s diplomatic push and kept his opponents at bay. But given the leader’s aversion to risk, his support was qualified and did not obviate Rouhani’s need for a coalition with other power centres.

The president, who is from the republican camp, brought on board the most important allies: the pragmatic theocrats, who control the unelected institutions. Almost every powerful group had a say in the accord, which reflected a national, strategic decision to turn the page on the nuclear crisis even as concern remains over the world powers’ commitment. The establishment appears as determined to implement the deal as it was to seeing the negotiations through – and largely for the same reason: to resuscitate the economy by removing sanctions, either as envisioned in the accord or by showing that Iran is not to blame for failure.

Rouhani has encountered difficulties in other spheres. He was forced to freeze priorities behind which he could not generate sufficient consensus, including social and political liberalisation. But his economic agenda, aimed at stimulating growth after several years of recession, is likely to move forward, even though it damages entrenched interests that have profited under the sanctions regime.

Everything suggests Rouhani will continue with a prudent approach, and change is likely to be arduous, slow and modest. Though the U.S. and its European allies might nudge him to move faster, there is no way to speed the reform process and many ways to undermine it. Seeking to empower republicans – touted in certain quarters as a potential by-product of the nuclear deal – will not work, as many theocrats view that tactic as a stalking horse for regime change.

This does not mean giving Tehran carte blanche, domestically or regionally, but issues of concern will need to be addressed judiciously, taking account of Tehran’s legitimate concerns no less than its adversaries’. It also means Iranians – notwithstanding the imperfection of their governance system, which many are the first to acknowledge – should determine their country’s positions without undue external interference. Trying to shape Tehran’s regional calculus through a variety of carrots and sticks is standard foreign policy practice, but trying to shape or short-circuit the decision-making process itself is another matter. As seen in the nuclear deal and now in the economic realm, internal consensus, reached through a credible domestic process, is the only stable basis for progress.

The best option for Western states and Iran is to continue reversing the negative narratives from decades of suspicion and hostility by fully implementing the nuclear accord; creating discrete and non-politicised channels to address other issues of concern or common interest; and, eventually, pushing for regional security architecture that takes account of both Iranian and Arab interests. In the end, Iran and the West may not be able to agree on a range of issues, but trying to game the Iranian system will ensure that they will not.

Tehran/Istanbul/Brussels, 15 December 2015