United States Institute of Peace

The Iran Primer

Rouhani: Mixed Bag One Year Later

Shaul Bakhash

One year after President Hassan Rouhani’s election, what are his administration’s main accomplishments?
      After the eight disastrous years of President Mahmoud Ahmadinejad’s administration, Rouhani’s signal achievement is simply to put government back into the hands of adults, of men and women of experience and common sense. Ahmadinejad managed to squander over $600 billion in oil revenues, to provide grounds for increasingly damaging sanctions against Iran, to exacerbate relations with almost all Persian Gulf countries and much of the international community, and to facilitate the penetration of the Revolutionary Guards into all major sectors of the Iranian economy achievement.
            Rouhani must deal with this crippling legacy. His government represents a return to sensible policies both at home and abroad. Already the effects are discernible. Serious negotiations over Iran’s nuclear program are under way. The Persian Gulf states are re-engaging with Iran as evidenced by the Emir of Kuwait’s recent trip to Iran and the invitation extended to foreign minister Javad Zarif to visit Saudi Arabia. The United States and the EU feel, at the very least, that they have an interlocutor in Tehran with whom they can have a serious dialogue.
            At home, unlike the Ahmadinejad administration, the Rouhani team understands that sanctions are doing serious damage to Iran’s economy. Iran’s banking system is threatened by non-performing loans and other weaknesses. The current level of government spending and budget deficits simply cannot be sustained. The role of the state and the Revolutionary Guards in the economy needs to be curbed. And restrictions on basic freedoms need to be eased.
            Rouhani and his team have not begun to address, let alone resolve, these festering problems. But after eight years of denial by both the former president and the current supreme leader, a government is in office that comprehends the depth of the problems the country faces.

