Impact of Sanctions on the Current Political Situation in Iran
Professor of History at Baruch College, New York; Adviser to the Campaign in Solidarity with the Iranian People’s Green Movement
Date of Interview: October 13, 2012
Source: CSIPGM Website
Thank you for giving us the opportunity to have this interview with you. Before anything else, please give us an overview of the impact of sanctions on the current economic situation in Iran.
The economic situation is really serious because of the decline in the value of the rial. And that is partly caused by sanctions, but not wholly. The sanctions have aggravated the situation; they have been the final straw on it. Pressure on the rial has been there for quite a while for a number of reasons. One, the rial has always been artificially a bit high because the government has tried to bolster it. Secondly, there has been inflation because of the printing and distribution of money, and the way Ahmadinejad has been spending money during the last eight years. That has been a long-going process, and of course people in the Central Bank have been warning about the dangers of it and the inflation.
On top of all that, of course, has now come the sanctions and the feeling in the markets that the government does not have that much reserves. The government has been very secretive about how much reserve it has. It probably has more reserves than people think it has. But the fact that the government has introduced two types of exchange rate — one, the official, more favorable exchange rate for priority goods, for importing such things as food and essential commodities; and another rate for less essential goods with drastic cutting of the ability to get dollars for things like student scholarships and so on — has added to the general feeling among the public and the markets that the government does not have much on reserve. So, people have been trying to buy anything except for rial. Money has been going into buying gold. Generally, then, people have been trying to avoid having rials. And that has been the main reason for the summersaulting decline of the rial during the past three weeks.
There is not much the government can do to establish confidence short of hoping that sanctions will not go further and that Iran will be able to sell oil and get the revenue to support the fundamentals of the economy.
How is the government handling this economic pressure? Is it just transferring the economic pressure on to the public, or is it trying to avoid that? It seems that the former is happening.
I think the government is basically thinking in terms of almost a war economy. If the sanctions continue then they need to have enough money to buy essential goods, especially imported food and certain spare parts that are essential for the industry. So, it is very much like the past Iraq war period where the government priority was basically to have enough foreign currency to buy what is essential. But then, of course, that means you have a very strong austerity economy for consumer goods, and they generally hurt the public.
Of course, during that war people were willing to go along since this was a serious threat to national security. But the present situation is somewhat different. I am not sure if the same political support for the government that existed when Iraq invaded Iran exists now. So, the government is thinking in terms of sort of war economy, but war economy works only when you have public support. And public support exists when people feel that there is a legitimate reason for national emergency. In the present situation many believe that Ahmadinejad’s policies have got Iran in this mess and that if they had a government with a much different policy there would be no such crisis.
It appears that this situation has created conflict within the leadership in Iran. There is a lot of blame going around among various factions, most of which is against Ahmadinejad and his policies. I don’t know if you read the recent interview with Rafsanjani. It seems that they are bringing him back to the stage — or he himself is taking advantage of the situation as the so-called “leader of reconstruction” in the past decades — to present him as the “savior.” In that interview, he talks about the formation of a kind of “national unity government,” supposedly under his leadership, as the solution to the crisis. How do you see Rafsanjani’s return to the center stage at the time when two of his children were just imprisoned and he himself is constantly under attack by the Ahmadinejad faction?
I think, from the Iranian leadership’s point of view, Rafsanjani’s policy would be the solution to the present situation. Especially if Obama is elected in November, it would make sense for Iran to be able to negotiate with the United States. That could help relieve the sanctions and hence relieve the pressure on the economy. So, the Rafsanjani policy is considered a solution….
What Rafsanjani policy are you referring to?
His policy would be basically to come to some agreement with the United States over enrichment and the nuclear standoff. And this is something that the Larijani brothers and the previous negotiators would favor. But you don’t necessarily need to have Rafsanjani to carry out the Rafsanjani policy. It could be other conservatives, people like the Larijanis or others, whom the Supreme Leader could appoint to do that.
