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Hassan Rouhani’s 100 Days

Does Iranian President Rouhani’s record in his first 100 days in office indicate a tactical shift in tone or a strategic shift in direction? That’s what will be evaluated by analysts, policymakers, and the media during this period. In separate policy briefs below, FDD experts analyze the Rouhani regime’s activities, policies, and trajectory and argue that this new government represents no strategic break or policy shift from previous Iranian governments and that Rouhani is heading a government that seeks only to achieve economic sanctions relief while their nuclear program marches on. The much-hoped-for reform and moderation have failed to materialize, raising concerns for the U.S. and its allies as they seek to negotiate a nuclear deal with Iran.


The Dollar Value of the Proposed Sanctions Relief at Geneva
Mark Dubowitz

The P5+1 is negotiating an interim nuclear deal with Iran to freeze in place its illicit nuclear program. Based on open source reporting, and an analysis by the Foundation for Defense of Democracies, the proposed sanctions relief could yield Iran $20 billion or more through the repatriation of frozen Iranian assets, gold transfers to Iran in exchange for its oil and natural gas sales, petrochemicals exports, and the lifting of sanctions on the Iranian auto sector.

Financial Relief: The Obama administration has offered what it has described as “very limited, temporary, reversible sanctions relief.” This is a one-time repatriation of Iranian assets that have been trapped overseas as a result of financial sanctions. Reportedly, the proposed Geneva deal could include an offer to release $3 billion of these assets back to Iran. Other non-public sources indicated that the P5+1 is contemplating the release of trapped oil funds valued at over $50 billion, through installment payments that could add significantly to this amount.

Gold Sanctions Relief: The deal on the table reportedly affords Iran the ability to resume the export of precious metals. Based on trade data compiled by Foundation for Defense of Democracies and Roubini Global Economics, gold imports from Turkey to Iran in 2012 reached as high as $1.6 billion per month. Using this figure as a guide, if gold sanctions relief is given for six months in the period leading up a possible final nuclear agreement, Iran has the potential to pocket at least $9.6 billion in gold sales.

Petrochemical Sanctions Relief: According to a recent Business Monitor International report, Iran exported $11.2 billion last year in petrochemical products exports and projects an increase of another $1 billion next year. If petrochemical sanctions relief is provided, using these numbers as a guide, Iran could enjoy a windfall of $5-6 billion over six months.

Automotive Sanctions Relief: Under U.S. sanctions since June 2013, Iran’s auto sector is inextricably linked to Iran's nuclear program because of its involvement with the Islamic Revolutionary Guard Corps and Iran’s procurement networks and sanctions evasion. During a seven-month period in 2012, before the sanctions were imposed, Iran exported approximately $1.4 billion from its auto industry. Thus, if the administration provides automotive sanctions relief, this could be worth approximately $1.3 billion over a six-month period.

Conclusion: Iran currently has approximately $80 billion in foreign exchange reserves. Of those funds, $10 billion is frozen, $20 billion is fully accessible, and $50 billion is only semi-accessible for barter trade in escrow accounts in China, India, Japan, South Korea, and Turkey.  A deal that offers $3 billion in cash, plus another $16-17 billion, totaling $20 billion in sanctions relief, would give a staggering 25 percent boost to Iran’s total foreign exchange reserves, bringing that number up to $100 billion. It would also constitute a doubling of the amount of fully accessible foreign exchange reserves currently available, from $20 to $40 billion. If the P5+1 went further and released trapped oil funds valued at over $50 billion, through installment payments, this would increase Iran’s fully accessible reserves from $20 billion to $70 billion.

A massive sanctions relief windfall of $20 billion or even more, granted in exchange for reversible nuclear concessions that do little to dismantle Iran’s military-nuclear infrastructure, is exactly what Iran would need to relieve the pressure from sanctions and enhance its negotiating leverage in the run up to any final agreement.

Mark Dubowitz is executive director of the Foundation for Defense of Democracies.

Khamenei’s 100 Days with Rouhani
Behnam Ben Taleblu

In a few days, President Hassan Rouhani of Iran will have reached his 100 day mark. Analysts rightly point to the change in tone adopted by the new president, particularly when compared to Mahmoud Ahmadinejad, his predecessor. Interestingly, a closer look at the statements by Rouhani’s boss, Ayatollah Seyyed Ali Khamenei, may reveal a shift in tone, as well.