During his campaign, Rouhani pledged to create a government of “prudence and hope.” What is his strategy?
      Rouhani’s top priority is to resolve the nuclear issue and get sanctions lifted. He and his foreign minister seem to believe that a breakthrough on the nuclear front and the end to sanctions will open the door to much else. With the nuclear issue and sanctions out of the way, Iran’s economy can begin to recover and produce much-needed jobs for university graduates and workers.
      Major foreign investors can be drawn into Iran’s oil and other industries. Iran can begin to reintegrate into the international community and secure a place at the table in the discussion with the US and others on major regional issues. A political opening at home will be more feasible under more prosperous economic conditions. Such, at least, seems to be the game plan.
On what issues has Rouhani  fallen short?
      The record of the Rouhani government in the first year is clearly a mixed bag. On the home front, there is an easing of social and press restrictions—everyone agrees the environment is decidedly freerbut arrests of bloggers, dissidents and critics continue. Publications are closed down. Sporadic crackdowns on women and the young occur. Some political prisoners have been released, including the human rights lawyer, Nasrin Sotoudeh, but many remain in prison—most notably the two Green Movement leaders, Mehdi Karroubi and Mir Hossein Mousavi.
            Rouhani clearly controls neither the security services nor the judiciary, which seem determined to flout his desire to open up the political system. For example, political prisoners at Evin Prison were attacked and beaten by guards in April, when they persisted in peaceful protests. Mostafa Tajzadeh, the outspoken member of the former Khatami government was nearing the end of this six-year prison term when the judiciary slapped on another one-year prison term for supposed anti-state activities.
            Rouhani’s appeal to Iranians to voluntarily give up the monthly government cash subsidy for all Iranians, which was instituted under Ahmadinejad, fell on death ears. Rouhani has talked about the need to reduce the Guards role in the economy, but he has done little on that score. 
What obstacles does Rouhani face on his domestic policy?
             An entrenched and narrow ruling elite, often described as hardliners or conservatives, control the principle instruments of power: the security agencies, the intelligence ministry, the military and the police, the judiciary, the Council of Guardians (which has the power to veto laws and candidates for elected office), and the Assembly of Experts, which will choose the next Supreme Leader. Connected to them is an economic elite, which has grown enormously wealthy on government contracts and quasi-monopolies of major import goods.
            These elites will resist any challenge to their hold on power and privilege. They also fear, perhaps with good reason, that any serious reform, whether political, economic or social, will open the floodgates and trigger a process of change that will end up threatening the whole system.
      The resistance has an ideological dimension as well. Like the Maoists in China or the Brezhnevites in the Soviet Union, Iran’s political and economic elites attack proposals for change as abandonment of revolutionary principles and disloyalty to revolutionary leader Ayatollah Khomeini. Such accusations are often self-serving—an easy way to besmirch the reputation of a rival—but they do reflect the rigidity and resistance to change that characterizes many in the conservative camp.
      In early June, Ayatollah Mohammad Taqi Mesbah-Yazdi, the powerful and arch-conservative religious leader, challenged Rouhani’s more liberal interpretation of Islam. He asked, mockingly, if the president had learned his Islam in England rather than at a seminary in Qum. He also seemed to sneer at Rouhani’s focus on getting sanctions lifted, “and not by resistance but through diplomacy, contrary to the line of the Imam [Khomeini].”
What obstacles does he face on foreign policy?
      The opposition Rouhani faces at home to his foreign policy agenda stem from similar sources. Supreme Leader Ayatollah Ali Khamenei wears his unyielding opposition to the United States and its hegemonic role in the world as a badge of honor. He said recently that this “war” between the Islamic Republic and “world arrogance” has no limit; it will be unending.  
      Critics on the right charge that Rouhani has already surrendered too much for too little in the nuclear negotiations. Hossein Shariatmadari, editor of the hard line Kayhan newspaper, wrote that the reported breakdown during the previous round of nuclear negotiations was a cause for celebration.
      On the nuclear issue, Khamenei has clearly allowed criticism to continue, but he has also not allowed such criticism to sabotage the negotiations. Iran will have to make extremely difficult concessions, but the need to get sanctions lifted could result in an agreement. Beyond the nuclear issue, however, Rouhani may have a hard time addressing other foreign policies that exacerbate Iran’s relations with the United States and European Union—even if he were so inclined.
            Some critical foreign policy issues also remain the domain of the Supreme Leader and his cohorts in the security agencies and the Revolutionary Guards. Iran’s support for Hamas and Lebanon’s Hizballah, both strong opponents of Israel, are unlikely to end. Tehran’s official position--that Israel is an illegitimate state that should not exist—is also unlikely to change.  Iran’s alliance with President Bashar Assad in Syria is also firm.
            As it strives for improved relations with the West, Rouhani’s team may hope that it can move on some issues but isolate others. It seeks common ground with the West and even its Persian Gulf neighbors in trade and investment, on resistance to violent Islamic Salafists, and security arrangements for the Persian Gulf even while agreeing to disagree on Israel, the Palestinians, Syria and other issues. Those all await the future. 
Shaul Bakhash is the Clarence Robinson Professor of History at George Mason University.

Photo credits: President.ir, Mir Hossein Mousavi Facebook page, Assembly of Experts website, Khamenei.ir

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Flurry of Diplomacy As Final Push Begins

            Diplomacy is accelerating in the run-up to the July 20 deadline for a nuclear deal. Delegations from most of the world’s six major powers are holding separate meetings with Iranian negotiators. Top U.S. officials led by Deputy Secretary of State William Burns held talks with the Iranians from June 9 to 10. Deputy Foreign Minister Abbas Araqchi welcomed Burn’s attendance in remarks to the press. Negotiations hard and intense, but held in a positive atmosphere,” Araqchi said after the two days of meetings. 
           Araqchi said Iranian officials will also meet with a French delegation in Geneva, the Russians in Rome, and the Germans in Tehran before the next round of multilateral talks on June 16. The Iranian ministry is working to arrange other bilateral meetings with the remaining members of the world’s six major powers.
            Even some Israelis are now conceding that an agreement is increasingly likely before the end of 2014. Iran is serious about negotiations with the world’s six major powers on its nuclear program, according to. “Iran is abiding by the interim agreement and the pressures, mainly the economic crisis, are leading it toward a dialogue, which we regard as serious-minded, on a permanent agreement,” Israeli military intelligence analyst, Brigadier-General Itai Brun he told the annual Herziliya Conference on policy on June 9. The following are excerpted remarks on the final push for a nuclear deal.


