Iranian politics is entering a delicate and perhaps pivotal period. Factional struggles, always lively, have intensified since July’s nuclear agreement with world powers, while the reformists are also pushing gently to return to mainstream politics.



The economy has slipped, perhaps back into recession, as Iran waits for financial and energy sanctions to ease early in 2016. While growth should resume next year, this is an awkward time for the government of Hassan Rouhani as elections loom in February for both parliament and majles-e khobregan (Assembly of Experts), the directly elected body of clerics that chooses the supreme leader.

Of all the political manoeuvring going on in Iran, that surrounding the Experts Assembly is the most opaque. And yet February’s election for Khobregan is potentially of historic importance given the reasonable chance that it will during its next eight-year term chose a successor to Ayatollah Ali Khamenei, who is 76 and who last year underwent prostate surgery.

The only previous succession - when Khamenei was picked by the Experts Assembly in 1989 to step into the large shoes of Ayatollah Ruhollah Khomeini - followed the bitter decision to end the eight-year war with Iraq with Saddam Hussein still in power. The next succession may well be more drawn out, but follows the similarly difficult decision to reach a nuclear agreement with world powers including the United States.

When Iran was in nuclear negotiations with the European Union in 2003-05, many principle-ists (fundamentalists) were concerned that the reformist government of President Mohammad Khatami would gain domestic standing from an agreement. Even though the reformists have been largely excluded from politics since the 2009 unrest, many fundamentalists now fear the same over President Hassan Rouhani.

Rouhani is essentially a conservative pragmatist, a man confident he can deliver and manage compromise both at home and in foreign policy. He and his negotiators, especially foreign minister Mohammad Javad Zarif, have not only reached a deal with the ‘Great Satan’, they have carried the bulk of the political class including Khamenei.

But opponents of the agreement are far from down. They know Khamenei wants their continuing support, and were encouraged by his warning to reformists and others, immediately after the nuclear agreement, not to “exploit” the deal and by his continuing stress on the dangers posed by the US. Vilayat-e faqih (‘rule of the jurist’) is a central constitutional principle in Iran, and no-one stresses the importance of loyalty to the leader more than the principle-ists.

On the other hand, Khamenei will not be leader for ever. Many will be thinking not just of their loyalty to the current leader, but their loyalty to the next one. In this sense, the caesura in Iranian politics up to February’s election is part of a longer period – almost an interregnum – that will last until a new leader is chosen.

Look in vain for real precedents. Khamenei was chosen in 1989 soon after the death of Khomeini, news of which had been held back to allow succession discussions to proceed without a public sense of crisis.

Until March, it was widely thought Ayatollah Mahmoud Hashemi Shahroudi was the front-runner to succeed Khamenei, but his withdrawal from the election of chair of the Experts Assembly seems to suggest he is not. It speaks volumes about the politics of the Assembly that we still do not know why Shahroudi pulled out, although there was evidence he was knifed by the judiciary, which is headed by Sadegh Larijani, a would-be playmaker in Iranian politics and perhaps himself a candidate to be leader.

Rouhani is himself a member of the assembly, as is former president Akbar Hashemi Rafsanjani, who topped the poll in Tehran back in 2005. It is tempting to think such pragmatists will do well in February, giving them a strong hand in the succession.

What options does this leave the principle-ists? Many senior clerics are of an age when gharbzadegi (“westoxification”) was the talk of the town and remain concerned over western cultural influence. But this seems an unpromising platform for February’s election. Opposition to the nuclear agreement, given public support for the deal and Rouhani’s popularity, is no better.

The recent arrests of journalists and others is seen by some as the principle-ists, especially within the Revolutionary Guards (IRGC), intensifying the factional struggle. Should we anticipate the public confession of a ‘spy’ linked in some way to the president’s office?

Rouhani, however, shows no sign of being intimidated, and has countered that concerns over “infiltration”, a term used by Khamenei in September, should not be exploited for factional political gain. “We have to fight in a serious and real way any type of foreign infiltration and a few should not toy with the word,” he said, in remarks last week. “If the supreme leader presents a word, we should understand it correctly and apply it and not allow a few individuals to take advantage of it in pursuit of their personal, group or partisan interests.”

Principle-ists may have another weapon in the watchdog Guardian Council, which vets candidates both for parliament and the Experts Assembly. It will surely block most reformist candidates, including any from the recently formed Islamic Iranian National Alliance party and certainly those associated with the ‘green movement’.

How far the council goes in barring others remains to be seen. In 2013 it barred Rafsanjani from the presidential election on grounds of age, and while this can hardly be a factor for Khobregan, whose chairman Ayatollah Mohammad Yazdi is at 84 three years older than Rafsanjani, it might give Khamenei some satisfaction to see his long-time rival blocked from any role in the build-up to the succession. But it would amount to a serious political risk. In the 2005 presidential election, Khamenei must have thought hard before he instructed the Guardian Council to allow two reformists to run.

There have been some signs that the principle-ists want to move their arguments with Rouhani from the nuclear agreement onto the economy, essentially the territory on which Mahmoud Ahmadinejad won the 2005 presidential election. Here, the nuclear agreement has not produced the sudden improvement many Iranians expected.

The economy is barely showing growth in the current Iranian year (ending late March 2016) after 3% growth in 2014-15. Inflation is down to around 15% from 40% two years ago, but prices in the shops are still rising. Banking and energy sanctions set to stay in place until early 2016, and continuing low global oil prices are restricting government revenue.

Rouhani conceded in October there might be negative growth in the current year (ending March 2015), which concurred with a report by the International Monetary Fund, released after article IV consultations in Tehran, suggesting 2015-16 would see growth at -0.5% to 0.5%, depending on the exact timing of the expected lifting of sanctions.

Despite its concern over structural problems – including the high level of nonperforming bank loans – the IMF was relatively upbeat, suggesting that with the easing of sanctions Iran’s economic growth would reach 5% in 2016-17 and 2017-18.

In the meantime, there is a ‘wait and see’ period in the economy – businesses and consumers were postponing decisions, noted the IMF, as they waited for sanctions to be lifted – that coincides with the uncertain political period in the run up to February’s elections.

The letter from four ministers, published in October and warning that a “recession” could become a “crisis” reflected stains in the cabinet and perhaps divisions between economic liberalisers and left-inclined figures, including signatories of the letter.

In public pronouncements over since parliament approved the nuclear agreement in October, Rouhani has suggested he will allow some relaxation of fiscal and monetary policies through increasing government spending on development projects and reducing the banks’ reserve requirements. This is intended to stimulate demand, although it will amend rather than replace the government’s commitment to tighten economic management and bear down on inflation.

Both in terms of the economy as well as in politics, the period up to the end of February is delicate. While the Rouhani government retains momentum and public support, it is vulnerable to upsets – the nuclear deal has done little to ease wider regional tensions.

Speaking of the economy – but it applies across the board - Martin Cerisola, assistant director of the IMF’s Middle East and Central Asia Department, recently said that “the complexity and extent of the problems” required “strong political leadership and support for decisive and coordinated action”.

This applies not just to the government and Rouhani. Because it isn’t really an interregnum. Khamenei’s decisions still count.

The Tehran Bureau is an independent media organisation, hosted by the Guardian. Contact us @tehranbureau