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Post-sanctions Iran: The next China?

As Tehran and world powers inch closer to a final nuclear agreement, Iran is poised to become a major emerging power.

Last updated: 30 Jun 2014 11:41
Richard Javad Heydarian

Richard Javad Heydarian is a specialist in Asian geopolitical/economic affairs and author of "How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings"
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The West has long sought to dismiss Iran as a rogue nation, with limited human capital and underdeveloped technological and scientific capabilities, writes Heydarian [Iran]

The lightning advance of the group now calling itself the Islamic Caliphate (formerly known as Islamic State in Iraq and Levant) throughout the north and eastern portions of Iraq has rattled governments across the region and beyond. For the first time in recent memory, there is the possibility that a terrorist group could end up controlling the geographical heart of the Middle East, home to one of the world's largest hydrocarbon reserves.

Quite paradoxically, such a worrying prospect has pushed Tehran and Washington closer to each other, as the two powers contemplate a modus vivendi to contain the menace and aid the flailing Iraqi Prime Minister Nouri al-Maliki-led government in Baghdad, which has been criticised for its lack of inclusive governance and increasingly authoritarian tendencies.

Given their shared strategic concern over the rapid proliferation of violent groups such as the Islamic Caliphate, there is a growing conversation about the possibility of a tactical alliance between the West and Iran - paving the way for a fundamental reconfiguration in the regional balance of power.

Above all, however, the greater issue at hand is the gradual re-emergence of Iran, currently among the world's 20 largest economies, as a serious international power, after years of geopolitical isolation and bitter ideological competition with the West. And it is the combination of pragmatism and resilience that underpins Iran's increasingly successful bid for (retaking) a pride of place among the world's leading nations.

Beyond Deng and Gorbachev

After his landslide victory in mid-2013, when tens of millions of Iranians unequivocally voted for greater pragmatism and moderation in the country's domestic and foreign policies, Iranian President Hassan Rouhani assembled one of the most capable governments in Iranian history. In fact, his cabinet boasts more American PhDs than the White House. Today, Rouhani oversees a highly professional, technocratic government, with an intimate understanding of not only international affairs, but also the US political system and its vagaries.

A year into office, the Rouhani administration has not only addressed pressing macroeconomic issues, particularly an explosive inflation and a collapsing domestic currency, but it has also managed to sustain a series of high-stakes negotiations with world powers to resolve a decade-long crisis over Iran's nuclear programme. Obviously, critics at home and abroad have sought to derail the Rouhani administration's efforts to negotiate a permanent settlement of the Iranian nuclear crisis with Western powers, especially Washington.

A year into his office, the Rouhani administration has not only addressed pressing macroeconomic issues, particularly an explosive inflation and a collapsing domestic currency, but it has also managed to sustain a series of high-stakes negotiations with the world powers to resolve a decade-long crisis over Iran's nuclear programme.

There is a high possibility that the ongoing negotiations will be extended beyond the July deadline, as Iran and world powers enter the final stages of negotiating a long-term nuclear agreement, which would theoretically allow Tehran to retain a measure of domestic enrichment capability in return for an end to Western sanctions against Iran's financial and hydrocarbon sectors.

Nonetheless, one can't deny that for the first time in decades, there is a real possibility of more normalised relations between Tehran and the West, potentially sparking a huge influx of Western investment and technology into the country.

As the current head of the Iranian government, President Rouhani has managed to carefully navigate Iran's multi-polar domestic power structure. Emphasising regime stability and preservation, he has convinced leading conservatives to support his often contentious diplomatic overtures towards the West. Meanwhile, he managed to attract the support of leading pragmatists and reformists by constantly emphasising his advocacy for greater socio-political freedom, economic revival, and political engagement with the wider world.

In many ways, Rouhani represents one of the most consequential pragmatists in the opening decades of the 21st century.

Far from emulating the Soviet Union's President Mikhail Gorbachev, whose political reforms precipitated the collapse of the Soviet Union, and China's Deng Xiaoping, who constantly pushed for economic liberalisation at the expense of political freedom, Rouhani is laying the foundations of an Iran that is economically dynamic, politically vibrant, and geopolitically powerful.    

The lion awakens

Long dismissed as one of the weakest teams in this year's World Cup, the Iranian football team, also known as Team Melli, had to overcome a pernicious combination of financial difficulties and administrative nightmares to prepare for the likes of Argentina. Due to Western sanctions, which prevented Tehran from collecting funds from international sponsors, Iran could barely organise a decent preparatory campaign ahead of the World Cup tournament. But against all odds, they eventually managed to win the respect of millions of fans across the world, cementing Team Melli's reputation as one of the most powerful Asian teams in recent history.

One could argue that initial misperceptions vis-a-vis Team Melli somehow mirror the broader misunderstanding of Iran as a country, and its achievements in recent decades. The West has long sought to dismiss Iran as a rogue nation, with limited human capital and underdeveloped technological and scientific capabilities. Given Iran's dependence on hydrocarbon exports, Western powers sought to change Iran's strategic by imposing restrictions on Iran's ability to conduct international trade and finance its domestic development. Without a question, the sanctions have been devastating, severely undermining Iran's macroeconomic conditions as well as its access to basic necessities such as food and medicine.

But a combination of resilience and increasing pragmatism has allowed Iran to not only emerge as a sporting powerhouse, especially in Asia, but, more importantly, as one of the most dynamic countries in the developing world. Today, Iran stands among leading countries in cutting-edge sciences such as stem cell research and nanotechnology.

As the Middle East's leading scientific power, Iran has managed to attain growing self-sufficiency in terms of space and nuclear technology, while leading Iranian universities have been producing among the best engineers in the world. After decades of rural development and pro-active developmental policies, Iran is among the leading Asian countries in terms of human development index, while boasting among the largest steel and automobile manufacturing bases in the developing world.

Overall, the main strength of the Rouhani administration is its profound realisation of the necessity to launch a creative diplomatic approach to remove artificial political constraints, which have prevented the full flowering of the immense potential of the Iranian people and the efficient utilisation of the country's immense hydrocarbon wealth.

As we inch closer to a post-sanctions Iran, we shouldn't be surprised to hear more leading global financial institutions describing the country as one of the most promising economies of the 21st century - and perhaps the next China.

Richard Javad Heydarian is a specialist in Asian geopolitical/economic affairs and author of "How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings".

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The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

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