Ebrahim Raisi: What India and the world can expect from Iran's new president

As Ebrahim Raisi prepares to take over as Iranian President, he faces multiple challenges – both in the domain of foreign policy and economic. His job is thus clearly cut out, and he will need to hit the ground running from the word go. The incoming President cannot afford to be isolationist in foreign policy, and needs to adopt a pragmatic economic policy.

Current economic situation of Iran

If one were to look at Iran’s economic situation, it has been witnessing negative growth for two successive years and is estimated to grow at 1.5 percent in 2021. Fiscal deficit too has been high. Inflation too has sky rocketed (it was estimated at over 40 percent till June 2021, for day-to-day food materials, inflation had surpassed 70 percent) and unemployment for the year 2021 was estimated at 12.4 percent. This has also given rise to numerous protests in the country.

While US withdrawal from the Joint Comprehensive Program of Action JCPOA/ Iran Nuclear Deal in 2018 was a serious setback to the country’s economy, COVID-19 has also been an important factor in the downward trajectory of Iran’s economy.

Iran-US relations under the incoming president

Raisi will need to show pragmatism in negotiating with the US. He has repeatedly said that while he is not opposed to the Iran nuclear deal, he will not kowtow to the West (his stance vis-à-vis the deal is likely to be markedly different from that of outgoing President Hassan Rouhani). Raisi has also sent out signals that he may want to negotiate the JCPOA from scratch (Vienna negotiations which have been going on since April 2021, seem to have made significant progress and this could be a big blow).

If the US does get back to the JCPOA and sanctions are removed, Iran’s oil exports will certainly get a boost and open up numerous other economic vistas for Iran. On the other hand, if Raisi adopts a rigid posture in negotiations, US has given indicators that it may put pressure on Iran by imposing sanctions on Chinese import of oil from Iran.

Advice for Raisi from economists

Economists have categorically told Raisi that Iran cannot afford to adopt an isolationist approach vis-à-vis the outside world, hinting at a nuanced policy towards the West which may resolve the JCPOA issue so that the country’s economy can be put back on track.

Apart from revival of JCPOA, Raisi has also been advised to adopt a pragmatic economic policy and not depend on advisors who are insular in approach. During his election campaign, Raisi had outlined some policies for reviving Iran’s economy. This includes subsidized health, an ambitious housing program, reduction in rent and a number of other measures.  

While the measures targeted at the bottom of the pyramid make perfect sense, some of the measures do not seem practical at least in the short term. There is no doubt that apart from US sanctions and COVID-19, populist policies have also played a role in Iran’s current crisis. According to a 2019 IMF report, energy subsidies were well over 100 billion USD (this accounted for nearly 1/4^th of the country’s GDP). Like subsidies in other parts of the world, it is the affluent who benefited the most

Balancing foreign policy relations

Due to the aggressive US policy vis-à-vis Iran, the latter has moved closer to China in recent years. A strong reiteration of the same is the Iran-China 25-year strategic agreement, under which China will invest 400 billion USD in Iran in a number of sectors with a focus on infrastructure and oil. In spite of the Anti-Western sentiment, this agreement with Beijing has been viewed with great suspicion with many raising eye brows, including former President Mahmoud Ahmadinejad, about the lack of transparency. In such a situation, Tehran will need to focus on economic links with a number of countries.

India-Iran ties importance

One country which is important in this context is India. After the withdrawal of US from the JCPOA, India-Iran ties witnessed a downward slope as New Delhi stopped purchasing oil from Iran and also as a result of New Delhi’s growing proximity to Gulf Cooperation Council (GCC) countries – especially UAE and Saudi Arabia. Ever since the Biden Administration has taken over, New Delhi has been paying closer attention to ties with Tehran, specifically the Chabahar Port project which is of strategic importance being a gateway for India to Afghanistan and Central Asia.

Indian foreign minister, S Jaishankar’s stopover at Tehran enroute to Moscow during which he met incoming President Raisi, and his conversation with Iranian Foreign Minister, Javad Zarif, in which the situation in Afghanistan was discussed, is a strong reiteration of this point. In the changing regional geo-political situation, India and Iran need to find common ground.

Thank President-elect Ebrahim Raisi for his gracious welcome. Handed over a personal message from PM @narendramodi. Appreciate his warm sentiments for India. Deeply value his strong commitment to strengthen our bilateral ties and expand cooperation on regional and global issues. pic.twitter.com/Ef7iEutkZi — Dr. S. Jaishankar (@DrSJaishankar) July 7, 2021

While there may have been differences between both in recent years, a few points need to be borne in mind. First, the geopolitical landscape in the Middle East in recent months has changed significantly with GCC countries themselves seeking to improve ties with Iran. Second, cordial ties with India will send out a strong message that Tehran’s foreign policy is not skewed and it is not solely dependent upon China. Similarly, India by strengthening ties with Tehran, irrespective of ties between Tehran-Washington DC, would send out a message that while it may have moved closer to Washington it will not kowtow on important foreign policy issues.

Conclusion

In conclusion, incoming President Raisi’s task is clearly cut out. He needs to have a balanced economic policy at home, while also striking a balance in relations with other countries and not being excessively dependent upon one. India-Iran ties are especially important in the changing regional scenario, and both sides should focus on improving ties and not hyphenate them with other relationships.

The author is a New Delhi-based policy analyst associated with the OP Jindal Global University, Sonipat

(Disclaimer: The views expressed above are the author's own and do not reflect those of DNA.)