Tough Year for the Iranian President

Iranian President Mahmoud Ahmadinejad experienced a tumultuous year in 2010. After he was sworn into office a year earlier, Iranians had been placing bets on how long into his second term he will last.

It is not just a matter of the stolen election that returned Ahmadinejad to power, or the massive, months-long demonstrations that followed. The coalition of military, clerical and political conservatives that had rallied to him in opposition to the Green Movement completely fell apart. No longer having to contend with an unarmed group of college kids demanding their basic rights, Ahmadinejad’s erstwhile allies began focusing all their anger on him.

While Ahmadinejad attended the annual United Nations General Assembly meeting in New York in September 2010, basking in the warm glow of television cameras and sitting down with the likes of Charlie Rose and Larry King, his political foes began stalking their prey.

Ahmad Tavakoli, one of the most hardline conservative MPs in parliament, wrote a scathing letter to the president outlining three major violations to Iran’s constitution that his administration made – all of them grounds for “censure” and “impeachment.” According to a published version of the letter, Tavakoli said one of the main issues he took umbrage with was Ahmadinejad’s open disregard for Iran’s supreme leader.

Tavakoli was referring to Ahmadinejad’s controversial remark that the executive branch is the most important branch of government in Iran. On the one hand, the remark was just another example of Ahmadinejad’s attempts to grab the reins of power in Iran. Yet his comment was widely interpreted as a direct and public rebuke of the country’s revered and “infallible” founding father, Ayatollah Ruhollah Khomeini, who famously said that the parliament must be the most important branch of the government.

After Ahmadinejad’s remark, a large number of MPs came out strongly against the president, with one conservative member, Ali Mottahari, ominously declaring that the parliament would be “stepping up” its examination of Ahmadinejad’s government. Another MP, Dariush Ghanbari, quipped that the president may not be “fully informed” about how the law in Iran works. But the best retort against Ahmadinejad came from Iran’s fiercely conservative speaker of parliament, Ali Larijani, who reminded the president that the purpose of the parliament was to keep the country from turning into a dictatorship, a not-so-veiled accusation that the president may be confusing himself with the shah. “If Imam Khomeini said (Parliament) has full authority, it was to prevent the reemergence of dictatorship in Iran,” Larijani said.

At the same time, Ahmadinejad was in serious trouble with the country’s clerical elite. After his first inauguration as president, Ahmadinejad, with the help of the Revolutionary Guard, had been systematically removing the mullahs from every position of power in the government and replacing them with former or current members of the Republican Guard. His cabinet ceased to attend meetings of the Expediency Council, whose members represent the interests of the clerical elite. Earlier in the year, Ahmadinejad told a Persian-language newspaper that, in his opinion, “Administering the country should not be left to the (supreme) leader, the religious scholars and other (clerics).”

Meanwhile, the country’s right-leaning parliament attempted to impeach Ahmadinejad on 14 counts of violating the law, including illegally trading 76.5 million barrels of oil valued at approximately $9 billion and withdrawing nearly $600 million from Iran’s foreign reserve fund without parliamentary approval. These are serious charges that would lead not only to impeachment but also, possibly, to arrest and imprisonment. However, according to reports from a number of conservative newspapers in Iran, lawmakers were kept from bringing the impeachment charges to a floor vote through direct interference by none other than the supreme leader himself, Ayatollah Ali Khamenei.

This row between the president and the parliament comes at a time in which Iran’s economy is reeling from the steady success of the international community’s targeted sanctions policy. The uncomfortable truth that Iran’s leaders are loath to admit is that the new round of U.S. and U.N. sanctions targeting Iran’s military and banking industries is taking its toll. Many of Iran’s most reliable European trading partners began to pull out of the country, including Germany’s Siemens and the steel company ThyssenKrupp.

“We believe Iran’s leadership was caught offguard by the speed, intensity and scope of the new measures,” said Stuart Levey, U.S. President Barack Obama’s undersecretary for terrorism and financial intelligence. Levey may be right. On Sept. 22, Ali Akbar Hashemi Rafsanjani, one of the most powerful men in Iran – certainly the richest – publicly admitted what all Iranians know to be true but few dare say: The sanctions were having an effect on Iran’s ailing economy. “During the (years after the) revolution, we have never had so many sanctions and I urge all officials to take them seriously and not as a joke.”

