Dealing with Iran’s Not-So-Irrational Leadership


Nothing expresses the widening gap between the mind frames of the Iranian ruling elite and their Western counterparts more than the headlines in their respective newspapers.  The American media, above all, have unilaterally resolved the intelligence questions over Iran’s nuclear program.  The New York Times leads the pack with articles and even editorials that assume Iran is building a nuclear bomb.1  The American media, once again, are doing damage control for their President — in this case, for the Bush Administration’s embarrassing Iran policy, especially after the December 2007 National Intelligence Estimate’s assessment that Iran abandoned its weapons program in 2003.  Western reporting on Iran’s nuclear program is based on the underlying assumption that the Iranians are irrational in their policy-making, therefore Iran is a nation with whom diplomacy is a waste of time.  A nuclear Iran has been framed by the Israeli hawks as an “existential threat,” the framing adopted by the American media as well: Iran is a suicide-bombing nation.  If allowed to build a nuclear bomb, they will strap it on and destroy Israel even if it means the destruction of their own country and its 70 million inhabitants.2 The logical way to deal with such irrational self-destructive characters is to preempt them by destroying them.  This logic looms behind Western news about Iran and remains a possible rationale for a military attack on the country.

We in the US are thus constantly bombarded with alarming media distortions of Iran’s politics, as well as Sy Hersh’s frenzied articles on the next possible date for a US and/or Israeli attack on Iran.  The mood in Tehran, in contrast, is calm.  Iranian newspapers daily herald their nation’s breakthroughs in forcing the West to the negotiating table and creating ever more diplomatic and economic deals with other countries.  They show a regime that feels itself well entrenched as a political system, one that is actively building its infrastructure at home and making important gains abroad.  For them, Iran’s nuclear program is symbolic of national independence and pride.

While the US pressures do pose a nuisance, they are in no way destabilizing the regime.  In fact, for the section of the Iranian ruling elite who advocate greater independence from the West, such pressures are only further proof of US injustices.  Moreover, the US economic sanctions, putting a Western face on the structural roots of Iran’s economic problems, create a greater opportunity — an impetus as well as an excuse — to advance their domestic and international agenda.   So, even as the sanctions compound the changes Iran’s economy is going through, the Iranian government is capable of managing their impacts.

Looking inside Iran, one sees a much more lucid and coherent set of national and international goals on the part of the country’s leadership than can be seen from the outside, though this is a leadership that is trapped by its own material interest, fickle and discontent population, and need for long-term stability, like any other ruling elite.

Even a cursory look at Iranian society and media shows that the most serious and far-reaching political debate and contention inside the country is not over the nation’s nuclear program.  It is, rather, over Iran’s rocky attempts at privatization and the government’s role in creating a free market.  This debate — named after Article 44 of Iran’s Constitution, reinterpretations of which promise the transfer of government-owned industries to the private sector — is what animates the country’s ruling elite and is where competition among them is being fought out.  In this context, the controversy over Iran’s nuclear program — contrary to the goals of those who make military threats and impose economic sanctions against it — is relevant for the nation’s ruling class only in so far as the fallout from Western reaction affects their competition over the country’s capitalist development.  Whether it is out of confidence in their internal and international popularity or mere hubris, the Iranian regime is basically going about its business on its own terms and is expecting the world to follow.

Iran’s Supreme Leader Ayatollah Khamenei laid out his perspective for the nation’s future in his annual Norooz address to thousands of pilgrims in the Iranian holy city of Mashhad on March 21 of this year.  Alongside Iran’s inalienable right to nuclear technology and its unwavering support for the oppressed across the globe, Ayatollah Khamenei positioned extremely worldly concerns over Iran’s economy within the ideological framework of the Islamic Republic: “Creating new wealth is a form of worship.”  Thus, the Supreme Leader articulated the Iranian version of American evangelicals’ “Prosperity Doctrine” as he put his official stamp on Iranian government’s open and unapologetic turn towards market-driven economics.  The current fight amongst the discordant and competitive ruling elite, whose referee is Ayatollah Khamenei himself, is over who controls and benefits from this increasingly privatized market.  It is one of the many ironies of the Islamic Republic that, as it increases its criticism of the West and resistance to Western pressures, it also increases its emulation of the worst kinds of American-led IMF/World Bank-style structural adjustments.

