Supreme Leader Ayatollah Khamenei in his annual Nowruz address advised that in the upcoming presidential election campaign, “candidates should not make the economy of the country contingent on others’ decisions and lifting of the sanctions and plan the economy of the country on the basis of the existence of sanctions.”[i] Further, the Leader argued that the ideal president should have ‘revolutionary jihadi’ performance. The ‘revolutionary jihadi’ or ‘hizbollahi’ is often attributed to the conservative Islamist worldview defined by an ideological commitment to the supremacy of the institution of Velayat-e-Faqih (the Guardianship of the Jurist) and resistance to the Western hegemony in the cultural, economic and geopolitical domain. While signalling resolve in context of negotiations over the revival of the Joint Comprehensive Plan of Action (2015), Khamenei’s remarks underscored the failure of Rouhani government’s pragmatist agenda that linked the country’s economic development with ending sanctions and re-integration with the international economy. The severe economic fallout of Washington’s ‘maximum pressure’ and the pandemic has entrenched the economic role of the Islamic Revolutionary Guard Corps (IRGC) and empowered them politically to the extent they are likely to dominate the scene in the presidential election scheduled for June 2021.
Battle of Economic Visions
Rouhani had sought to fix the structural crisis of the Iranian economy beset with sanctions, corruption and populist mismanagement of preceding administration by instituting economic reforms like limiting public spending, ending monopoly, and promoting foreign direct investment and trade liberalisation.[ii] Concerns of the working class on chronic unemployment and inflation were not prominent in Rouhani’s post-sanctions recovery agenda of economic liberalisation and austerity budget.[iii] Economic grievances were at the core of the nation-wide protests in December 2017, which boiled over after the introduction of higher fuel prices and were supported by the conservative political groups.
With the onset of the Trump administration’s ‘maximum pressure’ campaign, the concept of ‘economy of resistance,’ first coined by the Supreme Leader in 2010 during Obama-era sanctions, was elevated to the overarching concept advocating diversification of the economy and boosting of domestic output. The concept has lent itself to competing interpretations by various factions. Rouhani administration framed its economic reform agenda, including reconnecting Iran with the global economy, while promoting financial reforms and anti-corruption measures and transparency matching international standards as part of the quest for ‘resilient economy,’ often used interchangeably with the ‘economy of resistance.’ The long-drawn political contestation over four pieces of legislations constituting Rouhani administration’s ‘Action Plan’ for boosting financial reporting and transparency and bringing the country in compliance with the intergovernmental Financial Action Task Force (FATF) have been interpreted as a proxy for domestic political battle between proponents of integration versus those adhering to a policy of cautious and limited engagement with multilateral international institutions. After a moderate parliament approved the bills at the end of 2018, the two contentious bills related to Iran’s ratification of the Combatting the Financing of Terrorism (CFT) bill and also accession to the United Nations Convention Against Transnational Organized Crime were blocked by the Guardian Council and are under review with the constitutional arbitration body ‘Expediency Council’ (EC).[iv] Iran was put on the FATF blacklist in February 2020.
The Rouhani government has maintained that passing the bills is necessary for establishing international banking ties, especially with Europe and that the efforts to ease sanctions will be futile unless the tough counter-measures or financial barriers imposed as a result of FATF ‘blacklisting’ of Iran are not removed. Hardliner critics have argued that ratification would give away sensitive financial information while forcing Iran into making greater concessions in the future, particularly with reference to its support of regional groups such as Palestinian groups and Houthis in Yemen, which have been designated as terrorist organisations by the US and the European Union.[v] Mohsen Rezaei, the Secretary of the Expediency Council (EC), calling the pending bills a ‘tool of diplomacy’ argued that the Council will delay a decision on Tehran’s accession to the FATF as long as the US sanctions remained in place. He reasoned that full compliance with regulations will hamper Iran’s efforts to circumvent the sanctions. In early March, 2021 more than 200 deputies in the conservatives-dominated parliament signed a statement critical of the FATF legislation urging EC chairperson Sadegh Larijani to return the legislation back to the parliament for further review. The request was rejected for the lack of a legal basis.[vi] Upon Rouhani’s request, Khamenei extended the deadline for consideration of bills by the Council beyond the end of official Iranian calendar on March 20.
