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The supreme leader is clipping the wings of the reformist president
ABOVE the grimy car-choked streets of Tehran, Iran’s down-at-heel capital, a new poster campaign is under way. Beside the brooding black-turbaned features of Iran’s supreme leader, Ayatollah Ali Khamenei, slogans extol the virtues of the “resistance economy”. The regime, it seems, is not ready to let go of the isolationist days of Iran’s worst confrontations with the West.
Anyone who hoped that the signing last July of a nuclear deal between Iran and six world powers would strengthen the hands of the country’s reformists at the expense of the religious conservatives is starting to think again. The deal, which Mr Khamenei had been persuaded would boost a stagnant economy (see chart) by ending most international sanctions and reintegrating Iran into the global financial system, has so far fallen far short of what was hoped. The backlash has begun.
Iranian oil exports have, it is true, grown by 60% since the formal lifting of sanctions in January. Iranian and Western trade delegations scurry back and forth. But Iran is struggling to repatriate its earnings, and to turn its memoranda of understanding into contracts. Although John Kerry, the American secretary of state, insists the way is open for legitimate trade with Iran, Treasury officials say any dealings that “touch” America—for instance by trading with Iran in dollars—risk falling foul of America’s remaining sanctions if they involve entities linked to the army or the Revolutionary Guards. Given the opacity of Iran, that might mean any sizeable firm.
Without cast-iron assurances big banks, spooked by the gigantic fine of $9 billion levied on BNP-Paribas in 2014, are steering clear. SWIFT, the global bank transactions network, has been reconnected to Iran, but remains dormant—“a newly built highway no one is using”, says an Iranian official. Visitors to Iran still have to bring large wads of cash, since international credit cards do not work there.
Iran-minded fund managers, jubilant a year ago when an outline of the nuclear deal was first settled, now lament the lack of business. American investors visiting Tehran will not even leave their business cards for fear of possible repercussions. Despite Iran’s stability in a volatile region, its educated population, its well-developed road network and its potential as a regional hub, most Western companies continue to regard it as toxic. Few expect any change this side of the American elections, and perhaps for many months thereafter.
Mr Khamenei has seemingly turned on the government of President Hassan Rohani. Mr Rohani had reckoned the agreement would rapidly attract $50 billion worth of foreign investment, see funds frozen by foreign governments speedily released and spur growth to 8% a year. “We thought we would revive relations with the banks immediately after the deal,” says the central bank’s governor, Valliollah Seif. Many businessmen echo the supreme leader’s derision: “How come they didn’t negotiate the process of financial reintegration—which banks would transfer the frozen assets, how much and when?” asks a market analyst, aghast. Mr Khamenei’s advisers level accusations of incompetence, and suspect Mr Rohani has fallen into an American trap.
The supreme leader is seeking to rein in the president. Some of Mr Rohani’s planned visits abroad, including to Belgium and Austria last month, have been cancelled at the last minute. “I urge you to come and see for yourself,” said Mr Seif, wooing investors at a conference in London earlier this month. But Westerners whom the president’s office has invited to Iran find their meetings blocked by the supreme leader’s men. Puncturing public hope of an end to revolutionary isolation, Mr Khamenei recently criticised the teaching of English.
Mr Khamenei is also resorting to force. “Don’t be bashful,” he recently exhorted some 7,000 undercover police mobilised to uphold puritanical codes—even though the country’s mores are closer to those of Central Asia than the sex-segregated Arab world. (“White marriage”—the term for unmarried couples living together—is increasingly commonplace.) A fresh catch of activists has been put behind bars, including journalists, human-rights monitors and models who had appeared on social media unveiled. “The empire,” says a diplomat in Tehran, “is trying to strike back.”
Mr Rohani refuses to buckle. Emboldened by the conviction that he represents the popular mood, the president these days sounds more like an opposition leader, for all that he is a former head of the National Security Council and an Islamic clergyman. Along with his vice-president, he distances himself from talk of the “resistance economy”; he insists on the virtues of English and of pivoting towards global economic engagement. This means news bulletins can be schizophrenic. Headlines celebrate the latest trade deals alongside the supreme leader’s fulminations against Western plans for “colonialist inculcation”.
