In the June 2021 elections, the Iranian presidency was handed to Ebrahim Raisi on a silver platter. Supreme Leader Ayatollah Ali Khamenei made sure the election process was engineered, down to the smallest detail, for a shoo-in Raisi victory. For Raisi, this is something of a double-edged sword. At a minimum, it means policy continuity in Tehran, including in the realm of hybrid military-economic affairs. The Islamic Revolutionary Guards Corps (IRGC) will not only continue to have a free hand to shape Iran’s military and regional agenda, but it will also return to center-stage as far as economic planning is concerned. The same thing happened during the government of Mahmoud Ahmadinejad; he too gave the IRGC an free hand — a decision that he later came to regret. Raisi has no choice though. His political fortunes rest on continued support from Khamenei and the IRGC. Don’t expect him to unveil any trailblazing policies anytime soon.
The downside of being selected
Khamenei’s anointment will keep the opposition to Raisi within the regime to a minimum. This was already evident in how the members of the Majlis (parliament) treated his cabinet nominations with kid-gloves. Among his nominees, only one was rejected. The downside is that Raisi has very little room for maneuver as president. Unlike the seven presidents that came before him, Raisi does not lead a faction in the regime that he can call his own. His inner circle is staffed by individuals coming from institutions directly linked to the Office of the Supreme Leader and those moving into the Presidential Palace from the ranks of the IRGC, which essentially oversees most of Iran’s regional agenda, its support for militant proxies in various theaters across the Middle East, and Tehran’s missile program.
Raisi could seek to break away — the way Ahmadinejad did in his second term, even after he too was gifted the presidency by Khamenei and IRGC in 2005 — but Raisi will not do so. He has no reason to. Obedience to the agenda of Khamenei and the IRGC is what got him this far in his career and it could lead him all the way to the supreme leadership to succeed Khamenei if he plays his cards right.
As Raisi learns the ropes of his new role, and careful to keep his support base intact, he is more likely to double down on implementing the policy preferences of hardliners than to steer the country in a new moderate direction. His early defiance against both domestic Iranian and international opinion speaks for itself. He chose not to nominate a single woman or religious minority for cabinet posts while selecting a number of other controversial figures.
For example, Rostam Qassemi, who was oil minister under Ahmadinejad, has returned as transport minister. Qassemi is a former IRGC commander and his ministerial approach was focused on giving contracts to local companies with ties to the IRGC. The problem was that many of those oil and gas contracts, especially for large projects, were left unfulfilled as Iranian firms with ties to the IRGC could not handle the financial and technological aspects.
Qassemi’s appointment speaks volumes about Raisi’s approach and suggests he will favor maintaining the old boys network as opposed to seeking proven competence among the top officials he selects. Elsewhere, Raisi has chosen Mohsen Rezai, the longest-serving commander of the IRGC, as his vice president for economic affairs, even though Rezai has no credible background in economic planning. Another IRGC top commander, Ahmad Vahidi, is the new interior minister.
Institutionalizing the “Axis of Resistance”
The appointment of these military men masquerading as qualified technocrats is already reducing expectations about Raisi’s ability to jumpstart the economy, which he has said is his government’s top priority. Instead, a new wave of contracts can be expected to be given to companies linked to the Office of the Supreme Leader and the IRGC, further entrenching the latter’s role in the Iranian economy. It will be justified as advancing Khamenei’s cherished concept of the “resistance economy” in the face of U.S.-led sanctions and international isolation.
Khamenei’s commitment to building a “resistance economy” largely rests on the fact he does not want to change course on foreign policy. After all, an end to Iran’s international isolation is the quickest way to rescue the Iranian economy. But that requires concessions from Tehran, including on its nuclear program and policy agenda in the Middle East. But Khamenei, and the generals in the IRGC, are not yet prepared to bite the bullet on that. Instead, the Raisi government appears set to redouble its efforts to push ahead with its regional agenda, centered around the concept of the “Axis of Resistance.”
This model includes maintaining staunch opposition to Israel’s right to exist, looking for opportunities to coerce the U.S. to leave the Middle East, and supporting a cadre of militant groups from Hezbollah in Lebanon to the pro-Iran Shi’a militias in Iraq to the Ansar Allah (Houthi) movement in Yemen.
In this effort to bolster the “Axis of Resistance,” top officials in Tehran maintain a willingness to transfer arms and know-how — including missiles and drones — to groups that share Ayatollah Khamenei’s vision for the future of the Middle East. Put simply, the arrival of the Raisi government is not a turning point in Tehran’s approach to the region or its military posture (including investments in asymmetric warfare by backing non-state militias), as those policies have been set in motion and continuously sustained by Khamenei and the IRGC leadership.
What remains to be seen is the extent to which Khamenei and the IRGC will use the arrival of the Raisi government as a pretext to deepen such Iranian efforts against the U.S., Israel, and their allies in the Middle East. Iran’s new foreign minister, Hossein Amir-Abdollahian, who is linked to the IRGC, spoke in his confirmation hearing of Iran looking to “institutionalize” the “Axis of Resistance” model. Only time will tell what this means in practical terms, but no doubt this will be one of Raisi’s most pressing challenges.
