by Ellie Geranmayeh
On May 19, the Islamic Republic of Iran holds presidential elections, the first following the landmark 2015 nuclear agreement. Incumbent President Hassan Rouhani is running against five other candidates, approved by Iran’s Guardian Council to compete in the election. The race has centred heavily on economic policies for tackling high unemployment and growing inequality, together with how to reintegrate the country into global financial platforms following the rollback of sanctions in the aftermath of the nuclear deal.
Policy decisions in Iran are largely devised through consensus among the various leadership figures represented in the Supreme National Security Council (SNSC). The SNSC is headed by Iran’s Supreme Leader Ali Khamenei, who is the final arbiter on matters of national security, but the presidential role has proven capable of steering decisions towards moderate or radical positions. For European governments and businesses that have long dealt with the Islamic Republic, there is a clear distinction between the administrations of former presidents Mohammad Khatami, Mahmoud Ahmadinejad and Rouhani.
If Rouhani were to win a second term, Iran would likely continue its course of economic opening and accelerate its political engagement with Europe. However, a victory for either of his conservative opponents, Ebrahim Raisi and Mohammad Ghalibaf would likely result in a more isolationist pathway.
Candidates to Watch
- Hassan Rouhani: Incumbent president elected in 2013 with a mandate to resolve the standoff over Iran’s nuclear programme and remove international sanctions. Cleric, 68 years old with a PhD in law from Glasgow Caledonian University. He is viewed as pursuing largely centrist policies and supporter of diplomacy with global powers.
- Esghaq Jahangiri: Representative from the reformist political faction. Currently first vice president in Rouhani’s cabinet. Served as minister to former President Khatami. 60 years old, many view him as Rouhani’s wingman and expect him to quit closer to the election date in favour of Rouhani and to maximise votes behind a centrist/reformist bloc.
- Ebrahim Raisi: Conservative candidate and a close ally of Iran’s Supreme Leader who appointed him custodian of Iran’s holy religious site, Astan-e Quds Razavi, in March 2016. Cleric, 57 years old, holding a PhD in Islamic law. Former senior prosecutor, who served on the special committee that authorised controversial executions in 1988.
- Mohammad Bagher Ghalibaf: Conservative candidate and a former police chief and member of the Iran Revolutionary Guard Corps (IRGC), who has been Tehran’s Mayor since 2005. This is his third time running for president. 50 years old, he faced criticism last year over corruption in his municipality.
The 2017 campaign has focused heavily on Iran’s economy. Rouhani’s rivals attack his government for failing to improve socio-economic conditions despite the nuclear deal and roll back of sanctions. According to the IranPoll survey conducted in April before campaigning fully began, seventy-two percent of the electorate believe that the nuclear agreement has done nothing to improve the economic situation of ordinary people.
Although the Rouhani government has been successful in tackling soaring inflation rates (down from over 40% at the start of his term in August 2013 to roughly 10%), this has largely been due to domestic policy changes rather than the easing of sanctions. Unemployment has increased to 12.7% (roughly 3.3 million), with youth unemployment rising from 24% to 30% during Rouhani’s tenure.
Since the implementation of the nuclear deal and the easing of sanctions in January 2016, Iran’s growth economic growth projections have been impressive, ranging between 5 – 8% through to 2018. There has been an uptick in Asian and European trade with Iran, mainly due to the expansion of Iranian oil exports, which now stand at 2.5 million bpd. This is a significant increase from a low of roughly 1 million bpd in 2013, but still below the levels seen in 2011 before European energy sanctions intensified.
The Rouhani government has highlighted the importance of international investment for economic growth and job creation, arguing that reviving Iran’s oil and gas sectors alone will require $200 billion worth of investment over the next four years. During the final presidential debate on 12 May, Rouhani outlined that the nuclear deal increased revenues by $20 billion, from which the government wants to invest $15 billion for economic development projects.
It is clear, however, that international firms remain wary of large-scale investments inside Iran. This is primarily due to problems related to securing banking and financial cover for such deals, risk aversion, and the continued existence of U.S. primary sanctions on Iran.
As result, the easing of sanctions has not brought the expected influx of investment or job creation thus far. The deal has had little tangible impact on Iran’s middle and working classes, while social inequality has grown. Rouhani’s opponents seek to capitalise on this widespread sense of disillusionment and to peel off some of Rouhani’s 2013 supporters.
Pathway after the Nuclear Deal
All six presidential candidates have expressed a commitment to upholding the nuclear agreement as a document agreed to by the top leadership of the Islamic Republic. However, they split into broadly two camps on how to tackle the economic challenges that remain since the lifting of sanctions.
The moderate and reformist candidates Rouhani and Jahangiri acknowledge that more needs to be done to resolve the banking and financial hurdles restricting Iran’s integration with global markets, but propose further diplomacy and market-opening reforms as the main remedy.
