Khamenei And Rouhani Clash Over The Economy

clash economyIt’s no secret that Supreme Leader Ali Khamenei and president Hassan Rouhani do not see eye to eye on many issues. Khamenei is a “revolutionary” at heart who wants to preserve the ideals of the Islamic Revolution while Rouhani is an adept politician who was elected on a ticket for change (change in foreign relations, in the economy, in human rights, in the political system etc…) and if there is one thing that Khamenei finds abhorrent, it is change that can weaken the regime and its revolutionary ideals.

Over the past three and a half years, Khamenei, despite his claims that he is a revolutionary and not a politician, bided his time in a very diplomatic manner: he didn’t vigorously back Rouhani but he didn’t trip him up either.

Khamenei’s efforts to resist change were weakened by two strong blows: the signing of the JCPoA last year which effectively brought Iran out of its isolated pariah status and the elections in February in which the reformists and moderates experienced a significant growth in power both in the parliament and in the Assembly of Experts.

The key issue now is the economy and for the first time, Khamenei and Rouhani have openly taken two very different sides with diametrically opposed strategies which exemplify the differences between Khamenei, the regime and the older population on the one hand and Rouhani, the reformists and Iran’s younger and secular population: Khamenei’s “resistance economy” which would keep Iran independent but isolated versus Rouhani’s “constructive engagement with the world” which would lead Iran into a global economy.


Different bases of power
Khamenei’s base of power is immense: his title “Supreme Leader” is backed by many hardline elements of the regime such as the Assembly of Experts, a body in charge of choosing, supervising and even firing the Supreme Leader, the IRGC, a powerful military and economic force loyal to Khamenei and the regime and the Basij, a hardline voluntary organization in charge of carrying out the regime’s ambitions at a grass-roots level.

In contrast, Rouhani’s base of power can be summed up in one word: popularity. Rouhani’s power emanates from the support of the Iranian voters. The last time a popular president clashed with the Supreme Leader was in the presidential elections in 2009 when Iranians took to the streets to protest what they believed were rigged elections. The results exemplified the power of the regime: Khamenei’s favorite hardline candidate, Mahmoud Ahmadinejad became presidents, thousands of protesters were arrested, tortured and imprisoned and the reformist candidates were subsequently placed under house arrest where they remain to this date.

Over the past three and a half years, Khamenei, despite his claims that he is a revolutionary and not a politician, bided his time in a very diplomatic manner: he didn’t vigorously back Rouhani in his efforts to ink a nuclear deal with the P5+1, but he didn’t trip him up either.


The JCPoA and the elections

good cop bad copBut the negotiations leading up to the JCPoA, the signing of the deal and its implementation repeatedly placed more pressure on Khamenei to voice his mandate as Supreme Leader: he voiced his pessimism repeatedly, dictated his “red lines” to the negotiations team before the signing of the JCPoA, was visibly upset when some of these red lines were crossed in the final deal and tried to renegotiate the deal after it was signed. Once the deal was signed, Khamenei stepped back to front stage and formally relieved Rouhani from his duties in the implementation of the JCPoA and added some more “red lines” on Rouhani’s foreign policy by forbidding him from negotiating with the “Great Satan”, the US, and banning US brands from Iran. His paranoia, which may be justified, that the influx of Western brands and culture will weaken the regime remains a driving force for Khamenei’s animosity towards the US.

The elections for parliament and for the Assembly of Experts once again pitted Khamenei opposite Rouhani: The Guardian Assembly disqualified 90% of the reformist and moderate candidates and Rouhani looked in vain to Khamenei for help. Once again, Khamenei’s fears of change guided his actions and once again, he became the politician that he claims he isn’t and he didn’t get involved one way or another. Once the results were in, it was clear that although the moderates hadn’t reached the majority they had hoped for, the Iranian voters had given them enough support to create a sizeable shift away from the hardliners that had ruled until then. Khamenei vocally lamented the loss of key hardliners in the Assembly of Experts.


The economy is the key

Unlike differences between these two in the past, the economy has the potential to become a major clash because a) the strategies are so different and b) the Iranian public is suffering from a weak economy despite the fact that Rouhani has had some successes in strengthening the economy he inherited from Ahmadinejad.

Overall, Iran was disappointed to not see a visible improvement in the economy following the signing of the JCPoA. Khamenei voiced his disappointment that although the lifting of sanctions had brought on over 140 trade delegations from the world, “we haven’t seen anything tangible from these delegations visiting Iran…we are expecting to see some real improvements. Promises on paper have no value“. Furthermore, Khamenei continues to blame the US influence on the global banking community which hasn’t committed to dealing with Iran for fear of “slap-back” sanctions and the regional conflict surrounding Iran in Syria, Iraq, Yemen and the Gulf States as a result of Iran’s efforts to “Export the Revolution”.

This disappointment was followed by his yearly Nowruz speech in which he mentioned sanctions 28 times and designated his slogan for the upcoming year: “Resistance Economy: Action and Implementation”.  He published his 10-point plan on his website and it is incredible to note that there is no mention at all of foreign investments – it’s as if the JCPoA was never signed.

Rouhani’s Nowruz speech, by contrast, included only 2 mentions of sanctions and he focused on a positive note: “Conditions for the economic activities of our people have gotten greater and greater“. But in another speech, he shot back a veiled attack at Khamenei by stating that “the resistance economy will materialize with action, planning and without slogans” and then tried to mollify his criticism by claiming that “constructive engagement with the world and the path of our administration…has been economic resistance”.

If the Iranian economy doesn’t get the boost expected from the JCPoA, Rouhani’s popularity is bound to drop and the war of words between the two is sure to escalate. It will then be up to the Iranian people to decide whether Iran should finally become a country instead of a revolutionary ideal or not.


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