Hassan Rouhani was the clear winner of the Iranian presidential election - but he faces challenges at home and abroad.

President Rouhani of Iran. Credit: Flickr/governmentZA

By Clément Therme, Research Fellow for Iran.

Hassan Rouhani’s recent re-election as Iranian president seems to be a cry from the country’s people for further moderate domestic and international policy, a return to the reform and detente agenda of President Khatami (1997-2005). It was above all a vote against challenger Ebrahim Raisi and his strategy of self-isolation. Most Iranians rejected Raisi’s conservative, inflation-fuelling alternative economic policy. He was also wounded by an embarrassing contradiction: how could he square his role as head of the religious foundation Astan-e Qods, one of the biggest financial conglomerates in Iran, with campaign trail rhetoric about social justice and the plight of Iran’s poorest? The hypocrisy of a beneficiary of crony Islamic capitalism engaging in leftist discourse on social struggle was not lost on the country’s voters.

Iranians were not convinced by former president Mahmoud Ahmadinejad’s promises to directly provide cash to the poor a few years ago, so it is no surprise they did not support such policies in 2017, at a time of low oil prices.  Ultimately, the Iranian middle class preferred a centrist President, with a foreign policy focusing on the socio-economic development of the country. Raissi’s defeat is partly the consequence of a revolutionary fatigue among most Iranians.

Stronger economy could be a platform for civil liberties

Rouhani is in a strong position at the start of his second term because he is seen by the Supreme Leader Ali Khamenei as capable of managing potential social discontent. Iran’s non-elected institutions will nevertheless try to prevent Rouhani from implementing his reform agenda on civil rights. His primary focus will be strengthening the economy, a key stepping stone towards improving civil liberties. If wages rise and unemployment falls, Rouhani will be more popular and therefore in a stronger position to push for structural reform regarding civil rights.

Iranian presidents are typically weaker in their second term. But Rouhani could influence the rise of the country’s next Supreme Leader if he brings the country economic success. The key hurdle will be the reaction of the security services and their economic empire if Rouhani empowers civil society and the private sector: this is the worst-case scenario for the current Supreme Leader. He needs a rentier economy to reward the khodi, the most loyal defenders of the country’s revolution and members of the political and social elite within Iran.

New talks with Riyadh and Washington: wise but unlikely

On the regional front, the revolutionary guards will try to stop Rouhani reaching detente with the oil kingdoms of the Persian Gulf (especially Saudi Arabia) and disengaging the military from wars in Syria, Iraq, Yemen and elsewhere.

Although the Trump Administration has so far fulfilled the United States’ obligations under last year’s nuclear deal, the threat of new sanctions for alleged human rights violations or support to terrorism could slow the return of Western or other foreign investments to Iran. However, such a move by the US would risk creating a new divide between America and any European countries using Rouhani’s re-election to increase their bilateral economic cooperation and empower Iranian civil society.

The Rouhani government must fulfil the President’s election promise of ending non-nuclear related U.S. sanctions, and offer the Iranian population real economic recovery. To reach this objective, the Iranian government should open direct talks with both Riyadh and Washington, addressing the link between the Iranian Middle East policy and the implementation of unilateral US economic sanctions. Such a scenario remains unlikely for two reasons. Firstly, there is no consensus in Iran around changing the country’s regional policy in pursuit of economic gains. Secondly, the Trump administration’s anti-Iranian approach is driven by ideology rather than research-based analysis.

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