Contemporary Iran: Politics, Economy, Religion 9781529209570

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CONTEMPORARY IRAN Politics, Economy, Religion Farhang Morady

First published in Great Britain in 2020 by Bristol University Press University of Bristol 1-9 Old Park Hill Bristol BS2 8BB Uk t: +44 (0)117 954 5940 e: [email protected] Details of international sales and distribution partners are available at bristoluniversitypress.co.uk © Bristol University Press 2020 British library Cataloguing in Publication Data A catalogue record for this book is available from the British library ISBN 978-1-5292-0955-6 hardcover ISBN 978-1-5292-0956-3 paperback ISBN 978-1-5292-0958-7 ePub ISBN 978-1-5292-0957-0 ePdf The right of Farhang Morady to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved: no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of Bristol University Press. Every reasonable effort has been made to obtain permission to reproduce copyrighted material. If, however, anyone knows of an oversight, please contact the publisher. The statements and opinions contained within this publication are solely those of the author and not of the University of Bristol or Bristol University Press. The University of Bristol and Bristol University Press disclaim responsibility for any injury to persons or property resulting from any material published in this publication. Bristol University Press works to counter discrimination on grounds of gender, race, disability, age and sexuality. Cover design: Blu Inc Front cover image: Mehrshad Rajabi/unsplash Bristol University Press uses environmentally responsible print partners. Printed in Great Britain by CMP, Poole

Contents Acknowledgements iv Glossary vi Chronology x Maps xiii 1

Introduction

1

2

Capitalist Development in Iran: Continuity and Change

11

3

Oil, State, Power and Economy

33

4

Islam, Politics and Power in Transition: Prologue to the 1979 Revolution

53

5

Revolution: Theories and Practices

73

6

State and Political Forces in Post-Revolutionary Iran

93

7

The Dynamics of US–Iran Relations: Background, Evolution and Consequences

111

8

Regional Influence and Ambitions

129

9

Conclusion

145

References 157 Index 173

iii

Acknowledgements This book emerged over many years as I tried to grasp and understand the causes of the Iranian Revolution at both the theoretical and a personal level. In order to trace the roots of the Revolution, I spent a number of years deepening my appreciation of history and Iran’s political economy. Naturally I accumulated a number of debts to many friends, colleagues, students and my family. They have supported me throughout, inspiring and encouraging me during this long journey. In the early period of my investigation, my supervisors, John Ure, Morris Szeftel, Ray Bush and Mahmoud Messkoub, brought to my attention the importance of political economy in order to have a deeper understanding of the world-system. I owe an enormous debt to my colleagues at the University of Westminster. Dibyesh Anand has not only been a great friend but he has also been a constant motivator, encouraging me to research and publish my ideas. Graham Smith, Roland Dannreuther, Thomas Moore and Sahar Taghdisi Rad read my work and provided me with constructive feedback. I have had ongoing discussions on capitalist development and its implications in the Global South with numerous colleagues around the world who have helped me to shape my ideas: Ismail Siriner from Batman University in Turkey, Tien Thi Minh Nguyen from Hanoi University in Vietnam and Horacio Gago from the Pontifical Catholic University of Peru (Pontificia Universidad Católica del Perú) – to whom I also owe my gratitude. My students have always been my source of inspiration since I started teaching. I always see something special when I am engaged with them. Gabriele Piaza read the whole draft of the manuscript, providing insightful comments and suggestions. A number of friends have discussed various aspects of Iran’s politics and have provided me with references to books and articles for many years. Marjan Tabibzadeh read the manuscript and gave me encouraging thoughts. Through discussing Iranian politics, I have learned an enormous amount from friends including Zhila Rouhifar, Hoshang Noraiee, Mark

iv

Acknowledgements

Cowell, Mahmoud Bazargan, Peyman Fartain, Ghlamreza Kamyabi, Shahzavar Karimzadi and Kay Norman. My sisters Fereshte and Farihan have always been there for me, whether to identify Farsi books or to motivate me throughout my life. Many thanks to my daughter Layla – I owe her much for being patient and calm and for supporting me whenever possible. Finally, my appreciations are extended to William Heidbreder and Dawn Rushen, the copyeditors who read the whole book and provided helpful comments. Stephen Wenham, editor, and Caroline Astley, assistant editor, at Bristol University Press/Policy Press, worked closely with me to complete the manuscript.

v

Glossary Abadgaran

Developer.

Ansar

‘The Helpers’, the first converts from Medina and its population, who gave the Prophet Mohammad asylum.

Ansar-e Hezbollah ‘The Helpers’ of the party of God. Ashura

The 10th day of Mharram, a historical significance and mourning for the martyrdom of Husayn, son of Ali.

Ayatollah

Literally ‘sign of God’, high-ranking Shi’a clergyman.

Bazaar

A market place where bazaari (traders) sell and buy goods.

Basij

Volunteer force linked to the Revolutionary Guard.

Beyte Rahbari

Office of the Supreme Leader.

Bonyad Mostazafan va Janbazan

The Foundation for the Disinherited, established in March 1979 to administer the expropriated property of the Shah’s family.

Caliph

A successor to Mohammad, head of the Caliphate.

Esteghlal

Independence.

Faqih

A jurist who is an expert in Islamic jurisprudence (plural fuqaha).

Fatwa

A decree in Islamic law.

Fedayyan-e Khalq A Marxist-Leninist organization, founded in 1970 Organization by ex-members of the (Communist) Tudeh Party (FKO) and the National Front, including Bijan Jazani and Masoud Ahmadzadeh.

vi

Glossary

Hijab

Religious code that governs covering women’s hair in public spaces.

Ijtihad

Jurist’s ability to derive the rules of Islamic law from religious sources.

Imam

A Shi’a religious leader, traditionally considered descendants of Ali and Fatima.

Imamat

The Shi’a belief that Imams are the rightful successors to Mohammad and administer divine justice.

Islahat

Reforms.

Islamists

An attempt to blend Islam and politics, those who follow what they consider Islamic politics, and who believe in Islamic governance.

Jame-e Ruhaniyete Community of Struggling Mullahs. Mobarez Jaryan-e enherafi

Deviant current.

Jemiyete Motelefe-e United Islamic Community. Eslami Jihad

Holy war.

Jihad-e Sazandagi

The Construction Crusade, established in June 1979 to restructure the rural areas of Iran.

Jonbesh-e Sabz

The Green Movement.

Kharijites

Seceders from Ali’s group.

Kargozaran-e Sazandegi

Executives of Reconstruction.

Khod kafa’i

Self-sufficiency.

Maslaha

Expediency.

Majlis

Iranian Parliament.

Majles-e Khebregan-e Rahbari

Assembly of Experts.

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CONTEMPORARY IRAN

Majma Tashkise Maslahate Nezam

Expediency Council.

Mojahedin-e Khaleq Organization (MKO)

Islamic revolutionary organization founded in the mid-1960s.

Mojtahed

Practitioner of Ijtihad.

Mostakbarin

The oppressors.

Mostazafan

The weak, poor or disinherited.

Mullah

A clergyman.

Nezam

Establishment.

Ommat

Community.

Pahlavi

The dynasty that ruled Iran from 1925 to 1979.

Peyrevan-e Khatte Emam ve Rehberi

Followers of the Line of the Imam and Religious Leader.

Political Islam

An attempt to blend Islam and politics, favouring religious control of the state.

Qajar

The dynasty that ruled Iran from 1792 to 1925.

Safavid

The dynasty that ruled Iran from 1501 to 1722.

Sepah-e Pasdaran

Forerunners of the Islamic Revolutionary Guard Corps (IRGC).

Sharia

Islamic law.

Shora-ye Negahban Guardian Council. Tawhid

Oneness.

Theocracy

State controlled by clerics, in which God is regarded as sovereign.

Towse’eh

Development.

Towse’e-ye siyasi

Political development.

Tudeh Party of Iran

Iranian Communist Party, founded in 1941.

Ulama

High-ranking clergy.

viii

Glossary

Umma

The Islamic community.

Umayyad

Islamic dynasty, 661–750.

Usulgarayan

Principalists.

Usuli

A rationalist movement in jurisprudence that advocates Ijtihad and was dominant in Shi’a Islam after 1770.

Velayat

The authority to hold office.

Velayat-e Faqih

A jurist’s authority to rule on behalf of the Hidden Imam.

Waqf

A religious endowment, often known as charitable lands.

ix

Chronology 622

Mohammad migrates from Mecca to Medina, known as the Hejira.

632

Death of Mohammad, succeeded by first Caliph Abu Bakr.

644

Uthman becomes Caliph.

680

Martyrdom of Hussain, Mohammad’s grandson at Karbala.

750

Abbasid dynasty begins.

1501

Shah Ismail takes over in Iran and declares Shi’a the state religion.

1597

Shah Abbas moves his capital to Isfahan.

1722

Collapse of the Safavid dynasty.

1796

Qajar dynasty begins (1796–1925).

1811–21

Iran loses two wars (and land) with Russia.

1901

William D’Arcy acquires 60-year oil concession from the Qajar government.

1905–11

The Constitutional Revolution in Iran.

1906–07

Secret treaty between Britain and Russia divides Iran into their spheres of influence.

1909

Anglo-Persian Oil Company (APOC) founded.

1925

Reza Khan become Shah; beginning of Pahlavi dynasty.

1941

Allied forces occupy Iran.

1941

Reza Shah is forced to abdicate.

1949

Establishment of the National Front.

1951

Mohammad Mossadegh becomes Prime Minister of Iran.

1951

Nationalization of oil.

1953

Shah of Iran briefly flees the country but is reinstated with the help of the American CIA and Britain’s MI5.

1963

The Shah declares his ‘White Revolution’.

x

Chronology

1964

Ayatollah Khomeini sent into exile, first to Turkey, then to Iraq.

1978

Spread of mass demonstrations from Tehran to other urban areas against the Shah’s rule.

1978

Khomeini forced to leave Iraq and goes to Paris.

1978

Khomeini calls for an Islamic Republic.

1978

The Shah flees the country.

1979

Khomeini returns to Iran and appoints Mehdi Bazargan as head of the provisional revolutionary government.

1979

A referendum decides that Iran is to be an Islamic Republic.

1979

Creation of the Revolutionary Guards.

1979

Khomeini declared Velayat-e Faqih by the Assembly of Experts.

1979

Over 50 hostages taken from the US Embassy. Bazargan resigns.

1980

US imposes economic sanctions and makes failed attempt to free hostages.

1980

Closure of the universities for ‘clean-up’ operation.

1980

Beginning of Iran–Iraq War.

1981

The last of the US Embassy hostages are released from Iran.

1982

Council of Experts set up to choose successor to Khomeini.

1983

Veiling for women made compulsory.

1988

The USS Vincennes shoots down civilian Iranian airbus, killing 290 passengers.

1988

Iran accepts UN Security Council Resolution No 598, for an immediate ceasefire with Iraq.

1989

Khomeini dies.

1989

Ali Akbar Hashemi Rafsanjani, Majlis speaker, elected as President; Ali Khamenei elected as Supreme Leader.

1990

Iranian President Rafsanjani defends his policy of encouraging foreign investment.

1997

Ahmad Khatami elected as President.

2001

Khatami re-elected as President.

2005

Mahmoud Ahmadinejad elected as President.

2009

Ahmadinejad re-elected as President.

2013

Hassan Rouhani elected as President.

xi

CONTEMPORARY IRAN

2015

A preliminary framework reached between Iran and the Permanent Members of the UN Security Council (the US, UK, Russia, France and China) as well as Germany and the European Union. This is sometimes referred to as the ‘5+1’.

2017

Rouhani re-elected as President.

xii

Map 1: Iran and the Middle East

Source: www.sitesatlas.com/Maps/Maps/MEast.htm

Map 2: Iran

Source: www.sitesatlas.com/Maps/Maps/Iran.htm

Map 3: Ethnic and religious distribution

Source: University of Texas Libraries, Perry-Castañeda Library

1

Introduction The Iranian Revolution and the establishment of the Islamic Republic of Iran in 1979 manifested the apparent contradictions of a religious authority replacing secular rulers in a country that was part of the modern capitalist world-system. The formation of the Islamic Republic was an unexpected event in the 20th century and the establishment of a form of theocracy in which a religious hierarchy managed the state. This created a paradox: the state appeared to be both anti-Western and religious – and so involving a medieval ideology – yet it is functioning within the international capitalist system. Hence, the Revolution and its outcome continue to pose several questions that have preoccupied scholars, students and the interested public. Why did the Revolution occur? How could Islamists take over power and manage the modern state for over 40 years? What is the nature of the Islamic Republic? By 1979 the Iranian economy and society had gone through significant transformation, with industrialization, urbanization and expansion of the educational system – for example, the literacy rate increased from 12 per cent in 1950 to 36 per cent in 1979. This figure, according to UNESCO, increased in 2016 to 86 per cent – 90 per cent male and 81 per cent female (see http://uis.unesco.org/en/country/ir). This book attempts to interrogate the relationship between Islam and theocracy on the one hand, and Iran’s trajectory of capitalist development on the other. It aims to clarify various confusions and mystifications about the Islamic Republic of Iran, focusing on how Islam as an ideology has been made consistent with capitalist development from 1979 to the present day. It will highlight the continuities in Iran’s political economy by emphasizing the capitalist nature of the Islamic Republic, in particular the relationship between Iran’s political system and its economic development path. It aims to explore the tension between capitalism and the Islamic Republic underpinned by conservative Islam. By describing the relationship between the state, politics and capitalist development,

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and locating the country’s role within the region and in the world, it will challenge widespread Orientalist and mainstream approaches.

