Iranian President Hassan Rouhani swept into office in August 2013 with a slim majority built on a message of “hope and prudence” and an election campaign that promised to end Iran’s international isolation, bring economic prosperity, and expand social and political freedoms. Heading into the last year of his current term as president, his mixed record of successes and unfulfilled promises—as well as pressure from conservatives and the electorate—means he that he will not necessarily have an easy bid for a second term in 2017.

After a recession created by international sanctions and mismanagement by his predecessor, Mahmoud Ahmadinejad, Rouhani has stabilized Iran’s economy. A key part of this came from domestic consensus on the need to end nuclear sanctions, which gave Rouhani the mandate to negotiate the Joint Comprehensive Plan of Action (JCPOA). This has enabled Iran to increase oil exports by over one million barrels per day and restored access to an estimated $100 billion in frozen assets abroad. Rouhani has also improved economic management by, for instance, reopening the Management and Planning Organization, which is responsible for preparing Iran’s budgets and drafting the development agenda. Ahmadinejad had dissolved the body in 2007 in an attempt to bring the budget under direct presidential control, and its reinstatement now brings more order and transparency to the budgetary process. The combined effect of Rouhani’s policies has led the Iranian economy to go from negative gross domestic product (GDP) growth when he came into office to projected positive average growth for the current Iranian calendar year (1395).1 Inflation, a perennial problem for the country’s economy, has likewise been cut from 34.7 percent to a projected 11.5 percent during the same period. 

Rouhani, in concert with Foreign Minister Javad Zarif, has also diminished Iran’s international isolation. In addition to negotiating and signing the JCPOA, the opening of a diplomatic channel with U.S. Secretary of State John Kerry—unprecedented in the troubled history of U.S. relations with the Islamic Republic—has allowed the two sides to discuss pressing bilateral issues at higher levels more frequently. This allowed U.S. negotiators to secure the release of ten U.S. sailors captured by the Islamic Revolutionary Guard Corps (IRGC) in the Persian Gulf on January 12 within one day. In addition, it has allowed greater dialogue and coordination on regional issues, such as the ongoing Syrian civil war. Iran–E.U. relations are similarly improved, as demonstrated by Rouhani’s and Zarif’s tour of European Union capitals since the JCPOA was implemented on January 16, during which agreements valued in the billions of dollars were signed, including orders for Airbus aircraft to upgrade Iran’s antiquated civilian fleet. 

Finally, Rouhani’s allies made modest but consequential gains in the 2016 Iranian parliamentary and Assembly of Experts elections. Their larger presence in parliament could facilitate the president’s agenda. Meanwhile, gains in the Assembly of Experts—which sits for eight years and is theoretically responsible for choosing, supervising, and removing the supreme leader—could give moderates enough seats to block a hardline successor to Supreme Leader Ali Khamenei, who turned 77 in July, if this responsibility falls to them in the current term. 

Despite these successes, the last year of Rouhani’s current term promises to present challenges for a re-election bid. Even with better economic management and sanctions relief, GDP growth has been modest (in part due to low oil prices), unemployment remains high (especially among youth), and expected foreign trade and investment have not materialized. As Ayatollah Khamenei has noted, “Six months have passed since the [JCPOA] was signed, but no tangible and palpable effect has been witnessed in the living conditions of the people.” A public opinion survey conducted in June confirms this impression: 74 percent of Iranians say that people’s living conditions have not improved as a result of the nuclear deal, and 59 percent of Iranians think the general economic situation is either “very bad” or “somewhat bad”. In addition, a series of press leaks in June led to a pay-slip scandal regarding the astronomical salaries of senior public servants and executives—reportedly up to 290 times the median Iranian wage—further underscoring the perception that economic gains have not benefited ordinary people. 

Ayatollah Khamenei and segments of the Iranian public attribute the disappointing economic results to a failure by the United States to meet its JCPOA commitments, but a closer analysis shows a more complex picture. U.S. sanctions over Iran’s ballistic missile program, human rights violations, and support for Islamist militants have made leading global financial institutions reluctant to facilitate and finance the ambitious projects the Rouhani administration has envisioned for fear of punitive measures by the United States. Even without these sanctions, the unstable regional environment and provocative actions by some powerful domestic actors like the IRGC are likely to put off foreign investors. Moreover, Ayatollah Khamenei wants to limit Iran’s global economic integration through a resistance economy that emphasizes greater self-reliance. These objections are believed to have delayed the adoption of the Iran Petroleum Contract (IPC), which is supposed to offer more attractive terms to international oil companies. Although Rouhani recently approved the IPC, the supreme leader has claimed that it has undergone 16 rounds of revisions to address sensitivity around the potential for foreign domination of the Iranian petroleum industry, so it remains to be seen if it is lucrative enough to attract the $50 billion per year Iran is seeking to inject into its ailing petroleum sector. 

While the aforementioned survey found that 66 percent of Iranians think expanding civil liberties is important, Rouhani has fallen short on fulfilling this promise as well. A campaign against foreign cultural, political, and economic infiltration—spearheaded by the supreme leader over fears that a post-nuclear deal opening may undermine the system—has even made some cases worse. The Guardian Council disqualified a record number of aspiring candidates for parliament and the Assembly of Experts in the 2016 elections, and in an unprecedented step even disqualified reformist Minoo Khaleghi after she had already won a seat in parliament.

Meanwhile, dual nationals like the Iranian–American father and son Baqer and Siamak Namazi and Iranian–Canadian anthropologist Homa Hoodfar remain imprisoned on arbitrary charges. Human rights defenders, such as Narges Mohammadi, continue to face detention under harsh conditions. In what appears to be an unprecedented case, seventeen laid-off miners in West Azerbaijan province were sentenced to between 30 and 100 lashes each, on top of monetary fines, for protesting against their former employer. Although none of these individual cases can be laid directly at Rouhani’s feet, he comes out looking incapable at best and, at worst, like he is deliberately neglecting these vital issues. 

The Iranian president’s mixed record over the last three years, and the lackluster benefits of the JCPOA in its first year, do not by themselves pose a major challenge to his second-term bid. The conservative alliance, composed of traditionalists and hardliners, remains splintered and was neither able to unite around a single candidate in the 2013 Iranian presidential election nor around a single electoral list in the 2016 elections. Conservative voters might again lack a unifying figure to rally around and end up splitting their votes among multiple candidates. Of course, most of Rouhani’s supporters are likely to vote for him again, after having demonstrated that they remain engaged in the 2016 elections, even if only for lack of a better alternative. 

Should Rouhani choose to run for a second term, he cannot take a re-election victory as an absolute certainty. After two successive electoral defeats, conservatives may finally emerge from disarray and unify behind a strong candidate and election campaign. They could emphasize social justice, a theme that proved appealing to many Iranians under Ahmadinejad, and security, given the proxy wars with Saudi Arabia in the region and an escalating insurgency by militants on Iran’s frontiers. Furthermore, if economic conditions fail to improve and Rouhani does not take serious steps to expand civil liberties, he could face lower voter turnout, which historically hurts centrist and reformist candidates.

Rouhani’s fourth year in office promises to be fraught with challenges. His ability to skillfully navigate these challenges is crucial to winning a second term in 2017 and maintaining the course he has tried to set for the country.

 

Farzan Sabet is a nuclear security fellow at the Center for International Security and Cooperation at Stanford University and PhD candidate in international history at the Graduate Institute, Geneva. He is managing editor of IranPolitik, a website on Iranian politics. Follow him on Twitter @IranWonk.


1. Corresponding to March 20, 2016–March 20, 2017