After sanctions, politics in Iran are the next hurdle to better ties with U.S.

By Patrick J. McDonnell, Ramin Mostaghim

Jan. 19, 2016 8:16 PM PT

reporting from TEHRAN — A day after nuclear-related economic sanctions on Iran were lifted, President Hassan Rouhani took to Twitter to mark an achievement that had been the central focus of his administration.

“The legs of Iran’s economy are now free of the chains of sanctions,” he proclaimed.

On Tuesday, however, Iran’s supreme leader, Ayatollah Ali Khamenei, delivered a more sober assessment in a letter to the president.

Sanctions relief alone is “not enough to boost the economy and improve the lives of people,” the country’s ultimate authority wrote.

The differing reactions illustrate the mixed feelings here as a landmark nuclear deal comes to fruition.

The accord, signed in July after months of negotiation between Tehran and a group of world powers including the U.S., ended an array of economic sanctions in return for constraints on Iran’s nuclear program.

The removal of sanctions has been widely acclaimed here. The press has reported breathlessly on new trade pacts, the anticipated boost in oil and gas sales, fresh deals with airplane and car manufacturers from abroad and the parade of foreign trade delegations to Tehran.

But it remains to be seen whether the nuclear deal represents a transformational moment in U.S.-Iranian relations, or just an aberration amid almost four decades of hostility dating to the 1979 Islamic Revolution and the fall of the U.S.-backed monarchy.

Its effect will depend largely on domestic politics in Iran.

Rouhani based his successful 2013 presidential run on the idea that reintegration into the global mainstream could pull Iran out of its malaise of high unemployment, runaway inflation and few job opportunities for youths. Getting rid of sanctions was crucial.

Indeed, many analysts have predicted that Iran will embark on a path of increased liberalization and rapprochement with Washington, that the likely increase in outside investment and an increased foreign presence may spell the beginning of the end of the country’s economic, political and cultural insularity.

“The genie is out of the bottle,” said Cliff Kupchan, who heads the Eurasia Group, a New York-based risk assessment firm. “This deal will unleash forces that cannot be stuffed easily, if at all — like Western technology, better consumer products, more exposure to Westerners. Iran is going to be reconnected to the global economy.”

But that outcome is not inevitable.

Hard-liners have worked diligently to prevent deeper penetration of Western cultural and political mores into the Islamic Republic, and they are not about to roll over.

Rather, they are likely to use the lifting of sanctions to strengthen their agenda. Much of the tens of billions of dollars in frozen funds slated being released, along with new revenue generated, may end up in the coffers of the Revolutionary Guard Corps and other pillars of conservative society.

In his comments, the ayatollah seemed to downplay the end of the sanctions and instead lauded the notion of a “resistance economy,” a term frequently used to assure a weary domestic audience that Iran can do just fine without outside help.

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Hamid Reza Taraghi, an analyst who is close to the leadership, offered another explanation for the lack of enthusiasm from conservatives: “The supreme leader has reiterated over and over again that lifting the sanctions is not that big a deal, because America will just try to impose other sanctions to compensate.”

Even in welcoming foreign investors, the press has portrayed the lifting of sanctions as a victory of Iranian steadfastness against sinister Western powers — especially the U.S. — that had unfairly imposed the sanctions in the first place.

Many Iranians still view the U.S. with suspicion. U.S. appeals for more cooperation on thorny regional issues are often viewed as a demand for capitulation in key strategic arenas, including Syria, Bahrain, Lebanon and Yemen.

And they see hypocrisy in complaints from U.S. officials that Tehran is sponsoring terrorism and undermining legitimate governments in the region. From the Iranian viewpoint, Washington and its key regional allies — Saudi Arabia and Israel — are the ones sowing instability and aiding terrorist groups, including Al Qaeda-linked factions fighting to oust Syrian President Bashar Assad, Tehran’s close ally.

“What is beyond comprehension for many in Iran is how a country like the United States that was attacked by Al Qaeda on Sept. 11, 2001, could support groups allied with Al Qaeda in Syria,” said Mohammad Marandi, an associate professor at the University of Tehran.

The next round in the battle between Iran’s political forces comes next month in the form of parliamentary elections.

Rouhani and the moderates face a severe challenge from hard-liners, and Iran’s conservative Guardian Council, which vets would-be officeholders, has already delivered what could be a premature knockout punch. It has disqualified the vast majority — as high as 99% — of aspiring reformist candidates.

The soft-spoken Rouhani said he was disappointed at the mass disqualification and voiced hope for a reversal, citing the supreme leader’s mandate that elections be inclusive and competitive.

To voters, the country’s relationship with the U.S. is likely to be less important than Iran’s domestic economy. Interviews with Iranians of diverse backgrounds here suggest that few expect a sudden upturn as a result of the nuclear deal.

“We know that no immediate miracle will happen, but we hopefully look forward to improvements to come,” said Fereydoun Majlesi, a former diplomat who is now a columnist in Tehran.

Others were skeptical that the economic benefits would trickle down, citing persistent problems of corruption and bad management, especially in state-run enterprises.

“The purchasing power of people and sustained economic growth will not increase at all,” said Amir Kavian, a magazine editor in Tehran. “The corruption and mismanagement are so deep-rooted that this will devour any ‘unfrozen’ funds that arrive in the country in the post-sanction period.”

After years of diminished purchasing power, many Iranians appear to have lost hope that things will turn around.

“All the unfrozen assets or money or whatever does not make much of a difference to me,” said Ali Hasani, 48, a father of four and worker in a print house. “I do my best to make ends meet by working 16 hours a day.”

Times staff writer McDonnell reported from Beirut and special correspondent Mostaghim from Tehran.

Twitter: @mcdneville

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