Politics and economics in Iran

Pie in the sky

Four months after the historic nuclear deal, Iranian President Hassan Rouhani has been left practically empty-handed. UN sanctions against Iran have been largely lifted, but those still in force are so complex that few financial institutions in Europe are daring to conduct any business with Tehran, where there is a growing sense of disappointment – leaving rich pickings for the radicals. By Ali Sadrzadeh

"Reason and hope". These two words are generally abstract concepts. But not in Iran. There, they are part and parcel of the practical and daily vocabulary of politics and journalism. In Iran, reason and hope are not peddled as intellectual or surreal notions, they even have names and addresses. Here they crop up as frequently in speeches and the media as terms such as grand coalition, member of government or head of state do elsewhere.

As a result the two words have become banal linguistic tools of everyday media life. Some praise reason and hope above all else, others criticise and mock them. And then there are those who look away and shrug their shoulders when they hear mention of either.

A sophisticated plan

The reason for this is because right from the outset, President Hassan Rouhani has been using the two words to describe his government. As it turns out, this was no one-off occurrence, no throwaway political slogan. It was evidently a considered plan. Meanwhile the terms have mutated into a semi-official designation, a quasi epithet of his government. Since Rouhani took office three years ago, the head of state has never said "my government". This avoidance of the possessive pronoun helps him a great deal, rhetorically and in terms of content. Particularly since it goes against the grain of Persian culture and communication to say "I" or "mine" too often. That′s why Rouhani always uses the third person when he has an announcement to make.

They go something like this: The government of "Tadbir va Omid" – reason and hope – has decided such and such, is pursuing such and such a policy, will implement the following decisions – and so on. And because reporters are well known for making edits and taking shortcuts, readers are frequently confronted with formulations such as: "Reason and hope" want to cut subsidies, raise taxes or despatch a delegation.

This opens the door to irony and malapropism – so wide in fact that for some, it is hard to imagine that elsewhere, the words reason and hope are used with respect and humility.

Iranian President Hassan Rouhani (photo: Mehr)
"While we're on the subject of reason, compared with that of his predecessor Ahmadinejad, Rouhani's government is the absolute embodiment of rationality. After all, with the historic nuclear deal, Rouhani has indeed saved the nation from total isolation, even from a military confrontation," writes Ali Sadrzadeh

Undeniable achievements

While we're on the subject of reason, compared with that of his predecessor Ahmadinejad, Rouhani's government is the absolute embodiment of rationality. After all, with the historic nuclear deal, Rouhani has indeed saved the nation from total isolation, even from a military confrontation.

Before he took office, the threat of war could be heard daily, vociferously and from various sides; it is known that at the time "all options" were on the table in many of the world's capitals. It is Rouhani's achievement to have brought Iran back from the brink of the abyss with reasonable diplomacy and to have eased the devastating isolation of the country.

All observers agree that most of the members of his cabinet are prudent technocrats. When they want to praise – or criticise – the head of state, Iranian journalists write that Rouhani's cabinet has more graduates of US universities than any other in the world apart from Washington.

This life, the next and the nuclear deal

The term "hope" was also a considered choice by Rouhani, who uses it very specifically. As an educated theologian and preacher, he is well aware of the impact of this word on every devout Shia Muslim. After all, it is the waiting in hope for the redeemer, for the hidden 12th imam, that constitutes the core of Shia Islam. The Islamic Republic or the rule of the cleric is essentially nothing other than an Ayatollah deputising in the name of the hidden Imam whose timely reappearance must be anticipated by every Shia Muslim. Otherwise, he is not a true believer.

So reason and hope were strategic terms aimed at connecting this life and the next. Expressed in the banal terms of domestic and foreign policy, this means: with a prudent foreign policy – or in other words yielding over the nuclear question – real danger can be averted from the Islamic Republic. And that is the highest religious duty, for which one – as Khomeini, founder of the Republic, once said – is even allowed to neglect daily prayers and fasting.

With prudence, one can also hope for the lifting of sanctions and economically speaking, for a better life. Hope and expectation also have an earthly meaning.

Brochure about investing in Iran at the German-Iranian Business Forum in Berlin (photo: Getty Images/AFP/J. MacDougall)
Dawning of a new economic age for Iran? These days, top European politicians and business leaders are queuing up to talk to Tehran. Business meetings are being held in quick succession and there is a confusing mass of studies and expert reports on the possibilities presented by the mega-market Iran. Since the lifting of sanctions, German big business in particular has been chasing a number of lucrative contracts with the country. Germany′s exports to Iran had practically halved in recent years

Three years after he took office, Rouhani has successfully walked halfway along this path. The Islamic Republic is no longer threatened by war. The sense of international isolation has now largely dissipated. Where, during the Ahmadinejad era, a senior member of a European ministry would only have travelled to Iran if it was absolutely necessary and then, only in secret, top European politicians and business leaders are these days queuing up to talk to Tehran. Business meetings are being held in quick succession and there is a confusing mass of studies and expert reports on the possibilities presented by the mega-market Iran. In the tourism sector too, the country has now advanced to become something of an insider tip.

