Rouhani’s Call for a Referendum and the Supreme Leader’s Confrontation Policy: Are Iran’s Maneuvering Cards Being Eroded?
On November 3, 2019, Iran’s Supreme Leader Ali Khamenei stated before thousands of students on the occasion of the 40th anniversary of the storming of the US Embassy in Tehran that “one way of limiting the influence of America is to refuse to hold any talks with them. This means that Iran will not yield to American pressure. Those who believe that negotiations with the enemy will solve our problems are 100 percent wrong.” He also stressed that Iran’s problem with the United States dates back to the Mosaddegh period in the mid-1950s.
The meeting of the supreme leader was likely in response to a similar meeting held by the Iranian President Hassan Rouhani, on October 16, 2019, with a gathering of students coinciding with the beginning of the academic year in Iran. During this meeting, Rouhani called for a referendum to resolve “fateful issues related to the internal and external situation of the country,” considering, “For 40 years, we have not reached any straight and firm answer in this regard. Some seek to deal constructively with the world, and others call for a continuous confrontation. However, some believe that we must defeat the enemy while others see that we can solve many problems together with the world … The key issue is whether we are pursuing a strategy of negotiations or confrontation?” These words by Rouhani were perceived as a kind of pressure on the supreme leader and hardliners within the government to change their perspectives by replacing resistance and confrontation with a more open policy toward mediation efforts that call for negotiations with the United States.
This controversy between the two wings of power points to the extent of the internal differences between them on the issue of dealing with US pressure. Therefore, this raises a question concerning the context in which Rouhani’s call for a referendum is being made, and whether Khamenei’s statement means that he has closed the door to any alternative political vision for dealing with US pressure except for the option of strategic patience and calculated confrontation on which hardliners depend economically and militarily.
First: Increasing Economic Pressure
Despite the frequent talk about the declining impact of the strategy of maximum pressure pursued by the United States towards Iran, its manifold economic implications cannot be denied in any way. The maximum pressure strategy is now affecting the lives of Iranians. The rate of inflation is steadily increasing and the value of the national currency is declining; the value of one US dollar reached 115,000 Iranian rials in October 2019, after the US dollar used to equal approximately 30,000 Iranian rials two years ago.
The poor economic conditions have also affected government spending levels and trends. Iran’s military spending has fallen by 29 percent. In addition, Iran’s funding of its militias in the region has declined. In recent months after US sanctions were imposed on Iran’s petrochemical and mineral industries, Iran lost $10 billion and its economy contracted by 6 percent.
The International Monetary Fund’s (IMF) report in October 2019 forecasted that 2019/2020 will be the worst period economically for Iran since 1983 during the Iran-Iraq war.
The IMF’s report stated that Iran’s economic growth in 2019 is likely to decline by 9.5 percent, contrary to its previous forecast in April of the same year that estimated Iran’s economy would contract by 6 percent. The report also pointed to the decline in Iran’s exports of crude oil by nearly 80 percent since the reimposition of US sanctions on Iran’s oil sector and financial transactions in November 2018.
The IMF expects that Iran’s economic growth during the fiscal year 2019/2020 will be 90 percent less than it was two years ago. It forecasts that annual inflation will reach 35.7 percent next year. The collapse of the national currency is likely to continue. The official exchange rate of the Iranian rial against the US dollar reached 42,000 rials in October 2019, while the black market price reached about 115,000 rials.
Iran’s economy is still experiencing profound challenges as the US administration threatens to impose further sanctions. Foreign countries, companies, and banks also face challenges in dealing with Iran, including Chinese and Russian companies.
Second: Futile Policy
While the Rouhani government is obliged to deal with the aforementioned economic repercussions, it is also forced to accept the options of the supreme leader and the hardliners of continuing Iran’s resistance and calculated escalation, hoping to thwart America’s strategy. However, this policy clearly does not offer a solution to the current crisis in the long term. Day after day, the ability of the government is fading away and its cards are burning one after the other. This means that the government will eventually be cornered and will be under unprecedented pressure – more than it is under now – however, Iranian concessions are postponed until this happens. It seems that Rouhani and his team are more open to initiate negotiations with the United States.
Along with the internal conditions which were described by Rouhani as disastrous and the worst in the history of Iran since the revolution, a number of indications and positions suggest that Iran’s margin of maneuvering externally is narrowing over time. One of the most prominent positions is that of the Europeans, which has changed considerably. Some of the European states are on their way to broader coordination with the United States in dealing with Iran’s threat. The Europeans (France, Germany and the UK) blamed Iran after the strikes against Aramco’s oil installations in September 2019 in Saudi Arabia. For the Europeans, the strikes posed an unprecedented international security and economic threat. The United States, however, is exerting pressure on China and Russia to change their positions.
