IRAN CASE FILE June 2018 CONTENTS Executive Summary ...........................................................................4 Internal Affair ....................................................................................8 Political Benchmark ..........................................................................8 Rouhani’s conservative government of “Hope and Prudence” faces parliamentary challenge ........................8 Military and Security File ................................................................13 Iranian navy to boost its fleet with three destroyers and a submarine ...........................................13 The collapse of Iranian currency inflames bazaar ...........................14 Economic Benchmark ......................................................................17 Part I: Severe turbulence in Iran’s foreign exchange market ..................................................17 Part II: Major economic developments in June 2018 .......................21 Ideological Benchmark ....................................................................23 Part I: A Continued crackdown on Sufi Dervishes ...........................23 Part II: Khamenei meets university students to RASANAH_IIIS avoid a crisis with the post-revolution generation ..........................24 +966112166696 Part III. Summary of recent ideological trends ................................25 [email protected] Arab Affair .......................................................................................28 Part One: Iranian intervention in the formation of the next Iraqi government . .............................................................29 Part Two: The struggle of influence and the prospects of the Iranian role in the Syrian crisis ...............32 Part Three: The Implications of the liberation the Hodeidah airport on the Yemeni equation and the Iranian role ......................37 International Affair .........................................................................42 Post-US withdrawal from Iran nuclear deal .....................................43 www.rasanah-iiis org Summary and Conclusion ................................................................47 The materials contained in the Report should not be quoted without indicating their sources, and should not be republished without Rasanah permission. 4 Iran Case File, June 2018 EXECUTIVE SUMMARY This report tracks the most important events and developments in Iran in the month of June 2018. It provides readers with a comprehensive analysis of the Iranian case-file during this period on three levels: Internal Affair, Arab Affair, and International Affair. Internal Affair 1. Political Benchmark This section discussed the speech directed to President Hassan Rouhani from 187 Iranian members of parliament, asking for a change in his economic team as it had failed to resolve the harsh economic conditions in the country. This section is divided into three parts: the first discussed the shift in the Conservatives’ threats to the government- from questioning the Minister of the Economy to the demand to question President Rouhani and then to impeach him. The second part discussed the Reformers’ position which rejected the Conservatives’ threats to overthrow President Rouhani and his government while the last part handled President Rouhani and Foreign Minister Javad Zarif’s reactions to these demands. 2. Ideological Benchmark This section of the report discussed two issues: the continual suppression of Sufi Dervishes in Iran since last February along with the condemnation of this by human rights organizations and the US State Department. It handled the Supreme Leader Ali Khamenei’s meeting with some university students who sharply criticized the Iranian government and regime. Also, Khamenei’s illogical excuses are analyzed which made 5 it hard for him to convince the post-revolutionary generation considering the current harsh economic and social conditions in the country. 3. Military Benchmark This part discussed the Iranian Navy plans to enhance its fleets in the Caspian Sea and the Arabian Gulf with four vessels in the next few months- three destroyers and one submarine. It analyzed the specifications and capabilities of the Sahmand Submarine, the Damavand Destroyer which was maintained after it had hit the dock at Anzli port last January, the destroyer “Dana” described by Iranian authorities as a pure Iranian- made and it was the latest naval vessel produced by Iran and submarine Fatih the first Iranian medium-class submarine as stated by Iranian Naval Forces. 4. Security Benchmark In this part, the report discussed the demonstrations which erupted in the Tehran bazaar and in several Iranian markets due to a devaluation of the Iranian Riyal, the threats by the Chief of the Judiciary Sadiq Larijani and the Prosecutor Jafari Dowlatabadi towards protesters and the methods used by the Iranian regime to prevent the expansion of demonstrations. 5. Economic Benchmark This report handled the unprecedented rise of the USD against the Iranian Toman- 100% more than in the beginning of this year to trade 9000 Tomans per USD in the parallel market while the official market price remained stable at 4200 Tomans per USD. These developments provoked the bazaar merchants to protest these harsh conditions and increased the demand for the USD in Iran’s market, which reflected the Iranian government’s failure to implement the decision of a unified price for the USD and its inability to provide the required cash to cover this demand for both merchants and ordinary individuals who aimed to save their purchasing power by buying USDs as a type of investment while others sold the state-supported USD in the black market. 6 Iran Case File, June 2018 With Iran’s weak economic performance and the US withdrawal from the nuclear deal, the report handled the differences between economic crisis and collapse, the most important Iranian economic indicators to determine its current performance and its future prospects, and some Iranian views on the current and future economic conditions. Some of these views believed in the seriousness of the current situation and the possibility of increased severity in the future with unprecedented negative social and political consequences if the government does not take action and stop the economic downturn in the country. Other views mainly, Faiza Hashemi Rafsinjani, believed that a significant change had to take place in Iran’s foreign policy or else, the country would be exposed to more economic damage or perhaps collapse. Faiza added that change in Iran would not happen until after the current situation drove the country into the ground as preferred by the Iranian regime. The report addressed the most important economic developments and their consequences on Iran’s economy in the month of June. Iran suffered 16% decline of its crude oil exports during the first half of this month registering the lowest rate since December 2016 amid international company’s rejection to ship or insure Iranian oil, along with OPEC and other countries- Russia- tendency to increase oil production and decrease prices, which will exert more pressures on the Iranian economy through a decline of its oil exports and a deterioration in prices. Arab Affair 1. In this part, the report handled Iran’s interference in the Iraqi political coalitions’ talks that won the parliamentary elections to form a new Iraqi government, elect a prime minister, and plan its programs. Iran aimed to preserve its gains in Iraq by electing a proxy government to Tehran to implement its sectarian project in this country. Based on these assumptions, the report discussed Iran’s attempts to push the Sadrist movement leader Muqtada Sadr to ally with its closest ally in Iraq Hadi Alamiri- the Badr organization leader- and the motives behind such an alliance, the reasons behind Sadr’s alliance with the Prime Minister Heider Abadi and the future of the new Iraqi alliances in light of the current political confusion resulting from Iran’s interference in this country. 2. In this part, the report handled the ongoing conflict in Syria and the regional and international attempts to limit Iran’s role in this country. In fact, there is a near regional and international consensus to curb Iran’s influence in Syria and deny it access to important regional and international transit and shipping lanes on the Mediterranean and the Red Sea through successive military strikes on Iranian proxy militias in Syria, as well as Russia abandoning Iran under the concept of an alliance of necessity and the Turkish strategy to expand its sphere of influence in this country. In addition, the report discussed the consequences of military escalation in Daraa in South Syria and its reflection on regional conflicts, violating the de-escalation agreement signed in Astana in May 2017. 3. The report discussed the consequences of liberating Alhudaidah airport on the Yemeni crisis and its strategic importance for all conflicting parties, the Iranian role in Yemen in light of the decline of the Houthis influence and the impact of these developments on liberating other Yemeni provinces that would ultimately curb Iran’s role in this country. International Affair In this part, the report discussed the consequences of US withdrawal from the nuclear deal and US-Iran relations in the month of June 2018. It proposed the possible scenarios for new US position on Iran, the Reformers’ call for holding talks with the United States, and the Conservatives’