RUTHFULLY YOURS

Iran’s Supreme Leader Ali Khamenei last month used the Persian New Year holiday (Nowruz) to deliver his most comprehensive plan for Iran’s economy. His address, proclaimed from his hometown of Mashhad, outlined ten principles of the “Resistance Economy.”

From this speech, it is clear that Khamenei’s plan for Iran’s economic recovery is quite different from that of President Hassan Rouhani and his cabinet. Moreover, Khamenei threw down the gauntlet that he would hold Rouhani responsible for a failure to produce promised improvements in Iran’s economy. Left unsaid but implied was the threat that if Rouhani fails to adopt a “Resistance Economy” approach, it would negatively impact the President’s aspirations for a second term.

Iran’s Supreme Leader Ali Khamenei (left) recently implied that if President Hassan Rouhani fails to adopt a “Resistance Economy” approach, it would negatively impact the President’s aspirations for a second term.

The title of Khamenei’s speech was, “The Year of the Economy of Resistance: Action and Implementation.” This is a clear signal to the Rouhani administration as to what path the president should take in managing the economy.

Khamenei enumerated the following fundamental actions designed to revive Iran’s economy:

1. Resurrect domestic production by reopening Iran’s production facilities, 60% of which had been shut down during the sanctions period.
2. Avoid exports that weaken the goal of restoring Iran’s indigenous production.
3. Do not waste the money flowing into the country in the post-nuclear deal era.
4. Transform sensitive sectors of the economy into information- and knowledge-based orientation, rather than exporting raw materials like oil and gas, while also improving the country’s ability to produce planes and ships.
5. Make technology transfer a condition for any foreign commercial deal.
6. Fight corruption.
7. Fight drug trafficking.
8. Give special help to small- and medium-size industries. This step is designed to demonstrate that the regime must be on the side of lower classes, whose chief responsibility in life is to feed their families. The government must help with “Boojeh Aashpazkhsneh,” i.e. “Kitchen Budget” issues.
9. Promote energy-efficiency projects.
10. Construct Iran’s own factories; resist the temptation to import turnkey factories from abroad.

Khamenei’s warning to conserve foreign-currency windfalls that result from the lifting of sanctions is probably a criticism of Rouhani’s whirlwind visit to Western European countries, during which he concluded deals for big-ticket items. For instance, Rouhani signed deals to purchase 118 Airbus passenger jets and 20 turboprop passenger planes from the French-Italian aircraft manufacturer ATR.

Hardline members of Iran’s parliament (Majles) quickly exploited Khamenei’s address to criticize Rouhani and Foreign Minister Javad Zarif for emphasizing improved relations with the West during the first two years of Rouhani’s presidential term. MP Gholam Reza Mesbah declared:

“In the two years since the policies of the resistance economy have been issued, the administration has not taken action on this issue … Instead of focusing on international relations and the opening of the economy through this path, there should be special efforts toward domestic production, use of national capacities, natural resources, agriculture, industry, mines and tourism.”

Iranian journalist Abddullah Abdullahi commented that it is clear that Ayatollah Khamenei wants Rouhani to refocus his self-sufficient “Resistance Economy” approach.[1] One conservative figure on the Majles Planning and Budget Committee also warned that the government’s economic programs should not result in increased dependency upon “outside powers.”

Underscoring the serious nature of this criticism of Rouhani’s presidency was Professor Hojatollah Abdolmalehi of Imam Sadeq University, which has ties to the Islamic Revolutionary Guards Corps (IRGC). He stated that “beneath the inability of liberal economists to implement the Leader’s ‘Resistance Economy’ program is a proclivity to embrace secular and anti-religious overtones.”

Rouhani’s management of the economy will be closely monitored by hardliners seeking a return to popularity and the presidency in the 2018 presidential elections.

Dr. Lawrence A. Franklin was the Iran Desk Officer for Secretary of Defense Rumsfeld. He also served on active duty with the U.S. Army and as a Colonel in the Air Force Reserve, where he was a Military Attaché at the U.S. Embassy in Israel.