Iran: A New Deal?

On a recent trip to Tehran I visited a friend I hadn’t seen since June 11, 2009. We had met on the eve of that year’s presidential election, and my friend, a prominent campaigner against the incumbent, Mahmoud Ahmadinejad, had alluded somewhat unnervingly to the possibility of vote-rigging and violence.

Ahmadinejad’s landslide “victory” was indeed denounced as fraudulent by his moderate and relatively pro-Western challengers, Mir Hossein Moussavi and Mehdi Karroubi—along with millions of their supporters who took to the streets in demonstrations over the following week. On June 20, after a sermon the previous day in which the supreme leader, Ayatollah Ali Khamenei, warned of “blood, violence, and chaos” if the demonstrations didn’t stop, the security forces intervened with live ammunition, beatings, and waves of arrests.

My friend was among those who were jailed during the systematic crackdown that began that day, and that continued for the following two years or so, throttling the protest movement. Unlike many others who had been detained, he had not buckled under pressure to recant. Nor, he told me, did he feel ill-will toward the man, another high-profile detainee, whose denunciation had given the authorities a pretext to arrest him. My friend had spent a year in jail, including several months in solitary confinement. He was grayer than I remembered, as he talked to me while sitting in the same chair he had occupied that evening in 2009.

What is the significance of that thwarted election and its excruciating aftermath? The question seems almost academic now, for many of the goals of the opposition movement have ostensibly been achieved. Ahmadinejad is out of power—his second and final term ended last summer—and the country’s current president is a moderate, Hassan Rouhani, who has pledged to improve relations with the West, and whose current nuclear diplomacy with the United States and other world powers is a means to that end. Outside the country, and particularly in the US, there is little talk of 2009; the Obama administration’s approach to Iran was defined not then but in 2012 and 2013, when sanctions against the country were tightened considerably and the Iranians were brought reluctantly to the negotiating table.

And yet, if you want to understand the current diplomatic process and its prospects of success, the 2009 election has to be your starting point. It allowed Iran’s hard-liners to undertake a ruthless purge of reformists whom they regarded as traitorous, and to demonstrate to ordinary Iranians their unbreakable determination to retain power. These ordinary Iranians got the message, and it is one of the ironies of the 2009 protest movement that although several million people demonstrated in the streets, their movement disintegrated rapidly under pressure from the authorities and was ultimately suppressed with almost embarrassing ease. Still, two or three hundred people died.

Only from a position of unassailable domestic mastery could Ayatollah Khamenei countenance what for many Iranians was the extremely risky step of launching negotiations with the United States, the Islamic Republic’s unchanging enemy ever since the take-over of the US embassy in Tehran in 1979. The purge of reformists that followed the disputed election gave him that mastery, and the freedom to undertake a diplomatic initiative that he still regards with great distaste.

In the summer of 2009 I stood just a few feet away from the supreme leader during his sermon of June 19, as he denounced the “diabolical” British for allegedly instigating the disturbances, and his eyes bored—or so it seemed to me, the only Brit in the place—into mine. Until that sermon, friends and acquaintances who had voted for Moussavi or Karroubi had hoped that Khamenei, as undisputed arbiter of Iranian politics, would accomodate the demands they had made in the huge demonstrations of the previous few days, and order a new election. (It was taken for granted that Moussavi, the most popular of the two moderate candidates, would win the rerun.) In his sermon of June 19, the supreme leader scotched these hopes, endorsing the official results and effectively anointing President Ahmadinejad for a further four years.

In fact, as a sense of injustice prevented many of us from seeing at the time, the supreme leader could not have accepted Moussavi’s election without severely damaging his own position. Although Moussavi insisted that he was a loyal supporter of the velayat-e faqih, or guardianship of the jurist, the theocratic principle that confers absolute authority on the supreme leader at the top of Iran’s hybrid political system, it was no secret that many of Moussavi’s supporters were not. These men and women had been close to the reformist government of Ahmadinejad’s predecessor as president, Mohammad Khatami, and they had only been partially dispersed after Ahmadinejad’s election in 2005. Many worked in the private sector and the universities, holding out for a return to power.