Capitalist development, underdevelopment and uneven development The story of the political economy of Iran before and after the Revolution has been part of the country’s continuous capitalist development. The Revolution and the Islamic regime empowered clergy as the head of state and conferred on Iran’s politics a degree of separation from global capitalist forces. It would certainly be incorrect, and indeed naive, to characterize the Islamic Republic of Iran as inherently anti-modern, although there are elements with backward ideas. The Islamic Republic has remained capitalist, with the state ensuring that it does so, and to the benefit of its capitalist class, by using coercion when necessary. Capitalist development in Iran and elsewhere has not been uniform, but mediated by specific features of time and place. It is characterized not only by economic growth, but also by tensions, forms of resistance and sometimes stagnation as well (Kiely, 2007). The contradictions of capitalism in Iran can be expressed in various ways. Throughout the 20th century, and the 21st century thus far, various political movements in Iran have reacted to Western economic and political domination, including through anti-imperialism and the struggle for independence. These have varied between Marxism, nationalism and Islamism. The Constitutional Revolution of 1905, the struggle for the nationalization of oil in 1950 and the Iranian Revolution of 1979 reflect this. None of this has meant a return to its pre-modern existence; instead, it was a nationalist approach that sought to reconcile Islam and the modern world (Abrahamian, 1982). The ambiguous character of the political function of religion was sustained by its tendency to support both conservative values favoured by the traditional ruling classes, and the needs and demands of the poor. In connection with the latter, the Islamic Republic is sometimes seen as an anti-imperialist and otherwise ‘progressive’ force (Harman, 2010). The conservative anti-modern elements have persisted with tradition, family values and faith invoked against greater transformation and modernization in society. Such views, coherent enough on their own terms, have played a role in Iran from the beginning of the last century until today. These contradictions reflect variations in Islam and its class character. Hence, various interpretations of Islam may appeal to Iranians representing different social forces. Islamism has grown in societies experiencing the impact of capitalism and imperialism, transformations

2

Introduction

in social relations, the rise of a local capitalist class and the formation of an independent capitalist state. By 1979, the integration of Iran into the world economy was beyond doubt. The transition to capitalism in Iran had speeded up with the establishment of Reza Shah of the Pahlavi dynasty as the new monarch. The development of the modern state, bureaucracy, the army and industry accelerated this process, and thus was only interrupted when the Allied forces intervened militarily in Iran during the Second World War. In the 1950s, with the nationalization of the oil industry, a struggle emerged that involved nationalist, religious and Communist forces in an effort to bring energy under state control. The movement finally ended in defeat in 1953 as the CIA and British intelligence organized a coup d’état that toppled the democratically elected government of Iran (Halliday, 1979; Abrahamian, 2013). Changes in the economy and society in the late 1960s and 1970s were remarkable by any standard. The country’s population increased from 13 million in 1941 to over 36 million in 1979. Of the total population, 29 per cent lived in the urban sector in 1941, a figure that increased to over 50 per cent by 1979, and to 85 per cent in 2019. The vast majority of the population at the turn of the 20th century were either nomads or working in the agricultural sector, and there were many craft workers and little modern industry. This situation was transformed with the growth of the latter, a banking system, and a modern working class that stood at over 2.5 million in 1979 (Morady, 1994). Iran, like many developing countries, has continued to be on the periphery of the world economy. World-system theorists such as Andre Gunder Frank and Theotonio dos  Santos based their analyses on the apparent underdevelopment of ‘third world’ nations as a result of their historical and geographical position within the global division of labour (Frank, 1969; dos Santos, 1970). Frank argued that the division of the worldsystem into metropoles and satellites resulted in the misuse and squandering of resources throughout. In particular, this involved the appropriation of a large part of the economic surplus of satellites by their local, regional or national metropoles. However, the impact of global capitalism did not just cause underdevelopment, as suggested by the dependency school (see, for example, Frank, 1982; Amin, 1976); it also generated development as well as facilitating the emergence of the modern state, political and social forces, although this development was uneven, as seen at cultural, economic and political levels. Conversely, Halliday (2001: 17) claimed: … [c]apitalism unifies the world into a single market and a system of political dominations; yet the different subsections

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CONTEMPORARY IRAN

of this world system remain distinct. In many cases, the differences between them are accentuated by incorporation into a single system. It is because of this unevenness that the weakest links in capitalism as a whole may be found not in the most developed countries but those countries where the retarded impact of capitalism creates contradictions that are all the sharper because the developments carried through elsewhere have not yet been completed. In Iran, the expansion of the European capitalist mode of production in the 19th and early 20th centuries promoted the transition to capitalism, with such changes as the generalization of the commodity market, the growth of wage labourers and the capitalist class, urbanization, the development of a modern nation-state with a modern bureaucracy, army and educational system, and the emergence of political institutions such as a parliament. These transformations were due to both the internal logic of pre-capitalism in the country and the impact of Western capitalism. There is no simple correspondence between imperialism and the progressive erosion of pre-capitalist economic and social relations. The process of capitalist development cannot be explained by one factor; instead, both internal and external relations should be considered (Callinicos, 2009). Capitalism has developed at different speeds throughout the world, in different nations and sectors that were not isolated from each other. This development has taken different forms in different places, at different times and with different dynamics, as well as with specific contradictions within and between society’s economic, political and cultural spheres (Trotsky, 1977; Weeks, 2001; Callinicos and Rosenberg, 2008). In Iran, it has been concentrated around the oil industry. Uneven development is a striking feature of capitalist development, a result of the way that capitalism can incorporate even the remotest areas into the global division of labour. The effects of uneven development included significant variations in the form and role of the state, social classes and traditional institutions such as the bazaar, the religious establishment and the monarchy (Halliday, 1983). The economic contradictions generated by capitalist development were certainly among the important causes behind the Iranian Revolution, as well as the peculiarities of the nation’s political and economic development, its geopolitical importance and the continuing role and intervention of the great powers (Abrahamian, 1982; Keddie, 1983; Pesaran, 1985). The rise of Islamism to power in Iran in 1979 was a consequence of tensions caused by capitalism that included poverty and inequality, as well as the exclusion and marginalization of certain groups.

4

Introduction

The Islamic Republic could survive after the Revolution only because it had to work within a capitalist framework, particularly in terms of the nation’s integration within the framework through energy resources. Despite interpretations of Islamism that were popularized before and during the Revolution, such as by Sadr (1981) and Khomeini (1985), these have not operated outside the global system. In fact, Islamic organizations and institutions set up after the Revolution were implicitly modelled in terms of capitalism and the forms of the modern nation-state. Local interpretations of the Islamic Republic were not the same as those represented in the West. This does not imply an irrational perspective, however, as suggested by some Orientalist analyses (Kiernan, 1986; Koehler, 2014). The Islamic Republic proved unable to act as a block to the development of the capitalist economy. Instead, Iran in this period was transformed by leaps and bounds with the growth of its industries, education, railways and road infrastructure (Abrahamian, 2008; Halliday and Alavi, 1988). The Islamic Republic has operated within a global context, with the impact of capitalism and Western intervention on the one hand, and the political economy of oil on the other shaping the state. The nature of the state should not be located within its cultural or ideological adherence to Islam as the Orientalists claim. Before the Revolution of 1979, the Mojahedin-e Khaleq Organization (MKO) and Islamists such as Ali Shariati (1933–77), Mahmoud Taleghani (1911–79) and even Ruhollah Khomeini (1902–89) were aware of the transition that had been taking place in Iranian society. They were also influenced by growing analysis ranging from Marxism, nationalism and structuralism to modernization theory. In response, they attempted to develop an Islamic version of politics, economy and society for a generation of Iranians who were struggling against the Shah’s regime. Distancing themselves from the other political parties, the Islamists proposed that Islam need not pursue either a capitalist or a socialist path, but could take one that was uniquely its own, a ‘third way’ (see, for example, Khomeini, 1985; Hiro, 1987) that could involve unique principles that were neither capitalist nor socialist. This could mean appealing to the desire to alleviate poverty through economic development and ‘restructuring’ in a way thought uniquely possible under an Islamic government (Khomeini, 1985: 100). Such an alternative model was embraced widely, but it also had to be framed within the capitalist system. The way that this happened was not very different from that of Cuba under Fidel Castro or Venezuela under Hugo Chávez, in which these leaders attempted to address problems of uneven development and foreign domination by looking to a nationalism articulated as anti-imperialist.

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CONTEMPORARY IRAN

The Islamic Republic’s leaders defended the traditional trading class while promoting an emerging bourgeoisie. They looked to national autonomy in order to end or mitigate dependence on significant powers. This could only be achieved within the same world economy in which that dependence was inscribed. Islamism in Iran has not been an exception to the dominant neoliberalism. The latter was promoted with the International Monetary Fund (IMF) and World Bank (WB) forcing nations to accept restructuring plans that involved ending import substitutions, reducing the role of the state, privatizing nationalized industries and keeping wages low. Since the end of the war with Iraq in 1988, there has been a gradual removal of subsidies alongside increasing privatization. Obviously, the significance of oil in the Iranian economy has been substantial, with Iran continuing to be dependent on a single commodity that drives much of its political economy. The benefits of oil wealth are largely divided among the elites, including rich merchants, industrialists, religious elites and the army. These continue to provide the main support base for the regime. Since the Revolution, the Islamic Republic has exercised control over the populace through the use of both coercion and consensus. This began with the removal of political competitors during the early part of the Revolution, and involved religious centres, mosques, social welfare institutions, political parties and, for financing, the bazaar. As the Revolution evolved, various ideological formations within Iranian Islam developed, as reformists and radicals fought for power and sought to construct the new hegemony. This reached a turning point in 2009, with a dispute over the presidential election that had apparently been won by Ahmadinejad. When the political character of Islamism is contextualized historically, it represents continuity with its past. And here, once again, the role of the oil industry is critical, including in its relationship with the state. The Iranian state continues to behave as a ‘rentier state’,1 receiving its major income from energy, and so does not need to impose high taxation. This has been fundamental to shaping the Iranian state and its relationship with domestic social forces and global powers, and its role in the Persian Gulf region.

  ‘Rent’ in this sense means that the state receives an income on a regular basis and in substantial amounts from a resource. See Mahdavy (1970). 1

6

Introduction

Structure of the book The first part of the book provides a narrative of Iran’s political economy and its transition to a more unambiguous accommodation of global capitalism. It will discuss the vital role that the oil industry has played in integrating Iran within global capitalism. In the second part the focus is on the role of religion, demonstrating how Islamists’ perceptions and changing interpretations of religion have supported Iran’s transition to global capitalism, both before and after their seizing control of the state in 1979. In the third part we concentrate on the Islamic Republic’s foreign and regional policy, assessing the continuity and change in Iran’s relations with the outside world, particularly in the Persian Gulf region and toward the US. Following this Introduction, Chapter 2 presents a narrative of Iran’s political economy from the pre-capitalist mode of production to today. The chapter will trace Iran’s integration into global capitalism, the formation of the Iranian state in the early 20th  century, land reform and industrialization after the Second World War and the response of different political forces (including religion) to this process. It will discuss the role of traditional forces, as well as the vital role of global powers, in shaping Iran’s political economy (Halliday, 1979; Razaqi, 1988, 1990; Abrahamian, 2013). By the time of the Iranian Revolution, Iran was already a fullyfledged capitalist society, with the state dominating the economy through ownership and control of major industries, especially energy. As this chapter will show, the emergence of the theocracy represented a unique development in the region, but was not a complete break. Indeed, the pattern of development, and especially the role of the state and its relationship to energy resources in Iran’s economy, has remained fundamental. Chapter 3 evaluates the contribution of energy to the political economy of Iran within a wider historical context (Odell, 1986; Karshenas, 1990; Yergin, 1991). It looks at the substantial impact of income received by the state and its economic and political implications. It assesses both how income from energy was being used to the best advantage as far as development was concerned, and also how these finances were used to support the regime in the pre- and post-revolutionary periods. In spite of the regime change, there was much continuity in the ways in which oil income shaped the economy. While the state technically owns the oil industry, it does not entirely control its price, output or export. The international oil companies and the powerful states associated with them also play a vital role, while the flow of oil revenue has supported the

7

CONTEMPORARY IRAN

pre- and post-revolutionary regimes in Iran. Despite its infrastructure development, Iran remains highly dependent on income from oil, and consequently also on its relationships with global forces. The sanctions that Iran currently faces reflect this dependency. In Chapter 4, the narrative of Islamism is assessed in a wider historical context, describing its evolution as a political project and not just as religious doctrine. This requires specifying its association with the state and society, as well as its importance as an ideology (including in the popular imagination), and the way in which it has also been mediated by global factors and conditions (Rodinson, 1977, 1981, 1985; Engineer, 1984, 1987; Siegel, 2005). Attention is given to different branches of Islam, including its diverse interpretations in Shi’a Islam. The evolution of Islam in Iran occurred partly in response to societal transitions. This is demonstrated through an empirical study of 20th-century Iran, including the Constitutional Revolution of 1905–1911, the consolidation of the modern state in the 1920s and the struggle for the nationalization of oil during the modernizations of the 1950s and 1970s. The continuing affirmations of Islam have been possible in part because it has managed to adapt to changing economic and political circumstances (Akhavi, 1980, 1983, 1988; Voll, 1982; Keddie, 1980, 1983; Chehabi and Martin, 2010). Drawing on current developments in Iran, this chapter will show how flexibility in this regard was sustained by the coexistence of different interpretations of Islam, including forms of conservatism, liberalism and radicalism. The chapter will conclude that political space in Iran has always been heavily contested by different political forces within the religion. The post-revolutionary Islamic Republic came to represent a specific set of social forces, including the traditional middle class that now dominates the state and society. Chapter 5 presents Islam as a multidimensional entity through a variety of interpretations involving different actors since the 1960s, especially during and after the Revolution. This is important for two reasons: (a) the period coincides with major transformations of Iran’s political economy integrating it into capitalism; and (b) the emergence of new social contradictions, to which the Islamists had to respond. The chapter considers Islamist ideologies in a wider perspective, including their ability to mobilize broader masses and build hegemony. It will argue that, despite the prominent role of religion and the narrative adopted by religious leaders, the Iranian Revolution was strongly influenced by the consequences of the nation’s political and economic development, its geopolitical importance and the continuing role and intervention of the great powers (Abrahamian, 1982; Keddie, 1983; Pesaran, 1985). Islamist leaders had to respond to these movements in an appropriate

8

Introduction

way in order to expand their support base beyond the traditional middle class. The economic contradictions generated by capitalist development were among the important causes of the Revolution. Religious leaders such as Ruhollah Khomeini used these contradictions, exposing social incongruities in order to accumulate political gains and compete for political power. The Islamic Republic gradually established itself and became a political force controlling power ideologically and through the state. Chapter 6 looks at the inception of the Islamic Republic and the postrevolutionary state as transformational events in Iran’s history. It examines the political and religious institutions (for example, the Guardian Council and the Assembly of Experts) that emerged after the Revolution and their role in the nation’s political economy. The chapter argues that the major developments after the Revolution were driven by both revolutionary ideals and a pragmatic concern for national survival. Consolidating the theocracy involved a combination of consensus, including non-clerical support, and coercion. The development of state institutions also shows these dynamics, as the new ruling elites had to manage and support their power in complex regional and international contexts. In adapting to new economic and political conditions, the Islamic Republic gradually relaxed many of its earlier ideals (Baktiari, 1996; Abrahamian, 2008; Rakel, 2009; Maloney, 2015). During the early stages of the Revolution, some Islamic leaders presented a populist, anti-capitalist and anti-US doctrine. However, they were forced to change their policies once they encountered the harsh realities of the global political order. By recasting the existing state, society and economy, the new political forces continued to maintain their position of power through a fusion of past and present. Recognizing domestic, regional and global conditions, this chapter assesses the different narratives offered by Islamist leaders with regard to how to deal with the nation’s economic and political problems. Chapter 7 examines how Iran’s foreign and regional policy before and after the Revolution strategically responded to international and regional developments. Despite the continuing US threat and sanctions, Iran has remained an important power. The chapter will show that the Islamic Republic has survived for over 40 years under hostile conditions imposed by the US because of its ideological flexibility and determination to make strategically rational decisions. The fundamental policy approaches adopted by Islamic leaders since 1979 did not constitute a significant break from the previous regime (Ehteshami, 2013; Saikal, 2016). Chapter 8 takes this discussion further, outlining a similar trajectory of continuity and change in Iran’s relationships with the outside world,