As foreign investment failed to materialise in the wake of the US withdrawal from the deal, Khatm al-Anbiya, IRGC’s engineering arm and construction conglomerate took over mega projects, especially in oil and gas industries and infrastructure development.[vii] The ‘resistance economy’ framework helped legitimise an expansive economic role for IRGC to new areas such as auto industry, the third biggest industry in the country, which has been traditionally controlled by pragmatists and their conservative allies in the business community.[viii] In June 2020, Ali Hajizadeh, commander of the Aerospace Force visiting Khodro, Iran’s largest vehicle manufacturing company, promised to share IRGC’s technological experience, while insisting that IRGC will have an advisory role and will not enter the industry.[ix] Notwithstanding the importance attached by hardliners to self-reliance in high-technology and diversification away from oil to limit the impact of sanctions, they are increasingly attaching priority to finding new international outlet for economic activities, especially in the neighbourhood. In key theatres of Iran’s regional activism namely Syria, Iraq and Lebanon, analysts have pointed out a shift from Tehran’s policy of committing non-refundable aid aimed at securing political interest to making investment in mineral resources and agriculture to improving cross-border transportation. The reasoning goes that economic interdependency would make it harder for the US to force regional states to shut down Iranian economic activities in their countries.[x]
Further explicating on his economic vision for the country, Ayatollah Khamenei in his Nowruz speech emphasised on the “necessity for revolutionary associations and popular charity organisations to enter the economic arena.”[xi] The IRGC has played a key role during the pandemic, building modular hospitals, virology units leading disinfection operations and has established a new charity Imam Hassan Headquarters to offer safety net to 3.5 million low-income families.[xii] The powerful para-governmental charity foundations called Bonyads affiliated with the office of the Supreme Leader and IRGC with business subsidiaries active in sectors ranging from agriculture, tourism, manufacturing and oil and gas have also stepped up their activities. The largest of such foundations, Mostazafan foundation reporting to the Supreme Leader was put under sanctions by Trump administration in November 2020. Under a hardliner administration, not only will IRGC further consolidate its economic role in key sectors, provision of welfare and safety-nets, deemed essential to check discontent among the lower-middle class conservative constituency, will be tasked with well-resourced religious charities and para-governmental agencies.
Conservatives-Hardliners in the Ascendant
Since the JCPOA, the key achievement of the Rouhani administration, unravelled with the Trump administration following a policy of ‘maximum pressure,’ principlists or hardliners have been in the ascendant. The conservative camp secured an easy majority in the February 2020 parliamentary elections however, not without infighting as a number of reformist and moderate candidates, including ninety incumbent parliamentarians were disqualified by the Guardian Council. Candidates from hardliner Paydari, (the Persian acronym for the Front of the Islamic Revolution Stability) did not find a place in the list of the candidates fielded by SHANA (Persian acronym for Council for the Coalition of Revolutionary Forces). Mohammed Bagher Ghalibaf, former IRGC commander and Tehran mayor who is a key figure in SHANA, used his influence to revise the list but the changes failed to persuade the hardliners who came out with their own list that excluded Ghalibaf.
Earlier in the 2017 presidential election, Ghalibaf, a three-time presidential candidate had withdrawn from the race to strengthen the chances of Ebrahim Raisi against Rouhani. Raisi, the head of the Asthan-e-Qods Foundation won thirty eight percent of the votes and following his defeat was appointed by Khamenei as the head of the judiciary. While Ghalibaf’s name during his tenure as the mayor of Tehran (2005-2017) and Police Chief (1999-2005) has been associated with some high-profile corruption cases, Raisi has launched a publicised campaign against corruption in the judiciary.[xiii] The Combatant Clergy Association, Iran’s leading conservative group and Unity Council of Principlists has declared support for Raisi even as he is yet to declare his candidacy.