Some prominent reformists had been forced out of the country by pressure from the hard-liners. From the West, dissidents such as Abdulkarim Soroush, a forceful proponent of the compatibility of Islam and democracy, and Shirin Ebadi, a feminist lawyer who won the Nobel Peace Prize in 2003, cast doubts on the regime’s claims to Islamic virtue. Ataollah Mohajerani, a Khatami-era minister whose liberal cultural policies of the late 1990s had made him a hate figure for hard-liners, bided his time in London. Shortly before the election, Mohajerani had taken part in a debate on Iran at the British Museum; his circumspection on the podium suggested a man trying not to jeopardize his chances of going home. In the days before polling, the streets of Tehran and other cities were thronged with Moussavi supporters celebrating a victory they regarded as a foregone conclusion.

Imagine that Iran’s Interior Ministry had declared a different victor on June 12. It is hard to see how a triumphant President Moussavi could have resisted pressure from his supporters to welcome exiles, liberalize the universities and the media, which had been all but stifled after four years of Ahmadinejad, and endorse a pluralistic, integrated view of the world—all anathema to hard-liners in the Revolutionary Guard, the seminaries, and other organs of power. A Moussavi government would have allowed more criticism of the country’s pell-mell nuclear development and its recklessly hostile rhetoric toward Israel, exemplified by Ahmadinejad’s wish that Israel be “wiped off the map” and his suggestion that the Holocaust never happened.

In Washington, America’s new president, Barack Obama, had recently indicated his readiness to coexist with the Islamic Republic, but the signs were that he would only accept the Iranian regime if it ceased projecting power and influence beyond its borders. The American opening was regarded by Iranian hard-liners as an amicably presented continuation of the old Bush policy of regime change, and they did not welcome it. Moussavi, on the other hand, would probably have advocated a more favorable response to Obama’s overtures.

In sum, there was every reason for Iran’s hard-liners to regard the possibility of a Moussavi government with foreboding, and from their point of view the crisis of 2009 had the advantage of encouraging the reformists to show their radical colors. Although the protests dwindled in size following Khamenei’s sermon of June 19, thousands of Iranians continued to demonstrate and speak out, not only against Ahmadinejad, but also against the supreme leader. Many of these were duly punished.

Moussavi and Karroubi (as well as Moussavi’s popular and assertive wife, Zahra Rahnavard) were first subjected to intimidation and then placed under house arrest, a form of incarceration they endure even now; there were thousands of arrests and numerous reports of torture in the detention centers. Students who took part in illegal demonstrations were suspended from their courses and barred from careers in the public sector, by far the country’s biggest employer. Some of the country’s brightest journalists ended up going to London, where they were hired by the BBC’s Persian-language service—which the authorities had accused of stirring up the post-election protests. Even Akbar Hashemi Rafsanjani, a former president and Moussavi’s most powerful patron, was put under heavy pressure. Two of his children were arrested and his control over important public and private institutions was curtailed.

Perversely, the upheavals that happened in 2011 in the Arab world also had the effect of strengthening the Islamic Republic. Some of the Iranians who had taken to the streets in 2009 were envious when dictators fell easily in Tunisia, Egypt, Yemen, and Libya, and Syria’s Bashar al-Assad looked as though he would be next. But the Arab revolutions are now widely (if prematurely) considered to have failed, leading not to freedom but to violence and uncertainty, and I have often heard Iranians express relief that their country is not awash with arms, like Syria; that it enjoys a significant degree of ethnic, linguistic, and cultural homogeneity, unlike Libya; and that its people—in contrast to the Egyptians—are not so idiotic as to topple one military dictator, and then have second thoughts and accept another.

