Mehdi Khalaji, a Qom-trained Shiite theologian, was the Libitzky Family Fellow at The Washington Institute.
Brief Analysis
Hardliners have been exploiting the recurrent unrest as an excuse to lambaste the government’s economic track record, interfere with its prerogatives in various sectors, and double down on the Supreme Leader’s 'resistance' strategy.
In his first public reaction to Iran’s recent protests and mounting economic crisis, Supreme Leader Ali Khamenei attempted to deflect public anger toward President Hassan Rouhani’s government. During a nationally televised speech on August 13, he declared, “Most economic experts and many officials agree that all these problems are not caused by sanctions but rather stem from domestic matters, management style, and executive policy planning.” This fits with how state media have highlighted corruption instead of international sanctions in their reporting on the economic difficulties. Khamenei also implicated Rouhani and his team in the partial collapse of the nuclear deal, arguing that they mismanaged negotiations with the untrustworthy U.S. government. In all likelihood, his remarks will give hardline military elements even more room to interfere with the civilian government’s affairs.
TURNING POINT FOR ROUHANI?
Khamenei’s speech made obvious attempts to convince Iranians—especially those who support reformist and moderate politicians—that Rouhani is to blame for the unhappy outcome of the Joint Comprehensive Plan of Action (JCPOA) and subsequent increase in U.S. pressure. As the Supreme Leader told it, the government repeatedly ignored his warnings about Washington’s unreliability and its unalterable animosity toward the Islamic Republic.
In a seemingly regretful statement, Khamenei confessed that compromising his principles and allowing the JCPOA “experiment” to proceed in the first place “was a mistake of mine.” Far from actually admitting error on his part, however, he was sarcastically highlighting Rouhani’s supposed strategic mistakes and diplomatic incompetence, claiming that the president’s dogged insistence on reaching a deal at all costs had set the country up for failure, led to the people’s current suffering, and “crossed designated redlines.” The last phrase is particularly ominous because it essentially gives hardliners a green light to intensify their pressure on Rouhani and further curb his ability to follow his own agenda.
Likewise, by repeatedly describing the cabinet as incompetent, Khamenei is encouraging the Islamic Revolutionary Guard Corps (IRGC), the judiciary, and other bastions of hardliner influence to intervene in its affairs, especially in the economic field. Ultimately, yesterday’s speech may be regarded as a turning point in Rouhani’s political destiny, likely expediting a dramatic decline in his authority over the remaining years of his second term. Perhaps more important, his political allies—particularly the reformist camp—could pay a hefty price during the next parliamentary elections and other contests.
DIGGING IN AGAINST OUTSIDE PRESSURE
Regarding the prospect of opening new negotiations with “the bullying and demanding regime of America,” Khamenei essentially dismissed the possibility, arguing that such talks should not be viewed as a way for Iran to reduce U.S. animosity, but rather as a tool Washington would use “to better realize its hostility and pursue its agenda.” He then took a more explicit shot at the Trump administration: “Even if we hypothetically were to negotiate with Americans, we would definitely not have negotiated with the current administration.” This defiant tone was also rooted in his assessment of Iran’s domestic situation: “We can enter into the dangerous game of negotiation with America only when, economically, politically, and culturally, we reach our ideal point of authority and become insulated against its demagogies and pressure. But in the current situation, negotiation would definitely be harmful for us.”
Khamenei doled out criticism to U.S. allies as well. He accused Saudi Arabia and Israel of helping Washington provoke mass protests and incite “terror” last December via political and financial interference. He also bashed critics of Iran’s regional activities, taking special care to defend the regime’s ongoing involvement in Yemen, Syria, and Iraq. Yet he dismissed the mounting public anxiety about potential war with the United States: “There will be no war...We will never initiate a war, nor will the United States start a war, because it would be totally harmful to them...The Iranian nation has proved that it will do greater harm to any aggressor.”
