Foreign Affairs: Last tango in Tehran

The Islamic Republic’s political mess begins with the election itself. Technically, it will let the people crown one of eight candidates. Effectively, however, the next president has already been chosen.

Iran military parade 370 (photo credit: REUTERS)
Iran military parade 370
(photo credit: REUTERS)
Mahmoud Ahmadinejad is about to clear the stage, but if it’s up to the clerics who run Iran, the political adventurism and economic tailspin that are his legacy will survive the outspoken president’s departure.
The Islamic Republic’s political mess begins with the election itself, which is a sham even by Iranian standards. Technically, it will let the people crown one of eight candidates. Effectively, however, the next president has already been chosen, when the ayatollahs, led by Supreme Leader Ali Khamenei, banned hundreds of candidates and left on the ballots only a handful of colorless yes-men with whom Khamenei feels personally comfortable.
Once held by Khamenei himself, the presidency reflected for decades the Islamic Republic’s avoidance of wholesale despotism. While far from being either a product or a vehicle of democracy, Iranian presidents had to defeat in the ballots rival schools of thought, and then also routinely face parliamentary dynamics that sometimes included real debates over real issues under semi-free media scrutiny. The fact that Iranian presidents faced term limits – two four-year incumbencies – also made theirs a more sophisticated and flexible form of government that their Arab neighbors.
Over the past four years all this has changed thoroughly, as the regime lost its cool in the face of the mass demonstrations in Tehran and other cities in 2009. Having been clubbed off the streets by police, millions emerged convinced that their election had been stolen by Khamenei and Ahmadinejad, and that the real winner was former prime minister Mir Hossein Mousavi. Mousavi was critical of Khamenei personally, and also of various policies, including Ahmadinejad’s Holocaust denial.
Since then, the dynamics of political denial and oppression have only intensified. In fall ’09, Mousavi’s nephew was assassinated during an anti-Ahmadinejad rally. In February 2011, after the downfall of Egyptian leader Hosni Mubarak, Mousavi and fellow opposition leader Mehdi Karoubi – who also ran in the ’09 election – were both placed under house arrest, after calling on the Iranian public to follow the example of the Egyptians. Mousavi’s wife and daughters are now also under house arrest.
THE ARAB upheavals have caught the mullahs unprepared and left them panicking.
The most immediate sign of that came in tandem with the arrests of Mousavi and Karoubi, when dozens of lawmakers “spontaneously” marched through the Majlis’s floor while shouting “Death to Mousavi, death to Kharoubi.” Having taken place immediately after Mubarak’s downfall, this was the regime’s warning to the people that there would be no Tahrir Square revolution in Tehran.
While this happened at home, a titanic effort was launched abroad to prevent Syrian President Bashar Assad’s downfall, highlighted by the deployment of Iranian advisers and officers – some of whom the rebels later captured and displayed.
The democratic toppling of Arab autocrats threatened the mullahs, not because Mubarak et al. were their friends – if anything, Mubarak was a sworn enemy and relations with Egyptian President Mohamed Morsi, an Islamist, have been cordial. The problem is that in the aftermath of the Arab upheaval, the Iranians, once freer than all Arabs, are suddenly the Middle East’s most oppressed nation. Add to these the fact that the region’s new ruling elites are largely Sunni, and you get a Middle East that, from the Shi’ite regime’s viewpoint, is going in the wrong direction – both politically and religiously.
That is why Iran’s strategic commando, Hezbollah, was thrown into the Syrian fray, despite mounting casualties. Considering Assad’s latest military gain and the eruption of riots in Turkey, one might think that the strategic tide is turning in Tehran’s direction.
It isn’t.
Assad’s gain this week was the conquest of the town of Qusair, whose significance lies in its location on the road from Damascus to the seaport of Tartous, and in its overlooking northeastern Lebanon, where Hezbollah’s arms and troops have been pouring into Syria. The Iranian hope is that this local victory will constitute a turning point for Assad. Their joint struggle now proceeds to Aleppo, where Hezbollah fighters and Iranian advisers reportedly currently outnumber Syrian troops, as they brace to restore Assad’s grip on Syria’s commercial capital. Then, with Damascus, Tartous and Aleppo in hand, Tehran can return to cultivate a Shi’ite belt from Iran through Iraq and Syria to Lebanon.
The rioting this week in Turkey also seemingly helped this quest, as Prime Minister Recep Tayyip Erdogan has been Assad’s harshest critic in the region. Turkish police clashes throughout the week with demonstrators in dozens of towns may make it more difficult for Erdogan to confront Syria in the near future.
Add to these the effective backing Iran’s regional meddling is getting from Russia and China, and you might conclude that Middle Eastern dynamics are once again going Tehran’s way.
