The bloom is off the rose: Iran’s first 100 days of Rouhani

The hope of a nation is dampened by harsh economic reality and Rouhani’s inability to provide any relief.

Seeking to deflect attention from the economy, Rouhani is focusing on a deal abroad [Al Jazeera]

Hassan Rouhani’s surprise victory in the June 14 elections, unleashed a wave of expectation and hope. Widely considered a political outlier whose chief function was to lend credibility to an electoral process that was struggling to recover from the calamity of 2009, Rouhani’s deft handling of the Iranian media, his fluency in the debates and above all, his ability to tap into the simmering discontent of the wider electorate all ensured that he became the man to beat when Iranians went to the ballot box.

Drawing powerful and arguably game-changing support from two of the three grand old men of Iranian politics – Ali Akbar Hashemi Rafsanjani and Mohammad Khatami – Rouhani was able to galvanise and unite a broad coalition of centrists and reformists behind a policy platform of prudence and change.

The Supreme Leader, Ayatollah Ali Khamenei, faced with the prospect of an elite revolt born of deep anxiety about former President Mahmoud Ahmadinejad’s political and economic legacy, was encouraged to let the process follow through with minimal interference, though even he appears to have been surprised at the strength of the public’s feeling. Rouhani thus won the election on the back of widespread discontent, not only in the country at large, but among a broad alliance of the disaffected elite, many of whom had no interest in any significant political change. Rouhani may have campaigned as a reformist but he finds that he is increasingly having to govern as a conservative. This is proving to be a particularly difficult political balancing act, and unsurprisingly, in some quarters, the lustre is beginning to wear off.

The problem Rouhani may have however, is that there are significant sections of the conservative and hard-line elite that see sanctions relief as the end, and not the means to a wider reform of the economy – still less of politics – and that many Iranians have not yet fully appreciated quite what a tangled web the current sanctions regime represents.

To better understand the problems that Rouhani faces, one can distinguish three areas in which he has to operate: the economy; domestic reforms; and building bridges internationally. In all three areas, his inheritance is a poor one.

Economic woes

Almost all parties accept that the economy is in increasingly dire straits, and as new ministers and officials begin to pour through the books – if they exist at all – the real depth of the economic crisis is only now becoming apparent. Even accounting for a degree of exaggeration, as all succeeding governments have a tendency to do, it is quite clear that economic mismanagement fuelled by dramatic increases in oil revenue over the past eight years, and compounded by the most severe sanctions that Iran has experienced in recent times, have significantly damaged the economy. There is, to be sure, no shortage of liquidity in the Iranian economy, but much of the money has been spent on patronage and corruption, with a lamentable lack of infrastructural investment. The government finds itself short of cash, with many essential goods reportedly in short supply. According to some ministers, it may be several years before they are able to turn things around. Indeed, some have gone so far as to argue that the situation in some sectors, including the oil industry is much worse than in the immediate aftermath of the Iran-Iraq war.

However, if all agree on the ailment, there is considerable disagreement as to the cure. For many who had voted for Rouhani, the cure must be found within, both in terms of economic and political reform. The economy has failed because Ahmadinejad reinforced the tendency towards unaccountability, and there was a lack of transparency in the administration of government. A key element of this was the abolition of the Plan and Budget Organisation in 2007 – after more than half-a-century of existence – which Rouhani to his credit, said he would re-establish. This reflects his determination to repopulate the government with professionals and to draw again on the technical expertise that Ahmadinejad tended to dismiss. This can also be seen in the tenor of his administration and the decision to reappoint experienced economists and technocrats to key ministries in order to properly scrutinise Ahmadinejad’s legacy, and to begin to plan for a recovery. 

But beyond this economic focus, the trend has been for him to be highly cautious, leaving many supporters frustrated with the apparent lack of any immediate desire for political reform. There can be little doubt that there are limits to what Rouhani could have achieved in his first 100 days, but his promises had created dramatic expectations, and his swift attempts to dampen these down in the immediate aftermath of the election have not gone down well.