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especially the US, which influenced Iran’s foreign policy throughout the 20th century and continues to do so today (Ehteshami and Zweiri, 2007; Ansari, 2010; Hunter, 2010). This chapter evaluates the transformation in Iran–US relations, both before and after the Revolution. One major change in Iran’s foreign policy since 1979 was anti-US sentiment; this was one of the primary pillars of the Revolution, and could not be easily ignored. It was a shock to the system because Iran had been heavily dependent on close relations with the US since the 1953 coup that had brought the Shah to power. The US had put Iran under considerable pressure since 1979, threatening the country with invasion and sanctions. The Islamic Republic found it vital to neutralize Washington’s continuing threat of invasion and its imposition of comprehensive sanctions by orienting itself towards China and Russia, a strategy that has had limited success economically. Finally, Iran has maintained a dual foreign policy, combining aspirations to be a regional and military power with continued support for political actors and regimes in neighbouring countries that are accused of being too ‘radical’. Iran’s influence in the region has, in many ways, expanded. It has affirmed its status as a regional power, attempting to be a leading player in the larger Muslim world. Chapter 8 will outline the two most important events that have helped to strengthen Iran’s geopolitical position: (a) the end of the Cold War and the collapse of the Soviet Union; and (b) the US invasions of Afghanistan in 2001 and Iraq in 2003, both of which removed Iran’s arch enemies. This, in turn, brought Saudi Arabia closer to Israel, partly in order to limit Iran’s regional influence, at least in the short term. While Iran, with its important geostrategic junction and a population of 80 million, has the potential to dominate the region, this has also put the country in a vulnerable position, faced with global powers and regional competitors such as Saudi Arabia. This book will provide the background history of Iran before and after the Revolution, to shed light on the events of post-revolutionary Iran. Hence, it will examine the establishment of the Islamic Republic, its politics, society and economics, and its relationships with regional and global communities.

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Capitalist Development in Iran: Continuity and Change Introduction This chapter focuses on the political economy of Iran, specifically the evolution, formation and role of the Iranian state before and after the Revolution. Using historical materialist analysis, it attempts to frame the origins of the state within its integration into global capitalism. This will be done by exploring Iran’s economic development in the early 20th century, land reform and industrialization after the Second World War, and responses to economic, political and social conditions, in particular the establishment of the Islamic Republic in 1979. The state has played a crucial role in nearly all developing countries, especially with transformations in the ‘third world’ after 1945 (Katouzian, 1981; Harris, 1983, 1986; Bromley, 1994). Rapid changes in the economy and society took place under the capitalist mode of production that had replaced pre-capitalism, a development that began in the West and later spread to the rest of the world. Iran was no exception to this process, and had to develop its own way of integrating into global capitalism. The transformation included such political developments as that of a parliament based on forms of popular representation. Iran has followed similar patterns of capitalist development to those of other ‘third world’ countries, initially adopting import substitution industrialization (ISI), and with state intervention along capitalist lines. It also had to conform to market demands, Increasingly after the rise of neoliberalism during the 1970s before and after the Iranian Revolution. These demands originated in global markets and were variously adapted locally. With the global increase in the price of oil in the 1970s, oil-producing countries found themselves overwhelmed with the large flows of income

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they were receiving. Countries like Iran used this income to embark on major economic developments, including the growth of industries and large-scale modernization (Morady, 1994). The vast reserves of oil and natural gas in the region had become critical for industrial production and transport across the world. Countries around the Persian Gulf account for over one-quarter of the world’s supply of oil and natural gas, and the cash returns from their exports of these resources have become crucial sources of investment around the world (Hanieh, 2011, 2018). Oil export revenues had sweeping implications for the social structure, religion, culture, institutions and ideology of the region, including in Iran. The result was that superstructures were configured in contradictory ways. Iran’s economy was no longer a feudal system, as it relied heavily on its modern oil industry producing for the world market. Iran’s political economy increasingly became integrated with those of the advanced capitalist economies through both the oil industry and foreign investment. This meant principally Britain before 1945 and the US since then, with both countries playing a vital role in Iran’s economy and politics. Largely due, in this instance, to the role of energy both under the monarchy and later the Islamic Republic, the political power exercised through the state has represented particular class interests. While the Islamic Republic was not the close ally of the West that Iran had been under the Shah, it has had no choice but to accept the prevailing global order, as it has had to cooperate in order to survive and achieve its economic and political goals. The establishment of the Islamic Republic in 1979 involved an ideological shift away from the monarchy, with new political forces emerging to protect the participants’ economic and political interests. When necessary the state, under both the monarchy and the Islamic Republic, resorted to violence to guarantee the dominant forms of property continuing under capitalism. It has relied on its armed forces and dictatorial behaviour in order to exercise almost complete control over the state and society. Indeed, the character of the state in post-revolutionary Iran has remained capitalist, with the government guaranteeing the conditions for the reproduction and expansion of capitalist ownership.

Relevance of the past: The arrival and impact of capitalism While in many cases it has taken different local forms, today, capitalism is globally triumphant, and this has been facilitated by rapid industrialization in many countries. Since almost the beginning of the 20th century, Iran

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has been no exception. The modern Iranian state emerged in the 1920s, under Reza Shah, and the period after the Second World War saw the intensification of capitalist development, the integration of the country into the world market and its emergence as a major energy producer. The speed and shape of capitalist development in Iran has been driven by the oil industry that is at its centre, as well as by the state, which has been central to the nation’s political economy. This has enabled the incorporation of even the remotest areas of Iran into the world-system, while at the same time giving rise to new contradictions. Yet, owing to the continuing role of traditional political forces in Iranian society and its economy, it is often argued that capitalist development in Iran has followed a specific path, and taken a form entirely dissimilar to that in the West. Its development has been uneven, with traditional and modern forces and institutions co-existing. Yet, it can also be seen that the monarchy and religious institutions, while continuing to exist under the capitalist mode of production, changed their characteristic forms and role during the modernization process, which was complicating the picture. Before the impact of Western capitalism, Iran was a predominantly agrarian society, with the majority of its population living in the countryside and 90 per cent of the workforce dependent on agriculture or a nomadic life (Morady, 1994). Absentee landowners held most of the land and industries were few and undeveloped. The bazaar was an important place, not just as the hub of trading activities, but also for all members of society. It was a workshop for artisans who could make and sell their goods there, a bank, an important religious centre and a place where merchants, craftspeople, moneylenders, pedlars and religious figures would organize themselves (Abrahamian, 1982). At the same time, lying wholly outside the urban centres of the bazaar were those who practised a nomadic life. It has been estimated that these groups made up half of the population, and were comprised of tribes speaking different languages and maintaining relative independence from the central authority (Issawi, 1971). The 19th and early 20th centuries witnessed an important transformation in Iran’s economy and society, mainly owing to the impact of the West. The foundations of the traditional state were undermined, and a modern state with new institutions was established. The impact of the West on Iran’s political economy was, of course, part of a broader process of change in the world economy. This process involved European capital increasing its domination of world trade through expansionist commercial policies (Wallerstein, 1979, 2003). In the Persian Gulf, the English displaced Portuguese and Spanish merchants and colonists. After the English Civil War in the mid-17th century, the English Navy protected the activities

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of English merchant enterprises abroad.1 The growth of commerce, the necessity to export and other technological changes contributed to the end of the remnants of feudalism in Western nations, including in Britain. Capitalist development in Iran was a by-product of trade with the West, specifically the exporting of Iranian goods and the importing of European manufactured goods. The increasing expansionism of Britain in the region, including India, placed Iran in a strategic position as a geographical buffer against Russian advances towards India.2 The ongoing rivalry between Britain and Russia helped Iran to maintain its independence. Iran was never colonized in the sense of being formally ruled from abroad or with immigrant settlers transforming a substantial part of the economy to meet the economic needs of the colonizing country (Tabari, 1983). The influence of Western capitalism coincided with the weak rule of the Qajar dynasty (1796–1925). It is during this period that Iran became more open to the influence of European capitalism in its imperialist form. From the mid-19th century to the beginning of the 20th, a number of concessions were made by the ruling monarchs, which enabled foreign nations to exploit Iran’s natural resources and carry out infrastructure development projects in the country. Britain’s commercial interest in Iran was driven by its need to maintain Iran as a strategic barrier against Russia. By the 1850s, Britain was Iran’s leading trade partner, purchasing over 50 per cent of its exports and providing an even higher proportion of its imports (Pigulovskaya et al, 1967; Issawi, 1971; Owen, 2004). The Constitutional Revolution (1905–11) reflected changes in the political economy. Capitalist development opened Iran to the world market, while at the same time helping to weaken traditional ways of producing wealth. Sometimes, through their military power, Western nations were able to impose their economic and political will.

  Western Europe witnessed increasing transformation following the Revolution of 1648 in England and later the French Revolution of 1789. The resulting economic development was felt throughout Western European society, bringing accelerated technological innovation, the primacy of the growing towns over the rural areas, and the increased role of money and profit relations. Key events such as the Enclosure Acts in England were transforming feudal relations and replacing them with capitalist ones. See Manning (1991). 2  With the rise of merchant capitalism and European imperialism, Iran became significant as a trade and military route between Asia and Europe. See Deldam (1984). 1

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Reza Shah’s modernization The Qajar dynasty came to an end when Iran was occupied by Britain and Russia during the First World War. Along with the discovery of oil in Iran in 1908, the Russian Revolution of 1917 had a major impact on the political economy of the nation. Reza Shah (1878–1944) came to power in 1921 through a coup backed by a conservative faction within the parliament, representing an alliance of clergy, merchants and landlords who were concerned with countering the rise of Communism in the north. Reza Shah originally planned to abolish the monarchy and establish a republic with himself as its president. It was opposition from the ulama (high-ranking clergy), who associated republicanism with the secular reforms implemented by Mustafa Kamal Ataturk in Turkey, who came to power there in 1921, that persuaded Reza Khan to retain the monarchy, with himself as Shah (king).3 The new state used its military and bureaucratic power to promote modernization, ostensibly in the national interest. This eventually brought relative stability to the domestic economy, following the ravages of war and the exploitation of the country’s resources by competing imperial interests. Unlike previous regimes, that of Reza Shah invested heavily in the development of industry, roads and other infrastructure. Financial services were also unified, resulting in the 1927 establishment of the National Bank to manage the state’s accounts. The guilds were weakened when the government established monopolistic control of essential imports – such as tea, cotton, rice and sugar – and used quotas to restrict other imports. A comprehensive building programme, including the construction of the Trans-Iranian Railway (paid for by levies on tea and sugar), also changed the face of the country’s infrastructure. The road network was extended dramatically, from 1,286 miles in 1921 to some 16,000 miles by 1938 (Ashraf, 1970: 326). The discovery of oil had a major impact that was not immediate but accelerated in later years. In the years 1911–19, the state received a total of £335,000 annually in oil royalties, a figure that increased dramatically to £10.5 million annually in the period 1920–30 (Amuzegar and Fekrat, 1971: 16). The direct impact of oil on Iran’s political economy was insignificant in the period before the Second World War, but it was to become important for both the national and international industrial bourgeoisie. This increased existing tensions between them, and the   A republic was established in Turkey in 1923 that abolished the Caliphate and the Islamic legal and education system (Zürcher, 2004). 3

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control of oil became a major political question debated by the oil companies and Reza Shah himself, as he understood the importance of oil as a means to finance his planned reforms. The Shah’s infrastructure programme and reforms, along with the influence of the burgeoning oil industry that was propelling Iran towards full integration with the world economy, was a boon to other industrial sectors. Without yet entirely dominating the national economy, industrial capitalism was on its way to doing so. Although mostly still small-scale, production using modern techniques and technologies was spreading to the major cities, and employing a substantial section of Iran’s once-agrarian workforce. The occupation of Iran by Allied troops during the Second World War demonstrated once more the geopolitical importance of Iran to the great powers. Iran took a neutral position in the war, but this did not stop Allied forces from taking measures to ensure that Iranian oil fields provided a secure supply route to the USSR for its use in fighting the German army. This marked the beginning of another period of instability and change, culminating in the rise of the Iranian nationalist movement in the 1940s and early 1950s.