Despite his image in the West, this is the primary role that President Ahmadinejad is playing inside Iran: he is using the autocratic and repressive state apparatus to privatize public industries, weaken labor laws, and take away government subsidies.  He is, of course, doing so with an eye on building a stronger base for the regime and for his own re-election campaign next year.  And in that sense, Ahmadinejad is becoming a double-edged sword for the leadership of the Islamic Republic.  He is at once re-mobilizing some of the popular support for the regime and building a base for himself in order to operate as independently as possible.  He recently voiced frustration at the limitations on the powers of the President to implement his vision, the same frustration that former President Khatami expressed a few years ago and was denounced widely as being out of step with the regime.  So, while Supreme Leader Khamenei has proclaimed his pleasure at President Ahmadinejad’s strong stand against the West and has even hinted that the President should expect to be re-elected to a second term next year, establishment politicians such as former President Rafsanjani and former Speaker of the Parliament Nategh-Nouri have deepened their criticism of Ahmadinejad, his economic policies, and his attempts at repressing competitors.

In this process, one of the interesting outcomes of Ahmadinjead’s leadership is the fact that a layer of the ruling (and relatively more liberal) clerics are being marginalized at the hands of lay technocrats.  Many of these technocrats are veterans of the Iran-Iraq war, and they see themselves as, once again, picking up the banner of the Islamic Revolution from the indolence-prone mullahs.  They hope to further the independence of Iran while supporting other developing countries suffering under Western imperialism.  The nuclear program plays the ideological role of buttressing this sense of independence, and there are no forces inside Iran who are allowed to openly disagree with it.  Because of the West’s choice to ignore the Khatami presidency’s desire for rapprochement, President Ahmadinejad can say his own strong stand against the Western pressures is the only way to deal with Iran’s adversaries.  And as far as the Iranian establishment is concerned, he has been proven right.  The current negotiations between the West and Iran have come to allow Iran a lot more leeway than those under President Khatami, whose nuclear negotiation team was willing to accept the West’s preconditions before starting dialogue.3  The West rejected President Khatami’s overture, whereas President Ahmadinejad can point to his own success at bringing the West to the negotiating table under more favorable and just terms for Iran.

Though Ahmadinejad’s contentious political and economic policies have made a huge dent in Iran’s ability to join the international economic system — a stated foreign policy goal of the Rafshanjani-Khatami period throughout the 1990s — there is a logic to Ahmadinejad’s seemingly reckless behavior: he is not only forcing the world to accept Iran’s nuclear program, he is also actively and forcefully turning Iran’s economy away from being focused on the Western market.  Today Iran is becoming an increasingly independent nation.  And it was the decision in the West to not engage with Iran 10 years ago that has allowed Ahmadinejad to take Iran on its current course.  “A decade ago, the most relevant debate inside Iran was how [we] should try to build trust with the West in order to join the world market,” explains Bijan Khajehpour, Chairman of Atieh Group, one of Iran’s most respected investment consultants.  “Today, the debate is detached from the West and focuses on developing Iran’s [economic] potential by first building this alliance with other developing nations with the objective of becoming the region’s strongest economic and technological power [in the Persian Gulf and Central Asia].”

This trend finds ideological expression in President Ahmadinejad’s talks of reviving the Non-Aligned Movement, and economically he is also putting his money where his mouth is.  Iran’s economy is moving towards development that relies on the formation of a second-tier economic alliance comprising sectors within the world economic system that have as tenuous an access to the capitalist core as does Iran.  These possible allies include the BRIC nations (Brazil, Russia, India, and China) and smaller developing nations, as well as smaller sectors within the West.

“Ever since September 11, there is a desire by many in the region to keep their money invested nearby [rather than in the US or Europe] and Iran is benefiting from this tendency,” Khajepour explains.  He continues to lay out a number of examples of the way Iran is making economic progress in spite of the international sanctions: offering gas and other commercial incentives to various nations in the region in return for financing projects inside Iran, the building of the “Peace Pipeline” to Pakistan and India, and working with mid-sized European companies (such as OMV of Austria, E.ON Ruhrgas of Germany, and Edison of Italy) that are less vulnerable to US sanctions.  And with the closing of many major European banks in Iran, smaller banks are filling the void.