Well, they aren’t, and the first reason for this is that even if Assad fully quells the rebellion, Iran has exposed the limits of its regional sway.
Iran’s conduct during the Syrian war has positioned it as the enemy of the Arab world’s Sunni majority. The Syrian revolt’s 80,000 Arab fatalities are more than any modern Arab population has suffered in a war involving non-Arabs since the Iran- Iraq War.
Moreover, Iran’s meddling in Syria has provoked Turkey in a way Tehran can neither undo nor afford. Ankara will not allow Assad’s full recovery. Even if he survives in Damascus, and no matter who is in power in Ankara, Turkey will find a way to embolden Syria’s Sunnis, because unlike Iran, Turkey borders Syria, shares its majority’s religion, and has been its dominant trade partner for centuries. An Iranianruled Syria is, from Turkey’s viewpoint, geopolitical robbery.
This is, of course, all beside the fact that the fighting in Syria is far from over.
Experts expect violence to continue raging there for a long time, and as long as Iranian foreign policy remains under its current management, this means continuous Iranian hemorrhaging – physically, diplomatically, politically and financially.
The scorched earth Ahmadinejad is bequeathing on the diplomatic arena is well-known.
The cultivation of a nuclear program that has provoked the West, and the terror it has sponsored from Bulgaria and Argentina to Thailand and India, have isolated Iran internationally regardless of its regional cornering in the wake of the Arab upheaval. Yet all this is dwarfed by the economic mess Iran’s new president will face.
THE SYMPTOMS of Iran’s economic disease are appalling.
The rial’s exchange rate, about 9,000 to the dollar when Ahmadinejad took office, is now effectively 40,000 to the dollar.
More than a quarter of the workforce is believed to be jobless, as are at least a third of young university graduates. Thousands of factories shut down due to soaring raw material prices, and the International Monetary Fund says the economy will shrink by nearly 1.5 percent in fiscal year 2013.
When combined, these numbers mean stagflation.
Meanwhile, an ossified banking system, further burdened by clerical supervision, leaves the affluent with few investment options, which in turn makes them channel their excess capital to real estate, thus making housing prices soar even faster than inflation. The average Iranian, in short, is finding it increasingly difficult to find a job, pay rent and eat meat.
The Iranian economy’s woes did not originate in recent years’ sanctions. Rather, they began with the late Ayatollah Khomeini, who saw the poorer masses as the revolution’s backbone, and the middle class as potentially unruly and also heretical and subversive. Consequently, the Islamists created an elaborate subsidies regime whereby they effectively handed out cash to the masses, through artificially lowered prices for dozens of goods, from gasoline and public transportation to tractors, meat, flour and eggs.
Lurking behind this was the assumption that oil revenues were a given, and all the government needed to do was keep collecting and distributing them. That is how the Islamists ended up neglecting Iran’s industry, which under the shah grew annually, sometimes by double-digit figures.
Meanwhile, the population more than doubled, from 35 million during Khomeini’s rise to power in 1979 to some 75 million today. Someone needs to feed, employ and house this population, and the Islamists’ failure at doing this is increasingly glaring.
As had happened in Israel in the 1980s, subsidization ultimately became unaffordable, and Ahmadinejad indeed slashed large parts of it – but he did so without the complementary measures Israel took in its time. In Iran’s case, the measures should have included empowering the central bank to run monetary policy independently, and thus end the government’s funding its deficits by printing money; freeing up financial markets; modernizing the energy industry; selling state assets; decimating the public sector; and dismantling the Revolutionary Guards’s elaborate economic activities.
For Supreme Leader Khamenei, such policy changes are as welcome as sex-change surgery. They won’t happen during his shift, a decision he has made plain by offering the Iranian people the set of candidates among whom they are now asked to pick their next president.
Pundits expect the winner to be either Tehran Mayor Muhammad Kalibaf or chief nuclear negotiator Saeed Jalili. Others caution that Ahmadinejad’s election in ’05 was unexpected, as was Muhammad Khatami’s in ’97, which means that the winner may actually be someone else.
Even so, all candidates have spoken and none has presented any economic vision, expertise or passion.
In fact, they did not even mention the sanctions regime, whose economic damage is harsh because it makes the economy’s surplus cash chase after even fewer goods, and all this while the government’s foreign currency reserves plunge due to dramatically reduced oil sales.
In short, the clerics are leading Iran to catastrophe, and the identity of the president who will be sitting on their laps when judgment day arrives is irrelevant. What matters is not who he will be, but who he will not be: Iran’s next president will not be like the former Soviet Union’s Mikhail Gorbachev who would undo its reckless foreign policy, and he will not be like China’s Deng Xiaoping who would unshackle its economy.
That person’s arrival will have to wait for other things to happen first – whether within Iran, outside it, or both.