Crisis continues; infighting escalates

Hassan Rouhani is in the last months of his presidency that started in 2013. The presidential election – which can never be called an election when compared with elections in bourgeois democracies – is to be held in May 2017.

He ascended to power in the thick of crushing sanctions imposed by the West and endorsed by the UN Security Council resolutions. The sanctions that were enforced since 2006 plunged the Iranian economy in a deep slump, and intensified the economic crisis that has turned into a chronic disease of the country over long years. The Don Quixote-like policies of Mahmoud Ahmadinejad, who initially benefited from the all-out support of the regime’s “Supreme Leader” Khamenei, put the country on the verge of complete bankruptcy. Interestingly, Ahmadinejad, whose bizarre foreign and domestic policies had led to a chaos, in last years of his office, came even into such a head to head collision with Khamenei, so that some figures in the regime talked about ousting him before the end of his term.

In this context of the imminent collapse, Rouhani won a fragile victory in 2013. He was supported by the reformist-moderate bloc whose main figures were the once strong, but later marginalised, former Presidents Rafsanjani and Mohammad Khatami. The reformists had suffered a crushing blow in the 2009 election and many of their key elements were put in prison or were forced to go into exile. Through Rouhani they hoped to restore their power. On the other hand, millions of ordinary people, who were the main victims of economic sanctions and the intensified corruption and inequality, again found themselves with a choice between the evil and the lesser evil.

Rouhani’s achievements and failures

The most important achievement for Rouhani was ending the nuclear crisis that had put the country on the blink of full collapse and war. He repaired the regime’s credit to some degree by activating diplomatic relations with Europe and signalling a thawing of the ice with the United States. All these were to used to help the recovery of an economy that was experiencing a negative growth rate.

He boasts that his administration has increased the growth rate from -5 to +4 per cent, and decreased the inflation rate from about 40 per cent to about 9 per cent. According to government’s figures, 700,000 jobs were created in the first six months of this year but, on the other hand, 1.2 million entered the labour market in the same period, therefore, a gap of 500,000. So, as Rouhani himself acknowledged, unemployment remains as the most serious threat to the regime.

Although Rouhani by showing these fragile successes tries to encourage disillusioned people who expected a sudden improvement of the economy following the nuclear deal even official figures speak of the protraction of a deep economic and financial crisis. Ali Sarzaim, an adviser to the government, said recently: “The total state budget is 230,000bn rials (72.4bn dollars), out of which 58.3bn dollars is the revolving budget (the funds to be paid as the wages of the government's employees). What remains as the developmental budget amounts to about 12.6bn dollars. While the government’s debts to banks and contractors exceed about 126bn dollars, and incomplete developmental projects also need 126bn dollars the government will have no room for manoeuvre.”

He added: “To solve the economic crisis for those who will enter the Iranian labour market in coming 10 years, we need investment as much as 3,500bn dollars, and at least 1,000bn dollars out of this figure shall be provided from outside the country.”

Besides lacking in advanced technology to revive industries, especially oil and gas, the Rouhani administration faces restrictions even in employing domestic financial resources because injecting money to industries that generally suffer from financial shortage may lead to another nightmare of a high inflation rate. So the economy is trapped between recession and inflation.

Rouhani confessed in early November that the free fall of oil prices to one-third of the last year’s levels put his government in the worst situation so that Iran had to sell oil in advance in cheaper rates, so that it did not earn any revenue in the first quarter of the year. He said his administration can hardly pay wages, cash subsidies and interest of the vouchers issued by the government.

Two factions’ solutions

What do the two factions of the government have in the face of the deepening crisis? The so-called hardline bloc, consisting of Khamenei, the Islamic Revolution Guards Corps (IRGC) and its affiliates, plus the top clergy insist on further self-sufficiency and relying on domestic resources as much as possible. Khamenei coined the term “economy of resistance”.

However, this remains empty sloganeering. Military forces have shown a tendency to take over the economy but this only leads to more plunder of the economy rather than advancing a solution. The IRGC’s paramilitary branch has started publishing reports on founding small industries and job creation based on its own resources. Military officials ask how the country has improved its missile programme and defence industries but is unable to do the same with the economy. In other words, what the dominant faction favours is to keep the status quo, without showing a way out.

