Rouhani’s First Year

by Farideh Farhi

Ten months into office, Iranian President Hassan Rouhani has proven adept at isolating his hard-line critics and maintaining the political alliance that brought him to power. Skepticism regarding his ability to deliver on his campaign promises of resolving the nuclear crisis, improving economic conditions, and de-securitizing the political environment persists, but the support for his policies is still fairly solid.

The population at large remains hopeful that a nuclear agreement will be reached while the majority of the political class backs the effort to reach a compromise on the issue with the United States. On the economic front, the Rouhani administration has been criticized for some misses but is also given leeway for taking on the daunting task of addressing what many consider to be the real damage done by the previous administration to both the economic and governmental apparatuses. Even on the issues where Rouhani is deemed least effective — political opening and respect for civil rights — his reformist allies are hesitant to break ranks and have been restrained in their criticism of his inability so far to bring about the release of key political prisoners.

Nuclear politics

Rouhani’s aggressive approach to resolving the conflict over Iran’s nuclear program remains the centerpiece of his first year at helm. The key to his continued attempt has been his foreign policy team’s ability to convince most of Iran’s political spectrum firstly that Iran’s efforts are serious, and secondly that an acceptable resolution to all sides of the conflict is at least worth a try.

The attempt by hard-liners to challenge the terms of the November 2013 Joint Plan of Action agreed to in Geneva has failed. In fact, their loud opposition — framed as the voice of ‘the concerned” about the potential surrender of Iran’s nuclear rights — has mostly revealed their marginalization on the issue. This was evidenced by their inability to mount a serious challenge in the Parliament during their aggressive questioning of Foreign Minister Javad Zarif. In May, after Zarif’s spirited defense of Rouhani’s foreign policy during one such session, the opponents of the nuclear accord even declined to call for a vote on the Parliament’s satisfaction with Zarif’s responses out of the fear that their low number, estimated at around 40 in the 290-member Parliament, would be revealed.

In any case, the loudest opposition fizzled this past month after key conservatives such as Speaker Ali Larijani, Tehran Mayor Mohammad-Baqer Qalibaf, and even former nuclear negotiator Saeed Jalili and Army Chief of Staff General Hassan Firouzabadi, urged against attacking the Rouhani government. Firouzabadi’s lambasting of the hard-line media, including those affiliated with the Revolutionary Guards for “rumors and baseless accusations” last month was particularly effective since it was also seen as an expression of Leader Ali Khamenei’s dissatisfaction.

Meanwhile, the uniform response I have heard from ordinary folks regarding the prospects of a nuclear resolution and what will happen if there is no resolution is misheh, which literally means, “it will happen.” To be sure, this quiet confidence is a double-edged sword. On the one hand, it reflects the belief by many that Tehran is making its best effort to reach an agreement, even perhaps giving in on some key demands by its interlocutors. This places the Rouhani administration in a good position to blame the US if no deal is reached at least domestically. On the other hand, no one can predict what the impact of failure will be on the national mood. Indeed, the entire notion of misheh is premised on anxiety or the lack of desire to even think about potential failure. For now, however, the Rouhani administration is benefitting from the confidence inspired by the seriousness of the negotiations.

Financial battles

Economically, there is little visual evidence that the consumerism and socioeconomic inequality intensified by the massive infusion of oil money during the first six years of the Ahmadinejad presidency is on the wane. Yet the government’s focus on arresting runaway inflation through controlling liquidity has paid off. Indeed, despite the implementation of the second phase of subsidy reform, entailing a 75 percent price hike for rationed gasoline (which constitutes 60 percent of domestic consumption), a 43 percent increase for non-rationed gasoline, and an approximately 25 percent increase in utility prices, the inflation rate continues to move at a significantly slower pace compared to last year. According to the latest figures from the Central bank of Iran, the price index increase for the Persian month of Ordibehesht (April 21 – May 20) immediately after fuel price hikes was only 1.2 percent. But tight money policies and high bad-debt ratios for banks — which according to Central Back Chief Valiollah Seif stands at an astounding 15 percent — is inhibiting sufficient investment in and support for industry and agriculture.

The implementation of the second phase of subsidy reform has also proven to be another stumbling block to the adequate funding for economic development purposes, and effectively addressing recession and unemployment. The government’s attempt in the second quarter to reduce the number of cash grant recipients from the previous 77 million was not as successful as hoped. The public relations campaign to convince the relatively well-off not to register for the monthly cash grants of 450,000 rials (about $15), which they received in the first phase, led to the reduction of only approximately 4 million recipients. Accordingly, the raised fuel and utility prices will remain insufficient in making subsidy reform a revenue-neutral program unless the government finds a way to make the cash grant program more targeted towards poorer sectors of society. The Rouhani administration’s challenge is furthered by this fiscal year’s budget law, which requires the government to target the cash grant program by June 21. Various government officials have hinted that the government has identified at least 10 million people who are not in need; it has yet to decide whether to use this information in the next quarter to reduce its load and release funds for a job-producing development project.