The International Financial Action Task Force (FATF) is also exerting constant pressure on Iran. Tehran’s failure to comply with its terms will definitely lead to additional international challenges with regard to Iran’s financial transactions with international banks in particular, as it is already facing major challenges in this area due to US sanctions on Iranian financial transactions.
Iranian attacks targeting maritime traffic in the Arabian Gulf and the countries of the region as well as their oil facilities have led to consequences. These attacks have prompted enhanced security arrangements sponsored by the United States in coordination with some international powers. As a result, these arrangements have limited the ability of Iranian forces to harm and continue their policy of escalation as well as to target international and regional interests.
Regional pressures in Syria, Lebanon and Iraq are noteworthy, especially after the outbreak of protests in some of these countries against the Iranian presence. These protests pose challenges to Iran’s regional project and influence, especially since these protests are popular and involve Shia communities as well.
When the Iranian government thinks of starting the fourth phase of reducing its nuclear obligations to obtain another pressure card, this nuclear escalation will be a pressure card on international parties to find a solution to the crisis. It may lead to counterproductive consequences for Iran because the trend toward nuclear escalation will create an international consensus against it. The international community will turn a blind eye to the legitimacy of Iran’s response to US sanctions and this will lead to the end of the JCPOA. This will be viewed by the international community as a major threat to peace and security.
Third: A Delayed Option
Rouhani’s call for a referendum on the relationship with the United States is undoubtedly reviving and testing the option of negotiations within the government. A referendum is seen as an alternative path to breaking the stalemate and rethinking the dangerous repercussions of adhering to the option of resistance and escalation, which the supreme leader insists on. The option of resistance and escalation, however, may lead to an unexpected confrontation with the United States and its allies.
The threat of holding a referendum is a pressure card to be used by Rouhani against the hardliners as it will expose them in front of the Iranian people who continuously suffer because of their choices and refusal to negotiate with the United States. The president is taking advantage of the current situation to tighten the pressure on the government and limit its ability to continue its policy of resistance and confrontation.
Undoubtedly, Khamenei’s reaction to Rouhani’s remarks and criticisms entirely points to two important issues: first, the controversy surrounding negotiations with the United States between the two after Iran’s militias closed this possibility in the framework of Tehran’s policy of resistance and escalation adopted during the past year. Secondly, US pressure is likely to have exhausted the government and put it into a state of confusion. This may mean that Iranian decision-makers are close to pursuing inevitable options regarding Iran’s relationship with the United States. They include the possibility of openness along with the opportunities which this option brings, or the continuation of hostility which may lead to squeezing Iran further, exhausting the government and burning its alternatives.
The problem is that the hardline current adheres to a policy of confrontation based on ideological orientations that are compatible with the nature of the Iranian project. The pillars of this project include the adoption of the principle of independence externally, non-dependence on the United States and permanent hostility against it. This hardline current still maintains the option of resistance and confrontation and has full authority to determine the trends of Iranian foreign policy.
There is a pragmatic reform current in Iran. This current realizes the importance of dealing with reality and the world using modern perspectives that go beyond the historical perspectives that have defined the approach of Iran’s relations with America and the world. Particularly, as the Iranian government is facing a real challenge in light of US sanctions, which are ongoing, but this trend has no power to have its vision implemented.
The government will likely bring together its trends and currents like it did with the nuclear negotiations that began secretly years before the signing of the nuclear agreement. The process of distributing roles between the two wings of power [conservatives and reformists] is a matter of routine in Iran and is being used to prepare society to accept any potential shift in the relationship with the United States.
In the end, despite these controversies, as well as the government boasting of its ability to face the challenges imposed by the United States on Iran, and some Iranians doubting the usefulness of US sanctions, the United States believes that its strategy of maximum pressure suits the goals it aspires to. Undoubtedly, if US pressure continues or intensifies, the Iranian government is likely to resort to the option of negotiations under the supreme leader’s command. Perhaps, this option will be hindered since the terms of understanding between the Iranian and American parties are not available at the moment. This is due to each party’s maneuvering cards not being exhausted yet. The US strategy seems more coherent and influential. There is a determination by the United States to move forward to achieve its goals. Meanwhile, Iran’s cards appear to be eroding over time. Probably, increasing pressure and sensing the profound effects of the impending crisis has changed Rouhani’s attitude. Furthermore, the supreme leader’s attitude is likely to change as well after he examines the remaining few cards Iran has left to use as leverage against its neighbors and the West.
Rouhani’s Call for a Referendum and the Supreme Leader’s Confrontation Policy: Are Iran’s Maneuvering Cards Being Eroded?