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With Rouhani re-elected, Iran remains steadfast on reforms

Muhammad Zamir | Published: May 28, 2017 20:48:12 | Updated: October 18, 2017 01:15:19

With Rouhani re-elected, Iran remains steadfast on reforms

Hassan Rouhani has been re-elected president of Iran on May 19. The reformist leader decisively defeated his principal rival Ebrahim Raisi, representing the conservative forces. Rouhani was victorious with 57 per cent of the total 41.2 million votes cast (23.5 million). Raisi got 15.8 million votes. 
About 55 million Iranians were eligible to vote in the election. To facilitate the process of democracy, the Iranian government arranged for 63,000 polling stations throughout the country which were guarded by nearly 350,000 members from the security forces.
The voting figures indicated a massive turnout and voting was extended by several hours to deal with the long queues outside the polling centres. The election essentially became a two-horse race after two other candidates, conservative Tehran Mayor M.B. Ghalibaf and reformist Jahangiri, dropped out from the race to boost the chances of Raisi and Rouhani respectively.
Rouhani, a 68-year-old cleric, identified his campaign as a choice between greater civil liberties and 'extremism'. As a reformist, he also, in the more liberal mould, pointed out that he believed in opening up Iran to the world, liberalising economic policy and encouraging foreign investment in the country. Through such projection, Rouhani was seen as a promoter of the nuclear deal and socio-economic improvements. Raisi, on the other hand, projected himself as the preferred choice of the powerful security establishment, advocating a more self-sufficient 'resistance economy' rather than being reliant on foreigners or being in favour of liberalisation.
One of the factors that has helped Rouhani and the reformists in the election (they gained control of the six largest Iranian cities including Tehran, the holy city of Mashhad and tourist hotspot Isfahan) has been the impressive rebound of Iran since Rouahani's government signed the much-acclaimed international deal in 2015 aimed at restricting Iran's controversial nuclear programme. This led to easing of sanctions and assisted in successfully containing rocketing inflation, stabilising the currency and spurring economy growth.
The International Monetary Fund (IMF) in its latest report has, however, suggested that "Iran is still some distance away from fully tapping its huge investment and trade potential, given its vast hydro-carbon reserves, relatively diversified non-oil sector, large domestic market and young and well-educated labour force".
On the other hand, many experts have observed that since the lifting of sanctions, Tehran has ramped up output of oil and has now reached well above pre-sanction levels. Crude exports in March briefly touched a level not seen since the Islamic Revolution in 1979. Iran appears to have benefited from the exemption accorded to it by the Organisation of the Petroleum Exporting Countries (OPEC), which agreed in November, 2016 to Iran's request not to restrict its output on the plea that it was still recovering from the shackles imposed on it through sanctions. This was very important for Iran, as it today, according to economists, ranks fourth and second respectively in the world in terms of proven oil and gas reserves respectively.
The lifting of sanctions and on-going reform agenda helped Rouhani to stabilise the economy in 2016. It grew by 6.6 per cent that year, driven by a record 52.2 per cent pick-up in oil-related output. 
The IMF now considers that Rouhani's re-election will enhance chances of Iran's stable and muted recovery, supported by higher oil prices and closer integration with the different layers and stake-holders of the global economy.
Consequently, after this election, it is now being forecast that annual gross domestic product (GDP) growth in Iran would be between 3.0 to 5.0 per cent for the next five years.
In the economic front, Rouhani has made it clear that he intends to not only tame inflation, ensuring that it stays below 10 per cent, but also halt rising food prices. Efforts in this regard will include stabilising the exchange rate of the Rial (Iranian currency). This has reflected sensitivity to the various comments made on Iran by the new Trump administration.
Iran now hopes that it will now be able to attract more foreign direct investment (FDI) through a holistic economic approach. The Rutherford Frontiers, a management analyst agency, has pointed out the possibility of more than US$ 12 billion coming into Iran in the near-term future.
In the first three months of 2017, Iran has initiated five new projects worth US$ 1.3 billion. It may also be noted that,  about 70 per cent of the current FDI since 2016 has been in the oil sector, with the rest largely split between metals, alternative forms of energy and the fast growing automative sector. This investment will help rebuild Iran's ageing oil infrastructure.