In the past the Supreme Leader said that Iran could not negotiate with the United States. That was a no-no! But that no-no has already ended. When Ahmadinejad was willing to negotiate directly with the United States, it was clearly with the consent of the Supreme Leader. So I don’t think that taboo is any longer there. The future president, whoever it may be, could very much follow a Rafsanjani type of line without bringing in Rafsanjani himself.
But wasn’t Rafsanjani, during his active period in Iranian politics — of course he has always been active behind the scene — a symbol of pro-West, IMF privatizations in the country? Wouldn’t the re-appearance of Rafsanjani, or a Rafsanjani type of policy, on the Iranian scene be a step backward for the Iranian economy and the problems that people are facing?
Privatization is a separate issue. The foremost thing is the question of enrichment and the nuclear standoff with the United States. This is the most important issue. As to privatizations, Ahmadinejad has been pursuing the same policy. In the absence of a real, popular alternative, all others are going to be either conservatives or populists like Ahmadinejad. They are all pursuing the same basic policy of privatization and other capitalist economic policies.
But, in a critical situation like this where the country is being threatened, the really important issue at present is coming to a settlement with the United States over the nuclear issue. Here, I think, even Ahmadinejad seems to be willing to do that. But because of his baggage and all the things he has said in the past eight years, he is not going to have the ability to negotiate with the United States. But someone with a Rafsanjani perspective, or Khatami perspective, would be able to deal with Obama.
So, do you think they are going to ditch Ahmadinejad? Given the tremendous magnitude of the economic pressure, don’t they need to do something quickly? What do you think will happen between now and the next presidential election in Iran?
I don’t think they have to ditch Ahmadinejad. His term extends beyond the transfer of power in Washington. If Obama is re-elected in November, it would make sense for Khamenei to appoint a negotiator that would be able to negotiate directly with the United States as soon as possible after November. A few months ago, U.S. and Iran came pretty close to making a settlement on the nuclear issue. That could still be picked up and something could be delivered. In fact, few months ago Iran was already willing to compromise, but it was the Obama Administration that could not compromise because of Israel. But after the election, Obama would be more in charge to be able to make a deal. Then, he would not have to worry about electoral politics and being denounced as “appeaser” and so on in the American election.
So, I think it would have to be someone who directly represents the Supreme Leader, and not someone associated so much with Ahmadinejad talking about the Holocaust and his baggage, that Ahmadinejad brought to the table.
As you said, any policy aimed at solving the problem will need to have people’s support. With the austerity plan already in place, and with the emerging mass protests against economic conditions, what is going to happen inside Iran while the political process of finding an alternative to Ahmadinejad and his policies is unfolding?
There will be a period between the American election in November and the presidential elections in Iran. In that period I think the pressure on the Iranian economy could be reduced. So, by the time the Iranian presidential election occurs, this explosive economic crisis may not be there.
But it seems that the U.S. is refusing to lift the sanctions unless Iran fully submits to its demands, and even then, not all of the sanctions are going to be removed.
As I said, the most urgent issue is the current critical situation and its impact on the future of the country. Overcoming this urgent crisis requires a solution to the nuclear standoff with the United States. Obama’s response is presently influenced by the US presidential elections. But once Obama is re-elected, the difference between his position and Israel on how stringent their demands are will become clearer. Obama seems to be willing to accept having some amount of enrichment. His demand is not stopping the enrichment totally. With that sort of position Iran will be able to negotiate. During the election, when the American president is being pressured by Romney and Israel to be as tough as possible, they cannot come to the table and say Iran can have some enrichment. So they are saying that we cannot remove sanctions until Iran stops all enrichment gives us guarantees that it will not enrich in the future. This, of course, is unacceptable for Iran.
However, after the election, I think the Obama Administration would be much more flexible and would say that Iran could have some level of enrichment but with some oversight — which already exists and wouldn’t be a major concession to Iran. In fact, the presidential debate made the difference between the Obama Administration and the future Romney Administration very clear. The Obama Administration’s position is that under no condition Iran can have a bomb. Romney’s position is that under no condition Iran can have the capacity to make a bomb. This is a very important difference….