China is a big factor in this dynamic.  According to Mohsen Shariatinia, Senior Researcher at the Asia Research Group of the Center for Strategic Research, a major official think tank, “under the Rafsanjani period Iran was closely watching and following the Chinese model of development . . . basically learning how to turn a post-revolutionary society into a consumerist one.”  Yet, as the Iranian ruling elite proved themselves much less cohesive and disciplined than their Chinese Communist Party counterparts, and as the American “War on Terror” and Iran’s nuclear program marginalized Iran in the world economic system, they have had to change their models.  “Now,” continues Shariatinia, “China has become Iran’s primary economic partner and Iran has become China’s largest trading partner in the Middle East.”  China is more an ally than a model, and with China’s growing energy needs and Iran’s large oil and gas reserves, there is no reason to believe that this trend will stop.

“The sanctions [in effect] have slowed down Iran’s drive to be a major world energy power,” Khajepour sums up, “but they have encouraged the Iranians to seek other means to build their potential.”  This will be Ahmadinejad’s legacy if the Western threats and sanctions continue and Iran is left to develop its newly-liberalized economy under the current terms.  Looking at financial news in the Iranian newspapers since the Ahmadinejad presidency, one can see that Iran has strengthened its economic ties not only with its closest allies (Venezuela, Cuba) and neighbors (Iraq, Lebanon, Persian Gulf States) as well as the BRIC nations, but with such diverse countries as South Africa, Senegal, Nigeria, Ghana, Eritrea, Sudan, the Congo, Algeria, Belarus, Slovakia, Ukraine, Sri Lanka, Malaysia, Indonesia, Philippines, North and South Korea, Vietnam, Bolivia, and Nicaragua.  This list is by no means exhaustive.

Of course, this kind of economic development will not bring the Iranian public the consumerist bliss of Dubai, Beirut, Amman, Cairo, or any other place that is developing on a Western model.  But for a society that has been denied access to that kind of consumption pattern for 30 years, the inability to participate in the glitter that pours out of the satellite channels is not such a big deal.  In fact, developing a model of a strong-yet-humble economy is exactly what has created the air of popularity around Ahmadinejad — both nationally and internationally.

The social repercussion of this process within Iran is the marginalization of the class that prioritizes the Western consumerist culture.  “Ahmadinejad is [in fact] actively destroying that class,” laments Alireza Alavitabar, a liberal journalist and editor of numerous newspapers all of which were eventually banned.  “And in order to do this, he has relied on the support of the rural and urban poor and the large sector of government employees.”  Ahmadinejad is in effect re-animating and re-strengthening a social base which had been marginalized in the aftermath of the Iran-Iraq war.  In the name of “Islamic banking” the Ahmadinejad administration has been giving away no-interest loans (Sandogh Mehr-e Reza and Qarz ol-Hassaneh) which are giving promises and perks to the poor and the marginalized, alongside short-term opportunities that they have been denied since the end of the Iran-Iraq war.  This social base is, in many ways, in opposition to the classes that were benefiting from the Rafsanjani-Khatami period and who were seen as too unbeholden to the regime and its ideology.

Recent US media reports have shown that the US-led economic sanctions have had only a limited ability to stop even US exports to Iran.  In fact, the total amount of US exports to Iran has steadily increased in the past 8 years.

As the sanctions are wiping out the long-standing economic relations with major European banks and manufacturers, the Iranian government is turning its attention to smaller European firms and, more importantly, welcoming companies from Asia, Latin America, and Africa.  The government is encouraging a new layer of Iranian capital to benefit from this interaction.  The sanctions have slowed this process, too, but they have not stopped it.  In fact, it is not clear to what extant it is possible to hinder it through the sanctions.

The question that remains to be asked is: if even the US itself is continuing economic engagement with Iran, then what purpose do the sanctions and threats of attack serve politically . . . other than allowing the faction of the establishment in Iran that is most antagonistic to the West to use them to strengthen itself and its roots in Iranian society?

1  For the most recent examples, see New York Times editorials, “Adrift on Iran,” April 11, 2008 and “Belatedly Making Nice,” March 31, 2008; and Steven Lee Myers and Nicholas Kulish, “Iran Unmoved by Threats on Its Atomic Program,” New York Times, June 12, 2008.

2  The clearest elaboration of this line may be found in Yossi Klein Halevi and Michael B. Oren’s “Israel’s Worst Nightmare,” TNR, January 30, 2007.  But just about every other article in TNR pushes the same line.

3  See Kaveh Ehsani, “The Populist Threat to Democracy,” MERIP 241, Winter 2006.

Kouross Esmaeli is a journalist and filmmaker living in New York City.  Ramin Karimian is a scholar and researcher in Tehran.

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