It is, however, hardly an even fight. Beyt-e-Rahbar, the supreme leader’s headquarters, commands the armed forces, the 128,000-strong Revolutionary Guard Corps (IRGC), the networks of spies, the vast state-owned firms that dominate the economy, the judiciary, the sprawling state media and the bodies that vet and veto elected bodies. Presidential decisions are diluted or simply ignored by civil servants appointed by Mr Rohani’s predecessors. Even the cabinet is a coalition, including ministers wary of privatisation.
Some in Mr Rohani’s camp think little will change before Mr Khamenei dies or retires (he is 76, and thought to suffer from prostate cancer). Even then things might not improve. This week came the news that a veteran conservative from Tehran, Ayatollah Ahmad Jannati, has been appointed as the head of the Assembly of Experts, which will pick the next supreme leader when the moment arrives.
“Mr Rohani believes in economic liberalisation, but it doesn’t percolate down the pyramid,” says a member of Iran’s chamber of commerce. And for all Mr Rohani’s success in sharply increasing the number of reformist parliamentarians, the president still lacks a majority in the Majlis following elections held in February and concluded with run-offs in April. Some 80-85 independents hold the balance of power, and may bend as much towards Mr Khamenei as Mr Rohani. When your correspondent visited parliament recently, a preacher was giving sermons about the dangers of English spies.
Still, there are a few hopeful signs: three-quarters of the fractious old parliament lost their seats, including Gholam Ali Haddad-Adel, a veteran loyalist and a close relative of Mr Khamenei. The clerical contingent collapsed to 6%, half that of the last election in 2012 and just a tenth of its strength in the first post-revolution election in 1980. For the first time women outnumber clergymen in the Majlis.
Mr Khamenei has won every power struggle he has faced, including with Mr Rohani’s predecessors as president, the hardline Mahmoud Ahmadinejad and the reformist Muhammad Khatami (whose name he still bans from appearing in print). But the leader seems crankier than before. Mr Rohani enjoys the support of Ayatollah Ali Akbar Hashemi Rafsanjani, the veteran kingmaker. After the latest testing of ballistic missiles, timed to undermine one of Mr Rohani’s trips abroad, Mr Rafsanjani tweeted that Iran would be better engaging in dialogue than conducting missiles tests. “Those who say the future is in negotiations not missiles are either ignorant or traitors,” snapped back an irked Mr Khamenei.
So bad have things become that many observers now wonder whether Mr Khamenei will let Mr Rohani stand for a second term next year: his hand-picked Guardian Council could decide to bar him. Mr Khamenei’s problem is that there is no obvious alternative. For want of anyone more like-minded, he is healing his rift with Mr Ahmadinejad, perhaps hoping that the ex-president can recover his populist touch. Although Iran’s middle class blames Mr Ahmadinejad for squandering the money that rolled in during the oil-boom years, poor Iranians remember a time of generous welfare handouts and the reconstruction of Shia shrines, like Qom’s opulent Jamkaran. “When he goes walkabout in the provinces, Ahmadinejad is ten times more popular than Rohani,” insists Hamid Reza Tareghi, a confidant of Mr Khamenei who derides Mr Rohani’s supporters as counter-revolutionaries.
Qassem Suleimani, the head of the IRGC’s foreign legion, the Quds force, has been mentioned as another possible candidate. He is popular among reformists as well as hardliners, having led the fight against the Sunni jihadists in Iraq and Syria. But entering politics might cost the Revolutionary Guard its most popular leader.
The electorate itself may lose interest. Though Iranians voted in droves in the last election, Mr Khamenei’s recent actions demonstrate the limits of the ballot box in determining Iran’s course. Nor does the prospect of change from within inspire much hope. Down an alley of Tehran’s bazaar, a wizened peddler sells tea from a cart and compares the Shah’s reign with the current incumbents. Forget the people, he says, this lot struggle to rule themselves.