Hossein Dehgan, former IRGC commander who served as defense minister during first term of Rouhani and senior military advisor to Khamenei has declared his candidacy. He will also seek to utilise his lack of factional affiliation to position himself as a potential ‘consensus candidate.’ Dehgan as the General Manager of the IRGC’s investment arm, Bonyad-e Taavon-e Sepah during the post-war reconstruction period, played a crucial role in driving economic activities of the IRGC.[xiv] Mohammad Saeed, until recently the president of Khatm al-Anbiya, resigned from the position declaring his intention to contest for the top executive office. Subsequently, he was appointed as the special advisor to Hossein Salami, the Commander in Chief of IRGC. These candidates argue that their technocratic experience in the IRGC makes them fit for the top executive office and advance the vision of ‘resistance economy’. Abbas Ali Kadkhodaee, the spokesperson for the Guardian Council, responsible for vetting the candidates, recently clarified that persons with the military background are entitled to run for elections, only support for a political faction or party in election by military personnel is banned. Reformists, on the other hand have tended to argue that as per the constitution president needs to be elected from politicians and not from the military staff.[xv] IRGC, for its part is not likely to support a specific candidate in case of multiple candidates with IRGC background vying for the post.
To galvanise popular interest and participation in the election, a critical issue given the low turnout in last year’s parliamentary elections, participation of the reformist and moderate camp becomes important. Ali Motahari, a reformist figure who has been critical of the rising political influence of IRGC, while declaring his candidacy, argued that “the Guardian Council needs to confirm the qualification of those who accepted the Iranian Constitution to increase the rate of participation (in the election).”[xvi] Foreign Minister Javad Zarif, who has on many occasions dismissed that he will run in the elections and is currently mired in a controversy after his speech critical of the influence of the IRGC on country’s foreign policy was leaked to the public, has been shortlisted along with Mohsen Hashemi Rafsanjani by the moderate-reformist grouping Functionaries of Iran’s Construction Party. However, given Supreme Leader’s criticism of Zarif’s remarks it is rather unlikely that the Guardian Council will clear his nomination in the event Zarif announces his candidacy.
The hardliners’ approach to the nuclear issue is driven by brinkmanship rather than flexibility and compromise and whipping up of popular support for their nationalist-revolutionary narrative that western hegemonic pressure does not work on Iran. In December 2020, the hardliner dominated parliament passed a bill compelling the government to start enriching uranium at 20 percent purity, install advanced centrifuges and suspend compliance with the Additional Protocol to the nuclear Non-Proliferation Treaty after three months from the ratification of the legislation and if the US failed to lift the sanctions. Hardliners have forced Rouhani to harden the Iranian stance in the ongoing stalemate over sequencing of compliance with the JCPOA so as to deny moderates the opportunity to use the positive diplomatic momentum for electoral gains. In February last week when Iran suspended implementing Additional Protocol, it reached a technical agreement with the agency that will allow data to be collected without IAEA being able to access it immediately[xvii] As Rouhani administration is seeking to clinch a deal to revive the JCPOA before the elections, Mohsen Rezaei, former IRGC chief who came third in the 2013 presidential election and a potential candidate in the upcoming election, argued in early March that Tehran will return to discussions if Washington was to provide ‘clear signals’ that the sanctions which were imposed after the US exit from JCPOA are lifted within a year.[xviii]Rezaie’s remarks were nullified by a formal statement from the foreign ministry.[xix]
In a far-cry from the earlier decades of the revolution when matters of economy were sidestepped by a political class focused on a revolutionary agenda, over the last decade economic matters have acquired much salience as reflected in the traction that the concept of ‘economy of resistance’ has gained across Iran’s different political factions. Reformists and moderates have linked the economic development to normalising Iran’s international relations, a course which would be difficult to reverse even in the event of a conservative victory in the upcoming elections. Many analysts have pointed out that after the ascent of hardliners in consolidating their dominance in judiciary, parliament and potentially the top executive office is a strategy to create a more harmonious and homogenous political system in the context of critical challenges of sanction pressure on the economy, negotiating with the United States and succession of the Supreme Leader.[xx] However, the more immediate challenge would be to realise the ‘maximum participation’ Ayatollah Khamenei appealed in his Nowruz speech.
*Dr. Deepika Saraswat, Research Fellow, Indian Council of World Affairs,
Disclaimer: Views expressed are personal.