In a February 2013 speech to Iranian Air Force Commanders, Khamenei defiantly told his audience, “I’m not a diplomat, I’m a revolutionary…I speak explicitly, honestly, and decisively.”  Khamenei also insisted that “Negotiations with America will not solve anything…”

After Rouhani’s election, however, Khamenei appeared to amplify the pragmatic themes of his new president.  In September 2013, before Rouhani went to the United Nations General Assembly in New York, Khamenei promoted “heroic flexibility” in an address to the Islamic Revolutionary Guard Corps (IRGC). The address even contained a subtle rebuke of the highly public and prominent role of the Guards in Iran today.

Khamenei’s analogy was chided by a host of characters in uniform to his political right, which may have steered him away from a whole-hearted embrace of Rouhani’s rhetoric. In an October address, the Supreme Leader issued a course correction and said, “…some of the things that happened in New York were not appropriate, but we are optimistic about the diplomatic team of our dear nation and about our diligent administration.”

More recently, Khamenei has shifted again, vocally supporting Iran’s nuclear negotiating team, reportedly claiming, “They have a difficult mission and no one must weaken an official who is busy with work.” This appears to be Khamenei’s way of telling Foreign Minister Javad Zarif, the man entrusted with making Iranian compromises, “I’ve got your back.”

Based on his statements, Iran’s 74-year-old leader seems to understand the economic dangers of continued sanctions, although he also seems to grasp that “giving in” could cost him the revolutionary legitimacy that he has tenaciously fostered since coming to power in 1989. Khamenei thus appears to have embraced the position of “balancer,” prodding forward and holding back where appropriate.

Behnam Ben Taleblu is an Iran Research Analyst at Foundation for Defense of Democracies.

The Widening Gap in Iran Between Rouhani and the RevGuards
Ali Alfoneh

US Secretary of State John Kerry arrived in Geneva today to “help narrow differences” and finalize an agreement that would freeze Iran’s nuclear program in exchange for an easing of some economic sanctions. But while the gap between Iran and the U.S. is closing, a new one may be widening in Iran between President Hassan Rouhani, and the Islamic Revolutionary Guards Corps (IRGC).

As Rouhani’s team moved into office, it realized that Iran’s economy was in “worse shape than expected.” Eight years of mismanagement under president Mahmoud Ahmadinejad and sanctions had taken their toll on the economy that teetered on bankruptcy. Having run out of short-term financial measures to ease the pressure, Rouhani opted for nuclear concessions in return for sanctions relief. The aim was to secure fast access to hard currency to keep the economy afloat and prevent social unrest.

While Team Rouhani appears close to getting its hands on that hard currency, the IRGC remains opposed to any concessions. As the custodians of the nuclear program, the guards have everything to lose if Iranian negotiators freeze the program. The IRGC does not mind sanctions. As IRGC deputy commander Brigadier General Hossein Salami put it, sanctions have led to “self sufficiency.” Without foreign companies competing in Iran, the IRGC was able to take over significant sectors of Iran’s economy.

The IRGC also does not mind a state of permanent crisis in Iran’s relations with the West and a domestic state of emergency, which helps the IRGC consolidate their power in Iran. This is why IRGC commander Major General Mohammad-Ali Jafari condemned Rouhani’s phone conversation with President Obama as a “tactical mistake.” This is also why Salami even defied Khamenei’s call for “heroic flexibility” in negotiations with the P5+1, insisting, “there is no flexibility in our strategy.

Khamenei’s statements on the negotiations in Geneva appear to be an attempt to bridge the gap between Rouhani and the IRGC. On the one hand, he seems convinced by Rouhani’s argument that Iran risks bankruptcy. On the other hand, Khamenei can’t afford to alienate the IRGC, which serves as the power base.

While reports indicate that a deal in Geneva may be within reach, it is unclear whether Tehran can deliver on its promises. Khamenei’s attempts to bridge the gap with the IRGC could create new problems between Iran and the P5+1.

Ali Alfoneh is a senior fellow at Foundation for Defense of Democracies.

Rouhani’s Failed Human Rights Promises
Benjamin Weinthal

The first 100 days of Hassan Rouhani’s presidency has done little to improve Iran’s human rights record. Widely hailed as a moderate, Rouhani announced prior to his election victory, “All Iranian people should feel there is justice. Justice means equal opportunity. All ethnicities, all religions, even religious minorities, must feel justice. Long live citizenship rights!” Yet, dissidents, religious minorities and ethnic groups have suffered during Rouhani’s short tenure.

For example, four Iranian Christians were sentenced in early October to 80 lashes for drinking wine during communion and possession of a satellite antenna. On October 30, two of the accused were whipped, according to a statement from Christian Solidarity Worldwide.

