Iran: From pariah state to perestroika?

Behlül Özkan

The recent breakthrough in the months-long nuclear talks between Iran and the West is a potentially historic development. If all goes according to plan (i.e. if Iran and the West manage to finalize the agreement, lifting the sanctions on the country and integrating it into the global economy), this will drastically change the rules of the game in the Middle East. The Tehran government, though staggering under the burden of the sanctions, is nonetheless a key regional actor whose influence extends from Syria to Yemen. Once ties with the West are normalized, Iran’s clout in the Middle East can be expected to grow apace, profoundly altering the region’s economic, political, and military alliances, to a degree matched only by the 1979 Iranian Revolution. 

For nearly a century, Iran has been one of the world’s largest producers of oil. By the 1970s, Iran and Saudi Arabia were each producing 6 million barrels of oil per day; together they accounted for one-fifth of the world’s total oil production. Today, Saudi Arabia’s output has increased by 50 percent, up to 9 million barrels per day; Iran, unable to avail itself of the latest technology due to economic sanctions, has seen its own production levels plummet to 4 million barrels. Iran’s oil revenues, close to 100 billion dollars per year prior to the sanctions, have now fallen to 70 billion dollars – a substantial loss given that oil proceeds make up more than half the country’s state revenues.  In addition, Iran possesses the world’s second-largest natural gas reserves, exceeded only by Russia’s. Rejoining the global economy would thus result in greater oil and gas revenues for Iran, bolstering its regional influence.

The 1979 Iranian Revolution, a mass popular uprising which led to the establishment of an Islamic Republic, was a source of inspiration to political Islamist parties everywhere, from Turkey to Palestine, and Algeria to Lebanon. Unlike the totalitarian monarchies of Saudi Arabia and the Gulf States, the Iranian regime was at least ostensibly founded on institutions of representative government such as elections and a parliament. Iran’s anti-Western, anti-Israel discourse and foreign policy have indelibly altered the balance of power in the Middle East. Since World War II, Saudi Arabia has been seen by the West as a key regional ally and a guarantor of the Middle Eastern status quo. Paradoxically, it has also traditionally been the main patron of Islamist movements throughout the Middle East in their battle against leftism and pan-Arabism. After the Islamic Revolution in Iran, however, Saudi Arabia’s prestige among the region’s Islamists began to wane. It is misleading to see the power struggle between Riyadh and Tehran merely as a Sunni-Shiite conflict: Iran’s influence is hardly limited to Shiite-majority nations. Tehran has established close ties not only with Shiite groups such as Hezbollah, but also with Hamas and Islamist groups in Bosnia and Algeria. Even Islamists in Turkey have been influenced to some degree by the Iranian Revolution. 

And yet the Islamic Republic has failed to bring economic prosperity to its own people. Iran’s years of economic isolation have created an entrenched inner circle within its political leadership, one that has profited from the sanctions and the lack of competition. This inner circle does not merely run the Iranian economy, it also seeks to control politics and everyday life within the country, cutting off Iranians from the rest of the world by banning social media such as YouTube, Facebook and Twitter. Upon hearing of the recent nuclear breakthrough, Iranians of all walks of life flooded the streets in celebration – a clear sign of their desire to be freed from political repression and rejoin the global community.  

The present nuclear deal shows that Iran’s leadership is aware of one crucial fact: an economically isolated, sanction-crippled Iran is losing billions of dollars of potential income every year. Iran stands to gain much from reaching a nuclear deal with the West, opening its doors to the outside world and pursuing a policy of economic liberalization. This would be an upheaval on the same scale as 1979 – a fact recognized by leaders of the anti-Iranian camp such as Saudi Arabia and Israel, which fear that Iran’s rapprochement with the West will undermine their own position. And, needless to say, if the United States sets its sights on regime change in Iran, the negotiations will ultimately fall through. 

However, even if the West gives assurances that this will not happen, Iran’s inner circle will still be fearful of losing their monopoly on political and societal power. They are no doubt aware of the purges of party leadership that took place during the collapse of the Soviet Union and its Eastern European satellites during the 1980s. Accordingly, Iran’s leaders may look to China as a model, seeking to emulate its formula of controlled economic liberalization along with continued political repression. If so, then it is premature to declare the beginning of perestroika in Iran.