CONFIDENT DESPITE UNREST
The speech seemingly confirmed Khamenei’s growing self-confidence at home and abroad, most tellingly through his repeated appeals to “resistance” in domestic politics, regional adventurism, and economic policy. He even “resisted” reality at times by offering a rosy narrative about the Islamic Republic’s current troubles.
The primary target of this rhetoric was, again, Rouhani’s elite circle and public supporters. He accused them of causing economic hardships and undermining the regime’s legitimacy and credibility, whether through lack of strategic imagination, ineptitude at crisis management, opposition to his “Islamist” policies, or all of the above. According to Khamenei, “uncompromising resistance” is the sole way to survive foreign pressure and consolidate the revolution—code for consolidating his own power against domestic rivals. He expressed hope that the bitter fruits of the JCPOA experiment would show the wisdom of his stubborn resistance to street protests and other demands for increased democratization. In his view, recent experiences should teach skeptical Iranians that any hope for an alternative to the resistance approach amounts to “naivety” or even “treacherous collaboration with the enemy.”
Prior to the speech, some observers had noted the regime’s seemingly hesitant response to months of low-grade but continuous unrest, spearheaded by protesters angry about their living conditions and economic corruption. After political opponents used the widespread demonstrations as an opportunity to criticize Khamenei directly, some officials became worried, warning leaders that continued delay on long-overdue reforms could cloud the Islamic Republic’s future or even cause its imminent collapse. These concerns were exacerbated when the regime conspicuously refrained from potentially counterproductive crackdowns on protests.
Yet Khamenei’s recent statements suggest he is unfazed by the turmoil. For example, to assuage regime supporters and flaunt his defiant attitude to foreign enemies and domestic opponents, his office sent a brief release to domestic media on August 8 following his meeting with a group of “Iranian cultural activists abroad.” Responding to a question from an unnamed activist who noted that supporters outside Iran are anxious about the regime’s future, Khamenei offered an authoritative answer intended to be heard by everyone: “They should not have any concern at all. Nobody can do a damn thing.”
CORRUPTION: A THREAT AND OPPORTUNITY
Iranians tend to consider the country’s systematic corruption as a major source of economic chaos; some even view it as more destructive than international sanctions. Thus, hardliners are not afraid to exploit or even incite recurrent unrest on the matter as an excuse to subvert Rouhani’s government, interfere with its prerogatives under the Iranian constitution, and release mass propaganda portraying themselves as the true sympathizers with the people’s suffering. On August 3, for example, Ahmad al-Hoda—a prominent hardline imam in Mashhad who serves as Khamenei’s representative in Razavi Khorasan province—described the protests as a justified reaction to the government’s irresponsible attitude, declaring, “Revolutionary people, come to streets if your demands remain unaddressed!”
Indeed, the unrest may wind up helping Khamenei and his totalitarian circle—provided it remains limited enough to be controlled and shows no prospect of turning into a broader anti-regime movement, while also scaring ordinary citizens enough to make them welcome additional internal security measures. Social turmoil of this sort gives the regime leverage and legitimacy to further securitize the public sphere, weaken civil society, and marginalize moderates. Tehran seems to perceive the current period as a transformational moment, one in which national security concerns are diminishing due to its successful repressive machinery at home and the regional achievements of its multinational militia network. The more the regime—particularly the IRGC—believes it can unshackle itself from the demands of politicians, democratic processes, and public approval, the more it will strive for fuller control over civilian institutions, the clerical establishment, and other bodies. In this sense, the IRGC leadership can likely expect a less perilous process for taking over post-Khamenei.
The Trump administration hopes that economic problems will push Iran toward a change in regime policy, if not an outright regime change. Khamenei appears to agree—only his plan centers on making the country even more resistant to reform and engagement with the outside world, and consolidating even more power in the hands of the most militant elements. Whether he can succeed with this plan will determine where Iran’s future lies.
Mehdi Khalaji is the Libitzky Family Fellow at The Washington Institute.
