Situation Report Threat Update

authors

Marie Donovan

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Threat Update Situation Report

Authors

Marie Donovan

Latest Edition

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Iran’s Hardliners Can Leverage the Post-Protest Space

By Marie Donovan

Many reactions to the Iranian government’s response to the recent anti-regime protests in Iran have focused on President Hassan Rouhani’s opportunities to reform the Islamic Republic. Rouhani and the moderates are not the only side of the Iranian political spectrum that can leverage the post-protest space, however. The protests’ focus on the dismal state of Iran’s economy gave the hardliners political fuel against Rouhani and his program of economic austerity.

The protests amplified the weapon Iran’s hardliners have been using against Rouhani since his first term - the people’s economic discontent, especially with the disappointing  benefits of the nuclear deal (which Rouhani exaggerated in the process of selling the deal and running for re-election). The hardliners can use the protests to support their narrative that Rouhani’s plans to improve Iran’s economy by increasing foreign direct investment failed - and indeed, were never in line with Supreme Leader Ayatollah Ali Khamenei’s ideas in the first place. Hardliners have already renewed their attacks on Rouhani’s proposed subsidy cuts in the wake of the protests, and can be expected to leverage the people’s economic dissatisfaction against moderate and reformist candidates in the 2020 parliamentary elections and 2021 presidential elections. (Rouhani himself is not eligible to run again until 2025).

Ironically, the hardliners are undermining the regime’s best chance at improving Iran’s economy in the long run - Rouhani’s efforts to increase foreign direct investment and transparency. Many hardliners reject the scope of economic integration necessary to strengthen Iran’s economy out of fear of exposing Iran to infiltration by Western values. They instead stress reliance on domestic production and reduction of the economy's dependence on oil and gas exports.  Many hardliners also resist Rouhani’s efforts to reduce the economic power of the tax-exempt “bonyads,” so-called “charities” which the regime uses to exert economic dominance. Khamenei has let Rouhani curtail the hardliner-backed IRGC’s encroachment on the economy somewhat, but the president has struggled to achieve significant results in that regard.

The bottom line: economic grievances will be a major problem for the regime for the foreseeable future. The regime curbed the recent protests in part by vowing to address the protesters’ economic complaints, but is not on track to do so. Any number of sparks could reignite the protests. It’s too soon to tell whether Rouhani or the hardliners will benefit most in the short term, but Iran’s economy and people will likely suffer over the long term.

Beyond Iran, additional takeaways from the week

  • The Iranian regime’s reluctance and inability to redress protester’s grievances may spur further anti-regime protests. Supreme Leader Ali Khamenei allegedly ordered the armed forces to “exit businesses not related to their work.” Prior attempts at privatization have failed to improve the economy significantly. Religious leaders are also calling for additional budgetary funds, exacerbating another protest grievance.
  • A southern Yemeni governing body threatened to break from the internationally recognized government in one week. The ultimatum exposes the unpopularity of Abdu Rabbu Mansour Hadi’s government in areas it controls and the fragmentation of the Yemeni state that has occurred over the course of the civil war. The Transitional Political Council of the South (STC), which claims to represent southern and eastern Yemen, called for Hadi to dismiss his cabinet and appoint technocrats who would serve the people. The STC also formed an independent southern military and demanded the withdrawal northern Yemeni forces.