Ahmadinejad: Five Years On

On 3 August 2010, Iran’s President, Mahmoud Ahmadinejad, will have been in power for five years, having controversially secured a second presidential term in disputed elections last year. In this short space of time, he has irrevocably changed the face of Iranian politics. But when Ayatollah Khamenei, Iran’s Supreme Leader, gave his backing to the then little-known mayor of Tehran in the 2005 presidential election, he was simply seeking to restore conservative values to the Islamic hierarchy, after eight years of a reformist – Mohammad Khatami – at the helm. Had Khamenei known the consequences of his decision, he may have thought better of it.

Ahmadinejad’s accession to the presidency ushered in one of the most tumultuous periods in Iran since the Islamic revolution in 1979. Almost immediately, Ahmadinejad set Iran on a collision course with the West. Just a month into his tenure, he declared Iran’s “inalienable right” to produce nuclear fuel, resuming the uranium enrichment process which had been suspended by his reformist predecessor. He courted further controversy by denying the Holocaust and being widely reported as calling for the destruction of Israel. From the outset, his aggressive and confrontational stance riled the international community and landed Iran in deep water with the UN Security Council, which threatened sanctions. All within 14 months of taking office.

Domestically, he consolidated his hardline, populist credentials, while infuriating the clerical establishment at the same time, by insisting that the hidden 12th imam, whom Shia Muslims believe went into ‘occlusion’ in 874 and who will one day return to save mankind, was actually running the affairs of Iran.

Plunging economy

More ruinous is the lasting damage he has wrought on Iran’s economy. His expansionary populist fiscal policies resulted in rocketing inflation and severe deficits. During his first four-year term, the size of Iran’s fiscal deficit almost doubled, as did inflation. Moves towards economic liberalization, initiated prior to his accession, stalled, as he promoted an insular approach to development, giving key infrastructural projects to the Iranian Revolutionary Guard Corps (IRGC), in return for political support.

He also, most controversially, took control of monetary policy. In the space of 12 months in 2007 and 2008, two successive governors of Iran’s central bank resigned in protest at Ahmadinejad’s enforcement of lower ‘profit rates’ (rates of interest that comply with Islamic law). The historically low rates he set led to lax lending and a concomitant rise in money supply, which resulted in racing inflation. By pursuing such loose fiscal and monetary policies, Ahmadinejad dangerously weakened the economy, incurring the wrath of the country’s powerful bazaaris – the merchant class – in the process.

Velayat-e faqih : The supremacy of divine rule

Given this legacy at the end of his first term, it is a wonder that Khamenei extended his support to Ahmadinejad at his second-term election of June 2009. But as in 2005, when Ahmadinejad was Khamenei’s tool with which to sideline moderates, in 2009, Khamenei needed Ahmadinejad to hold back the swelling reformist tide, to which, ironically, his policies had given rise. The reform agenda, as now touted by the external pageGreen Movementcall_madeand which demands greater freedom and openness, is anathema to Khamenei’s conservative outlook. A true revolutionary, he believes in the supremacy of divine rule, the external pagevelayat-e faqihcall_made, over that of democratic rule, favored by the reformists.

There is also an international dimension to Khamenei’s support for Ahmadinejad. The latter’s aggressive international stance has – from the conservative point of view – paid dividends. He has exploited divisions among the global community to gain negotiations without preconditions and he has managed to incrementally advance Iran’s nuclear program while persistently deferring the imposition of damaging sanctions by the international community.

Having clearly signaled his support for Ahmadinejad a few months prior to the poll, Khamenei unequivocally pinned his colors to the mast and, with the benefit of hindsight, effectively gave notice that the Ahmadinejad regime was not prepared to relinquish power. What took place next has been widely described as a coup. By supporting the initial, widely-disputed, election result, Khamenei ensured Ahmadinejad’s victory and helped bolster the power of his regime. But the riots that followed demonstrated that Khamenei’s actions had far more deep-rooted consequences. He had seriously weakened his own legitimacy and credibility and in so doing, gravely undermined the very concept of the velayat-e faqih—the foundation upon which the Islamic Republic was built.

The rise of the Revolutionary Guards

In fact, Khamenei’s waning legitimacy was apparent even before the elections. Throughout Ahmadinejad’s first term, it was clear that he had extensive support from the IRGC, which he had empowered through patronage and commercial contracts. Indeed, the IRGC has benefited hugely from Ahmadinejad’s rule; senior members now constitute half of his cabinet and more than a third of parliament. In addition, they also control much of the bureaucracy, with the Ministry of Intelligence and other security agencies purged of reformists, and technocrats in other ministries replaced with Guardsmen. The IRGC has also built up wide-ranging commercial monopolies, gaining economic muscle in the process.