Derision and dismal reality

But nevertheless, hopes for a better life have yet to be realised – things are not moving as quickly as Rouhani promised, or as people wanted to believe they would. The unemployment rate continues to rise and poverty with it; official figures put the number of Iranians living below the absolute poverty line at one third of the nation's population of 80 million.

"Hope is dwindling" was the ambiguous headline of a report in the ultra-conservative daily ″Keyan″ last week, which claimed that since reason and hope began governing the nation, 7,000 factories have been closed down, each of them with at least 50 employees.

It feels like a new era: if, in the past, one wanted reliable information on the Iranian economy, opposition and foreign media were an indispensable source. This is no longer the case today. Radical media have now mutated into the mouthpiece of the impoverished. The ailing economy is their main focus. "Reason and hope were nothing other than empty promises to ensure accession to power," is the message of the powerful hardliners, repeated in a variety of formulations in the media they control.

But quite apart from their political motives, the radicals' snapshots come very close to reality. Then again, Rouhani's government is certainly not, or not primarily responsible for that. Were one to compile a list of those responsible for the misery, Rouhani's government would certainly rank right at the bottom. At the top of the table, alongside the Iranian radicals, would be those holding power in Washington who want to thwart Obama's policy on Iran.

Security guard at the Mahshahr petrochemical plant in Khuzestan (photo: picture-alliance/dpa/A. Taherkenareh)
No quick fixes for Iran′s faltering economy: owing to restrictions imposed on the Iranian oil industry as a result of the nuclear issue, the country has only been producing 2.85 million barrels of oil a day. With a number of sanctions still in place, European financial institutes also remain cautious. The US in particular is still upholding numerous restrictions – business transactions still may not be conducted in US dollars

Central Bank governor as a key witness

The sanctions against Iran have evidently only been lifted on paper. In actual fact, as far as everyday business is concerned, the US finance department has put in place some practically insurmountable hurdles. This is because since 2008, Iranian banks have been prohibited from conducting any US dollar transactions, thus preventing Iran from accessing its foreign reserves in its many dollar accounts held abroad.

Because this ban – which also affects dollar accounts held by European banks – remains in force, it provided the trigger for an uncharacteristic outburst two weeks ago on the sidelines of the spring meeting of the International Monetary Fund (IMF) in Washington. Valiollah Seif, the governor of Iran's Central Bank, a man usually described as calm and composed, had unusually sharp words for the US administration. He described the situation of Iranian banks still being prevented from accessing their funds held in foreign accounts and conducting a large volume of business as theft and extortion. It contravened the agreements reached as part of the nuclear deal, said Seif. Since he made this statement in Washington, the head of the central bank is now regarded by the hardliners as a witness in the indictment against "reason and hope".

The first 33 Iranian banks have at last been reintegrated into the Swift system. But they are still barred from making any dollar transactions. And it does not matter whether an Iranian bank is the contracting authority for or the recipient of payments.

A European bank can be penalised in the US for converting Euros into dollars, or vice versa, for an Iranian client. This is the reality following the lifting of sanctions – and this, at a time when most international trading is conducted in dollars.

Foreign Minister Javad Zarif (left) being congratulated in the Tehran parliament on 17 January 2016 following the historic nuclear agreement (photo: Getty Images/AFP/A. Kenare)
Premature rejoicing: Iran′s foreign minister, Javad Zarif (left) receives the congratulations of fellow parliamentarians on 17 January 2016 following closure of the historic nuclear deal. Now he is appealing to the US. No one should believe that a new future will dawn in the Middle East "if we fail" says Zarif

Blocked by the Republicans

The US Finance Department had pledged to cancel this regulation, but nothing has happened so far. Bankers in Europe say uncertainty remains because it has not been made clear to the banks which business they are allowed to conduct and when. To avoid problems with the US judiciary and billions of dollars in fines, many therefore steer clear of doing any business with Iran.

The Wall Street Journal reported two weeks ago that the US Finance Department planned to issue European banks with special permits allowing them to conduct dollar transactions with Iran. Barely had the report been published, Republican senators announced plans to present Congress with a draft law to maintain the dollar restrictions on Iran.

"Reason and hope" are under threat, were the words used by Iranian Foreign Minister Javad Zarif in a guest contribution to the Washington Post published last Wednesday. The article reads like a cry for help addressed to those who wield power in the US. No one should believe that a new future will dawn in the Middle East "if we fail", wrote Zarif, in a tone that warns and implores in equal measure.

If the Americans don't want to do business with Iran themselves, that's their problem: "But they shouldn't prevent the Europeans from trading with us."

In recent days, Zarif has repeated this sentence in Washington dozens of times. Is anyone listening to him? It's difficult to say. In Tehran, Rouhani is finding it increasingly difficult to make it clear to his opponents and his supporters that "reason and hope" could still bear fruit.

Ali Sadrzadeh

© Iran Journal 2016

Translated from the German by Nina Coon

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