This is the Israeli position too….
Yes, the Israeli position also is that under no condition Iran should have the capacity to make a bomb.
It seems that one way or another Iran is going to be stepping back and making concessions. Rafsanjani’s policy, which seems to have been responsible for the rift between him and the Revolutionary Guards leadership during the past decade, was to leave the enrichment process to foreign countries and import the enriched uranium from abroad. If this policy were adopted as a compromise, wouldn’t it make Iran’s nuclear energy hostage to Western powers?
I don’t think it will make a big difference because, in the past, Iranian position has been that they were willing to enrich under supervision and control. So, this is already a sort of hostage situation. I think it is more about the question of levels of supervision and control. Khamenei has always accepted that there would be some restrictions on Iran’s uranium enrichment.
You mentioned the issue of the lack of a real, popular alternative. Rafsanjani is now calling for a “national unity government.” Do you think this is possible at all at this late stage, given the existing pressures and factional divisions? How do you see the current factional arrangements? Who is siding with whom and against whom at this stage?
I am not sure what Rafsanjani exactly means by a “national unity government.” But in a crisis like this you do need to have national consensus.
Under the present conditions, you can’t have only one faction within the ruling circle to lead an advance its own exclusive policy. You really need to have a coalition government in which the Green Movement has representation so that whatever agreement is reached with regard to both foreign and internal policy, it has everyone participating in it.
This is where I think you need a very different thing from Ahmadinejad’s policy, which has been very exclusive during the past years — there is only one line and anyone who doesn’t follow it is basically marginalized.
Therefore, Rafsanjani, or anyone else, would need to have a much more unified government where everyone is participating.
So, do you see the freedom of the reform movement as a precondition for achieving this national unity in the leadership of the country?
Definitely. If you want to have everyone participating and having a role in the settlement, or even in a national concession, there has to be much more relaxation on the reform movement. There has to be much more opening up, like freedom of the press, expression and assembly, and freedom of political prisoners, so people feel that they are part of the political process. Now, of course, when there is an opening up there will always be people who will criticize or denounce any policy that the government makes. But they could live with that if there is enough public support for it. I think there is now enough public support for a settlement on the nuclear issue.
Do you think the leadership of the Islamic Republic is now moving in the direction of political openness, or is moving toward a more repressive internal policy and unilateral handling of the nuclear issue without any input from the public?
If Khamenei basically moves more to the right and becomes more repressive, while at the same time becoming also more intransigent and unwilling to meet Obama half way — if Obama agrees to Iran having enrichment but not to a high level — if that happens, then I think the regime will be serious crisis. For the first time in over thirty years, I would say, the regime would be in danger of basically unraveling.
From the very beginning, the more pragmatic politicians like Rafsanjani and Khatami argued that you really don’t want to escalate the nuclear issue to the point that there will be heavy sanctions. Ahmadinejad’s position was that no, the U.S. will never take us to the UN and get the sanctions. And when the U.S. tried to do that, he argued that the Europeans will stop it. And when the Europeans didn’t, he then said we can rely on the “third-world” countries to stop it. But, of course, he simply didn’t realize that the “third-world” countries do not have a veto power.
And in the process, he actually antagonized the Europeans more than Iran had ever done. So, some of the European countries like Germany and France are now actually more militant against Iran than the United States. So he has done almost the impossible thing: alienating the Europeans more than the Americans!
Given the present critical situation and need for political openness as solution, as a step toward coming to a national consensus or agreement on the policy, it seems that Iran is at an important turning point. What, in your view, can or should the Green Movement do at this stage to at least push the direction of the internal situation toward a more open society and a more united leadership? What would be a proper response by the Green Movement at this time? What steps should the Green Movement take at this stage?
