Rohani and the crisis of rising expectations

Friday 07/08/2015

Iranian President Hassan Rohani’s successful nuclear diplomacy has created a crisis of rising expectations among Iranians, which he cannot possibly satisfy prior to the February 2016 parlia­mentary elections. There is a growing belief this will turn his diplomatic victory with the July 14th Vienna agreement into a resounding electoral defeat.

Rohani’s campaign promise to the voters was very simple: He would solve the crisis over Iran’s nuclear programme through negotiations with world powers and achieve sanctions relief. The flood of funds this would produce, coupled with a competent economic management — an implicit reference to incompetent economic management under President Mahmoud Ahmadinejad — would improve the living standards of Iranians.

The Iranian public chose to believe Rohani’s explanation that the sanctions regime and Ahmadinejad-era economic mismanagement were the cause of their poverty. They also chose to believe in Rohani’s ability to solve the nuclear crisis through diplomacy, achieve sanctions relief and ease the economic hardships of Iranian families through competent management.

With both villains — the international sanctions regime and Ahmadinejad — gone, the Iranian public understandably expects improvement in their living standards. After all, watching one European trade delegation after the other arriving in Tehran, the Iranian public is right in demanding its share of the peace dividend — a dividend Team Rohani has yet to deliver. Rohani has indeed managed to turn negative into positive economic growth and control galloping inflation to less than 20%, thus stabilising the rial against the US dollar.

But the Tehran Stock Exchange remains cautious in its reactions to the nuclear deal. Unemployment remains high, in particular among the young, and the purchasing housing remains well beyond the means of the middle class, in particular public-sector employees. Major government-led infrastructure development projects and grand-scale construction have nearly ground to a halt.

Rohani’s allies and core supporters are going to great lengths in defence of his economic policies. Fatemeh Hashemi Rafsanjani, daughter of the former president, expressed hope that the Iranian public “understands that Iran’s economy can’t improve overnight” and will “patiently wait for the government’s economic initiatives to improve the plight of Iranian families”. Abdollah Ramezanzadeh, government spokesman under reformist president Mohammad Khatami, blames the current problems on the disastrous economic policies of the Ahmadinejad era during which $800 billion of Iran’s wealth was allegedly squandered. Ramezanzadeh also says the people “understand the government’s problems”.

On the other end of the political spectrum, Rohani’s critics are, as expected, fanning the flames of discontent over Team Rohani’s economic performance. Having lost the nationalist discourse over Iran’s nuclear programme to Rohani, they are seeking to regain the political upper hand by shifting their attention to the gap between his pre-election promises and the grim economic realities of today’s Iran.

Lawmaker Mohammad-Ebrahim Mohebi has attacked Rohani’s election slogan “I lived up to my election promise” by charging: “The president says we reached an agreement, but the agreement was meant to stimulate the economy… Unemployment has deteriorated and basic foodstuff has become more expensive under this government.”

Meantime, Hassan Abbasi, a theoretician of the Islamic Revolutionary Guards Corps (IRGC), seeks to whip up anti- Rohani anger among young members of the Guards and the Basij militia it controls by claiming that Iran will receive only $4.5 billion in sanctions relief rather than the probably inflated figure of $100 billion-$150 billion that’s being bandied about. The message is: the Rohani government is betraying the principles of “Quranic economy” and is thus ideologically unsound.

Professor Sadegh Zibakalam of Tehran University, who is a defender of the Rohani administration, correctly blames the president for raising public expectations and ignoring the “fundamental maladies of Iran’s economy”, such as “inefficacy” and the “corrupt nature” of a Soviet-style state-controlled economy” — none of which are likely to be solved in the short or even medium term. What Zibakalam does not openly mention is the central role of the rich and powerful revolutionary foundations (bonyad-haye enqelab) and the IRGC’s dominant position in the Iranian economy. These not only absorb the foreign currency flowing into Iran but also go to great lengths to protect their lucrative economic interests and monopolies.

This scenario does not bode well for Rohani or his supporters. Incapable of translating the nuclear agreement into economic growth and the realisation of Rohani’s pre-election promises, they risk turning the historic diplomatic coup in Vienna into a dismal defeat at the polls in February 2016.