The rise and failure of nationalism After the Second World War, the US replaced Britain as the world’s major Western superpower. It represented itself not just as the world’s principal capitalist force but also as an ideological superpower, fighting for the ‘free world’. The rise of the USSR as a challenger to US hegemony resulted in the Cold War, with the two superpowers competing over geographical, strategic, economic and political spheres of influence (Harris, 1983; Halliday, 1987). The US was already involved in the production of Saudi Arabian oil, and Iran’s proximity to both Saudi Arabia and the USSR also gave it strategic importance to the US for geographic reasons. Iran’s rulers at the time had a preference for the US over Britain and the USSR. The US had established a military mission in Iran in 1942, and had since increased its level of intervention, providing military and economic aid as well as political support to the new Shah, Mohammad Reza, who had succeeded his father on the throne in 1941, following the latter’s forced abdication. The British, following their invasion of Iran during the Second World War, had forced Reza Shah from office on behalf of his son. They saw him as being against their interests in general and the war effort in particular (Bakhash, 2015). As in Turkey and Greece, the US’s strategy was above all to counter the perceived threat of Communism. It was ostensibly to defeat a Communist danger that, in 1946, the US

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assisted the Shah’s army in defeating the autonomous Azerbaijani and Kurdish Republics. In the years 1951–53, Iran saw a mass social movement arise that sought, through nationalization, to retain the profits of Iran’s oil industry within the country. This struggle involved a more comprehensive range of the populace than the Constitutional Revolution had, and, like it, it challenged both the monarchy and foreign powers. It achieved some initial successes before facing both internal difficulties and external intervention (Abrahamian, 1982). The nationalization of the Anglo-Iranian Oil Company (AIOC) in 1944 was the key demand of the coalition of forces, which included both religious and secular organizations, behind the new government established in 1944. Mohammad Mosaddegh (1882–1967), leader of the National Front, proposed a 50-50 split of oil profits to the British. The British response was predictable. As a top British civil servant stated: I feel absolutely sure that we cannot reach an agreement with Mosaddegh which would not have disastrous effects, not only on all other British interests all over the world but on all other enterprises and trading activities in foreign countries on which the standard of living of the people of this country, and our ability to maintain our freedom and independence abroad depend. In the case of a mineral like oil they [the Iranians] are of course morally entitled to a royalty. But to my mind the Asiatic idea that morally they are entitled to 50 per cent is bunk. (Bill, 1988: 7) Mosaddegh’s political platform centred round three interrelated demands: the nationalization of oil, parliamentary democracy, and internal reforms to catalyse economic growth. After becoming Prime Minister in 1951, Mosaddegh faced a crippling economic embargo by Britain and other major powers, which brought the country’s oil production and exports to a halt. The effects of the AIOC’s refusal to pay the royalties it owed Iran, and the Bank of England freezing Iran’s assets in British banks, meant that Iran’s development was effectively curtailed. The sharp drop in oil revenues led to balance of payments, fiscal and monetary crises (Katouzian, 1981). The economic measures taken to counter the drop in revenues and the ensuing financial squeeze made Mosaddegh’s government ever more unpopular with many landlords and some of the bourgeoisie, leading to internal divisions within the National Front. A major religious figure, Ayatollah Kashani, Speaker of the Majlis (Parliament), defected from the

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Mosaddegh camp and, according to some observers, joined ranks with the Shah’s supporters to overthrow Mosaddegh (Akhavi, 1980). His position finally became untenable when he failed to win US support.4 The ensuing instability and the fragmentation of Mosaddegh’s support base eventually led the US and Britain to organize a military coup in 1953.5 The events of 1953, like those of the Constitutional Revolution of 1905–11, brought together a coalition of secular and religious groups, united by their shared opposition to Western domination. In both cases, although foreign powers were involved in the collapse of the movement, various domestic social forces, including much of the native bourgeoisie, also played a significant role, and Mosaddegh’s secular government found its support weakened by competing social forces. As in the Constitutional Revolution, the ulama played an important role both in supporting Mosaddegh and later in helping the opposition overthrow him.

Uneven development: Prologue to revolution Iran’s strategic position in terms of both its geography and resources meant that it was destined to be of major importance for the superpowers, particularly during the Cold War. The Shah had fled the country during Mossadegh’s administration, but Iran’s geopolitical importance led the US to provide the support needed to re-establish his regime following Mosaddegh’s fall. His priority on returning was to rebuild Iran’s state and institutions, especially the army. US support was vital to the Shah for both economic and political reasons: it assisted him in reorganizing the national economy and in challenging the Soviet threat. With the resumption of oil exports following the end of the Western oil boycott in the early 1950s, oil revenues enabled Iran to finance a planned development programme. By 1978, oil accounted for 38 per cent of the country’s GNP, 77 per cent of the state’s total income and 87 per cent of its foreign trade (Razaqi, 1988: 169). This meant an opportunity for the   The US administration did not wish to see British domination in the Middle East, particularly in a strategically important region like Iran. But its belief that Mosaddegh would become a vehicle for Communist influence in Iran (perhaps a mistaken view, given the fact that he was not a Communist, and the Tudeh Party did not give him open support until the last year of his government) convinced it to cooperate with the British. See Bill (1988), Katouzian (1988) and Azimi (1989). 5   Although there was some resistance by sections of the working class led by the Tudeh Party, Mosaddegh used troops to put down the demonstrations. This gave more impetus to the US and Britain for organizing a second coup, which brought the Shah back to power. 4

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regime to consolidate its power. The relationship between oil revenue and the state became so close that it was impossible to break. In the 1960s, the Shah embarked on his so-called ‘White Revolution’,6 which included land reform, industrial development, the vote for women and increased literacy among the populace. Despite resentment on the part of some religious groups, the state withstood the challenge that they presented and delivered the announced reforms (Morady, 1994). The land reforms were intended to achieve several purposes: increasing agricultural production and investing the surplus thus derived to expand the industrial sector; providing price stability through the introduction of new technologies; improving the standard of living of the peasantry through a rise in per capita output; and finally, ending the power of the landlords. As a result of the land reforms, capitalist forms of agricultural production became widespread, as the old landlord class was transformed into a modern bourgeoisie. At the same time, the commodification of power was accelerated in the 1970s by the massive migration of the dispossessed peasantry to the cities. The proportion of the population living in urban settings grew from 31.4 per cent in 1956 to 46.9 per cent in 1976 (Pesaran, 1985: 30). Although the Shah’s land reforms did increase agricultural production, it was not enough to meet the demands of the rapidly growing population. The state was thus forced to remove tariffs on the importation of agricultural products, to keep down the cost of food and so keep wages stable. An unforeseen effect of this policy was the inability of small-scale farmers to compete with cheaply priced imports, thus forcing them off the land and into the cities. As more people abandoned farming and the population continued to expand, imports of agricultural goods had to increase to meet demand. Iran thus became more and more dependent on the world market to feed its population.

Industrialization The land reforms laid the foundation for Iran’s further industrialization. The state implemented a policy of ISI, which supported the local production of goods, using foreign technology and machinery that had previously been imported. The aim was to reduce Iran’s dependence on imports and oil exports in order to reduce the economy’s vulnerability to fluctuations in the balance of payments. As the domestic production   The ‘White Revolution’ was part of a wide-ranging programme, including land reform and industrialization, that was launched by Mohammad Reza Shah in 1963. 6

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of imported goods was stepped up, the state imposed restrictions on the importation of essential commodities. Similar policies had been adopted after the Second World War in many less developed countries, particularly in Latin America (Bagchi, 1988). The policy had political implications derived from its nationalist aims. These included local ownership of local companies, the investment of profits in the domestic economy rather than overseas, the promotion of local innovations and the use of domestically developed (rather than imported) technologies wherever possible. The policy required the state to intervene in the market as needed and to monitor and regulate all overseas trade and financial transactions. This overall strategy was intended to give the country a role in the world economy that would facilitate its integration (Harris, 1986). In practice, the policy of ISI required the use of enabling technologies that had to be imported and paid for with the revenue from oil exports. As a result, Iran’s position in the international division of labour became principally one of supplying oil to meet the capital growth needs of industrialized countries, while in return absorbing productive capital from the world market. At least in the short term, the policy of ISI led to a growth in Iran’s imports rather than a decline. In 1972 alone, oil financed 53 per cent of the increase in total imports (Statistical Centre of Iran, 1979). Within a short period, the new industries began to utilize state-of-theart technology. Aside from the petrochemical industry, which was the most developed and mature sector in Iran, this led to the development of steel mills, an automobile industry and electronics assembly plants. There was sustained growth in the economy, evidenced by the increasing role of manufacturing, which generated a total income of 684.3 billion rials in 1978, up from 57.8 billion rials in 1963, a startling increase of almost 12fold (Statistical Centre of Iran, 1979). The state was a dominant player in the process of industrial development, through both direct interventions in the economy and the provision of funding. Oil income was a doubleedged sword, promoting both cooperation and conflict between the state and the private sector, but as long as the income from oil continued to pour in, the state could continue to promote its interests. By the 1970s, Iran had become one of the world’s fastest-growing economies. However, this rapid industrialization did not end the importance of traditional pre-capitalist institutions such as the bazaar, the religious establishment or the monarchy. The bazaar continued its close relations with religious institutions and provided financing to religious schools and mosques, thereby maintaining and promoting the latter’s influence within society. While individuals from both the religious and secular opposition were persecuted and sometimes imprisoned by the rulers, the mosque as an institution continued to maintain a

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degree of immunity from the encroaching power of the state. Thus, the modernization of Iran did not lead to the end of religion as a major force in society. On the contrary, this period saw a strong underlying continuity in the influential role of Islam.

Theocracy and development The 1979 Revolution marked an important change in the country’s political history. After 2,500 years of almost continual monarchical rule, the monarchy was overthrown and replaced by an Islamic Republic. Influenced by revolutionary zeal, the post-revolutionary state appeared at first to make Iran one of the most staunchly anti-imperialist nations. It was often said by participants in the movement that led to the Revolution that its aims included being ‘against Westernization’, an influence widely regarded as the main enemy of the Iranian people. With the economy integrated into global capitalism, the Islamic Republic was faced with the legacy of the old regime’s socioeconomic and political programme. Economically, Iran was strongly linked to the international division of labour as an oil producer and exporter, as well as an importer of capital and consumer goods. Politically, the Revolution was the outcome of the anti-Shah protests, composing a broad-based social movement that had united a wide range of classes and groups including merchants, the religious establishment and the working and middle classes. This alliance comprised a diversity of social interests that were temporarily united by opposition to the Shah and his economic and political programmes. The clergy enjoyed the political and financial support of the merchant class, much of which had lost economic power under the previous regime, owing to industrialization and competition from the growing capitalist class. Fearful of the anti-capitalist mandates that seemed likely under the new regime, many entrepreneurs and skilled professionals left the country, taking with them a substantial part of the nation’s accumulated wealth. The banking system was in turmoil, and many banking institutions could not meet the demand for money by depositors. A flight of capital from the country in 1978–79 had already inflated the price of foreign currencies against the rial on the black market and left many factories lacking finance. Foreign technocrats and advisers either fled or were deported, and consequently many industrial projects such as steel mills, petrochemical plants and copper works were left half-completed or lay idle. The lack of raw materials and a decline in market demand also left firms heavily in debt or bankrupt.

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State involvement in the economy expanded as private sector activity declined. The assets of many factories and firms, and all properties of the Shah and the Royal family, were confiscated, and the government used them to form new institutions. The state attempted to restore economic order through use of its centralized power. The Islamic government did not set itself entirely against the interests of private property owners, as demonstrated by its strong support for the institution of the bazaar. But just as the state believed that it had the right to take over the assets of members of the Royal family and its supporters when many private sector players fled the country, the state effectively assumed ownership of the assets they left behind. The resulting large-scale nationalization of banks, industry and foreign trade granted the state control over much of the economy. By 1980, nearly 80 per cent of previously privately owned industries were under state control (Morady, 1994). The largest sector of the economy, banking, was placed under the control of 15 newly established institutions, including Bonyad Mostazafan va Janbazan (The Foundation for the Disinherited). This form of control, along with the IRGC (Islamic Revolutionary Guard Corps),7 and Jihad-e Sazandagi had existed under the old regime with different names. For instance, Bonyad Mostazafan va Janbazan replaced the Pahlavi Foundation, the IRGC replaced the Shah’s Special Guard and Jihad-e Sazandagi replaced the Literacy and Health Corps. This last body, which was organized by the army, was sent out to villages during the land reform programme in the 1960s. Like the comparable institutions of the old regime, these organizations were vital for political reasons, comprising the new regime’s main support base. In particular, during the first half of the 1980s, they helped the state challenge nationalist minority movements such as that in Kurdistan, and later to fight its war with Iraq. Various interpretations of the Revolution’s aims emerged from within the regime, especially between so-called ‘radical’ and traditional conservatives. These two factions disagreed on economic and social policies, the former calling for the normalization of capitalist development, free markets and collaboration with the West, and the latter for greater state involvement, trade control and ISI. There was much jostling for position by individuals both within and between factions, aimed at creating alliances with providers of the major sources of income, particularly oil.   By the 1990s the IRGC was a very important force, with over 170,000 employees and 400,000 volunteers, comprising an important social base for the state. By 1989, the military controlled 240 major factories and some 12,000 privately owned enterprises, employing about 45,000 people. See Amirahmadi (1990: 147). 7

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Given the increased number of institutions involved with it, including the Office of the Supreme Leader, the Beyte Rahbari,8 and many other foundations, energy income was vital to funding the institutions that served as the system’s religious components (Taheri, 2004). At the same time, fluctuations in oil income intensified the power struggles between the factions. While Khomeini was alive, he was able to maintain a partial peace between the competing Islamist factions around him. The threat posed by the Republic’s main opposition groups, which were secular organizations on the one hand and ‘Islamist liberals’ on the other, convinced both of them to put aside their differences for the sake of common goals and national interests. The group led by Khomeini was able to oust the liberal Islamist Prime Minister, Mehdi Bazargan, who headed the first postrevolutionary government, and then Abul Hassan Bani Sadr, who was President during the subsequent two years. The threat of revolution in this vital region for neighbouring countries encouraged Iraq, with support from the US, to invade Iran in 1980. The key to understanding the Iran–Iraq War and the following nuclear processing issue is to consider both the national and international contexts. On the national stage, the key pillar of the Revolution was anti-imperialism, fuelled by the memory of Iran being invaded by Russia and Britain between the First and Second World Wars, and compounded by public resentment at the US for having engineered, along with Britain, the military coup in 1953. Consequently, on the international stage, the new regime clearly allied itself with radical states such as Cuba and organizations such as the Palestine Liberation Organization (PLO), supporting the latter’s fight against Israel, the US’s closest ally in the Middle East. Consequently, Iran was seen as posing a major threat by neighbouring countries such as Saudi Arabia, Kuwait, Iraq and Jordan, all US allies. The war helped the new regime in Iran to establish itself by mobilizing the masses in defence of the Islamic homeland (Hooglund, 1984). Iran successfully turned the war into an ideological struggle against the  This had been a position that offered general advice to followers on religious matters. After the Revolution, the role of the Supreme Leader became increasingly important, and Khomeini used Jamaran, his home in northern Tehran, to receive domestic and foreign visitors. This would evolve into a complex of centres. Khamenei, his successor, turned his office into a bureaucratic centre, with a number of branches and advisers and a huge budget, with very little transparency or accountability, and operated independently from government. For further information, see www.leader. ir/en (Khamenei’s website) and also Murphy (2007). 8

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‘atheistic’ regime in Iraq. Most importantly, it kept the army engaged in war rather than interfering in the political process. The IRGC helped the Islamists to survive during a challenging period. Unlike the old army, which was still influenced by the old regime, the IRGC helped the new rulers mobilize people to the war front and maintain the security of the ruling elite. Subsequently, some members of the IRGC very quickly moved into some of the highest-ranking military positions in the country (Amirahmadi and Parvin, 1988; Amirahmadi, 1990). The decision to accept a cease-fire with Iraq in 1988 reflected the recognition that it was not possible to continue the war, mainly owing to the high toll wrought on the Iranian economy and society. The impact of the costs of the war on production and the average standard of living was enormous. This was reflected in plummeting productivity and the near doubling of urban poverty. The real GDP in 1985–86 declined by 0.9 per cent, primarily due to a reduction in the price of oil (Fisher, 1990: 432). Some groups gained handsomely in post-revolutionary Iran, especially one group that formed an essential basis of the regime: the merchants and traders, or bazaari. They could obtain foreign currency at a rate of US$1 to 70 rials, while the unofficial price was about US$1 to 1,400 rials. This discount was subsidized by the state, using oil income. External pressure on Iran to halt the war mounted, with US support for Iraq exacerbated by the shooting down in July 1988 of an Iranian Airbus, causing 290  civilian deaths. The problems facing the regime were compounded by further difficulties at home, such as the continuing economic crisis and the logistics of mobilizing people for the war front. Finally, all of these factors led the regime to alter its pursuit of expansionism and to accept United Nations (UN) Resolution No 598, calling for a complete ceasefire in the Iran–Iraq War, which came into effect on 18 July 1988.

