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On the eve of the nuclear negotiations in Baghdad between Iran and the P5+1, two Iran experts discussed the role of Iran’s domestic politics, the recent parliamentary elections, divisions among the conservative ruling elite, and Iran’s economic difficulties as a result of international sanctions.

On May 22, the Middle East Program hosted a meeting on “The Dynamics of Iran’s Domestic Politics,” with Bernard Hourcade, Wilson Center Public Policy Scholar and Senior Research Fellow (emeritus) CNRS, Paris; and Bijan Khajehpour, Managing Partner of Atieh International. Haleh Esfandiari, Director of the Middle East Program at the Woodrow Wilson Center, moderated the event.

Esfandiari began the discussion by explaining the most recent nuclear negotiation breakthrough which was the announcement earlier the same morning by the IAEA chief, Yukiya Amano, that Iran has agreed in principal for a more thorough investigation into the nuclear program.

This development set the stage for Hourcade to pose the question of whether the Iranians are serious about the prospect of a return to the international community after 33 years of conflict. Or, rather, is this another attempt by the Iranian government to postpone sanctions on Iran’s oil industry and its Central Bank as they continue developing their nuclear program? Hourcade explained that the falling of despotic leaders in the Arab world and global hostility brought about by Western economic sanctions has forced the Iranian government to recalculate their nuclear position. Furthermore, the domestic political environment in Iran, as well as the consolidation of power by Ayatollah Khamenei after the 2012 Majlis election, has fostered what the Iranian government believes is the most optimal time for a comprehensive negotiation regarding their nuclear program. According to Hourcade, Khamenei remains opposed to the “cultural aggression of the West,” but he has drawn lessons from the popular protests in Iran of 2009. If he wants the regime to survive, Hourcade said, he has no choice but to seize the opportunity of and control the emerging opening with the West. In other words, Khamenei must say “yes” to some type of limited international opening even if he fundamentally remains opposed to the West. In Hourcade’s opinion, the best way to control this inevitable opening is to be the leader of it.

Khajehpour began his discussion by reiterating the impact that sanctions have had on the Iranian government and stated that the actual deliberations in Iran deal with a multitude of political, regional, economic, and international interests. Other factors include subsidy reforms, mismanagement, corruption, as well as the overall business confidence of the country, which, according to Khajehpour, has not been this low in Iran since the final year of the Iran-Iraq War. Khajehpour stated that due to the opaque distribution of business interests in the economy, it is difficult to measure the direct impact of sanctions on various sectors and industries. However, he argues that it is clear that the decline in oil production capacity is a consequence of sanctions over the past decade. Moreover, a decline in oil production and oil income will eventually undermine all business sectors in Iran. Therefore, according to Khajehpour, economic stakeholders inside Iran have been lobbying for the de-escalation of tensions in foreign relations with the West. Khajehpour concluded by arguing that the Iranian middle class are the main targets of the current economic downturn and that their situation will have a direct impact on the country’s business interests. Furthermore, economic interest groups, including the Revolutionary Guards, will continue to push for moderation in politics in order to safeguard their interests.

By Hanif Zarrabi-Kashani, Middle East Program