As The Wall Street Journal reported, “Iran’s central bank recently warned of a looming economic crisis and said nearly 2 million personal and business checks bounced in the first three months of the Iranian calendar, up 38 percent from a year earlier.” Inflation in Iran is officially at 10 percent, though many economists believe it to be much higher (probably closer to 24 percent). The Iranian parliament estimates unemployment to be at around 22 percent, but since even one hour a week of official employment counts as full employment, this number could be as high as 40 percent. Meanwhile, the International Monetary Fund estimates that the Iranian economy grew less than 1 percent in 2009 and is on track to grow a measly 1.8 percent in 2010.

In the meantime, Iranians are bracing for what many predict will be catastrophic consequences of Ahmadinejad’s plan to end government subsidies for fuel, food, energy and basic goods such as milk, cooking oil and flour. For decades, Iran’s presidents – from Rafsanjani to Mohammad Khatami – have tried to amend the subsidies system, valued at about $100 billion a year. But they were repeatedly deterred by the threat of massive protests. In a country that has been isolated from the outside world for three decades, government subsidies are the sole means of survival for millions of poor and middleclass Iranians. According to an IMF study, a typical Iranian household making about $3,600 a year receives an average of $4,000 a year in subsidies.

Although the subsidies program has yet to be fully terminated, the cost of basic goods and services in Iran already has skyrocketed. According to the Los Angeles Times, the price of a kilo of ground beef has jumped from $6, when Ahmadinejad began his first term as president, to $14.50 today. The cost of electricity has soared as much as 1,000 percent for some Iranian households.

The irony is that Ahmadinejad is unquestionably doing the sensible thing in pushing ahead with the removal of government subsidies, which account for approximately 30 percent of Iran’s entire annual budget. That is simply untenable for an economy that just last month saw the value of its currency drop a staggering 13 percent against the dollar. Iran’s oil industry, its most lucrative source of revenue, is in shambles after the recent departure of four oil companies – Shell, Total, ENI and Statoil. The carpet industry, once valued at $500 million, has disintegrated thanks to increased sanctions. Some 40 percent of Iranians live below the poverty line. With the price of oil remaining stable and Iran’s international isolation increasing, the government simply cannot afford to keep paying out nearly a third of its entire budget in subsidies.

But while what Ahmadinejad is doing may be the right thing for the country, it is the way he is doing it – by virtual fiat – that has parliament up in arms. To alleviate some of the economic hardships that Iranians will no doubt face, Ahmadinejad is personally doling out millions of dollars to families in need. According to the Iranian newspaper Payvand, some 60 million people (out of a population of 75 million) will receive about $40 a month to offset the inevitable rise in prices.

Not only has Ahmadinejad’s decision to pass out cash to Iranians further hindered economic growth, his insistence on doing so unilaterally and without any guidance or oversight from parliament has created a sense of panic among Iran’s merchant class. That’s because the president is no longer trusted on economic matters, not after his constant and deliberate misrepresentations of the country’s economic situation. Responding to the rosy government statistic about the health of the economy that Ahmadinejad continually touts as proof of his economic stewardship, the Grand Ayatollah Naser Makarem Shirazi spoke for most Iranians when he said that the government figures “contradict what people see with their own eyes.” In September, Rafsanjani publicly rebuked Ahmadinejad for continuing to treat the sanctions that are devastating Iran’s economy as “a joke.”

The mounting domestic pressure on Ahmadinejad may work to the international community’s advantage. Ahmadinejad is no fool. He knows his political and economic troubles at home could be disastrous for his legacy. That is why his approach to the international community, particularly the U.S., was noticeably softer and more accommodating, especially regarding Iran’s nuclear program. Toward the end of his U.N. trip, Ahmadinejad made a comment that would have been inconceivable six months earlier, saying he would be willing to halt all uranium enrichment in exchange for a comprehensive fuel swap. “We are prepared now as well, and I probably would say there is a good chance that talks will resume in the near future,” he said.

Whether his domestic troubles will compel him to be more accommodating in these international talks remains to be seen. But his problems have many Iranians wondering how much longer Ahmadinejad will last as leader of the Persian nation. While it seems that, for the time being, the president can rely on the supreme leader for protection, his enemies in parliament are feeling increasingly emboldened by Ahmadinejad’s fading popularity. Certainly, 2011 will be a decisive year for the dynamic Iranian leader.

Reza Aslan is author of the international bestseller No god but God and Beyond Fundamentalism. He is editor of Tablet and Pen: Literary Landscapes from the Modern Middle East.