New beginning for Iran

Daily News Editorial

In giving a strong mandate to reformist Hassan Rouhani to continue as President for a second term, an overwhelming majority of Iranians have rejected isolationism and fundamentalism and opted for closer integration with the rest of the world. This is a great result for the people of Iran as well as the International Community.

According to Iran’s Interior Ministry as reported by Iran’s Press TV, Rouhani (68) won about 57% of the vote with more than 23.5 million votes against his main challenger conservative Ebrahim Raisi’s 15.7 million. In a live speech carried by State TV, Rouhani said on Saturday that the vote showed Iran’s willingness to work with the international community and a rejection of hardliners.

Indeed, the tenure of hardline President Mahmoud Ahmadinejad was an unmitigated disaster for Iran, which faced crippling Western sanctions for continuing its Uranium enrichment programme. Rouhani knew more about the effects of sanctions than anyone else – after all he was the country’s chief nuclear negotiator who reached a deal with European nations to halt Uranium enrichment back in 2004. However, differences between the two men led to Rouhani’s resignation and the recommencement of the nuclear programme, which resulted in sanctions.

Rouhani, who grew up in Sorkheh, a small town in Iran’s northern Semnan province, is from a conservative family. As a young law student, Rouhani was heavily involved in the Islamic Revolution that saw the ouster of the Shah. He rose rapidly through the ranks of power in Tehran and later met an inspiring leader who would change his outlook on the world.

President Akbar Hashemi Rafsanjani, under whom Rouhani served as National Security Advisor, is his mentor and inspiration. Rafsanjani understood the importance of opening up to and working with the West and Rouhani too followed in his footsteps. After winning the Presidency in 2013, Rouhani oversaw Iran’s participation in a multilateral initiative in 2015 to halt the nuclear programme. It began with a telephone conversation with then President Barack Obama, the highest-level exchange between the two countries since the 1979 U.S. Embassy takeover and hostage crisis in Tehran.

Despite new US President Donald Trump’s initial promise to rip up the nuclear agreement, it is still holding on and so far, there is no sign that either side will dishonour the agreement that has lifted the sanctions imposed on Iran. Although there is no immediate sign of a further thaw in US-Iran ties, the country is already reaping the benefits of the lifting of most of the sanctions.

To cite an example, both Boeing and Airbus have signed multi-billion agreements to supply hundreds of new aircraft to replace Iran Air’s ageing fleet. It has also benefitted the economy by increasing oil production and exports. The oil sector alone expanded by a staggering 65.4%, thanks to higher crude production and exports following the lifting of sanctions. Iran is one of the top oil-producing countries in the world, ranked number seven.

Enforcing this agreement and seeing the rest of the sanctions off is just one challenge facing Rouhani. Rouhani will have to work hard to push his reform agenda which has seen the resumption of the publication of reformist newspapers, release of imprisoned journalists, expansion of 3G and 4G networks for smartphone usage and many other beneficial moves. He will no doubt have to keep in mind the fact that ultimate power in the country rests with Supreme Leader Ayatollah Ali Khamenei, who has held the title since 1989. Khamenei controls the country’s Security Forces and can veto any presidential policies. In fact, Khamenei has challenged some aspects of Rouhani’s rapprochement with the West. Rouhani will thus have to engage in a finely balanced act on the international stage.

The sluggish economy which took a major hit from the international sanctions remains a major concern, with youth unemployment at a staggering 12.7 percent (mid-2016). Iran is basically a “young” country and this could lead to discontent among the youth. Inflation is down, but this has slowed down the economy. The IMF has projected that Iran’s economic growth will stabilize at 4.5% over the medium-term, as the country’s recovery broadens. Real GDP growth is expected to reach 6.6% in 2016-17 and to ease to 3.3% in 2017-18.

The export and production figures too are not very positive. Rouhani has already talked of a workforce training programme aimed at ending joblessness that has left the electorate largely disappointed with his promise of economic recovery. Years of sanctions have kept foreign investors at bay and with the new developments in the US, most investors are unwilling to take the plunge in Iran. The country’s disorganised banking system is another cause for worry. Iran’s dual foreign exchange rates regime is also seen as an obstacle to the country’s reintegration into the global banking system and payment networks.

Rouhani will have to grapple with all these issues and his job will not be an easy one. But under his reformist drive, Iran has the potential to become a beacon of hope for the region.