The plight of sexual minorities also remains a serious problem. The Islamic Revolutionary Guard Corps arrested alleged “Homosexuals and Devil Worshippers” at a birthday party in October. Rouhani has refused to release the journalist Siamak Ghaderi, who was imprisoned in 2010 and flogged in 2012. Ghaderi published interviews with gay Iranians online.

The Bahai community also continues to suffer. After Rouhani’s victory, Supreme Leader Ayatollah Ali Khamenei declared the peaceful religious Bahai community to be a pariah group. He issued a Fatwa dictating that Iranians should avoid all contact with the members of the minority religion. Khamenei’s incitement to dehumanize the Bahais has contributed to a climate of violence. The religiously-motivated murder of Ataollah Rezvani, a popular Bahai leader, took place shortly after Khamenei’s Fatwa.

Rouhani, for his part, has made no effort to free imprisoned Bahai religious leaders. Bani Dugal, a representative from the Baha’i International Community, now notes that “reports to our office actually indicate a worsening of the situation facing Baha’is in Iran.”

Since Rouhani assumed office, the rate of executions has accelerated.  Iran’s regime imposed the death penalty on over 125 people during Rouhani’s tenure, including a record number of 50 executions during a two week period in September for principally drug-related offenses. In September and October, Amnesty International repeatedly called for an end to executions in Iran.

To be fair, Rouhani has released some prominent political prisoners. Ahead of his UN visit in September, the regime freed 11 political dissidents, including the prominent human rights lawyer Nasrin Sotoudeh.

But the overall treatment of minorities and dissidents remains deplorable in Iran. Rouhani’s rhetoric, while inspirational, does not match the policies of the regime.  

Benjamin Weinthal is a research fellow at the Foundation for Defense of Democracies.

Rouhani’s New Spymaster After 100 Days
Ali Alfoneh

Iranian President Hassan Rouhani has famously promised “moderation” in Iran since being elected president of the Islamic Republic this summer. His intelligence minister, Mahmoud Alavi, appears to have similar visions for Iran’s intelligence apparatus. However, the first 100 days of Rouhani’s presidency reveals that he may be failing in this regard.

Iranians have long been divided about the role of the intelligence services. For example, former Intelligence Minister Ali Younesi notes in his memoirs that former president Ali-Akbar Hashemi Rafsanjani criticized Younesi’s attempts at reining in the secretive apparatus. “The methods you are using in the Intelligence Ministry have reduced it to a municipal office: an ineffective organization nobody fears!” Rafsanjani charged.  Defending his record, Younesi retorted: “Everywhere else in the world, this is called intelligence methodology. We must see to it that the Intelligence Ministry is in the service of the public.”

Then, as now, the debate rages over the role of the Ministry of Intelligence and National Security (MOIS). In the one camp are those who, like Rafsanjani, see the MOIS, the Islamic Revolutionary Guards Corps (IRGC), and vigilante groups, as instruments of the state to terrorize the public into submission. The other camp includes the likes of Younesi and Saeed Hajjarian, MOIS co-founder turned reformist theoretician, who seek to centralize and professionalize the MOIS.

Rouhani’s new intelligence minister, Mahmoud Alavi, has staked out a position in the second camp. Asking for a parliamentary vote of confidence on August 15, Alavi declared his desire to, “institutionalize durable security without securitizing the society.” He expressed his belief in the sanctity of private life of citizens “as long as there is no conspiracy,” and concluded that the use of force always must be a last resort. Last month, Alavi raised similar themes.

The Islamic Republic’s intelligence community however, appears to be out of step with Alavi’s declared program. A recent report submitted by Ahmad Shaheed, United Nations special rapporteur on human rights in Iran, concluded that there is a “deepening human rights crisis” in Iran. While the report did not raise accusations against specific government agencies, press reports from the last couple of days identify the perpetrators. Intelligence ministry agents beat up the daughters of Mir-Hossein Mousavi, the 2009 presidential candidate who still is under house arrest, and they continue to imprison Iranians of the Bahai faith and converts to Christianity because of their religious beliefs. Alavi, despite his state policies, has himself declared war on ideologically non-conformist journalists whom he accuses of being foreign agents. More broadly, his intelligence services continue to seek out purported foreign spies and saboteurs.  

Alavi now finds himself in a position similar to that of Rouhani.  Even if he wishes to change the policies of the Islamic Republic, he lacks the authority.  Such decisions remain in the hands of Supreme Leader Ali Khamenei and the IRGC. Thus, the intelligence services are likely to remain what they have long been in Iran: a force for domestic terror and intimidation.

Ali Alfoneh is a senior fellow at the Foundation for the Defense of Democracies.