Israeli Brigadier-General Itai Brun
            “It is very possible that Iran and the world powers that are negotiating with it are moving toward the signing, sometime during the year, of a permanent nuclear deal.
            “In the meantime, Iran is abiding by the interim agreement and the pressures, mainly the economic crisis, are leading it toward a dialogue, which we regard as serious-minded, on a permanent agreement.”
            June 9, to the Herzliya Conference
Israeli Strategic and Intelligence Affairs Minister
            “A good agreement with Iran is an agreement in which Iran may get the ability to present a developed civilian nuclear programme like other countries have - Sweden or South Korea or Spain - but without the ability to enrich uranium and without the ability to yield plutonium.
           “We opposed the interim deal because we saw problems and holes in it. Nor do we like the idea of extending the talks by half a year or a number of months.
            “But if the alternative that will be raised in the coming weeks, beginning with this imminent week, will be to try to seal an agreement at any price ... it would be preferable - though we are not keen on this - to extend the talks by a number of weeks or months to close up all of the holes on a matter that is so critical to our well-being and that of the world.”
            June 9, to the Herlizya Conference
French Foreign Minister Laurent Fabius
           “We are still hitting a wall on one absolutely fundamental point which is the number of centrifuges which allow [uranium] enrichment. We say there can be a few hundred centrifuges, but the Iranians want thousands so we're not in the same framework.”
            June 10, to French Inter radio, according to Reuters
U.S. State Department Spokesperson Marie Harf
            “We think we've made progress during some rounds, but as we said coming out of the last one, we hadn't seen enough made. We hadn't seen enough realism, quite frankly, on the table.           
            “We are at a critical juncture in the talks. We know we don't have a lot of time left. That's why we've said diplomacy will intensify. People need to make tough choices.”
            June 10, to the press
Iranian Deputy Foreign Minister Abbas Araqchi
      The U.S.-Iran talks were “hard and intense, but held in a positive atmosphere.” It is “too soon to judge” whether an time extension is necessary.
      “But the good thing is all parties are seriously committed to meet that goal [the July 20 deadline]. Whether we can do it or not is something else.”
      June 10, to Iranian media
      “We hope to reach a final agreement (by July 20) but, if this doesn't happen, then we have no choice but to extend the Geneva deal for six more months while we continue negotiations. It's still too early to judge whether an extension will be needed. This hope still exists that we will be able to reach a final agreement by the end of the six months on July 20.
      “There are still gaps between Iran and the (six powers) in various issues and in order to bring our views closer, the other side must make tough decisions.”
      June 9, on the sidelines of talks with U.S. and E.U officials
            “Negotiations between Iran and the U.S. in the Swiss city of Geneva were held in a positive and constructive atmosphere.”
           June 9, after a five-hour bilateral session
            “We have always had bilateral discussions with the United States in the margin of the P5+1 group discussions, but since the talks have entered a serious phase, we want to have separate consultations.”
           June 8, according to IRNA and agencies
Chinese Foreign Ministry Spokesperson Hua Chunying
            “We would like to maintain close communications with all related parties and play a constructive role in the all-round negotiation process. China maintains the direct engagement between six countries and Iran will help deepen mutual understanding and promote negotiation process.
            “As the negotiations go deeper, the issues involved will be more complicated and sensitive. All parties should seek common ground and resolve differences with a flexible and pragmatic attitude.”
           June 9, to the press

