Days of Dawn and Torment: Iran’s slow revolution

The President of Iran Hassan Rouhani at the World Economic Forum in Davos, Switzerland, in January 2014The President of Iran Hassan Rouhani at the World Economic Forum in Davos, Switzerland, in January 2014 (Source: World Economic Forum)

“The Ten Days of Dawn” or “Daheh-ye Fajr” is a phrase used throughout Iran to describe and celebrate the brief period between Ayatollah Khomeini’s return to Iran and the official date of the 1979 Islamic Revolution. Some Iranians, however, have referred to the period as “Daheh-ye Zajr” or “The Ten Days of Torment”.  Two phrases that seem to sum up perfectly the extremes of Iranian politics at the time, and may also provide the perfect metaphor for modern-day Iran.

The Islamic Republic of Iran lies at several important crossroads.  Corruption is rife, the economy is stagnating, oil prices are falling, international sanctions are crippling and involvement in Syria and Iraq is getting nowhere. The election of moderate candidate Hassan Rouhani in mid-2013 raised the hopes of millions of Iranians for better things to come, but reform has been difficult and progress has been slow.  Iran, then, remains on that taunting precipice of change – tormented by the expectation for the dawn of a new era.

This is not to say, however, that there will be a sudden, overnight revolution in the entire Islamic Republic of Iran. This is a subtler, slower revolution that requires small steps, rather than rapid and radical change. As Princeton academic Kevin Harris points out, “radicals on both sides are exhausted”, especially since the traumatic events of the Green Revolution over the contested 2009 election. The BBC has described a new “euphoric atmosphere” taking hold in Iran upon the election of moderate Rouhani, in which many people can perceive a new centre-ground in which “anything is possible”. Perhaps not everything is possible when it comes to the Islamic Republic, but surely a very significant something indeed can be achieved if the right conditions are in place.

It’s Khamenei’s economy, stupid

Much of the excitement surrounding Rouhani’s election in 2013 was in anticipation of an improved economic situation for Iran. “Rouhanomics” was touted as a moderate path towards better trade relations, lower inflation, lower unemployment and higher levels of economic growth.

Something that seems to have been forgotten in all this hype, however, is that Rouhani is not a radical newcomer. He is an insider of the Khamenei regime. He has held senior positions in the Iranian government for many years, including at one point being the top Iranian negotiator on issues related to nuclear power and international sanctions.  It has therefore been very difficult for Rouhani to tackle one of Iran’s greatest obstacles to a high-achieving economy: the Islamic Revolution Guards Corps (IRGC), an organization that now effectively operates as the executive arm of Supreme Leader, Ayatollah Ali Khamenei.

Much of the Iranian economy is dominated by entities associated with or connected to the IRGC. Under the Supreme Leader’s control, the Guards and their associated holding company and business enterprises are able to monopolise markets, secure government contracts and remain tax-exempt.  This creates a great deal of inefficiency within Iranian markets and government revenue-raising. Suzanne Maloney of the Brookings Institution has argued that privatisation is the most important reform Rouhani could undertake.

Although Rouhani’s economic achievements are not to be sniffed at (with a reduction of 0.9% in unemployment and a near-halving in inflation over the past year according to official Iranian statistics), the 2015 budget suggests that Rouhani will do little to tackle those IRGC interests, and may even boost their current standing.  He has requested a large increase in the IRGC budget, increasing defence spending by 33% to US$10bn, though even this figure is likely a conservative estimate since much military funding is off the books. The IRGC will also receive almost double its 2014 government appropriation for its holding company, Khatam al-Anbia.  Emanuele Ottolenghi and Saeed Ghasseminejad describe the budget as “a sign of continuity with the repressive past”.

With great (oil and nuclear) power comes great responsibility

The recent drop in oil prices has exacerbated these economic problems. Rouhani’s 2015 budget (one third of which comes from oil revenue), for instance, relies on a projected rate of US$72 per barrel. However, global crude oil prices currently stand on NASDAQ at US$45.  This price drop poses serious problems for both government revenue and for the Iranian economy as a whole. The price drop is made even worse by the sanctions-induced reduction in oil sales, with a drop of almost 50% over the last three years attributed to the sanctions.

The sanctions are in part punishment for human rights abuses and state-sponsorship of terrorism, but in the main are related to Iran’s failure to not adhere to the requirements of the UN Security Council’s resolutions regarding its nuclear facilities and uranium enrichment programs. Comprehensive talks between the US and Iran over the future of Iran’s enrichment program have taken place over the past year and have recently been extended until Summer 2015. The progress of the talks, however, has been obstructed by certain domestic elements in both the US and Iran.

In Iran’s case, the main obstructive element comes from Iranian hardliners, which include such figures as Khamenei and the IRGC. Despite popular support for a nuclear agreement, the hardliners are reluctant to negotiate with the US on the basis of deeply-held mistrust, unique understandings of pride and their own personal sacrifices involved in any nuclear deal. As Seyed Hossein Mousavian points out in his recent work “Iran and the United States”, mistrust is something that is widely discussed in relation to US-Iran relations, but largely ignored in practice. Iranian mistrust began after the US admitted its role in the 1953 coup of the popularly-supported Iranian government, and has been aggravated by covert CIA operations and activities in the country and Bush’s inclusion of Iran in the so-called “axis of evil”, despite Iran having engaged in fruitful discussions with the US during the early 2000s.  Pride is something that is also largely forgotten in dealings with Iran, but it is something very deeply-held among its people. Given their long history with invasions and interference, the Iranian notion of pride is linked to empowerment. This partly explains Iran’s fierce resistance to coercive policies such as sanctions and is something that the West has repeatedly failed to take into account in its dealings with Iran. Moreover, the hardliners are also the main beneficiaries of the sanctions program. Because trade is so restricted and because the IRGC and its associates are by far the largest actor in the Iranian economy, the IRGC are able to create huge monopolies within the Iranian market.  This then boosts the hardline regime, all while punishing the Iranian people at large.

However, this is not to say that all hope for a nuclear deal should be lost. Rouhani recently made a speech calling out these hardline elements (though he did not and could not refer to them specifically) and suggested putting any nuclear deal to the people in a referendum (thereby appealing to the Iranian tradition of democracy behind the hardline rhetoric of the regime). He pointed out that Iranian ideals “are not bound to centrifuges”, and it is likely that if it were put to a vote, the moderates would win out. This is probably more of a threat than actual plan, aiming to scare hardliners into making more concessions.  The speech is also heartening, because Rouhani would have been unable to make such a speech without the permission of hardliner Supreme Leader, Ayatollah Ali Khamenei. This suggests that hardliners are beginning to change their position on the nuclear issue.

Hope on the horizon

There are, then, some major barriers to change in Iran. But there are also sources of hope. Following the crackdown of the Green Revolution in 2009, even hardliners began to agree that Iran could not return to its status quo.

It was in this context that Rouhani rose to power and the hardliners have softened. This change of direction for the country will be hard to reverse, especially when supported by such a highly-educated and actively-engaged people. However, as we have seen, it will also be difficult to continue along this road given the strength of entrenched interests in the country. The revolution will be slow, then, but a revolution nonetheless. And for the moment, the people of Iran will have to continue to suffer the torment of seeing the new dawn that, for now at least, remains just out of reach.