Yet as I previously mentioned, the indecisiveness and/or relative ineffectiveness of Rouhani’s economic team has not undermined the general support the government holds in tackling what many consider the consequences of the Ahmadinejad government’s mismanagement and extensive corruption. In other words, the government still maintains the support of powerful economic and political actors for the direction it has taken, especially since the overall frame of its macroeconomic policy of controlling inflation has brought a degree of stability and calm to the currency market. According to one factory owner I met, those who oversee economic policy in the Rouhani government “at least understand the problems facing the private sector and are our friends.”

Domestic politics

On the home front, Rouhani’s record is mixed. The increased number of executions has highlighted the question of whether he is strong enough to influence robust yet unruly institutions such as the judiciary. The closure of a couple of reformist papers, and ongoing political arrests, though less than before, also challenge Rouhani’s stated commitment to a more open political and cultural environment.

Yet comparisons to the way unelected institutions such as the Judiciary and the Guardian Council were able to stymie the desire for political openness during the Reformist Era of President Mohammad Khatami may be misguided. Not only are the political forces that brought Rouhani to power now more varied — they include an alliance among centrists, reformists and conservatives — but Rouhani also operates and speaks in a different language.

While Khatami spoke in grand terms about the need for democracy and the expansion of civil society, Rouhani’s own discourse challenges specific policies and approaches while forcing others to defend these policies on uncomfortable terms and, more often than not, by appearing out of date, at times ridiculous. On the cultural front, for instance, Rouhani even managed to turn a debate about what the government’s role should be in the people’s path to heaven into a policy question!

Indeed, almost every cleric who criticized Rouhani’s remark that people cannot be “forced to go heaven” has had to offer a clarification for the criticism. Even the often unyielding Tehran Friday Prayer Leader, Ahmad Khatami, has resorted to explaining that his words were not meant to suggest that physical force should be used in guiding the public toward “correct” cultural dispositions on issues as varied as veiling to the use of social media. The only cleric who has not recalibrated his criticism of Rouhani is the hard-line Ayatollah Mohammad-Taqi Mesbah Yazdi, who has only lashed out more, subjecting him and his supporters in the hard-line Steadfastness Front to even more public ridicule after his suggestion that Rouhani had learned about religion in the United Kingdom rather than in Qom where he was trained as a cleric. One hard-line member of the Parliament went further and stated in an open parliamentary session that through his Ph.D dissertation completed in Glasgow, Rouhani has provided secret information on Shia jurisprudence to the British.

The Iranian president has also benefited from the relative quiet of the reformists. Rouhani’s campaign platform of moderation and prudence was based on the rejection of “extremism” on both sides of the political spectrum. Following the reformists’ decision to avoid criticizing Rouhani publicly for his political failings — particularly his inability so far to secure the release of key political prisoners arrested in the post-2009 election — and focus instead on organizing for the 2016 parliamentary election, the only “critical voices” are coming from the political right. This lack of internal pressure gives Rouhani quite a bit of leeway in portraying the hard-liners as the only group out of the mainstream. Indeed, they are now identified inside Iran as harmful to the reconciliatory political environment required to resolve the mammoth challenges Iran faces after 8 years of a reckless Ahmadinejad presidency.

But Rouhani has not limited himself to public speech. The era of Ahmadinejad — during which the president used his executive powers preemptively with little to no oversight — has left Rouhani with a better appreciation of presidential powers. When the Internet filtering committee ordered the banning of the low-cost text messaging service, Whatsapp, the president simply vetoed the decision and the Telecommunication minister refused to carry it by the committee. Similar opposition has so far prevented the filtering of Instagram, which allows users to share their photos with the world. When a group of hard-liners prevented a scheduled speech in Boroujerd by Seyed Hassan Khomeini, the reformist-leaning grandson of the revolution, a governor who allowed the cancellation was removed. This was the first time an official was forced to resign for refusing to prevent hard-line groups, who have made a habit of obstructing public talks by their political adversaries, from getting their way.

So, to date, the strategy of making Rouhani appear weak and incompetent as president has proven ineffective. Yet Rouhani still has an uphill path before him. Indeed, with or without a nuclear agreement, he still faces managerial tasks of Herculean proportions with respect to Iran’s many other pressing problems. As of now, however, Rouhani will at least be going into his second presidential year without facing overwhelming challenges from other state institutions and political forces.