E.U. Foreign policy chief spokesperson Michael Mann
            “The E3/E.U.+3's diplomatic efforts to reach a comprehensive solution are now intensifying. They have always taken place at different levels and in different formats and included bilateral meetings in support of the central E3/E.U.+3 nuclear negotiations led by [High Representative] Ashton.”
           June 10, in remarks to Al-Monitor
The following is a list of U.S. officials that traveled to Geneva to meet with the Iranian team.
The Honorable William J. Burns
Deputy Secretary of State
Wendy R. Sherman
Under Secretary of State for Political Affairs
Jake Sullivan
Deputy Assistant to the President and National Security Advisor to the Vice President
Ambassador Brooke Anderson
Senior Advisor to the Secretary of State and the Under Secretary for Political Affairs on the Iran Nuclear Negotiations
James Timbie
Senior Advisor to the Under Secretary of State for Arms Control and International Security
Robert Malley
Senior Director for Iran, Iraq, and the Gulf States, National Security Council 
Paul Irwin
Director for Nonproliferation, National Security Council
Richard Nephew
Principal Deputy Coordinator for Sanctions Policy, Department of State


Report: Rouhani's Plan to Revive Oil Industry

            President Hassan Rouhani and his oil minister, Bijan Namdar Zanganeh, have launched an ambitious reform program for the oil and gas industry. They are trying to roll back the dominance of the Revolutionary Guards, halt privatization, prioritize near-completion projects and attract foreign investment, according to a new brief by Brandeis University’s Nader Habibi. The Rouhani administration has also taken steps to promote fuel conservation and reduce energy subsidies. But many obstacles lie ahead for the reform plan, such as oil ministry management issues, a bloated workforce and populist political pressure. The following are excerpts from the brief with a link to the full text.

           Soon after his victory in the June 2013 presidential elections, Hassan Rouhani announced that reforming and revitalizing the oil and gas sector would be one of his government’s top priorities. He and many of his aides showed no hesitation in criticizing the policies of former president Ahmadinejad toward the oil and gas industry in his two-term tenure.
           Like other oil-exporting nations, Iran depends heavily on oil revenues to finance government expenditures and pay for imports. When these revenues decline, the economy suffers. A combination of international sanctions and poor domestic management led to a gradual decline in daily oil output and stagnation in natural gas output in most of the years of Ahmadinejad’s presidency. The decline accelerated in 2012 as the United States and the European Union introduced new sanctions against Iran’s oil exports and put pressure on countries that were buying hydrocarbon products from Iran. While the Ahmadinejad administration put most of the blame for this decline on sanctions, critics of his government claimed that his own policies caused more damage to the oil and gas sector than did the sanctions.
           Political factions inside Iran still disagree regarding the causes of the decline, but there is no dispute about the magnitude of output loss in recent years. According to OPEC statistics (which are based on official data provided by member governments), Iran’s oil production fell from 4.3 million barrels per day (mb/d) in September 2011 to 3.3 mb/d in November 2013. Daily exports of crude oil likewise declined, from 2.7 mb/d in 2011 to just under 1 mb/d in the final months of Ahmadinejad’s presidency. Rouhani has tried to address both causes of this decline mentioned above: He is seeking to negotiate an agreement with the P5+1 group of world powers to end the international sanctions (which have disproportionately targeted Iran’s oil and gas sector), and he is reforming the country’s oil and gas industry.
Rolling Back the Dominance of the IRGC
           President Rouhani has no formal authority over the Revolutionary Guards, but he has used his good relationship with the Supreme Leader to reduce the domestic economic activities of the IRGC. It appears that this initiative has been successful, as the Supreme Leader has instructed the IRGC to step aside in some areas of economic activity. In return, President Rouhani has promised to offer several large-scale construction contracts to the IRGC’s engineering arm.
Reviewing the Privatization of National Iranian Oil Company Subsidiaries
           While Ahmadinejad justified many of his interventions in the oil and gas sector in the name of fighting corruption and nepotism, Zangeneh has exposed many irregularities and corrupt practices in connection with NIOC’s privatized downstream subsidiaries that were involved in refining and distributing oil and gas products. During Ahmadinejad’s presidency, oil ministry subsidiaries accounted for nearly 46 percent of all Iranian firms that were privatized through stock share offerings. Zangeneh claimed that many of these firms were sold below fair market value in corrupt dealings.
Prioritize Near-Completion Projects
           In another break from the Ahmadinejad era, Zangeneh has frozen some of the oil ministry’s development projects that are in the early stages or have not gone beyond the design and planning stage, to focus on remaining active projects that are more promising and more likely to be completed by domestic firms. This policy is most evident with respect to the development of the offshore South Pars natural gas field.
Promote Fuel Conservation and Reduce Energy Subsidies
           While the oil ministry has always been a strong advocate of reducing the massive price subsidies on domestic prices of refined oil and gas products, Zangeneh has intensified these efforts in recent months. These large subsidies force the oil industry to allocate an ever-growing portion of its output to domestic consumption. Furthermore, the forgone export revenues put a constraint on the oil ministry’s budget, both with respect to development projects and for the wages and benefits of its personnel.
Many Challenges Lie Ahead
           The policy initiatives described above may help Iran revitalize its oil industry and increase the country’s oil and gas production, if they can be effectively implemented.
Many potential obstacles, however, stand in the way of such implementation. Internally, the oil ministry faces a productivity and personnel crisis rooted in management weaknesses and an oversized workforce.
           Populist pressures can also limit the financial resources – both the oil ministry’s fiscal resources (budget) and the extent of loans and financing available from state-owned banks – available for the ministry’s maintenance and development activities, required for expanding its production capacity.
           An even more significant risk factor with respect to the ambitious plans of Zangeneh is the uncertain prospects for success of the nuclear negotiations. Much of the oil ministry’s ability to boost Iran’s output depends on the outcome of these negotiations: If they fail, international oil firms will not enter the Iranian market even though the oil ministry’s new investment contracts would offer them more attractive financial incentives.
Click here for the full report.

