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Iran: The Miracle That Wasn’t

Newsha Tavakolian/Magnum Photos
Tehran, 2015

Iran’s presidential election on May 19 will in all likelihood be won by the incumbent, the moderate cleric Hassan Rouhani. In 2015, two years after he came to power, Rouhani pulled the country back from the brink of confrontation with the West when he guided Iran toward the historic nuclear deal with the Obama administration. For Iran, the agreement—which it reached with the United States, the four other permanent members of the UN Security Council, and Germany—was supposed to bring its economy in from the cold after the bellicose and isolationist presidency of Mahmoud Ahmadinejad. According to the terms of the deal, many tough international sanctions on Iran were lifted in exchange for Iran’s mothballing of some of its main nuclear facilities; at last, foreign cash was supposed to flow in and the country’s lucrative oil reserves to flow out. So a Rouhani victory this month might seem like fair reward.  

But the economic miracle that was promised by the Rouhani government hasn’t happened, and the sense of anti-climax is palpable—a disillusionment that has broadened into a general contempt for politics, politicians, and promises that aren’t kept. Whether in Tehran or far-flung areas such as Khuzestan—an oil-rich province in the south that nonetheless suffers from chronic electricity and water outages, and whose inhabitants complain of neglect by the central government—there is widespread skepticism of the state’s determination to improve the lot of the ordinary Iranian.

True, inflation has been brought down to single digits from above 40 percent at the end of the Ahmadinejad era, but a recent spurt of economic growth (to above 6 percent in the Iranian year ending in March) was largely the result of a one-time leap in oil receipts following the reopening of world markets to Iranian hydrocarbons; all the while, indebted factories around the country are unable to pay their workers, hard-up schoolteachers may be found supplementing their meager incomes by freelancing as drivers for Snap, the Iranian Uber, and—most ominous of all in this young, restless society—unemployment among the under-twenty-fives is running at almost 30 percent. Whether it is acquiring property, buying a car, or marrying and forming families, middle-class Iranians are doing everything later, if at all. Meanwhile, the affluent continue to buy property, foreign currency, or gold, or put their money on deposit—anything to avoid investing it in the underproductive, capital-starved “real” economy. An influx of consumer goods, from Porsches to perfume at $300 a bottle, and a rise in the number of chic restaurants serving international food to the strains of Turkish pop, attest to the fearsome spending power of this rentier class.

Few of Iran’s current ills can in fact be traced to the Rouhani administration, which, on the whole, has played a poor hand well. But the government is paying the price for raised expectations of an influx of foreign investment, which—notwithstanding President Donald Trump’s claims that Iran has been making hay since the lifting of sanctions—has signally failed to materialize. Investors fear that the new US administration and the US courts will continue to punish multinationals—including banks and oil companies—that have extensive dealings with Iran.

Meanwhile, the Trump administration’s policy toward Iran is ominous, further contributing to the culture of prevarication that attends any major investment decision. On April 18, Secretary of State Rex Tillerson told Congress that Iran was complying with its obligations under the nuclear deal; this is the same Tillerson who likened the deal to the “failed approach…that brought us to the current imminent threat we face from North Korea.” Trump has ordered an interagency review to see whether the Iran deal is, in Tillerson’s words, “vital to the national security interests” of the US.

The Iranian election campaign has been dominated by speculation over whether or not the Supreme Leader, Ayatollah Ali Khamenei, favors one of Rouhani’s opponents—only the president and five other candidates have been cleared to stand by the Council of Guardians, a vetting body that also doubles as an upper house of parliament. Khamenei recently slapped down Rouhani after the latter claimed to have lifted the shadow of war from the country; “the people” were responsible, apparently. One of the most prominent conservative candidates, Ebrahim Raisi, a somber cleric with a power base in the shrine city of Mashhad, is certainly close to Khamenei; he stresses the succour that he would bring to the poorer sections of society, presumably through a rise in the subsidies that made Ahmadinejad so popular among the poor—and which helped tip the country into economic crisis by the time Rouhani took over.

