ALACO DISPATCHES: Nuclear deal looms large as Iran’s presidential election approaches

ALACO DISPATCHES:  Nuclear deal looms large as Iran’s presidential election approaches
Ebrahim Raisi is an ally of the Supreme Leader, and is also viewed by some as his possible successor.
By Yigal Chazan of Alaco April 13, 2017

On the campaign trail, Donald Trump threatened to tear up the nuclear deal with Iran, the Joint Comprehensive Plan of Action, JCPOA.  Then in office, when wiser counsel prevailed, he vowed to “rigorously” enforce it. But now the accord – which led to the lifting of international sanctions against Iran in January 2016 in exchange for curbing its atomic energy programme – faces a new threat. There are concerns that a recently introduced Senate bill, the Iran Destabilising Activities Act of 2017, aimed at curbing Iran’s ballistic missile programme and other non-nuclear activities, could undermine the JCPOA.

The bipartisan sponsors of the bill maintain it will not interfere with the nuclear deal, but critics are unconvinced. They say it adds new conditions on sanctions that Washington is committed to lifting if Iran adheres to the accord, a move Iran could interpret as an attempt by the US to unilaterally change it. Also troubling, the detractors argue, is a provision that extends terrorism sanctions to the Iranian Revolutionary Guard Corps (IRGC), Iran’s elite security body. If implemented, the bill would not only put the JCPOA under strain but also place American forces in the region at risk of Iranian retaliation, particularly if the US launches further air strikes against the Assad regime in Syria, which Iran supports.

The Senate bill has ratcheted up tensions between Iran and America, with a senior Tehran lawmaker warning that Iran would consider introducing legislation labelling the US military and the CIA terrorist groups. Amid fears that the proposed US law could play into the hands of Iranian conservatives opposed to the JCPOA in the run up to the presidential election on May 19, the Republican co-sponsor of the bill, Bob Corker, announced on April 4 that it would not move forward for now. But while the postponement may deny Iranian hardliners some useful ammunition, they look set to mount a serious challenge to reformist President Hassan Rouhani.  

Registration for the ballot takes place this week, with Rouhani, a vocal advocate of the nuclear deal, expected to throw his hat into the ring. There has been much speculation over whether the conservative camp – comprising the IRGC, military top brass and the clerical establishment led by the Supreme Leader Ali Khamenei – would be able to set aside their differences to rally around a single candidate to challenge Rouhani, who won a landslide victory in 2013, in part because his rivals were split.  A host of possible candidates have been touted in advance of the presidential ballot, but Ebrahim Raisi has emerged as arguably the strongest contender.

An ally of the Supreme Leader, Raisi, who on 9 April announced that he intended to run, is also viewed by some as his possible successor. While Raisi lacks political experience, crucially he appears to have the backing of Khamenei, who last year appointed him custodian of a prominent charity that oversees the Islamic Republic’s holiest shrine.

In a surprise development, controversial former President Mahmoud Ahmadinejad this week also applied to contest the election, despite the Supreme Leader advising him not to. Ahmadinejad, along with all the other candidates, will be vetted by the Guardian Council, half of whose members are appointed by Khamenei.

It is unclear whether conservatives will rally around Raisi if Ahmadinejad is allowed to enter the race, but they appear to be confident nonetheless, empowered by the Trump administration’s antipathy towards Iran and the imposition of new sanctions in response to recent ballistic missile tests. US military action against Syria will also strengthen their hand. But arguably their best card is the limited economic impact of the nuclear deal.

Addressing the nation on Iranian New Year in March, Khamenei – a grudging backer of the JCPOA – criticised the government’s economic policy for the second time in as many months, ominously calling for a “resistance economy”, an apparent rebuff of Rouhani’s faltering attempts to open up the country to international investment.

Taking their lead from Khamenei, other hardliners, who suffered a surprise defeat at the hands of reformists and moderate conservatives in parliamentary elections last year, have been speaking out against Rouhani and his government. Many conservatives believe the president has failed to deliver the post-JCPOA economic dividend he promised.

In the face of the attacks, Rouhani has sought to defend his record, insisting that he has improved living standards by raising minimum wages, pensions and welfare support.

To his credit, Rouhani has steered the economy out of recession and brought down inflation.  However, unemployment remains high.  While the nuclear deal has allowed Iran to boost oil exports to pre-international sanctions levels, investors have been nervous of committing their funds because of remaining American sanctions and uncertainty over Trump’s intentions.

Most Iranians feel they haven’t benefited from the nuclear deal. Backing for the President has fallen below 50 per cent, a poll in January revealed. But in an electoral boost for Rouhani, one of the country’s most respected conservatives, the parliamentary speaker Ali Larijani, has given him his support.

The presidential race looks like it could be a close-run thing. A conservative victory will not necessarily sound the death knell for the JCPOA because, for all their criticism, hardliners are unlikely to want to see the economic gains reversed. But if relations with Washington continue to deteriorate, Rouhani’s political rivals will probably express ever louder condemnation of the accord, whether they triumph in the election or not, potentially putting it in jeopardy.

Yigal Chazan is an Associate at Alaco.  Alaco Dispatches is the business intelligence consultancy’s take on events and developments shaping the CIS region. Alaco’s latest guide to international sanctions is now available.