To say that the Iranian economy is in shambles would indeed be an understatement. Today, inflation is running at nearly 40 per cent, unemployment is close to 25 per cent, and oil exports — still Tehran’s main source of income — are sharply down from 2011 levels. Notwithstanding the temporary lifting of the country’s access to frozen bank accounts, which were the result of comprehensive sanctions in place for over two decades, normal international financial transactions may be said to be almost non-existent. Amid this near-complete isolation, one can wonder how the Iranian regime can survive another day without collapsing?
In fact, it was the sum total of Iran’s economic strangulation that led to the June 2013 election of President Hassan Rouhani, a “moderate” head-of-state as many consider him to be, with the hope that relief would soon come their way. Iranians wanted sharp economic improvements and less ideological rhetoric, two reasons for voting against hardline candidates like Saeed Jalili, whose main campaign promise was “more resistance.” Still, many also took their political revenge on the 2009 presidential re-election of Mahmoud Ahmadinejad, whose elevation by the Supreme Guide was nothing short of an insider’s coup against popular will.
Nevertheless, while the people elected Rouhani, he was and remains a pure product of the establishment because, long before any ballot could be cast, it was the influential legislative-judicial body constitutionally charged with vetting all presidential candidates, the Guardianship Council, which selected him. Promulgated to the front line, the affable president thus faced the gargantuan task of helping Iran overcome its current economic and political difficulties, without fundamentally transforming the Islamic Republic.
Even if it is too soon to say whether Rouhani can deliver on his election promise to accelerate necessary reforms that will usher in further political and social liberties, including freeing political prisoners and relaxing annoying rules ranging from strict dress code to public decorum, Tehran is in no position to record significant progress.
Indeed, this relatively advanced society, at least by regional standards, failed to protect its economy after the 1979 revolution. On the contrary, successive leaders devoted so much energy and resources to exporting the Islamic Revolution, that they literally ran Iran’s economy into the ground. When one added serious demographic challenges to the equation, one realised the extent of the damage and the near impossibility for any leader to successfully overcome these doldrums.
Interestingly, few Iranian officials display much courage in evaluating the country’s sharply dropping fertility rates, which have now reached historical lows. Simply stated, and while the lack of desire for children is not a new phenomenon, traditional societies that experimented with modernisation tended to lose self-confidence, which often translated into limited childbearing and other cultural transformations. In 2013, the estimated birth rate in Iran was conservatively estimated to be around 1.86 children per woman, below the replacement rate of two births per woman. Actual figures may be even lower. Ironically, it was Ayatollah Ruhollah Khomeini who authorised the use of contraception methods in the 1980s, although his successor, the current Supreme Leader Ayatollah Ali Khamenei reversed the decision in 2012, hoping that the Iranian population would increase to around 150 million to 200 million from its current 85 million level.
Irrespective of this wish, Iran also faced a greying phenomenon, with estimates that over 33 per cent of citizens will be older than 60 by 2050, compared to only 7 per cent today. Like all greying societies, the cost of caring for elderly dependents will further crush the economy, which could add significant costs to current economic difficulties. Consequently, any assessments of ongoing barriers must take into account this serious demographic evolution, even if Tehran’s regional and global expansionist ambitions, surely mean that the state — under Rouhani or any other leader — will require substantial new resources.
Amid these economic and demographic regressions, wily and sophisticated officials emphasise the country’s nuclear programme as a unique opportunity to push for power, which must accomplish two simultaneous objectives: secure better relations with the world precisely to reduce external economic pressure and, second, utilise the nuclear negotiations to lock the country’s geo-strategic interests in the Gulf region.
Neither of these two goals can be guaranteed, however, if Tehran is caught in the whirlwind of an ideological struggle with leading Western powers. Although immensely pragmatic, Iran is over extended in its own milieu, negligent of its double outsider status in the Middle East: it is non-Arab and it is predominantly Shiite. In fact, its blanket support to the Bashar Al Assad regime in Syria — entirely based on pragmatic calculations rather than ideological preferences — created existential obstacles that will not be easy to overcome.
While Syria was and remains central to Iran’s interests in the Middle East, Tehran committed a rare blunder by transforming Damascus into a conduit to Hezbollah, which led to a full destabilisation of Lebanon. It also pretended to explain its military presence in Syria as a means of supporting Palestinian rejectionist groups, oblivious to the starvation under way at the Yarmouk refugee camp, while it overlooked the simple fact that the direction to Israel was southwards through the Golan Heights, not through Qusayr and Yabroud in the north.
Still, Syria is the only country from which Iran can have access to the Levant, and it will continue to invest blood and treasure to achieve its stated objectives. Over the long run, however, Iranian interests cannot prevail in Syria because several states, led by Saudi Arabia and Turkey, are determined to prevent an Iranian victory.
Now that Syria’s chemical weapons are effectively decommissioned, and negotiations with Iran over its own nuclear programme will, inevitably, lead to a similar outcome, Tehran will surely be emasculated of its ambitions. It remains to be determined whether President Rouhani will have the foresight to re-evaluate Iran’s regional and global objectives, to concentrate on indigenous economic challenges and literally save the country from a gradual disintegration.
Dr Joseph A. Kechichian is the author of Legal and Political Reforms in Saudi Arabia (London: Routledge, 2013).
