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The Iran Primer

Iran: Record High Foreign Investment

            Foreign direct investment in Iran surpassed $4.8 billion in 2012, a record high for the Islamic Republic according to a new U.N. report. Global foreign direct investment fell 18 percent to $1.35 trillion in 2012 while investment in Iran actually grew 17 percent. Iran was the second largest recipient of foreign investment in South Asia in 2012. About 76 percent of foreign investment went to Iran’s oil sector — despite international sanctions.
            “We are among the six countries that have had a constant increase in attracting foreign investors. It shows that Iran has a good economic capacity to attract foreign companies and the domestic private sector,” Deputy Minister of Economy Behrouz Alishiri said on June 30. State media reported that Iran attracted some $24.4 billion in foreign investment during President Mahmoud Ahmadinejad’s tenure (2005 - 2013), more than under previous presidents. Tehran attracted $10.452 billion under Mohammad Khatami (1997 – 2005) and $350 million under Akbar Hashemi Rafsanjani (1989 – 1997), according to government statistics.
            The following are excerpts from the 2013 World Investment Report by the U.N. Conference on Trade and Development.

 

 

Iran Willing to Accept Syrian Peace Talks?

Jubin Goodarzi
      Iran may be searching for an exit strategy in Syria. Tehran initially supported President Bashar Assad’s crackdown on the rebels since Syria is a frontline against the West and Israel. But Iran’s position on the conflict has evolved since fighting erupted in mid-2011. Tehran actually now has several incentives to support Syrian peace negotiations. Talks could prevent the spillover of violence into Iraq and Lebanon, both countries where Shiites have a strong political presence. Tehran might also be able to press for a national unity government that is not be hostile to Iran, while building up regional goodwill. The following is a rundown of the numbers game on Iran’s involvement in Syria since the crisis erupted in March 2011.

Iran’s Position on Syria has evolved through five phases:
  • Spring 2011 – Tehran issued steadfast support for President Bashar Assad.
  • Summer 2011 – Iran showed the first public signs of doubts, including negotiations with the Syrian opposition.
  • Fall 2011 to Winter 2012 – The conflict emerged as a proxy way. Iran demonstrated stalwart support for the Assad regime.
  • Spring/Summer 2012 – Tehran publically supported multilateral negotiations mediated by the United Nations and Arab League
  • Fall 2012 to present – Iran continued backing for Damascus while exploring other options and exit strategies.
Tehran has provided Damascus seven types of aid:
• Crowd control equipment and technical aid
• Guidance and assistance on monitoring the Internet and mobile telephone network
• Financial resources
• Arms and ammunition (via Iraq)
• Oil shipments (via sea)
• Provide personnel and specialist units
• Training for the National Defense Army
 
Iran has six incentives to support a negotiated settlement:

• Contain damage and cut losses because the pre-March 2011 status quo cannot be restored in Syria
• Prevent the dissolution of Syria and spillover of conflict into Lebanon and Iraq
• Demonstrate Iran’s importance as a key regional actor
• Avoid further polarization and total transformation of conflict into a regional sectarian war between Sunnis and Shiites
• Facilitate the emergence of a national unity government in Damascus that is not hostile to Iran
• Free up resources to solve Iran’s own domestic issues and deal with foreign sanctions

Click here for a summary of the event by the Woodrow Wilson Center Middle East Program.

Jubin Goodarzi, a professor of International Relations at Webster University Geneva, Switzerland, is author of, "Syria and Iran: Diplomatic Alliance and Power Politics in the Middle East." 
 

 

Gallup: Half of Iran Lacks Funds for Basics

             Iranian residents' election of moderate cleric Hassan Rouhani to the presidency has been widely interpreted as evidence of their desire for meaningful change in the country. Rouhani will preside over an increasingly distressed population: Half of Iranians say there have been times in the past year when they have had trouble paying for adequate shelter and for food their families needed. In each case, the 50% figure is the highest among 19 populations in the Middle East and North Africa region that Gallup surveyed in 2012 and 2013.

 

            Gallup trends also reveal that Iranians' emotional wellbeing has deteriorated over the past two years. Currently, more than half say they felt a lot of worry (58%), sadness (54%), and anger (54%) during much of the day prior to the interview. All these figures have risen substantially since 2011 and are now among the highest in the region.


