Iran’s former judiciary chief, Ebrahim Raisi, was inaugurated as the country’s new president on August 5. His assuming office consolidates the control by Iran’s ultra-conservative and hard-line factions over its key executive, legislative, and judicial branches of power. While Raisi has offered few indications about his policy choice, as a former judge he is likely to enforce strict policies to protect the Iranian Revolution while he is president. And he is likely to work to achieve this goal by tying Iran’s foreign policy agenda to rescuing the country’s ailing economy.
According to the Statistical Center of Iran, the country’s inflation rate was close to 43% in June, though the International Monetary Fund predicted better rates of 36.5% to 39% by the end of the year. The Chamber of Commerce reported average economic growth rates at 0% over the past 40 years, one indicator of the powerful impact of sanctions and the steep economic price Iran has paid to pursue its nuclear program. In recent months, Iran has been facing strikes in its oil sector and protests persist over water and power shortages. Raisi hopes to build up Iran’s revenue-generation capacity by: boosting economic productivity and increasing non-oil export revenue; encouraging the Iranian diaspora to return money home by promising to offer a secure investment environment; and promoting the private sector.
But these measures are hardly enough, even assuming they can be implemented (the effort to attract Iranian diaspora money may be a particularly tough sell for Raisi), unless Tehran improves its foreign relations. Raisi wants to promote trade with neighboring countries instead of waiting for Western powers to ease the U.S.-led sanctions regime against Iran. He has vowed to prioritize “economic diplomacy” to boost investments and has been advised by experts to explore preferential trade agreements, diversify imports, encourage joint ventures, and set up trade promotion offices in Iran’s 15 neighboring countries. To this end, Raisi has called for strengthening regional bonds especially in the Gulf region, and he met with an Emirati envoy on the sidelines of his inauguration.
Raisi also wants to improve ties with Saudi Arabia to buffer Tehran against bigger threats from Israel or the United States, mindful that Riyadh will likely encourage diplomacy over war. In the same vein, he has indicated he is open to having transparent talks with other Gulf Arab states to reduce regional tensions. But Iran could fail to appease its neighbors by insisting on advancing its ballistic missile and nuclear programs and continuing to offer support for regional allies or proxy forces. Tehran won’t likely compromise its military capabilities so will risk a degree of continued tensions with its Arab neighbors.
These issues were not addressed in the nuclear talks that led to the Joint Comprehensive Plan of Action in 2015. The latest Vienna nuclear talks between Iran and world powers were suspended until Raisi took office, but they could resume in September, offering an opening to reengage with Iran. Raisi will likely try to minimize diplomatic differences with neighbors to maximize convergence in this period, although Iran will almost certainly continue to project military power in the Gulf waters as a means to reinforce its security interests and project force, as a reminder to neighbors of the potential costs of choosing confrontation over commercial and diplomatic reengagement. Raisi’s response to the recent attack on the Mercer Street tanker, which Iran rejects involvement in, was to stress that Tehran would strictly enforce its deterrent capabilities in the Gulf.
With Raisi’s priority of addressing economic challenges, his main goal in the nuclear talks will be to seek relief from U.S.-led sanctions on Iran’s oil, banking, and financial sectors. Although making such a priority actionable – and a persuasive position for the world powers, particularly the United States – while maintaining his hard-line bona fides will be his main challenge. Raisi says he will support any diplomatic plan that leads to the lifting of sanctions.
Tehran insists that it does not want the nuclear talks to drag on if results are not achieved and tire everyone in the process. Iran is currently enriching uranium without restriction and could demand, if some of the hard-liners in the Parliament insist, an end to all U.S. sanctions and especially those enforced by the administration of former President Donald J. Trump in exchange for limiting enrichment, a likely nonstarter for the administration of President Joseph R. Biden Jr. But Raisi might be inclined to offer a number of nuclear concessions to achieve some sanctions relief. To focus minds in the negotiations, Iran has also halted inspections of its nuclear facilities by the International Atomic Energy Agency but could allow resumption of the inspections if its conditions at the negotiating table are met, given that it agreed to temporarily allow some IAEA inspections this year.
Raisi’s proposed Cabinet members, including Hossein Amir-Abdollahian as foreign minister, are not raising as much concern inside Iran as they are abroad. Iran-based analysts admit that the new selection for foreign minister is different from his predecessor Mohammad Javad Zarif who was considered an acceptable diplomatic figure around the world. Western media outlets and some Iranian sources describe Amirabdollahian as an anti-Western, hard-line figure. At the same time, he is a graduate of Iran’s diplomatic school run by its Foreign Ministry, and he earned a doctoral degree in international relations from Tehran University. A former ambassador to Bahrain, he also served as deputy foreign minister and director general of international affairs of the Islamic Consultative Assembly. He is also a facilitator of Iran’s foreign policy just like any other Iranian foreign minister rather than its mastermind, and although his contacts with Iran’s Islamic Revolutionary Guard Corps and purported familiarity with its operations across the Middle East could make him less welcome in Western capitals, it remains to be seen if he will be a far less persuasive advocate for Tehran’s policies in the West than his predecessor.
Nonetheless, Amirabdollahian speaks English and Arabic, and is seen by a few policy experts in Iran as a less radical figure compared to candidates previously considered for the job who have strong track records of being inflexible in negotiating with world powers, including Saeed Jalili and Ali Bagheri Kani. In a recent interview, Amirabdollahian insisted that Iran’s foreign policy outreach will never be restricted by the outcome of the nuclear deal, and that Raisi will pursue a balanced and proactive foreign policy. Amirabdollahian’s statements suggest that he could try to increase Iran’s engagement with the world. Finally, in an expression significant to the extent it still represents his views, he mentioned in a tweet years ago that negotiating with Washington was never a taboo subject in Iran.
Once his appointment is approved by Iran’s Parliament, Amirabdollahian could be tasked with restructuring the Foreign Ministry. An increasing number of experts are calling on the government to boost the ministry’s capacity to promote economic diplomacy and criticizing Zarif for doing too little in this area by focusing too much on the outcome of the nuclear talks. Without fixing the economy first, policy experts in Iran think the country has fewer incentives – in terms of deals and contracts – to offer to encourage international, particularly European, companies to significantly expand economic ties with Iran. And despite the emphasis on Iranian decision makers to take the necessary steps to get Iran’s economic house in order, if Iran’s economy worsens rather than improves, there is an emerging consensus among Iran’s political elite that the country might even fail to negotiate its nuclear file in a manner that serves Iran’s interests as it would have fewer strong cards to play. In this event, the analysts warn that the nuclear deal may no longer have any real economic value for Iran.
It remains to be seen if Iran’s new government will be able to reengage with its neighbors to build up the economy. To increase his chance of success, Raisi has promised to explore a strategic agreement with Russia and fully implement the terms of Iran’s recent 25-year strategic agreement with China. Almost all foreign policy decisions are made through consensus among major power brokers in the country rather than by Iran’s president. But, at least in the short term, as long as Iran’s economy is spiraling downward, its new government will have some incentive to ease tensions abroad. Whether it is sufficient to trump countervailing imperatives that have driven Iran’s foreign policy in the region and calculations about the need to entice or push neighbors to trade and engage diplomatically remains to be seen.