Rouhani faces multiple challenges

rouhaniIranians will discover in the coming weeks whether or not the nuclear crisis has been resolved, a move that would lead to the lifting of sanctions. For the time being, Tehran must  find ways of coping with falling oil prices and the cost of possibly long-term military commitments in Iraq and Syria, as Gerald Butt reports.

The collapse in global oil prices has come at an extremely testing time for Iran, with oil exports curtailed by sanctions and worsening economic conditions at home. As if all this was not enough, Tehran’s regional strategy is forcing it to bear huge financial burdens as it seeks to defend its interests in Iraq and Syria. While debates continue in Arab and international circles about the wisdom of intervening in these two conflicts, Iran alone has taken the plunge.

For President Rouhani and the Iranian government a deal with the international community that led to the ending of sanctions would go a long way towards resolving the country’s financial problems. But this is only one part of the bigger picture. For whether a deal is reached or not there will be pressure from the Islamic Revolutionary Guards Corps (IRGC) not to scale back Iran’s regional commitments. When it comes to Iran’s regional security policy the IRGC’s voice is the loudest in insisting that the Asad government in Syria should remain in power and that Baghdad and Shi’a regions of Iraq should be protected from Islamic State (IS) advances. The IRGC and its backers in Tehran, more than any other group in the country, see the conflicts in Iraq and Syria as vital in holding back the tide of Sunni political and military power.

But dealing with these two regional crises is costing Iran huge amounts of money, as well as a rising toll in human lives. To underline this latter point Iranians were shocked to hear that a senior military commander, Brigadier-General Hamid Taqavi, had been killed in the town of Samarra in Iraq. Deaths and injuries among IRGC ranks in both Iraq and Syria are on the rise.

While the IRGC will continue in the coming months in its extraordinary role of helping to defend two major Arab capitals, Baghdad and Damascus, President Rouhani and his advisers will seek to improve relations with Iran’s neighbours, notably Saudi Arabia. Coordination between these two regional giants, who share an enemy in the shape of IS, would be beneficial to both. While there have been suggestions that Tehran and Riyadh might welcome a move in this direction long-term mutual suspicion has yet to be eradicated – particularly on the part of Saudi Arabia which accuses Iran of meddling not just in Iraq and Syria, but also in Bahrain, Yemen and Lebanon.

Saudi Arabia, on the other hand, while facing potential economic difficulties in line with other oil producers because of the fall in global prices, is in far better financial shape to cope with the immediate future. The big question facing Iran is: if oil prices don’t pick up and a deal on lifting sanctions isn’t reached, then how will the government continue sustaining its regional policies while keeping its domestic economy alive?

So for all these reasons 2015 will be a taxing year for Iran. Economic hardship is resulting in increasing public discontent. President Rouhani knows that, at a time of low oil prices, only the lifting of sanctions will remove the threat of social unrest. And only the defeat of IS and other threats to the Assad regime in Syria will allow Iran to scale back on its costly regional commitments. These are tense and anxious times for those holding the reins of Iran’s domestic and regional policies, as the nuclear talks reach their climax and the war on IS remains in the balance.

Gerald Butt, a former BBC Middle East correspondent, is an analyst and author on the region.






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