Despite encouraging signs with respect to the release of political prisoners, this process has now stalled, while newspapers continue to be closed with little tangible protest from the new government. Arguing with some justification that his priority must be the economy, Rouhani has deployed most of his attention, not on the structural weaknesses at home – which inevitably will take some time to see results – but on the possibilities of a quick fix abroad.

Given the nature of Iran’s economy, one can see why the new government has decided to seek some sort of solution abroad. Both Rafsanjani, and more obviously, Khatami became unravelled seeking to address the structural problems in the economy, and while these remain at the heart of Iran’s problems, they are more profound now in the aftermath of eight years of mismanagement. Sanctions relief therefore offers one route out that may provide a much needed boost to the economy, sustain the sense of hope generated from the election, defer the need for more difficult decisions, but also create the space needed for the decisions to be made in due course.

The problem Rouhani may have however, is that there are significant sections of the conservative and hard-line elite that see sanctions relief as the end, and not the means to a wider reform of the economy still less of politics and that many Iranians have not yet fully appreciated quite what a tangled web the current sanctions regime represents. Those ministers who have noted that sanctions relief may take some time, have largely been marginalised from the front stage of political discourse; such language does not play well to a public in urgent need of good news.

Indeed, the present strategy appears to be to maintain a conservative approach at home and reformist one abroad.

Look to the West

On the international front, of course, Rouhani has been remarkably successful, perhaps even too successful for his own good. The charm offensive that began with his campaign and culminated with his celebrity-style visit to the United Nations, is ample testament to the Iranian mastery of public relations and an impressive ability to reframe the argument, when they decide to put their minds to it. The appointment of Javad Zarif as Foreign Minister was a stroke of genius in this particular respect. Fluent in both the language and culture of the United States, Zarif prudently arrived early to prepare the stage for the president’s arrival. The resulting performance – a tour de force and a much needed antidote to the Ahmadinejad years – did not disappoint and the receptiveness of his American hosts ensured that even the awkward moments were largely skated over. It ended with the now famous phone conversation between Rouhani and US President Barack Obama as the former headed to the airport.

This crowning moment inadvertently exposed some of the very real problems that need to be overcome with respect to the complex vested interests that feed into policy on either side. Both sides are acutely aware of being charmed into giving away too much. Curiously, with the dominance of the Supreme Leader as the final arbiter and decision-maker in the Islamic Republic, one might think, given his general approval of the process now taking place, that Rouhani’s position would be stronger than that of Obama, faced as he is with a Congress that can effectively (and constitutionally) constrain him. But, quite apart from the difficulty of reading Khamenei’s intentions and the position of his red lines (Khamenei has maintained a suitably supportive if skeptical posture to date), he, too, has pressures on his position coming from elite factions whose dislike of Ahmadinejad and the US is barely distinguishable, and are determined to hold Khamenei to his stated world view and the status quo in which they have built up a lucrative vested interest. Khamenei, in short, faces a few paradoxes of his own.

For Rouhani, keeping these particularly hard-line factions content, in light of the promises made during the election, is proving to be especially problematic. Indeed, the present strategy appears to be to maintain a conservative approach at home and reformist one abroad. This might not have been such a problem had extensive promises not been made during the election, with a view to getting the vote out. The calculation, however, seems to have been made that it is easier to disappoint the reformists than to confront the conservatives, and the latter have certainly been keen to show that they remain a very real force to reckon with. The paradox is that Rouhani needs a united front at home to strengthen his hand in negotiations abroad, but he needs a relatively generous agreement abroad to take the country with him. But, in order to get the sort of sanctions relief that will make a difference, he will need to concede more than many, including Khamenei, will be willing to consider.

Not for the first time, an Iranian politician is looking overseas to reinforce his position at home, yet this very concentration abroad is causing consternation among contradictory political tendencies at home. It will take considerable courage and all the skills of the “diplomatic sheikh” to navigate this complex web of vested interests.

Ali M Ansari is Professor of Iranian History and Director of the Institute for Iranian Studies at the University of St Andrews; Senior Associate Fellow, Royal United Services Institute; Vice President of the British Institute for Persian Studies. He is also Editor of the Cambridge History of Iran Vol 8 (The Islamic Republic).