‘Generalissimo of Reconstruction’ The architect of the Revolution, Ayatollah Khomeini, died in June 1989, sparking new elections. A ‘pragmatic conservative’, Akbar Hashemi Rafsanjani won the presidential election in August of that year, with 94 per cent of the vote. Along with the growing number of professionals and technocrats who had been given influential positions, he took on the challenge of repairing Iran’s ailing economy. Rafsanjani’s faction became known as Kargozaran-e Sazandegi, the ‘Executives of Reconstruction’, while he was bestowed with the title Sardar-e Sazandegi, the ‘Generalissimo of Reconstruction’. Iran under Rafsanjani was determined to use

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neoliberal policies to navigate the nation’s economy away from the deep crisis that it had been in since the Revolution. The post-war reconstruction had a reformist hue; it aimed to bring Iran closer to international capitalism by reducing state subsidies to industry, promoting free trade and re-privatization, and stimulating the stock exchange. While Ali Khamenei, who replaced Khomeini as Supreme Leader, had in the past denounced Western free market liberalism, he agreed with Rafsanjani on the need to balance the budget and end rationing and price controls, with the aim of both reducing the level of inflation and reining in the defence budget. Initially, these relaxations of government restrictions helped boost the nation’s GDP, government revenues and employment. Oil revenues, which in 1980 accounted for 11 per cent of Iran’s GDP, grew on Rafsanjani’s watch to 16 per cent in 1996 (Central Bank of Iran). This income was useful to the government in managing its expenditures during the period of reconstruction. However, Rafsanjani’s economic liberalization policies had led to a rise in unemployment, and Iranians living on low incomes were further impacted by cuts in food subsidies. In the mid-1990s, unemployment reached 30  per cent and food prices skyrocketed, especially for the important staples of sugar, meat, butter and rice. The young bore the brunt of the country’s socioeconomic problems, and their discontent was expressed partly as resentment against government restrictions on their civil liberties and freedom of speech. The problem was severe enough to result in a series of riots in April–May 1992, August 1994 and April 1995 (Bayat, 2002). The Guardian Council and the conservative clergy gradually became suspicious of Rasfanjani’s reformist approach, fearing that discontent among the poor – their traditional support base – might lead to a rejection of ‘Islamic values’. Many in the sphere of the bazaar were also anxious that the emergence of modern trading centres would undermine their economic interests.

Ghosts of liberalism The reformist politician Mohammad Khatami’s presidential candidacy generated much enthusiasm, especially among the younger generation. He won successive elections in 1997 and 2001, promising on the eve of his presidency to improve economic, political and social conditions. He presented himself as a humble man, living an ordinary life, but with knowledge of the Western world: he had lived in Germany and had

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studied Locke, Hume and Kant. He called for a ‘dialogue of civilizations’ instead of a ‘clash of civilizations’.9 He triumphed in the 1997 election, with a convincing 70 per cent of the vote, and an 80 per cent turnout. It transpired, however, that Khatami did not have a clear economic policy and felt constrained by the fear of upsetting any of the various factions among his allies. He tried to appease everyone by allowing the free market to function, albeit tempered by state control. He promoted a form of social liberalism with promises of a commitment to social justice and the equitable distribution of income, and more political freedom, transparency and accountability, as well as greater access to bank credit, and a variable exchange rate. Students and intellectuals, as well as many women, both within and outside Iran, viewed his election as proof that winds of change were at last blowing in Iran. In contrast, the Guardian Council, the IRGC, various state-run foundations, and in particular the conservative clergy, became concerned that the gradual liberalization and opening up of the economy to the outside world would inevitably lead to an unacceptable secularization. They could not challenge Khatami directly, as he had substantial popular support, but his own fear of reprisals also prevented Khatami from attacking them head on in return. The result was an uneasy impasse between the two factions. The state now represented a religiously based political force that had taken over the Revolution, assuming power and managing it in favour of the dominant class. However, the Iranian state was not devoid of contradictions from within, and in its approach to regional and global relations. For example, the President did not control most major state institutions, including the judiciary, which was headed by Mohammad Yazdi, a prominent right-winger. Consequently, Khatami’s reforms were hindered by the frequent arrests of reformists (including his friend, Hojjatul-Islam Mohsen Kadivar). By 1998, several prominent intellectuals, journalists and writers had disappeared and were later found dead (Keddie, 2006). Khatami’s inability to deliver on his promises eventually resulted in his losing the support of the young workers, students, intellectuals and unemployed who had believed that he would improve their quality of life. Under his presidency, the income gap between rich and poor was not significantly reduced. The highest-earning 10 per cent of the population received 34 per cent of the national income while the bottom 10 per   The concept was originally used by Bernard Lewis and later popularized by Samuel Huntington in response to Francis Fukuyama’s book, The End of History and the Last Man. See Lewis (1982, 1990); Huntington (1993); and Fukuyama (1992). 9

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cent received only 2 per cent (Rakel, 2009). The bazaari, who initially supported Khatami’s reforms and remained loyal to him during the first phase of these reforms, from 1997–2000, turned their backs on him when his government failed to bring political stability. Some began to develop links with the conservative Islamist faction to protect their economic interests. It is in this context that one of the architects of the reformist movement, Said Hajjarian, accused the private sector of undermining democracy in Iran (Nasr, 2005). The US’s role in the region, particularly in light of the inflammatory statements made by President George W. Bush in 2002, including Iran in his so-called ‘axis of evil’ in the wake of the destruction of the World Trade Center in New York, did not help the reformist case, and created space for conservative opponents to voice their displeasure and gain popular support.

Radical turn By the time of the July 2005 election, a large section of the population felt let down by the failure of Khatami to deliver on his promised economic and political reforms. After years of a ‘reformist’ presidency, Iranians were experiencing continuing unemployment, inflation, limited political freedom, restrictions on the press and the imprisonment of journalists and student leaders.10 While Western and Iranian observers predicted that ex-President Rafsanjani would emerge victorious in the election, many voters blamed him for their economic difficulties, not to mention ongoing political and social injustices. Rafsanjani and others in his reformist faction drew their support from the middle class, which included intellectuals, students and progressive clergy in theological schools. His opponent, Ahmadinejad, was a lesserknown figure in Iranian politics supported by conservative clergy in the seminaries, the traditional middle class and officials of the IRGC and its paramilitary voluntary organization, Basij. Although he did not become directly involved in the election campaign, Khamenei clearly favoured Ahmadinejad, who also gained the support of segments of the lower classes that were organized in right-wing Islamic organizations such as Ansar-e Hezbollah. The conservative faction around Khamenei (including the bazaari) chose to promote Ahmadinejad as the one who could best uphold Islamic values.   The most well known person imprisoned was Akbar Ganji, a journalist and writer, after taking part in a political conference held in Berlin.

10

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Ahmadinejad’s surprise victory in 2005 sowed the seeds of change on many fronts, including a move towards sloganeering and confrontational rhetoric in both domestic and foreign politics that was reminiscent of the 1979 Revolution. Ahmadinejad was explicit in reviving the populist approach of the early days of the Islamic Republic, mixing religious slogans with appeals to nationalism. He called for an end to the misuse of oil revenues, hinting at Rafsanjani’s failures without naming individuals. The slogans used during his first term in office included putting ‘Petroleum income on people’s tables’ – a promise to redistribute Iran’s oil profits among the poor (Ehteshami and Zweiri, 2007). During his first four years in office, Ahmadinejad used his patronage to reward his supporters with prominent positions of influence. His allies, who made up the majority of the cabinet and more than a third of the parliament, wielded real business and economic power, and held control over huge oil and chemical industry projects. Under Ahmadinejad’s presidency, the IRGC benefited handsomely from his privatization policies and expanded its reach to the oil and gas industries (Mather, 2009). Ahmadinejad was committed to accommodating the interests of the emergent bourgeoisie, fuelled by revenues from skyrocketing oil prices, which reached more than US$100 per barrel in early 2008. This oil-driven windfall empowered the conservatives under Ahmadinejad, and in turn intensified domestic competition over oil resources. By 2016 the IRGC was managing about 70 per cent of Iran’s staterun economy, from dental clinics to car factories and construction firms. According to the state-run media, the IRGC received at least US$6 billion from the government budget between 2008 and 2010 (Erdbrink, 2010). In 2006, it received subsidies of US$7 billion to develop gas and oil fields and refurbish the Tehran subway system. However, IRGC’s power was limited by the fact that the major institutions continued to be managed by the clergy. Although Ahmadinejad claimed to be the people’s president representing the interests of the poor, in reality he continued the neoliberal policies of his predecessor, albeit tailoring them to suit the new conditions in Iran. His government introduced a ‘justice share’ of stock for the poor in privatized state companies. In reality, this meant the transfer of shares from state-owned companies to boost the cooperative sector. In September, Etemad-e Mobin, an investment company linked to the IRGC, bought a 51 per cent share of the national telecommunications company after it was privatized (Erdbrink, 2010). Just like the previous government, Ahmadinejad used force when necessary to suppress strikes, students’ and women’s protests and nationalist movements. In 2005, one year into his presidency, the bus workers’

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union organized a strike of its 17,000 members in Tehran in a protest against poor working conditions. The result was the arrest and detention without charge of their leader, Mansour Osanloo (Human Rights Watch [International Campaign for Human Rights in Iran], 2010). The state’s power continued to rest on the two pillars of the security forces and the oil industry, which between them provided security for the regime. However, without adequate oil production and income, this alliance would be difficult to sustain. The state under Ahmadinejad, concerned with regional competition and continuing pressure from the West, particularly the US, reversed Khatami’s policy of halting development of the uranium enrichment capability of Iran’s nuclear program. The US response was predictable. It increased pressure on Iran with economic sanctions, which served as an effective tool, thanks in part to resolutions made by the UN. Ahmadinejad called the UN sanctions a ‘torn piece of paper … that will not have an impact on the Iranian nation’s will to obtain nuclear energy’ (quoted in Khabar Online, 2012). However, this argument overlooked the reality that sanctions were hitting Iran hard. The IMF projected that Iran’s economy would shrink in 2013 by 1.3 per cent, and that it would be hard for the government to finance productive investment while income from oil continued to fall. Owing to the sanctions, Iran’s exports of crude oil fell by over a third, from 3.5 million barrels in 2005 to less than 1 million in 2011. The reduced imports of oil forced Iran’s trading partners such as India and China to use complex bartering in order to settle their debts with Iran. For Iran, this meant increasing its imports of Chinese and Indian goods and services, despite their detrimental impact on sectors of Iran’s economy other than oil. Combined with the plummeting value of the national currency, this put tremendous pressure on the nation’s manufacturers, leading to bankruptcies and increasing unemployment. The combination of economic mismanagement by the government and Western-imposed sanctions began to erode the population’s standard of living. Unemployment reached 4 million overall; the 14–29 age group was the worst affected, with 39 per cent out of work (Mohammadi, 2013). At the same time, inflation soared to over 40 per cent, making it harder for low-income families to purchase necessities.

A government of hope and prudence The economic failure of Ahmadinejad’s government and the resulting political turmoil presented an opportunity for Hassan Rouhani, who was

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known as a political moderate, to position himself to gain a greater share of power. Before winning the presidential election in 2013, Rouhani called for a change in Iran’s stance towards the West so that economic sanctions could be relaxed. He argued that the Islamic Republic could not access the technology and capital it needed to continue to develop its large oil and gas reserves without the lifting of sanctions. Rouhani’s victory was not just due to the political astuteness of the leading elite, as some of the pragmatist and reformist leaders adapted to the changing face of politics in Iran. The victory was also due to the vast majority of the populace choosing to use the opportunity to express their opposition to the Ahmadinejad regime for its ineptness in dealing with fundamental economic, political and social issues. Rouhani promised an economic resurgence through the easing of tensions with the West. The Islamic leaders also came to realize that it was impossible to manage Iran’s economy in a way that was integrated thoroughly with global capitalism, through both energy and foreign investment, without Western support. Rouhani’s government hoped that the Iranian economy would begin to pick up by improving relations with neighbouring countries with the aim of ending the international sanctions. He called for constructive interaction with other countries based on moderate policies and referred to his government as one of ‘prudence and hope’ (quoted in Mehr News Agency, 2014). However, the ending of sanctions was not his decision alone, as Western powers (and the US in particular) also played an important role. Rouhani’s plan for development was based on his 2010 book, National Security and the Economic System of Iran. His cabinet included long-standing technocrats such as Mohammad Bagher Nobakhet, the government’s spokesperson, Mohammad Nahavandian, the President’s Chief of Staff and Akbar Torkan, his political adviser. Together, this group drafted a neoliberal open market model for development (Rouhani, 2010). On numerous occasions since assuming the presidency in 2013, Rouhani called for changes in Iran’s labour markets, including eliminating the minimum wage, providing greater flexibility for employers to hire and fire workers and reducing the power of unions. Rouhani’s model has very much depended on two factors: first; Iran’s relationship with the US, which has placed considerable pressure on the nation’s development, and second, his government’s attempt to speed up neoliberal reforms through greater integration of Iran’s economy with the world market. The latter has inevitably created internal conflict, especially over the need for greater openness in politics and economics. Rouhani’s early hopes and solutions for Iran’s ailing economy were contingent on forming closer relations with the global community.

