Ayatollah Khamenei’s ‘Resistance Economy’ – WSJ

Nuclear talks between Iran and the major powers are once again at an impasse. The alleged reason for the latest standoff is America’s insistence on Iran’s Islamic Revolutionary Guard Corps remaining on its terrorist list. But the story has much more to offer. Under Supreme Leader Ali Khamenei, the Islamic Republic is undergoing one of its most significant transformations since the founding of the theocracy in 1979. The cleric, who has survived and outmaneuvered all challengers since succeeding Ayatollah Ruhollah Khomeini in 1989, is about to rebuild the country to design. His actions have provoked popular protest and dissatisfaction among the elite. In tense times, the clerical regime has difficulty responding to diplomatic initiatives. It ducks.

Mr. Khamenei has long had a vision of an Iran immune to foreign pressure. He prefers to organize trade in what he calls a “resistance economy,” in which the Islamic Republic reduces its reliance on oil revenues, cuts itself off from global markets, and relies on internal resources and demand. “I firmly believe that the key and the solution to the country’s problems lies in boosting domestic production,” Mr. Khamenei told a group of supporters three years ago. “Those who seek outside help to improve production and the economic situation should know that the solution is to encourage internal production.”

In order to keep Iran as the leading Islamic state, Mr. Khamenei prefers an economic operation. Spending must be cut so that Tehran can better withstand financial pressure from abroad. Iran must also cut the onerous subsidies that have long drained its coffers. The Islamic Republic operates a sophisticated welfare state that offers services and goods at discounted prices. The clerical regime has often tinkered with subsidies. Past presidents have resisted deep cuts for fear of a popular backlash. Not Ebrahim Raisi, a disciple of Mr. Khamenei who rose through the republic’s police state for his zeal and ruthlessness.

President Raisi has cut subsidies for wheat, flour and cooking oil. More austerity measures are needed, especially on fuel subsidies, which are provoking protests from almost every sector of society. What appears to be an authentic Revolutionary Guard document leaked this year warns that “society is in a state of explosion” and that “social discontent has risen by 300% in the past year”.

Mr. Khamenei’s response is to unleash his security services and purge the political system. The recent housecleaning isn’t limited to “reformers” — it erased them from society more than 20 years ago. One of Iran’s most provocative public intellectuals, Mostafa Tajzadeh, who is linked to first-generation revolutionaries and the Revolutionary Guards, is back in prison, probably forever. Even Hassan Rouhani, who has a long and rarely acrimonious history with Mr Khamenei, was not offered the usual courtesies afforded to former presidents, such as a seat on the Expediency Discernment Council, which advises the supreme leader. Mr Khamenei has sidelined many conservatives who did not share his penchant for self-sufficiency. Traditional cultural conventions such as family over politics, which have often shielded members of prominent revolutionary families from prosecution, are becoming increasingly irrelevant. The opposition bloc within the revolutionary elite is now much larger than the Supreme Leader’s loyalist circle.

This arrangement does not encourage pragmatic foreign policy decisions. A parallel: When a controversial presidential election in Iran in 2009 provoked a mass uprising and divisions within the ruling class, the regime rejected Barack Obama’s offers of dialogue. Hearing the American offer, Presidents Mahmoud Ahmadinejad, who held office until 2013, and his successor Rouhani encouraged the supreme leader to send envoys to meet US officials abroad. Mr Khamenei has now thrown both men, the former a revolutionary populist and the latter a founding father of the theocracy and its intelligence agency, into political purgatory.

If the supreme leader’s reformation is successful and he establishes a regime entirely manned by his supporters, then he is likely to have little patience for Westerners to offer carrots or wave sticks. The whole purpose of Mr. Khamenei’s demanding and dangerous undertaking is to give the Islamic Republic autonomy in its decisions. It’s a reasonable guess that Mr. Khamenei, who has overseen the nuclear weapons program since things got serious in the 1990s, will decide to build a bomb before a new American administration takes office.

For too long, American leaders from both parties have hoped that diplomacy would avoid tough decisions on Iran. Democratic Washington still wants to pretend it’s time for another round of productive diplomacy. Republican Washington still wants to believe that reimposing tougher sanctions and “credible” threats of force will somehow solve the problem. Unfortunately, Mr. Khamenei has the casting vote; he doesn’t seem inclined to play along.

Mr. Gerecht, a former Iranian Targets officer in the Central Intelligence Agency, is a senior fellow at the Foundation for Defense of Democracies. Mr. Takeyh is a Senior Fellow at the Council on Foreign Relations.

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