Transcript: Q&A Domestic Dynamics and Foreign Policy: Transition or Trauma in Iran? Professor Abbas Milani Hamid and Christina Moghadam Director of Iranian Studies, Stanford University Chair: Sharan Tabari Senior Adviser, Legatum Institute 27 November 2014 The views expressed in this document are the sole responsibility of the speaker(s) and participants do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions. The published text of speeches and presentations may differ from delivery. 10 St James’s Square, London SW1Y 4LE T +44 (0)20 7957 5700 F +44 (0)20 7957 5710 www.chathamhouse.org Patron: Her Majesty The Queen Chairman: Stuart Popham QC Director: Dr Robin Niblett Charity Registration Number: 208223 2 Domestic Dynamics and Foreign Policy: Q&A Question 1 I have two questions, if I may. The first one: you said about the comments that are actually undermining the Rouhani government and his foreign minister in trying to reach a deal. Are they going to prevail, these comments and these people, like the Revolutionary Guards? My second one is: are the Iranian people actually aware of what this regime is doing to them as far as creating enemies of all the countries around them? As you know, the Iranian regime is interfering in Lebanon, in Yemen, in Bahrain, in Kuwait – everywhere they can basically, trying to be a superpower of the area. Are the Iranian people in accord with this? Is this what the Iranian people really want? What are they being told? Abbas Milani Whether they will prevail or not, I think remains to be seen. But I think it is now an open confrontation between Zarif and Rouhani on the one hand and many elements of the IRGC on the other hand. If you collect some of the comments that they have made in the last week alone, it is a virtual political civil war. They are openly attacking one another in ways that I would have thought unimaginable, particularly at a time where they are trying to give the appearance of a coherent, unified policy. I think the problem Mr Khamenei has is he has, by all accounts, given Rouhani and Zarif the opportunity to reach a nuclear deal with the west that has two characteristics. One, it can't appear to be a losing proposition. It can't appear that they're giving in too much, because Mr Khamenei has put virtually all of his political capital behind this nuclear programme. To now say we were forced to back down, to now say that out of desperation we have to make this agreement, would be for him untenable. So he wants a deal that he can sell to the base at home as a win, at least a win-win if not an outright win. Secondly, he wants a deal that does not allow Rouhani, Rafsanjani and the reformist camps to use and leverage to change the domestic dynamics of Iran. He wants to keep power as he has. He wants to keep power with the help of the parts of the IRGC that he has, with the help of the Basij that he has, and not open society, not bring in the reformists, not bring in the other forces that need, I think, to be brought in. I'm not sure it's going to work. I'm not sure they're going to solve the economic problems. Iran has profound economic problems that can only be solved with a massive infusion of capital. Mr Rouhani came to New York, they invited some of the most successful Iranian businessmen to try to meet with him. Twenty of them did agree to meet with him but they virtually told him the same thing: that unless you get the rule of law, unless you get the IRGC out of the business of having sweetheart deals, unless there is some resolution of the women's issues, we are not going to bring in this capital. The Iranian diaspora is a profoundly rich diaspora. So on your second question, it's very hard to have good surveys of opinion in Iran, so much of what we say is anecdotal. Certainly what I say is anecdotal. But I think the Iranian people are aware of what has happened to them. They are aware of the costs. All you have to do is read the jokes, go online and read some of the commentaries. Go and read some of the commentaries that people like Rafsanjani and Rouhani have been saying. Some of those comments are really remarkable in the context. When Rafsanjani comes out and says the people who brought Ahmadinejad and forced him on us for eight years, why don't they come and explain themselves and apologize – everybody in Iran knows who 'they' are. Ahmadinejad came to power with the direct support of Mr Khamenei and stayed in power with the 3 Domestic Dynamics and Foreign Policy: Q&A support of Mr Khamenei. Now everyone is talking about what a wreckage of an economy he has left behind, but no one seems to take responsibility. So people read these things. But people don't want Iran to become Libya, they don't want Iran to become Syria. They want to change, as I said, they want to change the regime without having a regime change, because they know this regime has 7 or 8 million; of those, a few hundred thousand are very dedicated, willing to kill and die for the cause, because they are sitting on $70 or 80 billion a year income, about which they give accounting to no one. So this is not going to be an easy fight, to get out of this to where Iran wants to be, I think. Question 2 It's a very promising picture of Iran's future that you paint, but I suppose if in the 1980s we'd been looking at Iraq and looking at the middle class growing in Iraq and the economy relatively prosperous, we might have had a similar prediction there. If there are many more years of sanctions and, as you say, the economy of resistance, isn't there the danger that the education sector will suffer, that future generations will actually be much less educated and perhaps less sophisticated than the present? Abbas Milani I absolutely agree. If there are more sanctions, if the economy of resistance (so-called) continues, you are going to have a very long, hot summer in Iran. I think the regime knows that. I think many people, by all accounts, have gone to Khamenei before the Rouhani election. We know a delegation from the bazaar went. We know some of the economists went, some of the economists he trusts. And they told him that the bottom is falling out, that the Iranian currency had lost something like 60 per cent of its value. As one economist says, Iran was the only economy in the world to have 42 consecutive years of double-digit inflation. It has now double-digit unemployment. It has a stagnation unlike anything Iran has ever experienced. It has a declining share of the oil market. It is unwilling to enter into the European gas market because it's afraid of what Russia might do in the nuclear deals if it tries to undercut Russia's monopoly of the European market. If Iran was pursuing a policy that sought Iran's national interests in a most rational way, Iran might very well be interested in trying to get into the gas market in Europe right now, but they have openly said they're not going to do it because they don't want Mr Putin angry at them. So my optimism is based on my notion, my surmise, that the status quo – both in terms of this rather strict authoritarianism that is incommensurate with the reality at the bottom, and the current economic reality – will not continue, that something else will. Question 3 I was just wondering, taking into account where Iranian society is headed, how do you foresee foreign policy towards Israel? 4 Domestic Dynamics and Foreign Policy: Q&A Abbas Milani Foreign policy towards Israel will depend on who gets the upper hand in Iran. If Mr Khamenei continues to have the kind of role that he's been having, it's going to be very hard to imagine a change. If anything, he has radicalized his position against Israel. He is now more openly challenging Israel. He is clearly laying out a map. Yesterday he said it's inexorable: the West Bank is going to be armed to the teeth, the same way the Gaza Strip is. So I see that as very difficult to change. But what doesn't help the change process is that Israel too, under Mr Netanyahu, has a very intransigent attitude. The notion that Iran must have zero enrichment at this time is a non-starter. By taking that kind of a position, by taking that kind of a radical position, I think Israel plays into the hands of the anti-Israeli rhetoric in Iran, saying the only country that is singling out Iran for this kind of exceptionalism is Israel.