The reformist-moderate faction favours a revival of the economy based on foreign investment. They inked the nuclear deal and are trying to sign other requirements, such as joining anti-money laundering organisations and international financial bodies. In foreign policy they would like to appease the US and allies and come to a compromise on Syria, Lebanon, Yemen etc. However, this has always been obstructed by the IRGC. A few months ago, while Rouhani was in the work to reduce tension in foreign policy, Qasem Soleimani, the commander of the IRGC elite forces issued a statement and threatened Bahrain monarchy with inciting an armed struggle.

In parallel with its ‘westward’ foreign policy, the reformist-moderate faction’s aim is to impose financial discipline and impose more austerity and neoliberal policies on the masses. They are trying to win approval of an amendment to the Labour Law in the parliament that will give employers a free hand to fire workers. As it has been true with other countries, the whip of neoliberal policies can help bring about some degree of trade unionism. Iranian workers still don’t have real trade unions, and compelling the regime to recognise these organisation remains at the top of the workers’ demands.

The “presidential election” and the ambiguous future

The president’s office is to large extent overshadowed by the Leader and IRGC. However, the President holds the country’s purse strings and economy. As a commander of the IRGC recently said the regime has a “soul” above and free form its legal structure. In other words, in the Iranian regime a balance of power behind the apparent legal structure exists that is decided by various internal and external factors. A strange interaction between overt and covert forces is in work. Apparently, Rouhani seems unlikely to face a candidate able to rival him in the so-called election.

Ahmadinejad had to withdraw prematurely at the request of Khamenei who feared that his candidature would lead to a destructive fierce quarrel inside the regime. The other possible candidate, Tehran Mayor Qalibaf was heavily discredited in a series of financial abuse exposed by reformist media.

The regime always needs attracting people to polling stations because it is important to display a show of legitimacy with the large number of voters that it tries to interpret as a sign of approval for the regime. However, to make the election attractive it has to open space and allow some level of candidates campaigning against each other. The 2009 election was a good instance, where the regime lost the control and the events went beyond what was expected, and a huge mass protest shook the country for months.

Although the regime’s election is a way to distribute power among opposing factions, and it is devoid of characteristics of a democratic election at all, but it to some degree opens a space for the progressive and left forces to advance genuine demands of the people and turn the event into a real fight of the working class against both factions. The left needs to study this space more precisely and once again think about how these very limited spaces may help promoting the level of workers’ organisation and class struggle in Iran.

Trump’s victory and its impact on Iran’s presidential election

Trump’s victory has been an earthquake that has shaken the whole world, including Iran, though Iranian regime’s leaders stereotypically said both candidates were the same, and the victory of either would not change the US-Iran relations. Perhaps, a US president-elect with a strange rhetoric and lunatic phraseology has brought more bewilderment to a regime that is itself known for taking odd policies. The first official opinion was presented by Khamenei who, a few days before the US election, implicitly endorsed Trump for telling the truth about the American society. He mocked Democrats for calling Trump a populist. However, he later cautiously tried to avoid keep the old line that “both are the same” and that Iran would pursue its policies no matter who rules in the White House.

The reformist media, on the other hand, almost showed an inclination for Clinton, so that hardline media attacked them for feeling sad because of Trump’s victory. Following the US election, what has drawn the attention in the media is the future of the nuclear deal. Trump once said he would tear up the deal and later one of his aides said it should be modified.

For Rouhani and his supporters, any attempt by the US to damage the deal would be a catastrophe because it is the most important and only remarkable achievement of Rouhani. While hardliners may welcome the US’s withdrawal from the agreement, because they find this as a good excuse to get rid of Rouhani, Khamenei has only warned against the US breaching its obligations. He said accepting the deal so hastily was a mistake and has asked the government to keep a precise watch on the Americans’ behaviour and be ready for a proper reaction. Iranian atomic officials also said they are ready to backpedal and restart the halted programme.

Though apparently Trump is going to form his administration with ultra-right neoconservatives, he will not abolish the nuclear deal but try to keep the Iranian regime at bay and at the same time use other levers to continue pressures on it. Trump has shown a friendly face to Russia but at the same time used a strong language against Iran. How does this work while Iran is to some degree a regional ally of Russia? Does this mean a deal with Russia to recognise its role in the Middle East and at the same time to push back and isolate Iran?

It seems that Trump’s policies in his first months in the White House will crucially affect the Iranian election, and perhaps this will help the emergence of a stronger rival to Rouhani. Whatever exactly happens this will not be a quiet period. Contradictions in the global capitalist system will be reflected in the Iranian political milieu in some way, and this will pose even more sharply the need for independent workers’ organisations that can offer an alternative both to elite rule and capitalism.

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