            The rising prevalence of anger in Iran may be particularly troubling to U.S. leaders. Almost half of Iranians (46%) say they hold the U.S. responsible for the international sanctions on their country, while 13% blame their own government. These opinions raise the question of the extent to which increasing hardship may be bolstering anti-U.S. sentiment in a country that, despite its economic troubles, has been an increasingly assertive power in the region. Currently, 15% of Iranians say they approve of U.S. leadership; though this represents a slight improvement from 9% in 2011, it remains one of the lowest figures in the Middle East and North Africa region.
 
This report by Steve Crabtree was released on July 1,2013 by Gallup World. Click here for the original posting.

Rouhani: Rival Constituencies

Alireza Nader

            Hassan Rouhani now faces the hard part. Iran’s president-elect won a decisive and surprising victory because he appealed to three conflicting constituencies— conservatives, reformists exiled from the political system, and Iranians dissatisfied with the status quo. Now his ability to govern will depend on satisfying disparate factions. Each has its own set of expectations—and each is also intent on coming out on top.
      Rouhani may be able to deliver results precisely because he is an insider. Since the 1979 revolution, he has served in some of the Islamic Republic’s highest positions. Before his 2013 election, Rouhani was Iran’s national security advisor for 16 years and then head of a government think tank. So he has close ties to Iran’s military and national security establishment. Rouhani has also been a deputy speaker of parliament and a member of the Assembly of Experts ― the only constitutional body with the authority to appoint and dismiss the supreme leader. Among 686 candidates who registered, he was one of only eight allowed to run for the presidency.
            So far, Supreme Leader Ayatollah Ali Khamenei, the Revolutionary Guards and conservative pressure groups ― such as the Islamic Revolution Steadfastness Front associated with ultra-conservative Ayatollah Mesbah Yazdi ― have thrown their support behind him. So the smiling cleric must be careful not to disturb his relations with these key power centers.
            But Rouhani has also presented himself as a moderate and a reformist. And he is, in a relative context. Next to bombastic President Mahmoud Ahmadinejad, Rouhani is indeed a moderate. And compared to the other candidates in the race, Rouhani used language about freedoms at home and “constructive interaction” with the international community that allowed him to don the reformist mantle.
            Yet he is not as much of a reformist as Mohammad Reza Aref, a former vice president who withdrew from the presidential race to support Rouhani. Nor is he as much of a reformer as former President Mohammad Khatami. Other credible reformist leaders such as Mir Hossein Mousavi and Mehdi Karroubi—who both ran for the presidency in the disputed 2009 election--remain under house arrest. And former President Ali Akbar Hashemi Rafsanjani, a centrist or pragmatist, was disqualified by the Guardian Council. Thus, Rouhani was the closest thing to a reformer on the ballot. Both Khatami and Rafsanjani endorsed him.
            Rouhani was elected with the support of conservatives and reformists, but it was the Iranian people — exhausted by repression, inflation, and sanctions — who voted him in. Rouhani’s campaign raised people’s expectations and they will seek much in return. But he could risk weakening his support within the regime if he responds unilaterally to popular demands. As Rouhani has stated, Iranians want a “freer and more prosperous life.” Many of his supporters have also demanded the release of political prisoners, especially Mousavi and Karroubi. The regime, which describes both men as leaders of the 2009 “sedition” against the system, may resist freeing them, especially if the reformists do not atone for their perceived sins against the Islamic Republic.
            Iranians expect significant and fast improvements in the economy. Some of the most onerous U.S. and international sanctions could be lifted if Rouhani succeeds in demonstrating transparency on the nuclear program. But he may not be able quickly reverse Iran’s fortunes. Many economic problems predate the imposition of sanctions. The Ahmadinejad government’s inflationary economic policies and growing corruption among the elite also are responsible for Iran’s dismal economic outlook.
            Rouhani may improve the economy in pursuing his underlying goal to preserve the Islamic system. He will almost certainly try to defuse tensions with the international community over the nuclear program, improve Iran’s relations with regional powers such as Saudi Arabia, and pursue relief from international sanctions. Rouhani will present a cheery face for a government described in global public opinion polls as one of the most unpopular in the world.
            But not all Iranians would be satisfied with just economic improvements. Many want greater freedom of expression and a bigger say in the political system. Rouhani’s status as an accomplished insider may also work against his ability to enact political reforms. He may not be able or even willing to offer Iranians what they seek ― especially as long as Khamenei remains in power. Still, Rouhani’s presidency could be a last chance for peaceful change in the Islamic Republic.

