Iranian Supreme Leader Ali Khamenei (left) and President Hassan Rouhani. (Wikipedia)

January 7, 2017

Iranian President Hassan Rouhani addressed the nation in a live television speech last week, saying that without the nuclear deal with the West the “government might only be able to pay public-sector salaries and nothing else.”

Rouhani’s words came in the run up to the anniversary of the implementation of the Iran nuclear deal on 27 January, with sanctions not only having been lifted on the Iranian economy, notably the oil industry, but also foreign investors slowly showing an interest in investing in different sectors in Iran.

“We’re seeing the effects of the agreement on oil and non-oil exports. If there had been no agreement, our income would have reached less than half what it is now,” Rouhani said on 1 January on an Iranian news programme.

This honest confession by the president shows that Iran needs to stick to the nuclear deal despite the complaints of hardliners and unhappiness at the continuation of the agreement.

However, Rouhani did not mention the cost of Iran’s involvement in the Syrian crisis and other regional conflicts in the interview. Many observers in Iran are privately saying that the economy would look far better today if money had not been spent on regional conflicts.

The Iran nuclear deal brings more transparency to some businesses like oil and banking, which means that some individual and associations are seeing their benefits cut from what they were under the sanctions when they benefitted from illegal business.

Those who perhaps benefitted the most were the Iranian Revolutionary Guards (IRGC), which was engaged in selling oil and importing goods during the sanctions regime. Today, the IRGC may be suffering as a result of the end of the sanctions.

Iran’s involvement in conflicts in the region from Iraq to Syria and Yemen has also cost the regime in Tehran a lot, and the present truce in Syria may last long enough to introduce meaningful national dialogue, reconstruction and stabilisation in Syria, all of which are likely to cost money.

Growing criticism within the Iranian government of the economic costs of continuing to support Iran’s “friends” in the region is part of these heavy bills, met from ordinary Iranians’ pockets.

The IRGC probably hopes to profit from the war in Syria by taking a leading role in the country’s reconstruction, much as it did in southern Lebanon after the war with Israel in 2006.

In other words, corrupt individuals within the IRGC will try to line their pockets when the regional wars are finished, while ordinary Iranians are mourning the losses of their sons on the battlefield and are having difficulty making ends meet at home.

Stories about homelessness in Tehran and Iranian drug-addicts rough-sleeping in graves on the outskirts of Tehran have shocked the nation and perhaps the world. It is a great source of shame to a people having such national pride and dignity that their situation speaks of undeniable poverty and the lack of social welfare.

A country with a massive wealth of natural resources is struggling to create jobs and give its people their share of its oil wealth and is even struggling to meet basic needs.

Systematic corruption and the lack of transparency are among the reasons for this injustice, plus the regime’s agenda for spreading its influence in the region which needs money and an iron fist to make the nation approve of it.

Yet, last year was a game-changer for Iran, and if on the one side the IRGC was making trouble, another side was making progress. With the implementation of the nuclear deal Iran received significant economic relief and witnessed a return to pre-sanctions levels of oil production and exports.

Iran has also demonstrated that it has the diplomatic capacity to engage in international negotiations on the world stage, particularly on Syria. Yet, despite these positive signs, it will face significant challenges in the coming year, and it looks as if Rouhani wishes to focus on political solutions to regional conflicts rather than fully involve the country in Syria’s reconstruction.

Despite all the money Iran has spent in Lebanon, Iranians are not popular in the country unless visitors travel deep inside the south, which is Hizbullah territory. Many Lebanese accuse the Iranians of interfering in Lebanese domestic affairs and causing ethnic and religious clashes.

The same situation may evolve in Iraq and Syria if Iran cannot find a way to manage sectarian tensions. In Iraq, many Sunni and Shia Iraqis may view Iran’s continued interference in Iraqi affairs as illegitimate once the immediate threat from the Islamic State (IS) group has receded.

Meanwhile, in mid-January Iran, Russia and Turkey are supposed to attend talks on the crisis in Syria with the Syrian opposition hosted by Kazakhstan

The solution to such challenges is for Iran to accept a political solution to regional conflicts that is non-sectarian and benefits all the parties involved. There is also now an opportunity for Rouhani and his team to become more politically engaged in post-conflict Syria, rather than let the IRGC have the upper hand.

It will be a challenging time for Rouhani over the next few months before he enters the next presidential race in Iran, with the key to his eventual success being popular approval of his domestic and international performance.


About Track Persia

Track PersiaTrack Persia is a Platform run by dedicated analysts who spend much of their time researching the Middle East, in due process we fall upon many indications of growing expansionary ambitions on the part of Iran in the MENA region and the wider Islamic world. These ambitions commonly increase tensions and undermine stability.