Rowhani and Sanctions

rowhaniHow long after the inauguration of the new president before disillusionment sets in? Yassamine Mather discusses the limitations of Hassan Rowhani

Iran’s new president, Hassan Rowhani, will take office on August 3. He faces major internal as well as international problems. It will be interesting to see how a man who describes himself as a ‘centrist’ will try to reconcile the warring factions of the Islamic Republic, but also the increasing divide between ordinary Iranians – victims of sanctions, poor economic management, as well political repression – with an increasingly paranoid religious dictatorship.

However, the new president’s biggest and most immediate problem will be the nuclear issue. He was, after all, elected on the basis of promises to ‘resolve’ it and thus remove sanctions. In the month and a half since his election he has already faced some serious setbacks, particularly over sanctions.

Iran is now facing more sanctions than the day he was elected – including the academic boycott of research by Iranian scientists and engineers. They have only just begun to take effect, even though they were passed by the US Congress and approved by the Senate in early 2013.

In what is an unprecedented move against Iranian academics, major publishers are instructing journal editors that, in accordance with US department of the treasury regulations, they should not be involved in the management and processing of any manuscript through peer review with any author or co-author who is acting directly (as an employee) or indirectly on behalf of the government of Iran – which includes “any political subdivision, agency or instrumentality thereof, [including] the Central Bank of the Islamic Republic of Iran”.

There are also additional new sanctions. Only a few days before the presidential inauguration in Tehran, the Republican-led Congress will vote on yet another set of sanctions, this time reducing Iran’s oil exports by a further one million barrels per day by the summer of 2014. The aim is clear: to stop Iran’s oil exports altogether. However, coming less than a week after the treasury department relaxed controls on the export of certain drugs and medical devices, such as dialysis machines and electrocardiographs, to Iran without special permission, it shows that, when it comes to negotiations between the two countries, Washington is as divided as Tehran.

Since the election of a ‘moderate’ president, sections of the US administration have been advocating conciliation (“The house must not snuff out hopes for Iranian moderation before Rowhani even gets a chance”), while the pro-Israeli lobby is more in tune with Binyamin Netanyahu’s latest comments on this subject. Speaking to CBS in mid-July, the Israeli premier called Rowhani a “wolf in sheep’s clothing”: Iran is “getting closer and closer to the bomb” and Tehran “must be told in no uncertain terms that that will not be allowed to happen”.1

On July 1, the Obama administration authorised sanctions targeting the already troubled Iranian currency, imposing penalties on financial institutions involved in rial transactions outside Iran. This measure was included in the ninth set of sanctions imposed during Obama’s presidency. According to Robert McNally, former White House energy advisor, Washington is following a twin-track strategy: “For diplomacy to have any chance of succeeding, it must be coupled with the threat of increased sanctions.”2

In Europe, Iranian banks and financial institutions are challenging their inclusion in the sanctions list and winning some court cases – ironically because EU governments are refusing to disclose legally acceptable evidence that the targeted banks or institutions are linked to Iran’s nuclear programme. These governments claim that if they were to provide such proof in a court of law this might reveal ‘intelligence’ sources.

The supreme leader, ayatollah Ali Khamenei, has made it abundantly clear he sees no hope of any deal with the US: “I said at the beginning of the [Iranian] year that I am not optimistic about negotiations with the US, though in past years I have not forbidden negotiations over certain issues like Iraq … the Americans are not trustworthy.”3

Khamenei might have a point here, given what I described above. And, of course, at a time of economic crises, the US might have strong political and economic reasons for wanting the state of conflict with Iran to continue.
Internal challenges

The Iranian press and media is full of speculation about Rowhani’s cabinet to be unveiled on August 4. However, none of the current nominees are much of a surprise – all are supporters of the centrist/reformist coalition that saw him elected.

The new president’s much talked about ‘economy team’, mainly drawn from politicians of the Rafsanjani era, represents a continuation of the theme he expounded during the elections: changes in foreign policy will bring stability and therefore economic prosperity! To be fair, Rowhani’s election has had some positive affect on the Iranian economy – but mainly for capital rather than labour. Rent and house prices have gone up! The Tehran stock exchange has been rising daily and hit a record high of 54042 on July 26 – up by 1554 points from Thursday, with shares in major industries increasing in value.

Shares have risen by 30% since the beginning of the current Iranian year in March. The rial’s rate of exchange has improved against the dollar for two reasons: the currency appreciated by 8.5% following the presidential elections and the central bank has officially adopted a single-rate policy. Until early July the government applied two separate exchange rates: one for importers of essential goods, such as medicine (this also applied to senior ayatollahs, government officials and their cronies), while importers of less essential products and ordinary Iranians purchased the dollar at much higher rates on the unregulated market.

So, while Iranian capitalism is doing well, for the majority of Iranians sanctions mean continued hardship, with prices spiralling out of control. In the last three weeks importers have refused to unload ships carrying staple food and basic goods. They claim these goods were purchased at the higher rate compared to the dollar and that this should be taken into account. But the central bank is adamant that the new rate applies.