[i]‘Zionist Regime’s Normalising of ties with pitiful governments cannot save it,” KHAMENERI.IR, 21, March, 2021, https://english.khamenei.ir/news/8433/Zionist-regime-s-normalizing-ties-with-pitiful-govts-can-t-save(Accessed on 7 April, 2021)
[ii]“Iran’s Rouhani urges end to isolation, calls for reform,” CNBC, 4 January, 2015, https://www.cnbc.com/2015/01/04/irans-rouhani-urges-end-to-isolation-calls-for-reform.html(Accessed on 6 April, 2021)
[iii]Batmanghelidj Esfandyar, ‘Iranian Protests and the Working Class,’ Lobe Log, 1 January, 2018,https://lobelog.com/iranian-protests-and-the-working-class/ (Accessed on 7 April, 2021)
[iv]‘Iran's FATF gridlock spawns 'death threats,’ Al-Monitor, 28 January, 2019,
[vi]Sinaiee Maryam, Iran Might Delay FATF Decision Over Continued US Sanctions, Iran International, 3 March, 2021, https://iranintl.com/en/world/iran-might-delay-fatf-decision-over-continued-us-sanctions(Accessed on 7 April, 2021)
[vii] Saraswat Deepika. ‘Economy of Resistance and Regional Economic Outreach: How Iran is Coping with the US ‘maximum pressure’ Indian Council of World Affairs, /show_content.php?lang=1&level=3&ls_id=4310&lid=3198#_edn6
[viii]Behravesh Mayasam, ‘Corruption is a Job Qualification in Today’s Iran,’ Foreign Policy, 26 June, 2020, https://foreignpolicy.com/2020/06/26/corruption-is-a-job-qualification-in-todays-iran/(Accessed on 8 April, 2021)
[ix]‘IRGC says to provide technology to automotive industry’ Tehran Times, 29 June, 2020,https://www.tehrantimes.com/news/449405/IRGC-says-to-provide-technology-to-automotive-industry(Accessed on 7 April, 2021
[x] Azizi Hamid Reza, ‘Iran Seeks Economic Benefits from Syria,’ 22 February, 2019, Atlantic Council, https://www.atlanticcouncil.org/blogs/iransource/iran-seeks-economic-benefits-from-syria/
[xi]‘Zionist Regime’s Normalising of ties with pitiful governments cannot save it,” KHAMENERI.IR, 21, March, 2021, https://english.khamenei.ir/news/8433/Zionist-regime-s-normalizing-ties-with-pitiful-govts-can-t-save(Accessed on 7 April, 2021)
[xii]‘Headquarters Founded to Coordinate Charity Efforts amid COVID-19 Outbreak in Iran,’ Tasnim News, 14 April, 2020, https://www.tasnimnews.com/en/news/2020/04/14/2243415/headquarters-founded-to-coordinate-charity-efforts-amid-covid-19-outbreak-in-iran(Accessed on 7 April, 2021)
[xiii]‘No one allowed to violate law, top judge says,’ Tehran Times, 13 March, 2021, https://www.tehrantimes.com/news/459121/No-one-allowed-to-violate-law-top-judge-says(Accessed on 8 April, 2021)
[xiv]Aarabi Kasra, ‘The Militarisation of Iran’s Presidency: The IRGC and the 2021 Election,’ Royal United Service Institute, 1 October, 2020, https://www.rusi.org/commentary/militarisation-iran-presidency-irgc-and-2021-elections(Accessed on 7 April, 2021)
[xv] ‘Construction Party wants Mohsen Hashemi as presidential candidate: member,’ Tehran Times, 15 March, 2021,https://www.tehrantimes.com/news/459169/Construction-Party-wants-Mohsen-Hashemi-as-presidential-candidate(Accessed on 8 April, 2021)
[xvi]‘Main battle in presidential polls will be between principalists, HashemiTaba predicts,’ Tehran Times, 26 February, 2021, https://www.tehrantimes.com/news/458529/Main-battle-in-presidential-polls-will-be-between-principlists (Accessed on 9 April, 2021)
[xvii] Murphy Francois, ‘IAEA chief Grossi describes black box-type deal reached with Iran, Reuters, 23 February, 2021, https://www.reuters.com/article/us-iran-nuclear-iaea-deal/iaea-chief-grossi-describes-black-box-type-deal-reached-with-iran-idUSKBN2AN1UU (Accessed on 9 April, 2021)
[xviii]‘Iran ready to resume nuclear talks if US lifts sanctions within a year, official says’ Middle East Eye, 5 March, 2021,https://www.middleeasteye.net/news/iran-ready-resume-nuclear-talks-if-sanctions-lifted-year (Accessed on 7 April, 2021)
[xx]Vakil, Sanam, ‘EbrahimRaisi: Will he Stay or Will he go?’ Atlantic Council, 6 April, 2021, (Accessed on 9 April, 2021)