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Abu Dhabi, UAEThursday 15 November 2018

Iranian hardliners not moderates are to blame for Iran's economic malaise

Rather than taking advantage of the opportunities the nuclear deal afforded to provide for the people, they have intensified their regional disruption, writes Con Coughlin

General Qassem Soleimani, who heads the elite Quds Force of Iran's Revolutionary Guard Corps, attends a graduation ceremony of a group of the guard's officers in Tehran. Office of the Iranian Supreme Leader / AP
General Qassem Soleimani, who heads the elite Quds Force of Iran's Revolutionary Guard Corps, attends a graduation ceremony of a group of the guard's officers in Tehran. Office of the Iranian Supreme Leader / AP

It is always a sure sign that all is not well at the heart of Iran’s body politic when tensions between loyalists of the supreme leader, Ayatollah Ali Khamenei, and those elected to run the country are aired in public.

In recent weeks rival factions within the Islamic Republic have been doing their level best to portray a united front as they attempt to deal with the increasingly confrontational approach the administration of US President Donald Trump is adopting towards the regime.

The first suggestion that the hardliners were toning down their traditional wariness towards the reformist agenda being pursued by Iranian President Hassan Rouhani emerged early last month when general Qassem Soleimani, the all-powerful head of the Iranian Revolutionary Guard Corps’ foreign operations, published an open letter pledging his support. Writing in response to some uncompromising remarks Mr Rouhani had made about Israel during a visit to Europe, Mr Soleimani praised the president’s “wise and appropriate remarks”, saying they were a “source of pride”.

Further signs that the hardliners, who are dedicated to upholding the supreme leader’s uncompromising anti-Western agenda, came with the announcement that the country’s Supreme National Security Council had agreed to the release of a number of prominent reformers who have been under house arrest since the ill-fated Green Revolution in 2009, including former prime minister Mir Hossein Mousavi and Mehdi Karroubi, the former speaker of the Iranian majlis.

Both men were leading lights in the reformist movement, which staged the biggest challenge to the hardliners’ iron grip over the Iranian constitution, but was ultimately crushed by the supreme leader’s allies.

Whether the reformers will actually get to enjoy their new-found freedom depends on whether Mr Khamenei gives his assent to the Security Council’s ruling. But the very fact that their release was even being considered was seen as a signal that the moderates and hardliners were pulling together in their attempts to deal with the threat posed by the Trump administration’s more aggressive anti-Iranian stance.

But while Mr Soleimani and Mr Rouhani appear to have been competing with each other in their public denouncements of the US president, significant tensions remain between the two camps – not least over the ruinous impact the threat of renewed US sanctions is having on the Iranian economy.

This week saw the rial fall to an historic low of 116,000 against the dollar on the Iranian black market, a disastrous state of affairs for Mr Rouhani, who was elected on a promise to reform the Iranian economy.

Indeed, it was to achieve this aim that Mr Rouhani initiated negotiations with the US and other major powers over Iran’s controversial nuclear programme. Mr Rouhani hoped that, by agreeing to a reduction in the regime’s nuclear activities, he would be able to get punitive economic sanctions lifted, thereby allowing him to begin work on rebuilding the Iranian economy.

From the outset Mr Rouhani’s approach was resisted by the hardliners, who believed Iran was capitulating to the Americans. They were ultimately persuaded to support the deal because of the economic benefits Iran would enjoy as a result of signing the agreement.

But the prospects of Iran enjoying an economic revival have now been undermined by the Trump administration’s decision to withdraw from the nuclear deal.

Instead of having the sanctions lifted, Tehran now faces the very real prospect of having another set of sanctions imposed against it, thereby inflicting further economic hardship on the country’s long-suffering population.

And the collapse of the rial, which is, in part, in anticipation of Washington imposing a new round of sanctions, has prompted the hardliners to end their uneasy truce with the reformist Mr Rouhani, and send him an unusually pointed message demanding that he do more to prop up the national currency.

In an open letter to Mr Rouhani published this week, Mohammad Ali Jafari, the overall head of the Revolutionary Guard Corps, warned: “The unique and extensive backing you benefited from in past weeks shouldn’t preclude you from taking revolutionary actions to control prices and prevent the enormous increase in the price of foreign currency and gold. Decision-making in today’s difficult circumstances necessitates revolutionary determination and decisiveness.”

Mr Jafari’s intervention is the first sign that, far from supporting Mr Rouhani in his stand-off with Washington, the hardliners’ are now looking for a scapegoat on whom to blame the country’s predicament.

But while Mr Rouhani, who has completely rejected any suggestion of renegotiating the flawed nuclear deal, must share some of the blame, the main culprits are the hardliners’ themselves.

For it is the hardliners who, rather than taking advantage of the new opportunities the nuclear deal afforded, have instead reverted to type, and used the easing of diplomatic pressure to intensify their attempts to pursue their disruptive agenda throughout the Middle East.

Instead of spending the billions of dollars Iran received after signing the nuclear deal on rebuilding the country’s ruined infrastructure, the likes of Mr Soleimani have instead preferred to spend their new-found riches on supporting rogue dictators like Syrian President Bashar Al Assad, or supporting the Houthi rebels in Yemen.

Their actions, moveover, have caused dismay among those world leaders like former US President Barack Obama, who naively believed that the nuclear deal would herald a new era of cooperation between the ayatollahs and the outside world.

Instead, the opposite has been the case. And rather than blaming Mr Rouhani for the collapse in Iran’s economic fortunes, the hardliners should take a long, hard look at their own role in creating the crisis.

Con Coughlin is the Daily Telegraph’s defence and foreign affairs editor