Iran’s golden summer

At the moment Iran is riding high internationally. The picture at home, however, is not so rosy.

Hassan Rouhani (photo credit: REUTERS)
Hassan Rouhani
(photo credit: REUTERS)
Summer 2014 has apparently been a phenomenal time for Iran and its leadership. Over the past few months Lady Luck seems to have been rolling both the political and the financial dice Iran’s way. But everything in the garden is not quite as rosy as it appears.
The good times started in June 2013, with the election of the self-styled “moderate”, Sayyed Hassan Rouhani as president – a candidate blessed, it goes without saying, by Iran’s Supreme Leader Ayatollah Ali Khamenei. Also blessed, no doubt, was the deliberate change of tactics from the defiant and confrontational stance adopted by ex-President Mahmoud Ahmadinejad, during previous attempts by the UN to induce Iran to control its nuclear program. Now all was to be charm and sweet reason – and immediately after his election, Rouhani made haste to agree to start substantive talks with world leaders about Iran’s nuclear intentions.
World leaders swallowed the bait. A new Iranian team, led by the president, met the P5+1 (the five permanent members of the UN Security Council – US, UK, Russia, China, France – plus Germany) in October 2013.  What followed provided Iran with precisely what it wanted – additional time for its centrifuges to continue spinning. The two teams indeed reached an interim agreement, but it actually permitted Iran to continue enriching uranium. Meanwhile, the negotiators agreed to meet again in January 2014. Four additional months. In January the teams decided that they would reach an agreement by July. Six more months. There was, it goes without saying, no agreement by July, so the P5+1 agreed to extend the deadline until November.  A further four months. And all the time Iran is moving inexorably closer to nuclear military capability. Certain that the Obama administration has discounted any sort of military confrontation aimed at preventing Iran achieving its goal, Iran’s leadership believes that finally the P5+1 will accept a deal allowing it to produce nuclear weapons at the drop of a hat. Every delay, every extra day without a deal, has brought Iran nearer to its desired objective. Veteran US Middle East observer Eric Mandel believes that while the West has been lauding Iran for converting much of its 20% enriched uranium, Iran’s state-of-the-art centrifuges make possession of 20% uranium irrelevant. With its advanced centrifuges, Iran can apparently convert 3% non-enriched uranium to 90% nuclear grade uranium in six to eight weeks. Right now, Mandel asserts, Iran has enough 3% uranium to produce between six to eight nuclear bombs.
In return for simply talking, Iran has been rewarded with the progressive lifting of financial sanctions. As part of the November 2013 interim deal, $4.2 billion in oil revenues were allowed to be transferred to Iran. After the July 2014 meeting, with still no agreement on the table, Iran walked away with guarantees of a total of a further $2.8 billion to be paid in six parts – four $500-million and two $400-million installments, in three-week intervals.
Few Iranian spokesmen these days are bothering to conceal the fact that the state’s long-term objective is to become the dominant power in the Middle East, and that, in pursuit of that aim, they are determined to achieve military nuclear capability. Arab states across the Middle East have come to regard Iran, and its obvious nuclear ambitions, as the major threat to their régimes. 
The political and religious elements of Iran’s intentions are inextricably interwoven.  One aspect of the dominance that Iran seeks is the ascendancy of the Shia strand of Islam over the Sunni, for Iran is the pre-eminent power in what has been termed the “” 
In striving for this dominance, Iran has in the past set itself foursquare against Saudi Arabia, the custodian of Sunni Islam, with Mecca and Medina located within its borders. Saudi Arabia, and other Sunni Gulf régimes under its influence, have been the object of Iranian-inspired plots aimed at destabilizing their governments. But a new player has emerged on the scene, claiming the leadership of all Muslims the world over – the extremist Sunni organization calling itself the Islamic State (ISIS). Its military successes, its rapid advance into northern Iraq and Syria, its ruthless persecution of all who fail to subscribe to its extreme brand of Islam, the recent beheading of an American journalist in front of the television camera, and the large numbers of adherents flocking to its black banner from all over the world – all this has shocked the West into realizing the nature and extent of the threat that the ISIS poses to accepted civilized and democratic standards.
With Iran apparently co-operating in the nuclear discussions, influential voices in the West have been urging their governments to forget the fact that Iran is the world’s number one sponsor of terrorism, ignore its past record (and that of its “moderate” president) in this respect, turn a blind eye to its nuclear ambitions, and enter into some sort of alliance with it, aimed at defeating the bloodthirsty ISIS armies. Little account is taken of the likely result of direct Iranian involvement against the ISIS – namely the triumph of President Bashar Assad’s despotic regime in Syria, and the defeat of the democratic forces ranged against him. Moreover the West, unlike most Middle East states, appears to discount the consequences of Iran gaining a nuclear arsenal – namely that their clients, like the terrorist organizations Hezbollah and Hamas, to say nothing of Assad’s forces in Syria, would also be probable beneficiaries.  In short, the likely result of clutching Iran to our bosom is that we will all get stung.
At the moment Iran is riding high internationally. The picture at home, however, is not so rosy. Perennially high inflation, persistent double-digit unemployment, low productivity, rampant corruption, a hostile business environment that actively discourages entrepreneurship, and weak financial institutions, complete a dire economic picture. 
These underlying weaknesses in Iran’s economy are masked to some degree by sizable oil revenues, but the underlying cause of much of Iran’s domestic problems is the harsh and prolonged stagflation caused by tightening international sanctions. Between 2012 and 2013, for instance, Iran faced 40 percent inflation and an almost 6 percent contraction in GDP. Today, inflation still hovers around 25 percent and GDP is set to contract by another 3 percent by the Persian new year (March 2015).  
This is why Rouhani’s best efforts are devoted to wooing Western opinion and winning further concessions while, of course, not abandoning for one instant Iran’s intention of becoming a nuclear power as soon as may be.  One can only hope that the P5+1 are alive to the realities of the situation, and in November, realizing the effect that sanctions have had on the Iranian economy, stand firm on their demands for genuinely effective control of Iran’s nuclear program before giving another inch.
The writer’s new book: The Search for Détente: Israel and Palestine 2012-2014 has just been published. He writes the blog “A Mid-East Journal” (