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During Barack Obama’s presidency in the US, Rouhani’s government was involved in intense negotiations with Western powers, hoping to bring the sanctions to an end. Finally, in July 2015, a framework agreement was reached (Borger and Lewis, in The  Guardian, 3  April 2015). As a result, there was a resurgence of optimism based on the belief that Iran’s economy would start growing by attracting much-needed foreign investment. However, it proved to be both a slow and problematic process to remove restrictions on financial transactions and release billions of dollars in frozen Iranian assets. The implementation of the neoliberal model plunged the nation into a crisis with a sudden drop in Iran’s currency; the rial lost more than half of its value in the year following April 2018. No doubt Donald Trump threatening to leave the framework agreement was one factor in this drop, but it was not the only one. Under Obama’s presidency, the US administration had closely monitored the operation of firms trading with Iran through US-based dollar accounts. US policy under Obama and later Trump was based on expediency, with an agenda that consisted of a series of demands and expectations from Iran in order to prioritize the US’s geopolitical interests in the region. On May 2018, President Trump announced that the US was withdrawing from the 2015 nuclear deal and hence that sanctions would be reinstated on Iran. Apart from demonstrating the economic power of the US to call an end to a deal that took 12 years of diplomacy to reach, this action indicated the comparative weakness of the influence of Europe and emerging powers such as China, Russia and India. It also reflected the US’s intent to ensure its own influence in the Middle East and throughout the world, even if it had to disregard the demands of global diplomacy. The impact of the rejected accord has included added pressure for the Iranian regime, while many Iranians are losing hope for any substantial change. The US’s strategy and the Iranian economy’s heavy reliance on energy demonstrate how little space Iran has to manoeuvre in the global system. Undoubtedly, its efforts to maintain its position within the region and beyond have meant further difficulties, as various political revolts, especially those in 2009, have demonstrated.

Conclusion Iran’s political economy has gone through several phases in the 20th and 21st centuries. Its integration with the global economy, especially since the discovery of oil in 1908, gave it a new role in the world economy, as Iran became an exporter of oil and an importer of consumables and capital

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goods. This transformed Iran’s geopolitical role in the region, giving it influence over an area awash with energy resources. The subsequent capitalist development in Iran was a result of the growing influence of Western interests, initially over energy resources and later in other areas of the economy. Since the Second World War, the state has become the key agency in the process of development. It continued to promote capitalism despite the change of regime in 1979. The integration of the Iranian state into the global capitalist system, especially in terms of energy resources, made Iran dependent and vulnerable on the world system. Indeed, the latest US-imposed sanctions on Iran demonstrate this. Since its formation, the Islamic Republic has used several different approaches to govern while trying in each case to adapt to the existing capitalist order. It has not always done so successfully. Yet, acting with greater independence and ignoring the pressures of the global system would have made it impossible for the regime to survive. Inevitably, under considerable pressure, different articulations of economics and politics surfaced since the 1979 Revolution, representing different economic interests within society. Radicals, progressives and liberals, along with the religious leadership, split over different approaches to macro-economic and foreign policy. Variations in approaches to the form of government since the Revolution have reflected a variety of different interpretations of Islam, all attempting in different ways to accommodate the demands of the nation’s role in global capitalism. This theme will be considered in detail in Chapters 5 and 6. The state under the Islamic Republic had to accept and deal with various domestic, regional and global pressures, with leaders at times trying to rationalize their approach and reconcile it with earlier radicalism. Indeed, the ending of the war with Iraq, improvements in relations with the West and neighbouring countries, and the end of Iran’s nuclear programme have all demonstrated a willingness to compromise when necessary. As the next chapter will demonstrate, the heartbeat of the process of transformation of Iran’s political economy has been the energy sector. It has shaped the state as well as the contested interplay between religion, politics and economics, and also internal and external economic and political forces, and will no doubt continue to do so for some time.

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3

Oil, State, Power and Economy

Introduction The Iranian economy has undergone significant transformations since 1945 when the state embarked on a project of major development. The role of energy in this process has been fundamental, but also the subject of much debate and discussion due to the nature of development and the role of the state. Although oil extraction started at the beginning of the 20th century, revenues only began to influence the economy after the Anglo-Persion Oil Company (APOC)1 began production in 1908 (Yergin, 1991). Oil income paved the way for the integration of Iran’s economy into the global system as well as the political transformations of subsequent decades. It also greatly enhanced Iran’s geopolitical importance, making it a centre of attention for the great powers, especially after the Second World War. Since the Second World War, the great powers have concurred that Middle Eastern oil must be accessible in the interests of the stability of the global economy, regardless of competition. With the transformation of the world economy since the Second World War, the emergence of the Gulf countries (including Iran) with both huge oil and gas reserves and cash flow for global investment have made them vital actors in the global system (Hanieh, 2011). In addition, the rise of China and India as world economic powers has made the importance of the oil-producing countries even more significant. The impact of energy on the Iranian political economy has gone through several economic and political phases. The 1950s saw the growth of nationalism and anti-imperialist sentiment in Iran, led by Prime   APOC changed its name in 1935 to the Anglo-Iranian Oil Company (AIOC), which became British Petroleum (BP) in 1954. 1

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Minister Mohammad Mosaddegh, who called for nationalization of the oil industry. Britain, as joint owners of APOC, organized a boycott of Iranian oil and finally colluded with the US to organize the coup that brought down Mosaddegh’s government in 1953. Following this, oil resources and policies began to play a vital role in the modernization and development of Iranian society. This has particularly been the case since the 1970s. The huge income generated by oil sales since this period helped to turn the state into a powerful actor with a major role in influencing the path of development domestically as well as its influence in the region. Iran’s energy-directed development occurred in an uneven and contradictory fashion. Oil income enabled the modernization of infrastructure and industry, but at the same time it created significant inequalities in wealth and power that have remained until today. The postrevolutionary governments never attempted to structurally change the relationship between the state, energy and development. Instead, Iran found itself compelled to adapt to external pressures, including the economic sanctions imposed by the West to punish Iran for developing nuclear energy. This chapter will look at the impact of energy resources on the Iranian state, providing a theoretical assessment of Iran as a rentier state, a country that has articulated and managed the development process on behalf of the capitalist class: promoting, representing and defending the interests of this class. This strategy has been manifest in various contradictory forms, including political mass movements in the 1950s, 1970s and since 1979. The current conflicts between different business interests, the government and factions within the ruling clerical elite can best be understood through this lens.

Implications of a resource The post-Second World War reconstruction of the world economy and the industrialization of many developing countries led to increased demands for oil and higher prices, especially after 1973. This gave energyproducing nations great global importance, particularly as they began to make their own decisions on pricing and energy production levels. With the establishment of the Organization of Petroleum Exporting Countries (OPEC)2 in 1960, the oil-producing states started to exert   OPEC was launched in September 1960 in Baghdad. The founding membership included Iran, Saudi Arabia and Venezuela. Later, other countries, including Qatar, Bahrain, the United Arab Emirates (UAE), Libya, Nigeria, Gabon and Angola, also joined. See www.opec.org/opec_web/en/about_us/24.htm 2

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political influence on the world market. It became clear that the supply, demand and production of energy resources need not be determined by the market alone, and that oil-producing states were no longer passive followers of the demands of global powers and multinational companies. Historically, the price of oil was not only determined by fluctuations in market supply and demand; it has also been affected by the manipulation of production and surpluses and by keeping oil off the market through collusion. Some oil-producing nations, including Iran, when subjected to shifts in the world economy had no choice but to comply with the demands of international institutions, particularly the IMF and World Bank. At the same time, the neoliberal free market mode required by these institutions has not always been strictly adhered to. States in the oil-producing countries have generally maintained control of energy production, retaining on average two-thirds of oil industry profits, and sometimes up to 80 per cent, depending on the prevailing market prices (Morady, 1994; Crystal, 1995). The great powers, including the US, have been unable, in part from lack of political will, to force any change in prices, although, through invasion, Iraq was forced to auction off its oil assets. In these and other ways, state ownership of oil resources has coexisted with the liberal world economy for decades. Although all major world powers would prefer to reopen the upstream sector (potential underground or underwater crude oil and natural gas), there seems no prospect of such an opening in any of the oil-producing countries. With the growing international importance of oil, the governments of oil-producing countries accrued windfall income that could be used to manage their economic and political affairs. Some of these states, including Iran, embarked on modernization in the 1960s and 1970s, with near-total dependence on a single resource. This meant in each case that in a very short time income from energy transformed the economy and society. In looking at this unexpected rapid development, many social scientists and scholars tried to define the nature of these states. Iran has been called a ‘rentier state’ (Mahdavy, 1970), and claimed by some to hinder to democracy (Ross, 1999, 2001; Friedman, 2006; Diamond, 2008). Most analyses were focused on the role of religion, or domestic economic and political affairs, ignoring both wider historical and geopolitical contexts and the role of the great powers. Historically, one of the key features of capitalist development has been its uneven character, meaning that there are persistent differences in both the degree and rate of economic development between economic sectors and geographical regions, with some regions becoming much more advanced and others advancing much more slowly. This was certainly the case in Iran. As discussed in the previous chapter, by 1979, Iran’s economic

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development was totally dependent on the global economy. It was difficult for it to choose any other path, although given the discrepancy between the nation’s revolutionary ideals and the demands of the global economy, the question of how to manage the domestic political economy was bound to be a complex one. The windfall of oil revenues accrued largely to the state, in the form of ‘unearned’ income.3 It provided the state with expanded economic and political power, and meant, in turn, that the ruling elite functioned as ‘guardians of the status quo’ (Meissner, 2010). Beblawi, referencing classical economists such as Smith and Ricardo, notes that rents have no relation to production (1990: 85). In rentier economies, the incomes from rents are concentrated in the hands of a small elite. This revenue can reach as high as 90 per cent of the budget revenues of the government and 95 per cent of exports, although only 2–3 per cent of the labour force is involved in its production. Luciani (1990) uses the term ‘allocation state’ to describe its ability to generate financial resources from oil as a substantial share of its GDP with very little effort. With the establishment of the Islamic Republic, the clerical rulers, who claimed that their legitimacy derived from God, had huge resources to devote to enforcing this mandate. This drew the attention of those such as Orientalists (we will assess this in more detail in Chapter 4) who emphasized their argument of the correlation between energy income and a comparative lack of economic and political development and progress (Halliday, 1993). Beblawi (1990) emphasizes the idea of rentier mentality as one in which citizens do not need to work for their income, as they can instead merely benefit from economic rent. A consequence of this, according to Beblawi, is a lack of development caused by the unproductiveness of the populace. The ‘rentier state’ theory and the correlative hypothesis that ‘oil hinders development and democracy’ is part of a larger discussion about whether, and when, natural resource abundance is also a curse or only a blessing for development. Whilst the unearned income should be welcomed in poor countries as it supports development goals, the economic and political consequences have often been destabilizing (Moss et al, 2015). The notion of a causal relationship between oil wealth and authoritarianism has been challenged by highlighting instead the importance of institutional quality. It is argued that in a country with good governance, oil abundance can be a ‘blessing’ rather than a ‘curse’ for democratization (Herb, 2005; Dunning, 2008; Haber and Menaldo, 2011). In fact, a handful of naturally oil-abundant countries have demonstrated   Internal rents may also be derived from exporting other minerals or commodities, hosting a foreign country’s military base, or even from foreign aid. See Mahdavy (1970). 3

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successful development and democratization, including Botswana and Chile (Stevens et al, 2015). The rentier analysis of the oil-producing countries provides a good understanding of the state’s economic and political role and its relationship with other social forces. However, the rentier state does not act independently from the global political economy. While there is some evidence that oil wealth is a factor in the persistence of authoritarianism in rentier states, it is not the only cause. However, the literature, both that which supports and that which criticizes the rentier state theory, tends to be both apolitical and ahistorical. It analyses state–society relations in isolation from the historical context in which internal and external forces have aggravated or eroded the persistence of authoritarianism. Indeed, in Iran oil wealth was a key factor in the democratic political movement of the 1950s, as well as in the struggle against the Shah’s regime in 1979. The development of Iran before and after the Revolution cannot be separated from the global capitalist system.

The early impact of energy The first oil concession in Iran was granted by its government to a British subject, William D’Arcy, in 1903. This concession gave him the right to develop, explore, produce and refine oil in an area of about 480,000 square miles of land (or four-fifths of the country, excluding the five northern provinces) for a period of 60 years. In return, the Iranian state received £20,000 in cash, an additional £20,000 worth of paid-up shares, and 16 per cent of the company’s annual net profits (Sampson, 1975). The economic effects of oil in the early period of this agreement were negligible, both indirectly in terms of the interplay between the state and the burgeoning industry, and directly through the state’s share of the oil income. However, the royalties paid to Iran rose steadily in subsequent decades. A total of £335,000 in royalties was received in the period 1911–19; this figure rose to £10.5 million for the period 1920–29 and then doubled during the 1930s, with receipts for 10 years amounting to £26.9 million. Between 1911 and 1951, only 10 per cent of the value of oil exports stayed in Iran, with the rest repatriated to international oil companies (Statistical Centre of Iran, 1974: 163). Indeed, most of the wealth was appropriated by the APOC and only a small percentage went towards improving living standards for local workers. The company’s policies were typically colonialist, including the segregation of housing and transportation between foreign and local workers. There were also disparities considering the provision of health: foreign employees

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were provided with hospital facilities but local workers were not (ElwellSutton, 1955). The minimum wage for local workers stayed constant for over four decades, and most of them had to live in shanty towns. Oil was one of the key factors behind the Allied occupation of Iran that began in 1941 and lasted for 16 years. Iran’s location on the Persian Gulf and its huge oil reserves made it very important to the great powers (Abrahamian, 1982). Iran was occupied by British, US and Soviet forces, and during the Second World War, it became an important conduit for the supply of food and ammunition to Soviet troops (who were under German attack from the West). The US was to emerge from the war as the world’s strongest military force, and as its interests in the area grew, it exerted a greater influence on Iran. This is clearly expressed by the words of the then US Secretary of State, Cordell Hull, who, in 1943, told President Franklin D. Roosevelt: … from a more directly selfish point of view, it is to our interest that no great power be established on the Persian Gulf opposite the important American petroleum development in Saudi Arabia. (quoted in Bill, 1988: 19) The US had maintained a foothold in the region since the 1920s when its oil companies first started to seek concessions. The US–Soviet rivalry that began after the Second World War led the US to seek access to Iran’s oilfields, while the Soviet Union was involved in the north of the country, and the British tried to keep a foothold in Iran. After the war, the geopolitical importance of Iran – especially as it neighboured the Soviet Union – made it a prime target for US attention. The growing power of the Soviet Union and anti-imperialist struggles in the region led the US government to ensure that its oil companies played a central role in the area. This led to the rapid penetration of Iranian oil into the world’s energy markets, particularly in Europe, where US loans aided international oil companies. Under the Marshall Plan, European powers had to accept the principle of the US having ‘free and equal’ access to all raw materials produced by their colonies.4 The US wanted to challenge British hegemony over Iran, but was concerned that a weakening of British interests could lead to a vacuum   The US continued its pressure through the operation of the Marshall Plan, under which a country that received loans had to guarantee US capital equal opportunity with that of its own citizens to invest in the development of raw materials. As a result, US oil companies increased their foothold in oil-producing regions. See Yergin (1991) and Bill (1988). 4

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that might be filled by either the Soviet Union or radical nationalism. Consequently, the US had no interest in supporting a democratic process in Iran or backing Iran against Britain over the issue of oil nationalization. Rather, the US was obliged to pursue its own interests, by manoeuvring against not only the Soviet Union and Britain, but also against any threat from local nationalists.