Internally, I think the Green Movement should insist on opening up the system, especially on less censorship of the press, on freedom of expression and assembly, and on freedom of political prisoners. But in foreign policy, the Green Movement shouldn’t try to criticize any negotiations. Clearly it is in Iran’s interest to come to a nuclear settlement. To criticize any negotiation as a sell-out is beyond Iran’s national interests. I am sure that the Green Movement will not be tempted to do that, but some conservatives may be. Doing so may win some popular support for a while, but in the long run it would be disastrous for the country.
Do you have any suggestions for specific tactics on the part of the Green Movement? How should they enter the scene right now, given the fact that Rafsanjani is entering the scene from his own angle? How can the Green Movement create pressure from below to facilitate a pro-people solution?
The main focus of the Green Movement should be on mobilizing its social base and strengthening it. Especially under the present unbearable economic pressures on the people, supporting and advocating people’s economic demands must ben given priority. At the same time, pressure should be put on people like Rafsanjani to support much more the idea of opening up the political process, and especially the freedom of expression and the press. I don’t think Rafsanjani would be against that. One reason: his own daughter has become so prominent as she is still serves time prison. This can be a bridge towards the reform movement.
Given your vast research on the history of Iranian social movements in the past, can you give us some historical examples of how, in similar situations in the history of Iran, people have used proper tactics to advance the cause of national and popular interests?
In the past, we have had major crises where there has been an opening up of the system, for example during the Mossadeq period and the Constitutional Revolution. In such situations political parties do have an impact, sometimes negative. The danger is in people trying to out-radical everyone else, saying they are more nationalistic or more radical than everyone else; and that those who are making the decisions are selling-out or betraying the national interests. That is an easy way of trying to out-do everyone else. On the national level, at the time when the present crisis on the nuclear issue is very serious, such an approach can be counterproductive.
Going back to the oil crisis, people who accused Mossadeq of not being militant enough and being willing to sell out Iran’s interests, which was not true, in fact undermined Mossadeq’s government which eventually led to a coup. It would have been much more logical to continue supporting Mossadeq’s policies because they represented Iran’s national interests.
In the present situation, too, it is in the interests of the country to have enrichment, but not necessarily high enrichment to the level that it is going to create a confrontation with the Western powers.
I assume you been following the “Campaign for Peace and Freedom” which was recently formed in Iran. What do you think of this kind of campaign?
I think that this would be something that any unity government must take seriously. You can’t really talk of unity if you are smothering a huge proportion of the public, the whole reform movement. People who think they were cheated out of the presidential elections must be brought back into the whole political arena.
So what is your general prediction for Iran in the immediate future?
I think a lot hinges on the American elections. In the last few months, the problem with coming to an agreement on the nuclear issue has really been in Washington rather than in Tehran. So I think so much of Iran’s future already depends on what will happen in the U.S. elections.
With everything depending on the U.S. elections, what do you think will happen if Romney is elected?
Probably there will be no negotiations because he will demand that Iran has to stop all enrichment. And of course Iran is not willing to do that. Then the next step for him would be to decide whether he is going to attack Iran militarily. And this will be disastrous.
The rational policy from the U.S. point of view would be to negotiate. The Obama Administration has realized that and is now waiting for an opportunity to do it after the election.
If Romney gets elected, I still think that he will not attack Iran but will continue with even worse sanctions; and that will create an even worse crisis in Iran. In that case, you will have a situation in Iran in which there will be basically a complete suppression and the establishment of total dictatorship to control the state, because there will be popular uprising. Then the only way the regime could survive would be to turn to its military and security forces.
Would Israel be emboldened to attack Iran if Romney is elected?
They would be, but I don’t think that would solve the problem. Clearly Israel does not have the capability of actually removing all the nuclear installations. So, that will not solve the nuclear issue either. It would only put back Iran’s nuclear program. The only way they could cause real damage is if there is a U.S. military intervention.
Don’t you think that an Israeli military attack will drag the United States, willingly or unwillingly, into a military confrontation with Iran?
Possibly, but not necessarily, because even the second Bush Administration, after the Iraqi fiasco, basically told Israel that the U.S. is not going to get involved militarily. Romney could choose to pursue basically the same Bush policy.
Thank you, Dr. Abarahmian.