In the meantime, food prices are out of control – according to the government’s own figures, Iran’s inflation rate surged to 45% in June. According to the semi-official students news agency, ISNA, food prices have gone up sevenfold in the last 10 years – overall inflation has more than doubled in the same period. The Mehr news agency confirms this. At the same time, wages are going down – and this is for the lucky minority who have kept their jobs. On average workers’ real income has been halved in the past year: a combination of low wages and soaring inflation.
Rowhani ministers

In addition to his own limitations as a centrist Islamist, in proposing his new cabinet Rowhani faces two major hurdles:

1. Appointments to some ‘sensitive’ ministries, including foreign affairs, intelligence and internal affairs, need the approval of the supreme leader and his office.

2. He needs to get his nominations approved by a hostile majles (Islamic parliament) dominated by conservatives.

So far two major posts seem to have been decided. Ahmad Jannati, the son of the notorious hard-line ayatollah of the same name, is very likely to become minister for culture and Islamic guidance. This is an important post, as it deals with issues such as freedom of speech, arts, culture, publishing and also the women wearing the hijab. Jannati senior has presided over the operation of sharia law in Iran. However, as Jannati junior keeps telling everyone, political thought is not “genetically inherited” and indeed he is a close ally of former president Akbar Hashemi Rafsanjani, and will make an effort to moderate the harsh attitude of the Islamic authorities regarding art, culture and women’s attire. The ministry of religious guidance is responsible for policing the streets of Iran’s’ major cities, arresting any woman not adhering to its strict dress code. In recent weeks, buoyed by Rowhani’s election, many Iranian women have felt confident enough not to cover all their hair.

Another Rowhani possible nominee is Ali Younessi, who says he has been asked to take over the ministry of intelligence. He was the director of the ministry and a member of the Supreme National Security Council during the presidency of Mohammad Khatami (1997-2005), but before anyone starts celebrating let me remind them that Younessi was in charge when allegedly ‘rogue elements’ in his ministry embarked on what became known as the ‘serial political murders’ of leftwing intellectuals and nationalist politicians in the late 1990s.4


The day after Rowhani’s election and in the ensuing celebrations, the crowds in Tehran were calling for the release of all political prisoners and an end to the house arrest of ‘reformist’ leaders Mir-Hossein Moussavi and Mehdi Karroubi as signs of change. But Rowhani will find it almost impossible to deliver on either of these two accounts. The supreme leader has made it clear there will be no release of any political prisoners unless they apologise and ‘repent’!5

Amidst all this, what is getting little coverage is the plight of Iranian workers. Last week alone there were dozens of major workers’ protests. Workers from the Zagros Steel Factory in Kurdistan embarked on days of demonstrations, but when they were ignored by the company they moved their protests to Tehran and demonstrated outside the presidential offices. Zagros has recently closed down, claiming losses in the last two years. According to MP Kamal Alipour Khonakdari, the 82,000 workers are owed three months’ pay.6 The situation in the Iran Tractor Manufacturing Company is no better. Thousands of workers have not been paid for May and June and hundreds have gathered outside their factory in protest.

So, as the inauguration of Hassan Rowhani begins, we can expect the usual hype about the possibility of an improvement in the relations between Iran and the west and no doubt with the departure of Mahmoud Ahmadinejad the language will change when it comes to discussions about areas of mutual interest, such as Iraq and Afghanistan. (It is interesting that Khamenei openly admitted that these talks were occurring last week7). There might even be some relaxation vis-àvis the most severe forms of sanctions. However, conflict between Iran and the US has a history longer than the nuclear issue.

No US administration can forget the humiliation that accompanied the loss of the island of stability that was Iran under the shah and, although the 1979-81 holding of hostages at the US embassy in Tehran was not an anti-imperialist act, it left a bruising as far as successive US administrations are concerned. For its part the Iranian government cannot forget US and western support for Saddam Hussein during the Iran-Iraq war or the deliberate destruction of the Iranian economy’s infrastructure after decades of sanctions. So, as far as Iran-US relations are concerned, we are likely to see more of the same in the coming months.

Internally Rowhani is likely to cause even more disillusionment than his reformist/centrist predecessors. There might be a little more toleration of a ‘bad hijab’ during approved celebrations. But wait until there are radical protests and see how our ‘diplomatic cleric’ reacts then!

On the economy, Iran will remain proof of the absurdity of the claim that Islam provides social justice (adl eslami). The Rafsanjani presidency is remembered by Iranian capitalists as the start of the ‘good times’, including the accumulation of major wealth. But for the Iranian working class it was the beginning of deregulation, employment contracts, the loss of job security … and Rowhani’ s economy team were all part of the strategists of that era.

What will be different is that this time they will have to work under difficult global economic conditions – they might not be able to deliver even as far as capitalists are concerned.


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6. Some_82000_steel_workers_have_not_received_ pay_for_3_months_Iranian_MP/319029.html.

7. st/2013/07/201372122714912527.html.

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