Even as the presidential campaign enters its final weeks, proceeding sedately on the surface, without the huge rallies of neighboring Turkey, or India, the eyes of Iran’s political elites are fixed on the inexorably approaching succession to seventy-seven-year-old Supreme Leader. Overshadowing the election to decide the country’s number two position—the president is head of the executive, but in practice all major decisions must be cleared by Khamenei—is the knowledge that the Islamic Republic will at some stage in the next few years face a struggle over who becomes number one—a struggle that will be resolved not at the ballot box but in assemblies inaccessible to ordinary people. One theory is that Raisi is being pushed forward as a possible eventual candidate for Supreme Leader, but if he loses the presidential election, his stock will inevitably fall.

Maxim Shemetov/Reuters
Iranian President Hassan Rouhani, Moscow, March 27, 2017

It is a measure of the growing insolence of the political class in this period of morbid anticipation that the main early drama of the campaign was an act of lèse-majesté by Ahmadinejad himself, aimed at stamping his personality on events. Ahmadinejad’s eight-year tenure between 2005 and 2013 was tainted by far-reaching peculation and economic mismanagement, glowering tensions with the US and Israel, and the brutal treatment of Iranian protesters following his disputed re-election in 2009.

On April 19, in defiance of advice from Khamenei, Ahmadinejad announced his candidacy for the presidency, and although he was duly disqualified by the Council of Guardians, in the course of a subsequent press conference he alluded in indirect fashion to the Supreme Leader being responsible for the excesses of 2009. In this way Ahmadinejad let it be known that it was in his power to make damaging disclosures. His eight-year presidency gave him access to the most intimate secrets of the Islamic Republic, and his erratic blend of nationalism, millenarianism (one of his close associates is popularly believed to be in touch with the occulted Twelfth Shia imam), and populist appeal are a threat to the clerical hierarchy.

It is little wonder that in the aftermath of Ahmadinejad’s disqualification there have been rumors that his freedom of movement has been restricted. Since the inception of the Islamic Republic in 1979 several ex-heads of government have fallen out of favor and either fled into exile, been placed under house arrest, or been otherwise excluded from public life. Ahmadinejad may now be setting out his stall as a figure of opposition, with a view to influencing events after Khamenei’s demise.

The Council of Guardians was rumored to have come close to disqualifying Rouhani as well. Hardliners have accused him of craven capitulation to the United States in the nuclear negotiations, of encouraging corruption and a flood of Western consumer goods under the vague rubric of economic liberalization, and of turning a blind eye to the spread of degenerate Western culture in Iran.  

The decline of revolutionary ideals may be gauged by the fact that one of the most popular films in Iran at present is a the latest instalment of a satire, Gasht-e Ershad, or “Guidance Patrol,” on the morality squads that once struck dread into young people, while in affluent north Tehran the compulsory hijab, or women’s head covering, is increasingly honored in the breach; having for years taken the form of a light headscarf clinging precariously to the back of the head, in some cases it has slipped further, reduced to the status of a neckerchief. Meanwhile, regime stalwarts are mercilessly mocked on social media, while few young people show any interest in such monuments to the Islamic Revolution as the former US embassy, parts of which operate as a museum to inform Iranians about the perfidious actions of Uncle Sam. The slippage in Islamic zeal is pervasive, extending in some cases to the families of leading hardliners. Thus, it is less on social and cultural issues that Rouhani will be vulnerable on polling day—few Iranians seem to hunger for a return to the austerities of the past—but economic ones.

Even taking into account Iran’s rumbling discontents, it seems unlikely that either Raisi, who as a judicial official was associated with many repressive measures, or Mohammad Bagher Ghalibaf, who has twice failed in bids for the presidency, stand much chance of toppling a man who, for all the grumbles about his underperformance, has brought the country a precious measure of stability. A greater threat to Rouhani’s second term may come from the Trump administration and its Republican-dominated Congress, which, whatever the results of the current review, are unlikely to ease their opposition to investment in Iran. If the US persists, it will only entrench Rouhani’s reputation as the man who gave up Iran’s nuclear program in return for eau de cologne.