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A promising start

In his first year in office, Rouhani stares down the fundamentalists

by Gareth Smith

Mohammad Khatami has criticized a six year jail sentence handed to journalist and activist Serajeddin Mirdamadi. In speaking out, the former president reflects a sense among fellow reformists that little has changed in the year since Hassan Rouhani assumed the presidency promising to “desecuritize” Iran’s domestic atmosphere.

Mir-Hossein Musavi and Mehdi Karroubi, former presidential candidates and leaders of the ‘green movement’ which took to the streets to contest the 2009 presidential election, remain under house arrest. Husband and wife Jason Rezaian and Yeganeh Salehi, reporters for the Washington Post and The National respectively, have been detained since July.

Many suggest that opponents of Rouhani are fighting his presidency with any available tool, using state positions to crush expectations of liberal change. ‘Principle-ists,’ or fundamentalists, fear that Rouhani, however loyal to the system, is an unwitting Trojan horse for those who would undermine the Islamic Republic.

Hence, while Rouhani has called for more tolerance of ‘bad hijab’ — the exposure of any part of a woman’s body other than her hands and face — principle-ists have organized demonstrations demanding stricter veiling. While Ali Jannati, the culture minister, last year suggested easing Iran’s ban on Facebook and Twitter, May’s high profile arrest of six young Iranians dancing on Youtube to Pharrell Williams’ song “Happy” highlighted the allegedly pernicious nature of social media.

International human rights organizations, as well as Nobel Peace Prize winning lawyer Shirin Ebadi, have criticized a rise in executions under Rouhani, although a political agenda is hard to establish. 

But it is hard for principle-ists to confront Rouhani, who has chosen his battles carefully and is maintaining support from Ayatollah Ali Khamenei. On assembling his cabinet last summer, Rouhani consulted Khamenei closely and produced a mix largely of centrists but with some reformists and, crucially, conservatives Abdolreza Rahmani Fazli as interior minister and Mostafa Pour-Mohammadi as justice minister.

Rouhani has been most robust in defense of his government’s international diplomacy, recently calling critics of nuclear talks with world powers “political cowards” who “shake” at any kind of negotiations. Khamenei’s call last year for “heroic flexibility” in the talks made clear his backing for a deal that would curb Iran’s nuclear program as long as its rights were recognized. Despite the talks’ failure to conclude by the initial deadline of July set by November’s interim Geneva accord, an agreement remains possible by the extended deadline of November 2014.

Crucially for Rouhani’s standing in Iran, there have been improvements in the economy, due partly to tighter fiscal and monetary management and partly to optimism after Geneva, which included sanctions relief, including the release of frozen assets of around $7 billion over six months.

The Iranian rial has strengthened and inflation has roughly halved from over 40 percent. In tightening fiscal discipline, Rouhani showed in April his aptitude for tough decisions, introducing substantial increases in the prices of subsidized gasoline, diesel and compressed natural gas (popular with taxis in Tehran). In so doing, he confronted Iranians’ sense that cheap fuel is a national birthright by virtue of oil reserves of 157 billion barrels, 9.4 percent of the world’s total.

The government has also claimed a dramatic improvement in two sectors eased by Geneva — auto production and petrochemicals. Geneva’s effect on crude exports, halved to 1.1 million barrels a day by draconian United States and European Union oil and financial sanctions in 2012, is less clear. Geneva envisaged a freeze, but there are signs exports are edging upward, especially with growing levels of condensates.

However, these are not fundamental changes in sanctions. According to Djavad Salehi-Isfahani, one of the most well respected analysts of Iran’s economy, “manufacturers are still using cumbersome and costly channels to procure their raw materials and parts.” Official figures do show a drop in unemployment, with the Statistical Center of Iran reporting a fall from 12.1 percent during March 2012–March 2013 to 10.4 percent during March 2013–March 2014. The latest IMF report suggested that under current conditions it will rise “toward 20 percent by 2018” and many analysts in Tehran doubt that unemployment could be falling in an economy that is not growing.

Rouhani, who has characterized his government as one of “prudence and hope,” recently suggested Iran was sandwiched between “Iranophobia, Islamophobia, and Shiaphobia” on one hand, and a fear of “interaction” with the outside world on the other. Momentous as his first year in office has been, his second will be more so.

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Gareth Smith

Gareth Smyth has reported from around the Middle East for more than two decades and is the former Financial Times correspondent in Tehran.

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