Raisi, the IRGC, and the Arab question
As both a candidate and as president, Raisi has repeated a basic mantra: that he will seek to quickly improve relations with neighboring states, and particularly the Arab Gulf states. In terms of his motivations for this, two points are undeniably important. First, there is no indication that Raisi’s stance represents a sea-change in the mindset of the ruling elite in Tehran, including Ayatollah Khamenei, regarding Iran’s regional posture. Instead, this seems to be more about making tactical adjustments to its foreign policy. Second, much of Raisi’s call for détente with neighboring states is rooted in the challenges he faces, the most obvious of which is the economy. His government is only weeks old, but it is close to bankruptcy. This has created its own socio-economic pressures in a country that is already a tinderbox.
Besides taking pre-emptive steps in the hope of avoiding popular unrest, Raisi also has his own self-centered political motives. The popular view of Raisi is that Khamenei selected him to be president, and that he might even be on the shortlist as Khamenei’s successor. To legitimize his presidency and elevate his stature with the supreme leadership in mind, Raisi has to therefore quickly create pockets of goodwill for himself in Iranian society.
This why his economic policies so far have been extremely similar to those pursued by Ahmadinejad in 2005: populist and aimed at the lower-middle and working-classes. Not only does Raisi have to work harder to generate a base of support for himself as compared to Ahmadinejad (who actually had one), but he has far fewer financial resources at his disposal to do so. Unlike in 2005, the Iranian economy today is on life support.
This domestic economic reality is directly linked to Raisi’s call for détente with Arab states. Raisi needs to lower the cost of Iran’s foreign policy agenda, and he seemingly has the support of Khamenei to do so. At the very minimum, the regime in Tehran would be putting itself at great risk if it invested further in regional projects at the expense of tackling domestic demands. This diagnosis is the central impetus behind Raisi’s call for détente. The rest of the regime is playing its part to promote this message and facilitate its acceptance by neighboring Arab states. The Saudis are the principal audience. The message is clear: The Americans are untrustworthy, uninterested in the future of the Middle East, and it is time for regional actors to begin the arduous process of making compromises with the hope of moving the region toward a new security arrangement. That said, neither Raisi nor Foreign Minister Amir-Abdollahian has articulated an original idea of how to go about this.
The Raisi government has made references to the Hormuz Peace Endeavor (HOPE), but there are two problems with HOPE. First, it was launched by his predecessor, President Hassan Rouhani. Second, the Arab states have so far been indifferent toward it, so its utility is limited. In time we will find out if the Raisi government can formulate some kind of regional initiative that might be of interest to the Arab Gulf states. There is no sign of it as yet though. In the meantime, Tehran can be expected to push ahead with the process of détente on a bilateral basis with neighboring Arab countries.
The best that can be hoped for at the moment is for Iran and the Gulf states to identify areas of mutual interest, like maritime security cooperation. The number of incidents involving vessels in the Persian Gulf and the Arabian Sea in recent years — including seizures and armed drone attacks — makes this a highly relevant area for possible cooperation. But for this to happen, Tehran would have to admit to the problem first.
In early August, Iranian officials at the U.N. in New York complained about “false flag” operations in regional waters by Israel and its allies that aim to frame Iran. At the same time, Tehran has declared its openness to working with neighboring states on maritime security and freedom of navigation. These two contrasting positions pose a policy dilemma. In essence, at the moment the Iranian position of regional cooperation appears to be pre-conditioned on neighbors not having security and military cooperation with Israel. This, in turn, puts the Gulf states, particularly the UAE and Bahrain, which have diplomatic relations with Israel, in a tough spot. The challenge for the Gulf states is to press Tehran to decouple possible areas of tactical cooperation, such as maritime security, from the broader strategic foreign policy choices each country makes.
What is equally worrisome is that the question of Israel remains an inherent ideological component of Tehran’s proclaimed “Axis of Resistance.” This is at least the rhetoric from the new Iranian government, and it creates its own challenges: how to reassure concerned Gulf states about Tehran’s regional ambitions when it openly declares it wants to strengthen the one aspect of Iranian foreign policy they resent the most. The main issue for the Gulf states is the following: If they choose to accept Iran’s overtures and the call for regional cooperation, how can they then nudge Tehran away from investing further in the “Axis of Resistance,” which is essentially an anti-status quo model, and therefore an incitement for further regional instability?
Iran’s neighbors and the rest of the world will soon have more to judge the Raisi presidency by. It is important, though, to accept some basic realities about how he became president in the first place, and which interest groups in Tehran he is beholden to. On the domestic level, this makes it possible to be clear-eyed about Raisi’s motivations in terms of who he chooses to install as his inner circle and the gloomy message this in turn sends about the likelihood of policy introspection in Tehran. That said, Raisi, and the same circles who put him in the Presidential Palace, are under immense pressure. All levers of power in Tehran are now in the hands of the hardline camp. Under the crushing weight of sanctions, business as usual is not an option, and Khamenei, his hand-picked president, and the IRGC that with force underwrites the regime’s survival have some tough choices to make about the best ways to preserve their power.
Alex Vatanka is the director of the Iran Program and a senior fellow at the Frontier Europe Program at the Middle East Institute. His most recent book is “The Battle of the Ayatollahs in Iran: The United States, Foreign Policy and Political Rivalry Since 1979.” You can follow him on Twitter @AlexVatanka. The opinions expressed in this piece are his own.
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