TEHRAN—Three students are standing outside the University of Tehran excitedly discussing the future of their country. Now that the United States and Iran have agreed on a nuclear accord, Iranians have high hopes for improving the economy.
“Trade will come back,” says Iman Ahdeli, a twenty-two-year-old medical student. “We’ll import and export more easily.”
From the espresso bars of wealthy north Tehran to the poor sections of south Tehran, Iranians are cautiously optimistic that lifting sanctions will boost their ailing economy. Many also hope that political reforms will follow.
Iran’s ruling elite has for decades been primarily divided into reformist and conservative camps. Both these trends support the Iranian constitution, which gives political power to religious leaders and severely curtails civil liberties. But the reformists seek an expansion of democratic rights within the system while conservatives fear such openings will undermine the Islamic state.
President Hassan Rouhani and his reformist supporters fought hard against the conservatives to reach the nuclear agreement, hoping that momentum will carry them to victory in Iran’s February parliamentary elections and beyond.
But hardliners within the military, police, and judiciary are fighting back. Outspoken reformists have been arrested and harassed. And Iran’s staunchly conservative supreme leader, Ayatollah Ali Khamenei, continues to make all important political and economic decisions.
So far the reformists are winning, according to Javad Etaat, an associate professor of political science at Tehran’s Shahid Beheshti University. “The extremists think there should be no cooperation with the United States,” he says.
In mid-July, seven nations—the United States, Great Britain, France, Germany, Russia, China, and Iran—signed an agreement in Vienna calling for strict inspection of Iran’s nuclear power program in return for lifting economic sanctions. In September, the agreement went into effect when opponents in Congress failed to muster the votes to kill it.
Iranian negotiators agreed to let the International Atomic Energy Agency inspect the entire nuclear chain, from uranium mining through enrichment and disposal. Iran must allow inspection of military and research facilities, even those it says have no nuclear connection.
That angers Ruhollah Hosseinian, a leading conservative member of parliament, who argues that Western countries can use the agreement to undermine Iran’s conventional arms program. “They can inspect what they want,” he says.
And Hosseinian strongly opposes the ability of the United States and Western countries to reimpose sanctions without a United Nations vote.
“It’s like a hammer above our head,” he says. “This endangers investments. So no one is going to invest in Iran.”
But the reformists hope that lifting sanctions, which could happen by early 2016, will further boost the economy and their popularity, adding to the setbacks experienced by the conservatives during the last few years of the administration of President Mahmoud Ahmadinejad.
Ahmadinejad is the Donald Trump of Iran—a rightwing populist full of bluster and bravado. In 2009, millions of Iranians poured into the streets to protest fraudulent presidential elections and demand democratic rights. Some went much further than the reformist leaders by calling for a new constitution and secular rule. The regime cracked down viciously.
Even mainstream politicians weren’t safe from the repression. The two main opposition presidential candidates in 2009, Mir Hossein Mousavi and Mehdi Karroubi, remain under house arrest for supporting the Arab Spring and calling for renewed demonstrations.
Ahmadinejad bragged that Iranians could ignore international sanctions but, in reality, they hurt. Iran had to severely cut back sales of oil, natural gas, and petrochemicals. Sanctions blocked all bank-wire transfers. Business costs rose sharply. The government deficit skyrocketed, and Tehran simply printed money to pay its debts. Inflation hit a high of 40 percent in 2013.
In the 2013 election, Iranians were fed up with Ahmadinejad’s policies. Rouhani, a centrist candidate, won election in the first round of voting when reformists supported him at the last minute. The new government instituted a popular medical insurance program, reined in expenses, and reduced direct subsidies.
So far, the economic reforms are working. During the last year of Ahmadinejad’s rule, the country’s gross domestic product declined 7 percent. It is now growing at a 3 percent clip.
“For the next five to seven years, we need to concentrate on the local situation to rebuild our economy, which has suffered not only from sanctions but also because of mismanagement,” explains Saeed Laylaz, an economist and prominent reformist who spent a year in jail in 2009. “We need at least ten years to rebuild the per capita gross domestic product.”
But ordinary Iranians are expecting immediate economic improvements once sanctions are lifted, says Etaat. That could be a problem.
“It’s a mistake by the government to lift expectations after the deal,” he says. “It’s also the people’s mistake that they think everything will be solved.”
Iran’s problems go well beyond heightened expectations. It has one of the world’s most complex and opaque systems of government. Iranians can vote but that doesn’t mean the government follows the popular will.
Under Iran’s constitution, majority opinion is constrained by a series of clerical institutions that supposedly provide Islamic guidance. The Guardian Council, made up of senior clerics, can overrule any law passed by parliament. It must approve all candidates running for president or parliament.
In the past the council has disqualified sitting members of parliament from seeking re-election because they became “un-Islamic.” In 2013, the council even prohibited Akbar Hashemi Rafsanjani from seeking the presidency, even though he was a former president and held a high position in government at the time.
The conservatives, who retain a majority in parliament, are likely to use such tricks to dominate next February’s elections. They are still angry that President Rouhani negotiated the nuclear accord with the West. For them, the reformists gave away too much. But conservative leader Hosseinian concedes that if the economy continues to get better, the reformists will gain ground.
“If they can improve the quality of life for the people, definitely they will be the winners,” he says grudgingly.