Alireza Nader is a senior policy analyst at the nonprofit, nonpartisan RAND Corporation and the author of “Iran After the Bomb.”

Read Alireza Nader's chapter on the Revolutionary Guards in "The Iran Primer"

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Rouhani: Challenges Ahead

Haleh Esfandiari

            The decisive election of Hassan Rouhani as Iran’s new president has been greeted around the world as a sign that Iranians are tired of hardline policies at home and abroad and are ready to embrace change. But the outcome also raises the question of how the new president might go about it, given Iran’s powerful clerical leadership and long history of quashing reform efforts.
      Rouhani will inherit from his predecessor a host of difficult, even insurmountable problems. In the past eight years, such limited freedoms as existed have been severely eroded. The economy is in shambles due to Western-imposed sanctions and outgoing president Mahmoud Ahmadinejad’s reckless spending and misguided policies. With few real friends, Iran is internationally isolated, and its relations with the US and the Europeans are under strain over Iran’s nuclear program, its support for Assad in Syria, and its inflammatory rhetoric on Israel. Negotiations between Iran and the so-called 5+1 (five members of the UN Security Council and Germany) about Tehran’s nuclear program have been deadlocked.
            While he is considered a moderate, Rouhani comes to office as an insider. For sixteen years he was head of Iran’s National Security Council (NSC) and for two years Iran’s chief nuclear negotiator. Even today, he sits on the NSC as the personal representative of the supreme leader, Ayatollah Khamenei. He served five terms in the Majlis, or parliament. He sits on two major state councils, one of which, the Assembly of Experts, will elect Khamenei’s successor whenever he passes away. In holding high office, Rouhani was more a team player than a maverick and continues to support many existing Iranian policies. On Syria, since his election he has offered only the formulaic non-answer that the Syrian people should decide their own future through elections.
            Critics have noted that Rouhani spoke in support of the harsh crackdown on student protesters at Tehran University in 1999—he later explained he was in the government at the time and could have not done otherwise. He also was silent when security forces brutally crushed protests following the contested 2009 presidential elections, and his explanation for that silence remains unconvincing: he was not then in the government, he said, the nature of the protests had changed, and the protesters were obligated to act within the laws.
            Yet Rouhani did not run his campaign as an insider. On many issues, including political freedoms, the growing presence of government informants among student and civil society associations, Iran’s international relations and its nuclear negotiations with the West, and the state of the economy, he used language and adopted a posture at odds with those of the ruling conservatives and, indirectly, of the supreme leader. While regime conservatives paint a rosy picture of Iran’s international standing, Rouhani spoke during the campaign of the “clouded visage” of Iran in the world. Conservatives describe Iran as the freest country in the world, but Rouhani spoke of the “the bowed silhouette” of freedom in the country, and of the need to free political prisoners. Both the Abdorrahman Boroumand Foundation, an Iranian human rights group in Washington, DC, and the International Campaign for Human Rights in Iran estimate the number of political prisoners at any one time at around five hundred, although many hundreds more pass through the prison system for short periods of incarceration. Rouhani also promised to establish a ministry for women’s affairs, to pay attention to women’s rights, and to remove restrictions on women’s access to higher education imposed by the outgoing government. He also spoke vaguely of a “charter of rights” for all citizens.
            Regime hardliners have continued to attack their reformist counterparts as “seditionists,” while Rouhani, both during his campaign and in his first press conference after his victory, stressed the need for national reconciliation. He will be the president of all the Iranian people, he said.
            Rouhani also embraced and won the endorsement of two former presidents, Hashemi Rafsanjani and Mohammad Khatami. This was significant because both men are identified with the reformist endeavor and have been the target of vicious attacks by the hardliners. Rafsanjani, a pragmatist and ultimate insider (and president in 1989–1997), has been marginalized in recent years due to his centrist policies; and the Council of Guardians, which rules on the qualifications of candidates for the office of president, vetoed his candidacy on the lame excuse that, at age seventy-eight, he was too old to spend more than a few hours a day tending to the presidency. Khatami (president in 1997–2005) ushered in an unprecedented period of expanded freedoms, only to be frustrated by a right-wing backlash.