Oil and nationalism and reaction The move to nationalize oil in Iran was boosted by developments in other oil-producing nations. In 1950, Saudi Arabia signed a deal with ARAMCO, the Arabian and American Oil Company. These events gave the Iranian government the confidence to demand the same royalties from AIOC. In 1951, Mohammad Mosaddegh, leader of the National Front, the Iranian oil protest movement, became Prime Minister, and nationalized the Iranian oil industry. This was met with an angry reaction from the British government, which led a boycott of Iranian oil (Odell, 1986; Yergin, 1991). In the early days of the nationalization process, the British government even considered military intervention against Iran; they were only dissuaded from this by the need to give priority to the serious political crisis in Egypt, where British interests were also severely threatened.5 The establishment of the state of Israel in 1948 resulted in resentment among Arab nations and a war against the new country. The ensuing defeat of Egypt and the other Arab states in this conflict further promoted antiimperialist sentiment, and in this climate Britain decided to avoid dealing with either Egypt or Iran at the time (Terzian, 1985). Despite this, the British continued to pressure Iran via the boycott of Iranian oil, which was effective because consuming countries were able to access oil from other Gulf countries. The shortfall in Iran’s oil production was offset by an increase in production by Iraq, Kuwait and Saudi Arabia. The British-led boycott imposed severe economic pressure on Iran, leading to a virtual standstill in its oil operations and exports. Britain also refused to pay any royalties owed to Iran prior to nationalization and froze Iran’s sterling assets, which ultimately led Iran to experience massive economic difficulties.

  Britain occupied Egypt in 1882 and only in 1922 declared Egypt’s independence unilaterally, imposing conditions that meant the continuation of the protectorate. See Hopwood (1985). 5

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The loss of oil revenues meant a drop in foreign exchange and growing economic hardship, which posed a threat to Mosaddegh’s government. Aiming to balance the budget, the state increased taxation, which had a direct effect on a large section of the population that was already experiencing financial difficulties. The government tried to postpone salary payments to state employees, borrow from the private sector, and print money to better manage the economy. Mosaddegh tried every political avenue to overcome the difficulties faced by Iran, including attempting to gain US support in order to balance British and Soviet power. The US initially played a mediating role between Iran and Britain in an effort to bolster its own influence, but this did not last. President Truman never actively supported Mosaddegh, and subsequently, President Eisenhower began covert activities against his government. Under the influence of Britain, the US administration came to believe that Mosaddegh’s persistence with the policy of nationalization would adversely affect Western interests in the oil-rich Persian Gulf and beyond. The result of these political concerns was that the US joined the British boycott of Iranian oil (Bill and Louis, 1988). By early 1953, Britain and the US seized on the opportunity presented by the increasing domestic economic turmoil in Iran, and, with help from a splinter group, made an attempt to oust Mosaddegh. The crippling economic embargo by Western powers and the Bank of England freezing Iran’s sterling brought Iran’s economy to its knees (Katouzian, 1981). Dissatisfaction among the landlords and the bazaar then led to internal divisions within the National Front. Kashani, anxious about the Islamists’ social base, shifted his support away from Mossadegh (Akhavi, 1988). This encouraged the CIA and MI5 to organize a coup to remove Mossadegh from power. Oil nationalization became an important event in Iran’s history, and Mosaddegh, like Mahatma Gandhi and Gamal Abdel Nasser, became and would remain a national hero. Unsurprisingly, as in the Constitutional Revolution of 1905, religious leaders played a crucial role in the unfolding series of events, first by supporting Mosaddegh and then by joining the coup to depose him.

Lopsided development A rapid increase in oil revenues after 1954, along with military and economic aid from the US, enabled Iran to promote modernization through a series of development plans. The influence of oil became more noticeable after nationalization, with the state playing a greater role. Production increased to over 1.2 million barrels per day in 1961,

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twice as much as in pre-nationalization days. By 1974, the production of oil reached 6 million barrels per day (Morady, 1994). Oil was a basis of the state’s power over the economy, which in turn enhanced its political power. This was achieved partly through the redistribution of oil wealth throughout society. Oil income facilitated the land reform and industrialization that took place after 1960. Compensation payments were provided to landlords whose farms were taken over by the state, credit was supplied to capitalist investors and there was substantial public spending on food subsidies, infrastructure, education and health. Through these payments, public expenditure could increase in these and other areas without the need to extract the necessary resources from other areas of the domestic economy, and this had important political implications. It meant that the government was under less pressure to tax the population to pay for essential services and economic improvements. The oil price increase in 1973 greatly inflated oil revenues, which grew at a faster pace than non-oil revenues. In 1973, oil revenues accounted for 90 per cent of Iran’s total exports, up from 77 per cent in 1964. As a result of this, the government’s total expenditure increased by 260 per cent in the period 1967–73, and by a further 200 per cent between 1973 and 1979 (Statistical Centre of Iran, 1991). With the economy growing rapidly, unemployment stood at only 1 per cent. The state provided subsidies to enable the population to afford basic foodstuffs such as wheat and sugar (the price of sugar was 25 rials per kilogram while the price of importing it was 100  rials). Imports of wheat, which in 1972 amounted to approximately 770,000 tonnes, increased to 1,430,000 tonnes in 1974 (Central Bank of Iran, 1975– 76). Education was also made freely available, from primary school to university level, and the government promised comprehensive health and state housing programmes. Developments in the region and a perceived increased need for internal and regional security provided the state with a reason to expand its military spending. Iran increased its level of arms spending as its oil revenue grew from US$77 million in 1970 to more than US$7.8 billion in 1978 (Sivard, 1986). By 1975, Iran was one of the world’s major arms buyers, behind only the US, the Soviet Union, China, West Germany, France and Britain. Military expansion became integral to the wider process of economic and political change that was officially part of the country’s modernization programme, during and after the ‘White Revolution’, when it was used effectively to mobilize the Literacy and Health Corps into rural areas. The development of the economy seemed to require increasing centralization of the state, with a strong bureaucracy and army. The latter became the central institution supporting and sustaining the regime internally.

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Oil revenue helped to transform Iran from a weak economic and political position into a dynamic and relatively autonomous player in the region. However, the modernization of Iran was mostly confined to the major industries and cities. As society became more prosperous overall, new and old economic and political institutions existed concurrently. The price of oil increasing three-fold since 1973 brought relative stability. However, the profound transformation presided over by the Shah’s government did not mean an end to traditional forces: the bazaar and religious organizations continued to exist alongside the growing modern industries and education. The uneven character of development gave some Islamic leaders fuel for their cause, since they could point to the growing inequalities in the society. The very nature of Iran’s modernization thus enabled religion to continue to have an impact within the changing environment of the late 1960s and throughout the 1970s. Oil initially helped the monarchy to strengthen its political position in society. As the nation emerged from the crisis under Mosaddegh, the Shah grew in confidence. Comparing Iran’s economic development to that of Western nations, he claimed that the income received from oil was sufficient for the Shah to promise that wealth would be distributed fairly, increasing the standard of living for all Iranians. In the mid-1970s, he declared victoriously that there would be no need for belt-tightening or hard work to bring about the promised paradise (Amuzegar, 1991: 206). The income stream from Iran’s oil-triggered development in the 1970s was substantial, although the country was still relatively under-developed. Increases in oil prices together with strong global demand brought huge amounts of income, which the state could use in managing the nation’s development. As in other newly industrializing countries, such as South Korea, Mexico and Brazil, the state was the key actor in directing the course of development while the new wealth meant little pressure directed towards political change. As with his father’s regime, the Shah’s opposition was repressed, with the army used to put down any political challenges. The Shah attempted to legitimize his power by identifying the Iranian monarchy with traditions stemming from the ancient Persian Empire. He also cultivated a ‘cult of personality’, claiming a divine mandate to rule.

Playing politics with oil The Iranian state used oil money, especially during the 1970s, to embark on major economic improvement programmes. The historical importance of oil in Iran’s economy and politics inevitably brought it to the forefront of the

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struggle against the Shah’s regime. Some religious leaders called attention to the fact that the recent economic changes came without political freedom, and they made use of this claim to put forward new interpretations of religion that involved the expression of resentment against the Shah’s regime. The most important of the religious figures who took up the fight against the state was Khomeini, from his exile in Iraq. Khomeini used energy as a political weapon to mobilize Iranians against the government and its Western backers, accusing the Shah of squandering Iran’s resources and allowing Western imperialists to take it in return for very little: Our oil is being plundered, and our country is being turned into a market for expensive, unnecessary goods…. A number of foreign states carry off our oil  … and the negligible sum they pay to the regime they have installed returns to their pockets … [and] God only knows what it is spent on. (Khomeini, 1981: 11) Khomeini thus condemned the economic policies of the Shah’s regime and his modernization programme during the 1970s. He claimed that the Shah had committed a crime against his people by facilitating the historical role of imperialism in Iranian politics, particularly with respect to the oil industry and the regime’s cosy relations with the US. Khomeini went on to assert this call of alarm: “They are giving it [oil] away at such a rate that in 30 years, we will have no oil left” (Khomeini, 1981: 218–36). He promised that with the help of the people and, in particular, religious scholars, this situation could be reversed. Yet, Khomeini’s views were rooted not in medieval religious thinking but rather in modern objections to the way that capitalism had developed inequality in Iran. Despite his vague policy statements and unashamed populist appeal, he was aware that oil was the most potent resource. The spectacular oil revenues after the 1973–74 price increase not only helped the Shah’s regime consolidate its power, but it also created more instability, with an overheating economy and high inflation (Cottam, 1980, 1990). Iran had become the most important producer of oil in the world, its average oil production reaching nearly 6 million barrels a day. However, during the Revolution, with oil workers taking strike action, the industry was brought to a halt. The crisis appeared on the world market as a shortage in oil forcing the price to increase from US$12.81 to US$18.73 (Morady, 1994). The political role of energy became most fully visible during the Revolution, as the industry’s 30,000 workers brought the country to a standstill. This proved greatly important for both economic and political

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reasons, inspiring workers in other sectors to strike in support of the revolutionaries. Without these workers, the outcome would likely have been completely different. What followed were more strikes, including takeovers in factories, offices, hospitals and universities. This became a common pattern as the Revolution unfolded. Without this, the establishment of the Islamic Republic would no doubt have been entirely different (Bayat, 1987).

God, governance and resources Almost immediately after the Revolution in 1979, the Islamic Republic was beset with difficulties on all sides: political instability, projects left half-completed, under-capacity in many key industries and rising unemployment, at a time when workers had high expectations of the new regime. The government was faced with a tough choice. Rebuilding relations with the West was politically unwise since the Islamic leaders had come to power by voicing popular resentment at Western imperialism. Yet, without Western finance, the economy would remain underfunded and underdeveloped. The Islamic Republic’s position in the international division of labour as an oil-producing country remained unaltered. The regime was caught between resentment of the West and the need for oil income, and it was unable to find an economic solution to its difficulties. Providentially, the seizure of the US Embassy in 19806 provided an opportunity for the regime to divert attention from its failings, as it was used to rally people against the ‘Great Satan’. This was followed by the War against Iraq, which also represented a fortuitous diversion. Although the US lost its status as a major trading partner with Iran (in contrast to the prerevolutionary situation), other Western countries benefited. Most of Iran’s exports, including that of oil, continued to be bought by Western nations, particularly those of Western Europe, as well as Canada and the US. The post-revolutionary government promised to reduce the country’s dependence on oil and to diversify its economy, and this was achieved, to some degree. As a proportion of GDP, oil revenue fell from 26 to 11  per cent during the Iran–Iraq War (1980–88). At the same time, foreign exchange revenue continued to depend on oil income and the   A group of Iranian students who were followers of Khomeini occupied the US Embassy in Tehran in November 1979, taking 52 US diplomats hostage. The hostages were not released until January 1981. 6

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vagaries of international markets. In the period 1960–79, the value of oil exports, as a percentage of Iran’s total exports, amounted to 92 per cent. Despite the new regime’s commitment to reducing this dependence, oil has remained a vital source of income. Oil revenue accounted for 88 per cent of export income during the Iran–Iraq War (1980–88) and 74 per cent during Ahmadinejad’s presidency (2006–12) (OPEC, 2013). In addition to its inability to change the structure of an economy that was based on pre-revolutionary values, the Islamic Republic also had to manage domestic, regional and global challenges. Not least of these was the Iranian people’s growing expectations of the regime and the political challenges it faced from competitors. It politicized the war as an ideological struggle against the ‘atheistic’ regime in Iraq, and the war also kept the army engaged and unable to interfere in the political process. Yet, even the war could not dislodge Iran from the global world economy. This was in part because the regime needed armaments that had to be imported and financed from oil revenues.