During the presidential election Rouhani  drew on the support of the middle-class and the younger generation by instructing banks to allocate at least 10 per cent of their loans to small and medium-sized enterprises and manufacturing companies. Some experts have, however, expressed caution about such a dynamics and pointed out that a wider spread of such 'discretionary loans' might eventually lead to a major jump in non-performing loans.
INTERNATIONAL RELATIONS: Will the re-election of Rouhani cast any shadow on international relations and foreign policy aspects pertaining to Iran's relationship with members of the Gulf Cooperation Council in general and Saudi Arabia in particular? One has to also evaluate the geo-political and strategic facets of future relationship of Iran with the United States in the context of Donald Trump's recent visit to Riyadh, Saudi Arabia.
The election coincided with facing increasing scrutiny and criticism of Iran from Donald Trump over its involvement in Syria, Iraq and Lebanon. He has gone to the extent of warning that Tehran is "on notice". It may be noted here that Iran's Quds Force, the wing of the elite Revolutionary Guards responsible for operations abroad, is providing crucial support to Syria's President Bashar al-Assad in his country's six-year war and is also active in Iraq, Afghanistan and allegedly is also involved in the conflict in Yemen (where the Saudi-led coalition is fighting Houthi rebels ostensibly supported by Iran).
Such a scenario has ostensibly led some commentators in the Financial Times to observe that "Sunni-led Gulf States fear that Tehran is establishing a sphere of influence dubbed the Shia crescent, running west of Iran through Shia-governed Iraq into Syria, where Assad's Alawite regime is clinging to power, and south to Lebanon, home to Shia militant group Hizbollah and also to a tense border with Israel".
The post-election dynamics in Iran has been marked by Russian President Putin congratulating Rouhani on his victory and confirming his readiness to continue "active joint work... in line with maintaining stability and security in the Middle East and the rest of the world". Britain and France have also congratulated the Iranian leader and praised the huge turnout of voters. They have urged Rouhani to continue his support for the 2015 nuclear deal.
Trump, on the other hand, has taken a different path, probably to satisfy his Saudi and GCC hosts. While advocating "starving terrorists of their territory, their funding, and the false allure of their craven ideology" during his speech in Riyadh on 21 May, he has also noted that "Iran gives terrorists all three - safe harbour, financial backing, and the social standing needed for recruitment. It is a regime that is responsible for so much instability in the region". He has also observed that "from Lebanon to Iraq to Yemen, Iran funds, arms, and trains terrorists, militias, and other extremist groups that spread destruction and chaos across the region. For decades, Iran has fuelled the fires of sectarian conflict and terror. It is a government that speaks openly of mass murder, vowing the destruction of Israel, death to America, and ruin for many leaders and nations in this room. Among Iran's most tragic and destabilising interventions have been in Syria. Bolstered by Iran, Assad has committed unspeakable crimes, and the United States has taken firm action in response to the use of banned chemical weapons by the Assad regime - launching 59 tomahawk missiles at the Syrian air base from where that murderous attack originated". He has then noted that "responsible nations must work together to end the humanitarian crisis in Syria, eradicate ISIS, and restore stability to the region. Until the Iranian regime is willing to be a partner for peace, all nations of conscience must work together to isolate Iran, deny it funding for terrorism, and pray for the day when the Iranian people have the just and righteous government they deserve". This anti-Iranian trend continued in his statements delivered during his subsequent stop-over in Israel.
Such harsh criticism, quite understandably, has been received by the re-elected leader in Tehran and Iran's Foreign Minister Javad Zarif with a degree of disdain. Analysts have in this regard observed that such frontal assault by Trump means that it is unlikely that relations between the US and Iran two countries will be ever as constructive as they were during the administration of former President Obama. They have however expressed hope that this downward trend would not imperil the nuclear deal.
The writer, a former Ambassador and Chief Information Commissioner of the Information Commission, is an analyst specialized in foreign affairs, right to information and good governance. 
muhammadzamir0@gmail.com
 

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