The elevation of the IRGC under Ahmadinejad has fundamentally altered the power structure in Iranian politics. Formed in 1979 in order to safeguard the ideals of the revolution, the IRGC’s creeping influence has resulted in the militarization of the Iranian state, particularly since its key role in quelling the opposition movement after the 2009 elections, through its affiliated external pagebasij militiacall_made. It is not a monolithic organization, but factional, with some parts loyal to Ahmadinejad, some to Khamenei and still others to former IRGC commander, Mohsen Rezaei. But despite internal fractures, it has acquired the role of kingmaker, and with the rise of Ahmadinejad’s IRGC-backed power, Khamenei has also had to use the IRGC to buttress his own authority. So while he remains the Supreme Leader, he is, to a certain degree, beholden to factions within the IRGC.

Yet claims that the IRGC has taken over the Iranian state and has, in Hillary Clinton’s words, turned Iran into a “military dictatorship” are exaggerated. However, there is no doubt that today, more than ever, the IRGC is the guarantor of the system and the current administration. If Ahmadinejad in his first term empowered and enriched the IRGC, then the 2009 election embedded the organization even deeper within the hierarchy, wedding it closer to the fate of both the president and Supreme Leader. At the same time, however, the IRGC owes its position to the Islamic Republic, so its survival is intertwined with that of the velayat-e faqih and therefore Khamenei himself.

Similarly, and particularly since the contested elections, Ahmadinejad derives his own legitimacy from the velayat-e faqih. As such, he too is dependent on Khamenei maintaining his authority. But there is increasing evidence that the growth of Ahmadinejad’s power, in parallel to the decline in Khamenei’s credibility, has fostered tensions between the two. This adds to the fragility of the regime at a time when it needs to consolidate its strength through unity.

Growing instability

Khamenei’s concern over Ahmadinejad is that his economic mismanagement and international grandstanding pose a serious liability for Iran. Such is the country’s economic plight – for which Ahmadinejad must take much of the blame – that he has now been forced to implement radical remedial measures. In what he calls Iran’s “biggest economic plan in the past 50 years,” this year’s budget proposed the cutting of $40bn off the government’s subsidy bill, which is estimated at over $100bn. While parliament rejected the plan, it nevertheless acquiesced to a still significant cut of some $20bn.

Although the need to cut subsidies is urgent, it is a risky economic strategy, as it will increase inflationary pressures at a time when consumer prices are already high and rising (in March annual inflation was recorded at over 10 percent). Ahmadinejad’s overriding aim is to reduce the country’s exposure to likely sanctions on its oil imports by reducing domestic demand. But given that Ahmadinejad is personally responsible for incurring the threat of sanctions, the measure could also exact high political costs.

The shifting political landscape within Iran has altered the international dimension. The West, and the US in particular, understands the fragility of Ahmadinejad’s position and is concerned that sanctions might help him consolidate his domestic support base. The US sanctions plan would therefore appear to favor ‘smart’ sanctions, which would specifically target the regime’s bulwark – the IRGC. But the US is still having considerable difficulty in building an international consensus on Iran and discussions over sanctions look set to drag on for some time ahead.

A question of legitimacy

Five years on, Ahmadinejad has boosted his own authority considerably, but in doing so, has greatly weakened Iran’s revolutionary political infrastructure, calling its very legitimacy into question. Without legitimacy, the Islamic Republic cannot be sustained; certainly Ahmadinejad knows that he cannot maintain his rule and the integrity of the system through repression.

Yet to imagine that the reform movement could effect real change in Iran is to suspend belief, for it would have to take on the might of the IRGC, which at present has too much invested in the status quo to ever want to let go.

However the reform movement did not engineer the regime’s current crisis; it was self inflicted through economic mismanagement, political posturing and hardline intransigence. Today the country is more polarized than at any time since 1979.

Ahmadinejad’s policies have given voice to the reform movement and, in doing so, he may well have sown the seeds of the Islamic Republic’s downfall. Until now, he has managed to suppress its protests, but the reform movement remains a powerful latent dynamic. The Islamic Revolution of 1979 took a few years to play out and, in a similar fashion, there is a likelihood that Ahmadinejad has unleashed forces that his increasingly fragile regime may be unable to contain in the long months ahead.