            On the nuclear issue, Rouhani has not strayed far from the official Iranian position—that Iran has a right to enrich nuclear fuel and to the full nuclear cycle, even though it has no intention of weaponizing—but his tone has been far more conciliatory. He has spoken proudly of his success, as Iran’s chief nuclear negotiator, negotiating compromise agreements with the Europeans in 2003 and 2005. Former British Foreign Secretary Jack Straw recalled that in the 2003 negotiations, Rouhani broke a deadlock by working the phones with Iran’s president and supreme leader, securing the flexibility to reach an agreement. In brief, he has a track record for looking for compromise and the middle ground, and he is offering greater transparency on Iran’s nuclear program.
            But the obstacles Rouhani faces are formidable. The internal security situation has grown worse in recent years. Journalists and intellectuals are routinely jailed for the mildest challenge to the ruling ideology. According to Amnesty International, Iran executed 314 individuals last year—one of the highest rates of execution in the world in relation to population size. Rouhani will win a lot of credit with the young and the urban middle class if he manages to remove the checkpoints, the security forces, and the morals police from the streets, close the secret detention centers, or if he secures freedom for political prisoners and the two opposition leaders, Mir Hossein Mousavi and Mehdi Karroubi, who have endured house arrest for the last four years. Yet any attempt by Rouhani to ease controls over the press, civic associations, and political activity will be opposed by Iran’s ubiquitous security agencies and by the powerful Revolutionary Guards.
            The economy is in dire straits. Mahmoud Ahmadinejad squandered a huge influx of oil revenues on pet populist projects and liberal handouts, without generating much employment or investment in productive industry. Under the impact of sanctions, the Iranian currency has lost more than half its value against the US dollar. Iranian oil exports have been halved. Iran’s once substantial foreign exchange reserves have shrunk. Iranian banks have been virtually squeezed out of international transactions, and Iranian industries are having difficulty securing spare parts and raw materials.
            Rouhani understands what needs to be done to reset the economy on a more sensible course, but he is caught on the horns of a dilemma. He cannot resolve Iran’s economic problems without a significant easing of banking and other Western-imposed sanctions. At the same time, the US insists on maintaining sanctions until Iran’s nuclear posture changes; and Rouhani may not be able to persuade Iran’s leader to be more flexible on the nuclear issue unless sanctions are eased.
            However, Rouhani’s election has aroused hopes and a sense of movement and possibilities—and pressure from the left to move quickly on multiple issues. Several senior clerics, congratulating Rouhani on his election, have urged him to address the problems of unemployment, inflation, moral decline, political division, and restrictions on political freedoms. Ayatollah Dastghaib, a senior cleric from Shiraz, called on Rouhani to expedite the release of Karroubi, Mousavi, and Mousavi’s wife, Zahra Rahnavard. There are other senior clerics, concerned at the mismanagement and the direction of the country under Ahmadinejad, who would support Rouhani’s efforts; but it is also the case that most of the senior clergy have been intimidated by the hardliners and have been relatively silent in recent years.
            Rouhani’s powers are limited: he cannot appoint judges or the chief of the judiciary; he cannot appoint the chiefs of the security forces. But one of his predecessors, Mohammad Khatami, succeeded in removing the intelligence minister—twice—reining in the ministry and purging it of its most notorious elements. Khatami also succeeded in lifting restrictions on the press, book publishing and political association. The security services are much stronger today, but Rouhani has a model he can emulate. And as president, he can at least provide a moral voice and speak out against the widespread violation of human rights.
            Clearly Rouhani’s task will not be easy. He will need time; he will need to pick his battles carefully; he will need to show progress without alienating the real centers of power in Iran; he will need support and understanding abroad. And he will need a great deal of luck.
 
This article was originally published on The New York Review of Books blog.
 
Haleh Esfandiari is director of the Middle East Program at the Woodrow Wilson International Center for Scholars and the author of “Reconstructed Lives: Women and Iran’s Islamic Revolution” and My Prison, My Home: One Woman’s Story of Captivity in Iran.”
 

Photo Credit: Hassan Rouhani's official Facebook page and promotional materials for the 2013 presidential campaign

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