The Islamic Republic

The West's Iran policy: For real change through trade

Despite four years of moderate rule under President Rouhani and the historic nuclear deal with the West in 2015, little has changed in Iran. There has been no improvement in the human rights situation and the lifting of economic sanctions has mainly benefitted companies close to the state, writes political analyst Ali Fathollah-Nejad

The ink on the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran nuclear deal, had barely dried when the then German Minister of Trade and Energy Sigmar Gabriel landed in Iran along with a large business delegation. The Germans were the first ones in; after all, Iran had been hailed by financial services firms as the most lucrative economic bonanza since the collapse of the Soviet Union.

The German vice chancellor′s visit attracted its share of criticism – critics said it was a premature, if not a plainly false signal to an unaltered authoritarian regime – but in Germany in particular and in Europe in general the renewal of economic and political ties with Iran was rationalised as an integral part of a "change through trade and rapprochement" policy and as such was nearly immune to objective appraisal.

The Islamic Revolutionary Guard Corps and its economic empire

Now, on the second anniversary of the Iran deal and after the end of President Hassan Rouhani′s first term in office, a balance can be taken: has Europe′s policy of rapprochement favoured change in the Islamic Republic or not?

There is still hope that an Iranian opening towards the West will provide the space necessary for Iran′s civil society to act as an agent of change. But the facts so far are hardly encouraging: firstly, the human rights situation under President Rouhani has only worsened.

Iran′s shameful record in executions per capita is only topped by China.

Secondly, the bulk of post-JCPOA trade agreements signed with Iran has benefitted the economic empires of the Islamic Revolutionary Guard Corps (IRGC), the Supreme Leader and the 'bonyads' – tax-exempt economic empires disguised as Islamic charities.

As the news agency Reuters reported in January 2017, of almost 110 agreements worth at least $80 billion signed after the July 2015 JCPOA, 90 were signed with companies owned or controlled by Iranian state entities.

In other words, the revitalisation of trade between Iran and the outside world has almost exclusively benefitted the authoritarian state.

Germany′s then trade minister, Sigmar Gabriel, meets the Iranian oil minister in Tehran (photo: picture-alliance/dpa/M. Kappeler)
Sigmar Gabriel in Tehran: Gabriel (at the time still trade minister) travelled to Iran with a body of industry representatives in July 2015, shortly after the signing of the nuclear deal, with the aim of securing trade contracts worth millions. But has the lifting of economic sanctions had any impact on Iranian society? "The facts tell a different story," writes Ali Fathollah-Nejad

This is hardly surprising given the reality of the Islamic Republic′s politico-economic power configuration, in which the private sector is only granted marginal status in the face of dominant state or semi-state entities.

Thirdly, Germany′s foreign cultural and educational policies have barely incorporated the spectrum of Iran′s diverse cultural scene; rather, they have often merely followed the paths offered by the Islamic Republic, prompting criticism by some Iranian artists. And fourthly, President Rouhani′s policy of "moderation" towards the West has been effectively undercut by an increasingly assertive, if not hegemonic, Iranian regional policy run by the IRGC and the Supreme Leader′s Office.

The futility of the "authoritarian stability" paradigm

As the 2011 Arab uprisings have dramatically shown, the West′s decades-long "courting" of Middle Eastern autocracies is barely sustainable. This policy of "authoritarian stability", long legitimised as a way to ensure stability, together with the neo-liberal nature of economic policy has allowed an elite to enrich itself while circumventing the bulk of society.

Ironically, the presidents of Tunisia and Egypt, both countries praised as economically successful and politically stable, were the first ones chased away by popular upheavals. The nature of relations with the West helped foster social inequality and cement authoritarian structures, which turned out to be the engines of the Arab revolutions.

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