Notwithstanding some violent separatism in the peripheral regions of Iranian Baluchistan and Kurdistan, which have Sunni majorities, Iran is one of the most stable countries in the Middle East. It is possible to drive the length of the country, a distance of some 1,400 miles, fearing only the lunacy of one’s fellow motorists. Recently, I was asked by a Western “security” contractor who had been active in Iraq and Afghanistan if there was a market in Iran for firms such as his. I told him I doubted it. The state takes care of personal security against everyday crime, and on the whole, the people—even bitter critics of the Islamic Republic—approve of its protection.

By the beginning of 2012, the opposition movement was dead and the reformists were scattered. But sanctions, which had intensified thanks to the efforts of the United States and the EU, were now hurting Iran badly. Oil revenues collapsed in 2012, with a calamitous effect on the national currency, the riyal, which halved in value; the economy went into recession, and inflation soared toward its mid-2013 peak of 42 percent. Unable to import parts or machinery, factories closed and unemployment rose to an estimated five million. Car production, for example, declined by about 40 percent between March 2012 and March 2013.

The misery of ordinary people was compounded by their knowledge that a small number of well-connected Iranians had made fortunes by helping the Islamic Republic evade sanctions. A series of high-profile corruption cases, one of them involving a businessman accused of owing the government more than $1 billion from oil sales he arranged, has revealed something of the private enrichment that has gone on while officials have been urging Iranians to build a spartan, self-sufficient “resistance economy.”

No one can be sure when the supreme leader decided to throw his weight behind serious diplomacy aimed at getting sanctions lifted. What is certain is that he did not want Ahmadinejad or anyone associated with him to be involved. Mercurial, noisy, and ultimately inconsequential, Ahmadinejad was despised not only by the reformists—for obvious reasons—but also by mainstream Iranian conservatives of the kind the supreme leader represents. The brand of Shia Islam that Ahmadinejad follows is anticlerical and chiliastic almost to the point of heresy; conservatives referred to his supporters as the “deviant current.”

As president, Ahmadinejad ostentatiously associated himself with Iran’s policy of increasing the use of centrifuges to enrich uranium, appearing in a white coat among the cascades of Natanz, the country’s main enrichment facility, and making light of sanctions. For all his espousal of the patriotic cause, however, he was given no leeway by the supreme leader to make foreign policy. So far as diplomacy was concerned, the United States would never have accepted him as an interlocutor because of what he had said about Israel.

The choreography of last June’s election of a president to replace Ahmadinejad reveals much about how the Islamic Republic operates. Ahmadinejad’s candidate, Esfandiyar Rahim Mashaei, was barred from running by a vetting body whose composition is heavily influenced by the supreme leader. The former president Akbar Hashemi Rafsanjani was also vetoed—his election would have reopened old wounds from 2009. But the same body, which also controls the voting process, did nothing to prevent the election of the only man on the ballot who could be described as a conciliator. Hassan Rouhani’s pledges to restore order to the economy, end the needless saber-rattling of the Ahmadinejad years, and solve the nuclear crisis through diplomacy won him just over 50 percent of the vote from a field of six—and no one has called his election “stolen.”

Rouhani is a British-educated cleric who is sufficiently trusted by the supreme leader to have acted as his adviser over many years. He is a regime loyalist who served as Iran’s chief nuclear negotiator in the early 2000s, when negotiations with Europe led Iran to suspend uranium enrichment in order to create time for negotiations that would set the conditions for future nuclear development. Iran resumed enrichment in 2005, amid accusations of bad faith on both sides. Rouhani is close to Rafsanjani and he is respected by many reformists. Arguably more important than all these qualities, however, are the bona fides that Rouhani established in the summer of 2009—by staying well clear of the “sedition.”

In Tehran a few weeks ago, I went to my local newspaper vendor to buy the morning papers. The front page of one of them, Etemad, carried a large photograph of John Kerry in a press conference next to a balding, bespectacled man with a goatee and wearing the collarless shirt of the Iranian mandarin. This was Mohammad Javad Zarif, Rouhani’s foreign minister, and to judge from the genial, alert, mildly ironical expressions on both men’s faces, they were not displeased to be in each other’s company.