More “Happy” Videos Go Viral in Tehran

            Iranian youth have posted several videos of themselves dancing and lip synching to Pharell William’s hit “Happy.” One version featuring three women — without hijab — and three men went viral and led to the dancers’ arrest on May 20. They were pressured to express remorse on state television. But all six were released the following day, after people from across the world including Pharrell Williams condemned their detention via social media. A tweet on President Hassan Rouhani's semi-official account may have indicated disapproval of the detention: “Happiness is our people’s right. We shouldn’t be too hard on behaviors caused by joy.” The following are some of the latest videos from Iran.  

"Happy in Tehran" directed by Ehsan Azimi

Young Iranians dance in streets and parks around Tehran


"HAPPY – Pharell William’s Iranian Puppet Fans" by animator Mehdi Alibeygi


Clips of breakdancers from Tehran's Rahaa Crew put to "Happy"

"Happy [Tehran Dance Edition]" directed by Sassan Soleimani
This video was viewed more than 100,000 times on YouTube before the six dancers were arrested. It has been reposted several times.



G-7 Statement on Iran

      On June 5, the leaders of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, the President of the European Council and the President of the European Commission issued a declaration at the close of the G-7 summit in Brussels. The following is the full text of point 35, which focuses on Iran.


35.   We reaffirm our strong commitment to a diplomatic resolution of the Iranian nuclear issue and welcome the efforts by the E3+3, led by High Representative Ashton, and Iran to negotiate a comprehensive solution that provides confidence in the exclusively peaceful nature of Iran's nuclear programme. We underline the importance of the continuing effective implementation by the E3+3 and Iran of the Joint Plan of Action. We call on Iran to cooperate fully with the International Atomic Energy Agency on verification of Iran's nuclear activities and to resolve all outstanding issues, including, critically, those relating to possible military dimensions. We strongly urge Iran to fully respect its human rights obligations. We call on Iran to play a more constructive role in supporting regional security, in particular in Syria, and to reject all acts of terrorism and terrorist groups.

Click here for the full declaration.

Photo credit: By Number 10: The Prime Minister’s Office via Flickr (CC BY-NC-ND 2.0)


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