Seeking to save battered economy, Iran’s Raisi may prioritize axing US sanctions

TEHRAN (AFP) — Iran’s ultraconservative Ebrahim Raisi will be inaugurated on Tuesday as the new president of the Islamic republic, a country mired in deep economic crisis and hit by crippling US sanctions.

He replaces the relatively moderate president Hassan Rouhani, whose landmark achievement was the 2015 nuclear deal between Iran and six world powers.

Raisi, 60, will have to tackle the nuclear talks aimed at reviving the deal from which the US unilaterally withdrew.

Two days after Tuesday’s inauguration by the Islamic republic’s supreme leader Ayatollah Ali Khamenei, Raisi will take the oath before parliament.

He won June’s election when more than half the voters stayed away after many political heavyweights were barred from standing.

A former judiciary chief, Raisi has been criticized by the West for his human rights record.

Ebrahim Raisi, head of Iran’s judiciary, waves to media as he visits the Interior Ministry in Tehran to register his candidacy for the June 18 Iranian presidential elections, May 15, 2021. (AP Photo/Ebrahim Noroozi)

Iran’s economic problems, exacerbated by the American sanctions, will be the new president’s greatest challenge, according to Clement Therme, a researcher at the European University Institute in Italy.

“His main objective will be to improve the economic situation by reinforcing the Islamic republic’s economic relations with neighboring countries,” Therme told AFP.

“The goal would be to build a business model that would protect Iran’s economic growth from American policies and decisions,” he said.

Therme believes Raisi’s main priority will be to “remove US sanctions” so Iran can bolster trade with its neighbors and non-Western countries such as China and Russia.

The 2015 deal saw Iran accept curbs on its nuclear capabilities in return for an easing of sanctions.

But former US president Donald Trump unilaterally withdrew from the accord three years later and ramped up sanctions again, prompting Tehran to pull back from most of its nuclear commitments.

Trump’s successor Joe Biden has signaled his readiness to return to the deal and has engaged in indirect negotiations with Iran alongside formal talks with the agreement’s remaining parties — Britain, China, France, Germany and Russia.

Economic malaise

The US sanctions choked Iran, including by seeking to stop its oil exports, and the economy contracted by more than six percent in both 2018 and 2019.

This was a blow to Rouhani who had hoped to liberalize the economy and develop the private sector.

In the winter of 2017-2018, and again in 2019, street protests sparked by economic woes rocked the country. And in July this year, demonstrators in the oil-rich Khuzestan province, which has been hit by drought, took to the streets to vent their anger.

The economic malaise has been exacerbated by the coronavirus pandemic, which has left many Iranians struggling to get by.

Iranians walk past a shuttered cinema hall in downtown Tehran on July 20, 2021. (ATTA KENARE / AFP)

Iranian reformist economist Saeed Laylaz said that the outgoing president was an “idealist” in his approach to the West.

“Rouhani believed he would be able to solve all the country’s problems quickly,” said Laylaz, who has acted as an adviser to Iranian presidents.

Laylaz believes that Raisi will choose a different path.

After his election, Raisi made clear that his key foreign policy would be to improve ties with regional countries.

In mid-July, Rouhani said he hoped his successor can clinch a deal to lift US sanctions and conclude nuclear talks.

But Khamenei, who will preside over Raisi’s inauguration on Tuesday and whose word is final in policy matters, has warned against trusting the West.

Nuclear talks

Raisi himself has already said he will not negotiate with the other parties to the nuclear deal, and indirectly with the US, just for the sake of negotiations.

His government will support talks that “guarantee national interests,” he has said.

Six rounds of nuclear talks between Iran and world powers were held in Vienna between April and June. The last round concluded on June 20, and no date has been set for another.

Officials in Tehran said there would be no new talks until Raisi assumed office.

Iran’s Governor to the International Atomic Energy Agency (IAEA), Kazem Gharib Abadi, Political deputy at the Ministry of Foreign Affairs of Iran, Abbas Araghchi, and Deputy Secretary General and Political Director of the European External Action Service (EEAS), Enrique Mora stand in front of the ‚Grand Hotel Vienna’ where where closed-door nuclear talks take place in Vienna, Austria, June 2, 2021. (AP Photo/Lisa Leutner)

According to Therme, the new administration in Tehran, where the ultra-conservative camp deeply distrusts the United States, has no wish to press things.

There is a will in Tehran “to show the American side there is no urgency for a quick compromise,” he said.

The new government also wants to show “it can clinch a better deal than the previous one,” Therme added.

According to Laylaz, the future of the nuclear deal will be one of the factors that will affect the fate of the economy.

“If Iran declares its intention not to pursue the negotiations, the sanctions will remain,” he said.

But he also expects Washington and Tehran to reach a compromise. “Iran and the United States cannot continue with the status quo,” Laylaz said.