As recently as a year ago, for an Iranian politician or journalist to suggest that Iranian and American officials should sit down and talk over their differences was to invite savage criticism and perhaps criminal charges. To ordinary Iranians, images such as that displayed in Etemad suggest a big change in Iran’s position in the world.

It all began last November 24, when Iran and the permanent members of the United Nations Security Council, in addition to Germany, agreed in Geneva to start a process of negotiations whose goal is ending the nuclear crisis of the past decade and readmitting Iran to global trade and acceptability. Under the interim deal signed at Geneva, which is due to last six months but may be extended, Iran has halted the parts of its nuclear program that could be put to military use. In return, the US and other leading nations have lifted sanctions on Iran’s automotive and petrochemical industries and are releasing, in stages, a few billion dollars’ worth of frozen Iranian assets. The United States has undertaken not to continue forcing down Iran’s oil sales by using coercive diplomacy against buyer nations, and to impose no fresh sanctions of its own.

Iran’s gains from Geneva are quite small compared to the estimated $5 billion that the Islamic Republic is losing every month as a result of the sanctions—or the almost $100 billion it has in frozen assets abroad. As Jessica Mathews of the Carnegie Endowment for Peace argued in these pages, “Iran gave far more than it got.”^* But Geneva’s importance inside Iran is above all psychological.

For many Iranians, the November deal converted hopelessness to optimism, and the government has done its best to foster this sentiment. Last December, Iran’s oil minister, Bijan Namdar Zanganeh, informed his fellow OPEC ministers that Iran expected to attract Western buyers back to Iran, and that oil sales would more than triple as a result—to four million barrels a day. The following month, President Rouhani attended the World Economic Forum in Davos, where he pledged “constructive engagement” and favorably impressed many of his fellow delegates. (Ahmadinejad never received an invitation to Davos.) Senior representatives of one hundred French companies were in Tehran in February to discuss their entry—or, in some cases, reentry—to the world’s biggest “frontier” market. Seminars on investing in Iran have been offered in Dubai.

Rouhani seems to understand that one of his chief advantages is that he is not Ahmadinejad. He has resisted the temptation to respond to the description of him made by Benjamin Netanyahu, Israel’s prime minister, as “a wolf in sheep’s clothing.” His government does not dispute that the Holocaust happened—the foreign minister, Mohammad Javad Zarif, has described it as “tragically cruel.” In February, the government made a large donation to a Jewish hospital in Tehran. (Iran has a population of nine thousand Jews, the biggest in the Middle East outside Israel.)

As the Rouhani government understands well, what has happened so far is a series of psychological moves, for while no foreign investment will take place until the current negotiations end in a deal and sanctions are lifted, each visit, each handshake, each act of sectarian tolerance strengthens the impression that Iran is in from the cold.

Inside the country, these impressions count. The riyal remains weak but had stabilized before a recent slide over the Persian New Year, and oil sales have risen a bit—from a low point of 1.2 million barrels per day to 1.4 million. Inflation is down a few points and car production is up. The country may even inch out of recession in 2014. Life for the average Iranian has not improved much since Rouhani came to power and many people will feel economic pain as the government continues the process, begun by the previous government, of dismantling energy subsidies—which seems likely to exert more upward pressure on prices. For all that, the fear that a bad situation might suddenly get dramatically worse has been dispelled. No longer is there talk of an imminent Israeli attack—as there was for much of Ahmadinejad’s presidency.

In Tehran, a highly informed observer told me that “the perception among people here is that the deal with the West has been done, the ongoing negotiations are essentially fine-tuning, and that it is only a matter of time before sanctions are lifted.” Such perceptions are overoptimistic, as the Obama administration and its allies point out. The main elements of a final deal, from Iran’s enrichment rights to its ability to conduct further nuclear research and the scope of future inspections of its nuclear sites, are a long way from being agreed on. Then there is the obstreperous mood of the US Congress, some of whose members share Netanyahu’s view that Iran is hoodwinking the West and that sanctions should be strengthened, not lightened. In the words of Catherine Ashton, the European Union’s foreign policy chief, on a visit to Tehran in March (another first: she never came as Ahmadinejad’s guest), the task of reaching a comprehensive agreement is “difficult, challenging, and there is no guarantee that we will succeed.”

