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Iran after the presidential election: domestic and foreign policy challenges during the second term of Hassan Rouhani

The Institute for Foreign Affairs and Trade organised a roundtable discussion on the 12th of June 2017 entitled “Iran after the presidential election: domestic and foreign policy challenges during the second term of Hassan Rouhani”. The participants – Erzsébet N. Rózsa (Institute of World Economics, external expert of IFAT), Miklós Sárközy (Károli Gáspár University) and Gergely Ablaka (Eötvös Loránd University) – analysed the election and its effects on the Middle East. The event was moderated by Péter Wagner (IFAT).

All three experts agreed that Hassan Rouhani’s landslide victory in the first round of the election was highly probable. Erzsébet N. Rózsa reminded the audience that Rouhani had a similar, decisive victory in the previous election. Furthermore, in Iran, presidents usually govern for two terms. Miklós Sárközy highlighted that in 2017 Rouhani collected more votes than four years ago, thanks to his relatively broad supporting base in every social, ethnic and religious group. Gergely Ablaka added that after the death of Akbar Hashemi Rafsanjani in January 2017, it became uncertain if the reformist group could be kept intact. Nonetheless, the leading moderate politicians all stepped behind Rouhani. In addition, conservatives supported the unknown and poorly communicating Ebrahim Raisi as their main candidate. This ensured Rouhani’s victory.

Erzsébet N. Rózsa drew the attention to the fact that 70% of Iran’s population is under 40 years old, so they have no personal connection to the revolution in 1979. They voted for Rouhani despite the fact that the economic result of the nuclear deal is not yet tangible for them, unemployment is still high in the country. However, inflation has declined and the exchange rate of the rial was stabilised. Furthermore, Tehran improved the economic regulatory environment and the investment climate, they took steps to reform the banking system. Miklós Sárközy recalled that Rouhani was heavily attacked during the campaign for supporting the inflow of foreign capital, as it weakens local businesses. According to Gergely Ablaka, Raisi’s cash handout promises reminded the voters of Ahmadinejad’s failed economic policies. At the same time, he underlined that Rouhani’s primary challenge in the following four years would be to reduce unemployment.

The experts agreed that although the Iranian Revolutionary Guard Corps (IRGC) has a large margin of manoeuvre, they do not make decisions on strategic issues alone. Gergely Ablaka underlined that the economic weight of the IRGC is expected to fall back in the coming years. As the moderates had great results in municipal elections as well, fewer public orders would be given to companies linked to the IRGC. Regarding the recent terror attack in Tehran, Miklós Sárközy added that if Iranian involvement in the Syrian conflict become questionable in the public eye – because of the growing Iranian casualties – it can backfire to the IRGC.

Concerning the Gulf Cooperation Council (GCC) and Iran’s belligerent relations, Gergely Ablaka underlined that Tehran has a different relationship with each country. For instance, Oman and Kuwait maintains balanced relations with Iran. According to Miklós Sárközy Rouhani’s policy towards the GCC has failed so far, Tehran should show more gestures of goodwill to its neighbours. However Saudi Arabia is not ready to make any compromise in resolving the relations between the GCC and Iran. Erzsébet N. Rózsa emphasised that the blockade on Qatar was only partly due to their good relations with Iran. It is equally important that Qatar supports the organisation of the Muslim Brotherhood against the Saudi-led Wahhabism. In any case, Tehran is trying to exploit the current crisis of the GCC and tighten its relations with Qatar.