The opposing conservative and ‘principalist’ factions reject this path, calling instead for a more demanding approach to international partners as well as a more self-reliant economy. In the second live debate held on 5 May, Raisi stressed that it is now time to ‘cash in’ the deal but argued that Rouhani is too weak to deal with the United States to deliver economic benefits to Iran’s poorest. Ghalibaf meanwhile plans to demand Iran’s ‘full rights’ from the United States to access international banking facilities. Both position themselves as champions of the country’s poor, and aim to reduce inequality by boosting domestic production with increased subsidies.
Raisi attempts to appeal to the pious and lower income voters in the rural provinces. Ghalibaf lambasts Rouhani as elitist (and the president of the so-called top “4 percent”) who is out of touch with economic reality for average Iranians. He pledges to create 5 million jobs and double average income. These plans have unsurprisingly been criticised by Rouhani and Jahangiri, who argue that increasing subsidies will trigger high inflation and that absent international investment there is little room for economic growth.
Some of the policies propagated by the conservative candidates seems to be more in line with the wishes of Iran’s Supreme Leader, who has long insisted on building an “economy of resistance” to Western pressures and in a speech on 25 April, advised the presidential candidates “not to look to [Western countries] and instead focus on national capabilities” to meet the needs of the country.
Wider Foreign Policy
Though campaigning remains focused on domestic issues, the candidates have laid out some visions regarding engagement with the West.
Rouhani and Jahangiri warn against isolationism and advocate expanding diplomacy, which they argue has brought Iran a seat at the negotiating table on Syria. They attack the conservative candidates for lacking diplomatic experience to defend Iran’s rights at the international diplomatic stage.
In the first live debate, Jahangiri insinuated that groups carrying out the raid on the Saudi Embassy in Tehran in January 2016 were linked to conservative factions seeking to scuttle the Rouhani government’s diplomatic outreach. Similarly, in the following debate, Rouhani suggested opposition groups linked to some of the conservative candidates tried to derail the nuclear deal by testing ballistic missiles emblazoned with anti-Israeli messages.
While endorsing diplomacy where necessary, Raisi and Ghalibaf place a greater emphasis on the need to strengthen military and defence capabilities to reduce vulnerability to foreign pressure and secure Iranian borders. Ghalibaf has repeatedly expressed a deep and vocal distrust of the United States and, to a lesser extent, European countries, who he portrays as profiteering at Iran’s expense.
Who’s Backing Who?
Rouhani has secured the support of former President Khatami, seen as the spiritual leader of the reformist bloc, as well as Molana Abdolhamid, a leading Iranian Sunni cleric. To attract more reformist and minority voters, Rouhani is pledging to place more focus on creating equal citizenship rights in Iran regardless of gender, faith, ethnicity and political affiliation. He has also bluntly suggested that his main conservative rivals share a platform with pro-violence extremist factions inside Iran. Without confirming Rouhani as his chosen candidate, Ali Larijani, an influential conservative figure who is speaker of the parliament, dismissed the economic subsidy plans proposed by Ghalibaf and Raisi.
Raisi was endorsed by the influential religious Qom seminary. Raisi and Ghalibaf are expected to gain votes from rural provinces and lower-income households that backed former president Ahmadinejad. IRGC officials have stated that the group will not publically support any candidate. However, it is widely believed that some powerful factions within the IRGC favour Raisi given their distrust of the Rouhani government.
Iran’s Supreme Leader is encouraging a high turnout and has not formally backed any candidate (nor is he expected to do so). He has nevertheless repeatedly cast doubt over the Rouhani government’s ability to capitalise on the nuclear deal, and media outlets close to the Supreme Leader have stepped up attacks against Rouhani’s campaign.
The IranPoll survey conducted in April before the live televised debates and confirmation of candidates suggested a three horse race between Rouhani, Ghalibaf and former president Mahmoud Ahmadinejad. Jahangiri and Raisi, meanwhile, were unknown to almost half the electorate. However, Ahmadinejad has since been disqualified from the race, and recent opinion polls have indicated that Raisi could overtake Ghalibaf as the main rival to Rouhani.
Although Rouhani remains in pole position, a large number of undecided voters (roughly 50%) could shift the results in the coming week. Raisi or Ghalibaf could yet overtake Rouhani, or push the voting to a second round. This would be unprecedented for an incumbent president.
If Rouhani ultimately triumphed, a close result would likely weaken his ability to accelerate planned economic reforms, openness to foreign investment and willingness to actively pursue diplomacy with Western actors. His campaign will, therefore, focus on attracting high voter turnout and securing the backing of not only the reformist groups but also the centrist conservatives who favour his economic and more moderate policies.
Republished, with permission, from the European Council on Foreign Relations blog. Photo: Iran’s presidential debate on May 5, 2017.