It is possible that some on the Iranian side, expecting sanctions to erode over time, want to string out the diplomatic process. Europe and the United States are keen to prevent this, and following the visit of the French business executives to Iran President Obama warned pointedly that he would come down “like a ton of bricks” on those who violated sanctions. Sabotage of negotiations is another potential hazard. From the hard-liners in Tehran and Washington to the Netanyahu government in Jerusalem, the peace process is not short of opponents.

On March 5, Israel announced that it had intercepted a shipload of arms sent by Iran to armed Palestinian groups. There have been incidents of this kind in the past—most significantly, in January 2002, when Israel’s seizure of a similar consignment led President George W. Bush to include Iran in his “axis of evil.” This latest interception allowed Netanyahu, who was in the United States when it happened, an opportunity to contrast Iran’s murderous actions with the “smiles and handshakes” of a misguided diplomatic process. Whether or not the seizure was genuine or, as Iran has claimed, an Israeli concoction, reaction in Washington and Europe was relatively muted. There seems to be a determination not to allow incidents like this to imperil diplomacy.

Iran’s hard-liners also present obstacles, as was shown during the recent visit of Ashton. While in Tehran, she met several women’s rights activists, in addition to the mother of an Iranian dissident blogger who died in prison in 2012. The meeting seems to have been planned without the knowledge of Ashton’s hosts in the Foreign Ministry. Hard-liners excoriated her for abusing Iran’s hospitality and meeting “seditionists” on the sly. Opponents of the diplomatic process clearly intend to use incidents such as these to show the meddlesome nature of Iran’s negotiating partners—and the government’s naiveté in trusting them.

During his political campaign, Rouhani promised to improve Iran’s human rights record, but he has now subordinated this goal to the immediate task of solving the nuclear issue. Although some political detainees have been released from jail, many remain behind bars and freedom of speech is limited, with Twitter banned and public critics of the regime arrested—as in the case of Saeed Razavi Faqih, a former student leader who was detained in March after making a speech that was elliptically critical of the supreme leader. According to the UN, the Iranian judiciary has put to death at least 176 people this year alone, mostly for drug offenses.

Rouhani’s pragmatic approach is not surprising given his record of loyalty and circumspection. He clearly regards the supreme leader’s support as more important than that of the liberal Iranians who voted for him, and insofar as his main goal is to solve the nuclear crisis, his position makes sense.

Khamenei has said that while he does not oppose the nuclear negotiations, he does not expect them to succeed. For all the public distance he maintains, however, everything we know about the supreme leader suggests that he is closely involved in planning Iran’s diplomacy. He is said to have restrained Rouhani’s hard-line critics, giving the president all-important cover for his difficult mission. Nonetheless, his rhetoric remains noticeably more extreme than that of Rouhani, as was illustrated in his speech to mark the Persian New Year, when he again called for the building of a “resistance economy” and questioned the veracity of the Holocaust in the course of criticisms of what he regards as the West’s hypocritical approach to freedom of speech. So far, the hard-liners’ attacks have been pinpricks compared to the judicial and propaganda onslaught of which they are capable.

An unexpected convergence of events, starting with the elimination of the reformists and going on to the imposition of crushing sanctions by the US and its European allies, has created conditions that are more favorable to a deal between Iran and the West than they have been for years. Rouhani has raised high expectations, and the reaction of Iranian citizens, if they feel let down, are difficult to predict. However hard Iran’s diplomats, and, by extension, its supreme leader, bargain over the months ahead, they will not want to be the ones who walk away.

—March 25, 2014