The recent Joint Comprehensive Plan of Action (JCPOA) agreements between Iran and the international community will, no doubt, have a major impact on Iranian domestic politics. The agreements open the door to an increased opportunity for improved foreign relations and international business agreements that will be needed to help Iran emerge from years of economic hardship created by international sanctions. The question will be whether Iran will itself walk through this doorway to a more inclusive future in the international community or whether it will slowly close the door, untrusting of those waiting on the other side.
One thing is sure, however, and that is that whether or not Iran chooses the path of better international engagement, it will be done at Iran’s pace, and given the current structure of its ruling elite, that pace will be slow moving. The Iranian ideological structure is built to retain the status quo and given the level of distrust of the international community any amount of cooperation will be hotly contested. With conservatives firmly in control of the real sources of power, any foreign investment and involvement in the country goes against the grain of their core principles as was recently echoed when Ayatollah Khamenei recently said, the JCPOA is “just an excuse and a tool for penetration” and “an instrument for imposing their demands”. The push, however, will come from working and middle class Iranians who have suffered from years of recession and high inflation and are keen to see the economic inequality between themselves and those that have continued to prosper during the sanctions reduced.
Ideally a potential path for Iran would be one similar to that taken by China, starting in the late 1970s. Overcoming the trajectory set in place by Mao Zedong, reformers, led by Deng Xiaoping, moved the nation away from the communist ideology of the past and towards a more western capitalist approach. This would, however, be a difficult path for Iran. In Iran, unlike China, the Ayatollah inherits his power through Islamic ideology and without it his place at the top of the ruling structure would be in jeopardy. It is this resistance to relinquish any semblance of control that has highlighted Ayatollah Khamenei’s tenure to date. Since gaining power in 1989 Ayatollah Khamenei has not hesitated to use violence against his own people, as we saw in the Green Revolt of 2009, in order to retain firm control of the nation and to ensure alignment with the direction set forth in the 1979 Revolution. This violence, however, has also severed the delicate bond needed between the greater society and its ruling elite and is further exacerbated by the extreme economic hardships being suffered by the common Iranian.
Given the unlikelihood of any meaningful reform to the leadership structure of Iran there are, however, steps that can be taken to bring some measure of prosperity back into the common Iranian’s life without the wholesale changes that would require nothing short of another revolution. The first step would be to produce a more stable environment through which business and trade can be conducted within the private sector. The government would need to relinquish some of the control that it pulled from the private sector and tone down, somewhat, the anti-foreign rhetoric, allowing the international community greater access to investment opportunities throughout Iran. The JCPOA has gone a long way towards beginning the process of improving Iran’s standing within the international community and the government should work to not lose that momentum. Some forces inside Iran favor a stricter Iran that is resistant to interaction with outside nations and more isolationist, not unlike North Korea. It will be up to leaders like Rouhani to counter these groups and move Iran towards a more inclusive role in the global community.
The state should also ensure that it not fall into the trap of relying simply on the easy money that an easing of sanctions and a return of its oil and gas exports will bring. Wealth brought on by the export of oil and gas and used to purchase foreign-made products will not have the desired effect in reducing the state’s crippling unemployment problem, so emphasis should be given to the promotion of building a larger breadth of industry, such as manufacturing and agriculture, that could begin to support job growth among the largely unemployed youth of the nation. This is an important distinction to be made with a nation that has the rich cultural diversity and history of Iran.
The national economy is currently faced with at least five major imbalances that must also be addressed: (1) An international payments imbalance due to a highly over-valued exchange rate, increasing reliance of imports, lagging genuine non-oil-based exports, and a precarious and uncertain future oil-export market; (2) A budget imbalance caused by rising expenditures in the face of stagnant and doubtful revenues; (3) A resource imbalance due to artificially low prices for water, power, and fuels that encourage ever-expanding demand; (4) A monetary and financial imbalance resulting from government-directed low interest rates, non-performing banking assets, rising defaults, and an increasing flow of savings into the informal market and capital flight; (5) Finally, a labor imbalance resulting from the rising work force, inadequate in housing and industry, and an anti-business labor code. (Amuzegar, 2014)
Another key element going forward, and particularly in the case of President Rouhani, as his campaign platform is focused on such items, is progress in levels of freedoms, civil liberties, and political rights. Since his election Rouhani has focused mainly on the nuclear talks and to this point he has gotten a pass on some of these campaign promises not being addressed but as the JCPOA grows more distant in the rear view mirror he will be held more and more accountable for his inaction on these items. If Rouhani is to retain the level of support from the Iranian public that brought him into office then he will need to make significant progress into these areas. The unelected political elite do not share Rouhani’s vision for an increase in these freedoms and civil liberties, as they come into direct conflict with their conservative ideologies. So it is imperative that Rouhani work to find means to bridge the ideological gap.
Within Rouhani’s power to affect change in a positive manner, and in keeping with his campaign pledges, include items such as increased freedom of speech. Currently media outlets can be prosecuted for such things as criticizing government organizations and it is well within Rouhani’s power to encourage more restraint in these instances. Another important major platform promise that Rouhani will need to address was his promise to uphold the rights of women and to address cases of discrimination against them. The removal of restrictions on the participation of females in government, and enrollment of female students in certain academic disciplines, are all key items of concern.
A final matter of concern is that of governmental transparency. Currently there is a considerable lack of basic and reliable information needed to conduct basic business with regards to the nation’s economic issues. A key impediment to this much needed privatization is the lack of ownership structures needed to ensure proper transfers of entities to the private sector. Commitments to the observance of law and transparency throughout the legal process is also essential in establishing even the most basic of environments necessary for the successful integration of foreign businesses. This is where Iran is at the moment. The REAL success of the JCPOA is not so much in Grand Strategy proclamations and reinvigorating Empire, but rather in the small incremental successes of normalcy for the Iranian common people.