The Iran–Iraq War As discussed in Chapter 2, the Iran–Iraq War (1980–88) destroyed much of the infrastructure of the state and led to internal refugees putting pressure on the provision of public services such as housing and education. At the same time, the fighting of a ‘holy war’ with the use of modern technology was paid for by oil revenues and benefited from a strong currency. Nonetheless, the price of oil fell dramatically from the height of US$30 per barrel to just US$10 in 1986 before settling at around US$18 in 1987. In 1979, Iran was exporting 3 million barrels per day, which declined to an average of 1.2 million in 1988 (Statistical Centre of Iran, 1991). Saudi Arabia, an important ally of both the West and Iraq, was less reliant on its huge revenues from oil and therefore able to use oil as a political weapon, flooding the market to keep prices at a low level.7 The lower oil prices impacted Iran with a sharp drop in its oil revenues, by 59 per cent in the first half of 1986 as compared to the first six months of the previous year. In comparison, over the same period, Iraq’s revenues fell by 30 per cent, Saudi Arabia’s by 24 per cent and Kuwait’s by only 8 per cent (Renner, 1988). The external pressure on Iran was compounded both

  Saudi Arabia was producing around 5 million barrels per day in 1986, an increase from 3.5 million in 1985. See Central Bank of Iran, 1987. 7

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by Washington’s continued support for Iraq8 and an increased number of US fleets in the Persian Gulf. This was not merely a market mechanism put in place to impact the price of oil and Iran’s oil revenues, but also a deliberate political manoeuvring by countries in the region, led by Saudi Arabia and the US. The situation was exacerbated by economic difficulties and the problem of mobilizing citizens for the war effort. Rationality prevailed and the Islamic Republic’s leaders finally accepted UN Resolution No 598 calling for a cease-fire, which was implemented in July 1988. The role of outside agencies throughout the war, especially the US, shows that although the Islamic Republic had broken off relations with the great powers, it could not ignore their influence and interests in the area. As with the policy of wholesale nationalization, the new government managed to represent its decision to end the war as being in keeping with its Islamic ideals. Such flexible thinking in the attitudes of the nation’s Islamic leaders was not new but served as an example of the extent to which their ideas could be adapted according to the prevailing circumstances. While the call to war was made in the name of Islam by individual leaders such as Khomeini and Rafsanjani, so, too, was the call to end the war and pursue various economic and political reforms. Although radical forces within the Islamic Republic advocated the continuation of the war, the dominant faction, led by Rafsanjani and supported by Khomeini, eventually called for its end. This was the beginning of a major shift in both domestic and foreign policy. The regime established formal diplomatic ties with France, and later with Britain and a host of other countries. Economically, the Islamic Republic opened formal talks with bankers, industrialists and officials from various Eastern and Western countries to help in its post-war reconstruction efforts. In addition, financial and economic advisers from many countries – as well as from the IMF and World Bank9 – were invited into the country. Under the presidencies of Rafsanjani (1989–97) and Khatami (1997– 2005), Iran’s reconciliatory approach was not always welcomed by the West, including, in particular, the US. As will be discussed in the following chapters, both Iran and the US cooperated to oust the Taliban from Afghanistan in 2001 and to remove Saddam Hussein from power in Iraq in 2003.

  During an emergency meeting in the UN, the US opposed formal condemnation of Iraq and its use of chemical weapons. See Sick (1989). 9   In 2004 Iran was in debt by around US$12 billion, which constituted 8 per cent of its GDP. See Central Bank of Iran (2005). 8

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Iran’s resolve to return to developing a nuclear programme, that was abandoned in 1979, started under Rafsanjani’s presidency. Economic development, the growing use of energy and political insecurity were deemed just reasons to resume nuclear development. However, this policy could only be realized with the use of modern technology, which had to be financed with income that only oil could provide.

Energy, the nuclear programme and sanctions Iran’s recent history of interference from outside forces, coupled with a need to legitimize and assert its power domestically, regionally and globally, were factors in the Islamic Republic’s decision in the 1980s to re-start its country’s nuclear development programme. The development of nuclear power in Iran dates back to the 1950s when the US provided highly enriched uranium fuel for the country’s reactors (Linzer, 2005). Twenty-five years later, Henry Kissinger, who had been Secretary of State in US President Richard Nixon’s government, publicly endorsed Iran’s nuclear programme, having concluded that it was for peaceful, commercial purposes (Linzer, 2005). The Iran–Iraq War and continuing gestures of aggression from the US convinced the Islamic Republic’s leaders that the nuclear programme should be recommenced to serve as a deterrent. In the 1990s, Iran and China signed a nuclear cooperation agreement that allowed Iran to import the raw materials needed for its programme. In 1995, Russia began to reconstruct one of the reactors at the Bushehr plant, and after years of delay, it was finally completed in 2010. Under Khatami’s presidency, in a bid to gain Western trust, Iran temporarily halted uranium enrichment, asking in return for an end to the economic sanctions that had been imposed by the US government on Iran after the Revolution, and as a mechanism to obtain endorsement of its application to join the World Trade Organization (WTO). Iran was prepared to meet with Zalmay Khalilzad, US ambassador to Afghanistan, to negotiate on these issues, but the US refused to consider such discussions (Porter, 2006). Instead, in 2002, George W. Bush castigated Iran as part of the supposed ‘axis of evil’,10 and called for increasing sanctions.

  This is the term used by President George W. Bush in his State of the Union address to US Congress in 2002 to characterize Iran, Iraq and North Korea as supposedly supporting of terrorism and possessing or seeking to possess weapons of mass destruction.

10

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The failure of Iran’s moderate faction to win concessions from the US strengthened the power of the regime’s conservative hardliners. Consequently, when the highly conservative Ahmadinejad became President in 2005, he took a hardline approach to the West, in particular the US. The response from the US was to increase economic sanctions and threaten military intervention. In order to circumvent the sanctions and to win greater international support, Ahmadinejad moved Iran closer to India, Russia, China, North Korea and radical left regimes in ‘third world’ countries such as Venezuela and Cuba. The restrictive sanctions imposed by Western governments, which mainly targeted Iran’s energy sector and its access to the international financial system, caused enormous problems for Iran’s economy, to the point where the regime was forced to re-examine its foreign policy. The sanctions imposed by the US during Ahmadinejad’s administration did not at first dramatically affect Iran’s economy. The game-changer occurred when sanctions were no longer imposed unilaterally by Western countries, but legislated by a UN Resolution, effectively altering the policies of countries and organizations around the globe. Consequently, Iran faced huge economic difficulties as its oil exports fell from over 2 million barrels a day to less than 1.5 million (Morady, 2017). The decreasing oil production and Iran’s inability to earn necessary foreign capital after 2012 were reminiscent of both the crisis following the nationalization of the oil industry in 1950 and the situation during the Iran– Iraq War in the 1980s. The Islamic Republic was facing enormous domestic economic difficulties, which created a split within the ruling establishment. By 2012, the Islamic Republic’s oil export revenue had declined to US$69  billion from US$95  billion in 2011. At this time, oil exports accounted for 80 per cent of Iran’s total export revenue and 50–60 per cent of the government’s income. Sanctions also curtailed much-needed investment in the oil industry, as foreign companies cancelled many different projects. Iran was a relatively inefficient user of energy and had relied on subsidies to reduce the costs of supplying power to the nation’s consumers. The doubling of Iran’s population since 1979, coupled with inefficient usage, caused demand for energy to surge well beyond expectations. Natural gas accounts for 59 per cent of total energy usage and oil makes up 39 per cent (Morady, 2017). According to an IMF report published in April 2014, the economic sanctions constricted Iran’s economy, with real GDP declining by nearly 6 per cent a year in 2012–13. Between June 2012 and February 2014, Iran experienced negative GDP growth for seven consecutive quarters. When Rouhani became President in 2013, his priority was to stabilize Iran’s economy. The energy sector was in his sights when he appointed

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Bijan Namdar Zangeneh, Oil Minister during Khatami’s presidency, to his cabinet. His plan was to bring back experienced technocrats to support and manage the ailing economy. However, Rouhani urgently needed to find a way to bring an end to economic sanctions in order to encourage investment. Immediately after the election, he persuaded the Western powers to sit around the table and engage directly in negotiations over Iran’s nuclear programme. By 2017 Iran had not regained its former share of the oil market. Its energy sector was also in bad shape and desperately needed investment in infrastructure improvements. The state was unable to fund necessary upgrades, which would cost millions of dollars. Two avenues for channelling the essential action are from oil and foreign investment. However, under the shadow of sanctions and the US’s ambiguous attitude, companies continued to be cautious about investing in Iran. Rouhani’s attempt to deal with economic austerity was compromised by the US’s continued antipathy towards Iran and his unwillingness to encourage international companies to involve themselves with the country. Trump called for a US withdrawal from the nuclear negotiations. Washington counted on its prediction that Rouhani’s government would face more internal discontent from the Iranian population than it did when the ‘5+1’ originally negotiated the deal back in 2015.

Conclusion The development of capitalism in Iran was shaped by the needs of Western economies, which sought its natural resources, particularly oil. The discovery of oil in what was a vital geopolitical region increased the international importance of Iran and facilitated conflict between the great powers as they struggled to gain access to Iranian oil. While the West influenced capitalist development in Iran, it also depended on the development of internal class and other conflicts. The increasing importance of oil in the world market created deep divisions between domestic social forces and international oil companies, that both wanted to control Iran’s natural resources. The limited economic progress that took place during Reza Shah’s reign in the 1920s and 1930s had a secondary effect that bore fruit during the 1950s, in the growth and increasing confidence of various political forces that were willing to fight for the nationalization of oil against the wishes of foreign oil companies. This struggle was a significant political cause that united the majority of domestic social classes and groups, including the clergy, who put aside their differences in the push for nationalization. Just like the

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Constitutional Revolution of 1905, this turned into one of the most significant political events in Iran’s history, not only for the nationalization of oil, but also the transition to a secular democracy. Iran became a major player from the 1950s, with its strategic location, huge oil and gas reserves and US support. With growing confidence and the ability to embark on a programme of development, the Iranian state was able to impose itself as a relatively independent actor in the region. It had its own interests to protect, which included facilitating capitalist development, but this could only be possible with growing demand based on a good price for its energy. Hence, Iran was completely tied to the international capitalist system, and thus the Shah’s state benefited from the political and military support of Western capitalist nations. Iran’s political economy was very much influenced by the income that the state received from energy. Oil gave the state a high degree of autonomy and the power to carry out its economic development plans. The injection of petro-dollars into the economy, especially after 1973, alleviated some of the inequalities in Iranian society but created new problems. The major imbalance was due to the state’s domination of the economy, leaving very little space for any other social forces to affect economic and political decisions. Iran’s increasing modernization and economic integration with global capitalism did not lead to the subordination of historical institutions, such as religion, in Iranian society. Indeed, the Iranian Revolution of 1979 was a reflection of their continuing importance in politics and society. However, the religious organizations had to respond to the transformation that was underway and not stay aloof from it. As with the 1905 Constitutional Revolution, during the 1950s oil nationalization, Islamic leaders had different interpretations of the transformation that was happening in Iran. Some of the religious leaders, just like their predecessors in Iran’s political movements, responded to those Iranians who wanted greater change in politics and society as well as economics. The post-1979 regime in Iran made no committed attempt to wrest Iran from the global political economy or to reduce the country’s dependence on oil. This was demonstrated time after time by the actions that the regime was prepared to take to end the Iran–Iraq War and to lift the comprehensive global sanctions imposed by the US under the auspices of the UN. In both cases, the theocratic regime in Iran made a U-turn in policy to promote oil exports and thus obtain increased foreign capital. Over 100  years after the discovery of oil, Iran’s political economy continues to be shaped by the interplay between domestic social forces, religious organizations, geopolitical and global powers and international oil companies. Since 1979 the Islamic Republic has continued to operate

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within this system. Despite breaking off relations with some of the powers such as the US and international oil companies, it has nonetheless been forced to conform to the world order. Indeed, the current stand-off between the US and Iran demonstrates this conformity. The responses of the Islamic leaders, while otherwise varied, have all involved more or less accepting the given world order. This is due mainly to the growing integration of Iran’s economy into global capitalism through energy resources. Time and again Iran’s development has demonstrated its vulnerability to the fluctuations of the supply, demand and the price of oil in the world market, as well the complex geopolitical situation in the region.

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4

Islam, Politics and Power in Transition: Prologue to the 1979 Revolution

Introduction Since the Iranian Revolution of 1979, Islam has emerged as both one of the world’s fastest-growing religions and a major political force.1 These developments coincided with the end of the Cold War and the advent of ‘globalization’, regional integration with the global economy, and cultural homogenization. On the contrary, the Islamic revival is perceived as nationalist, inward looking and tending towards anti-imperialist extremism, threatening secularization and democratization (Zubaida, 1989; Arjomand, 1989; Esposito and Voll, 1996; Roy, 2004). In Iran, both Islamists and secularist organizations competed to win the hearts and minds of the people. They both championed social policy measures meant to address excess poverty and inequality and the pervasive sense of alienation that had accompanied the nation’s rapid modernization. This was given a global dimension by the 1979 Revolution, which established the world’s first Islamic Republic in a revolutionary movement that, rather surprisingly, happened in one of the most modern and secular countries in the Middle East, raising various questions in the process, not least among them the possible relationship of Islam to the character of states, societies and economies. Various scholars and politicians in the   According to the Pew Research Center, in 2015 there were 1.8 billion Muslims in the world, about 24 per cent of the world’s population, and in 2020 the world’s second largest religion after Christianity. See Lipka (2017). 1

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West spoke of ‘Islamic fundamentalism’, most often defined as some ‘return to 7th-century Islam’, in attempting, somewhat reductively, to define the new regime (Abrahamian, 1993). In this clichéd and polemical view, Iran had now become ‘traditionalist’, and its Revolution and the new government were said to be against ‘modernization’. Islam was portrayed as a static and anachronistic religion, which was incompatible with modernization and threatened instead to hold back development. Halpern claims: They champion the values and emotions of a heroic past, but repress all free critical analysis of either past roots or present problems…. [Islamism is] … unable to solve the basic public issues of modern life – intellectual and technological progress, the reconciliation of freedom and security, and peaceful relations among rival sovereignties (Halpern, quoted in Kramer, 2017: 72). A similarly overly schematic and reductive view of the Iranian situation is provided by a group of theoretical approaches sometimes called ‘Orientalism’, in a reference to Edward Said’s eponymous book, or included under the category of the quasi-Marxist ‘dependency theory’ (Halliday, 1993; Hinnebusch, 2003; Said, 2003). Broadly, ‘Orientalism’ refers to works that share the opinion that predominantly Muslim societies and cultures differ fundamentally from those of Europe, North America and Japan in being self-indulgent and economically less developed, traditional, particularistic and autocratic, instead of pluralistic, rational, secular and economically vibrant. This difference is then thought of as explaining (or justifying) the relative ‘backwardness’ of the Orient (a term that Said, following some 19th-century European usages, used to refer to the Arab and Middle Eastern Muslim world, including Turkey, the predominantly Muslim Soviet Republics, and Iran, Afghanistan and Pakistan). These highly schematic, and doubtless ideological, constructions of a regional traditionalism countered the widely accepted assumption that after the Second World War, ‘modernization’ would inevitably lead to secularization (Morady, 1994). Notions like this, if vague in their contours, were promoted by some, including Khomeini himself, who stated, shortly after the Revolution had put his faction in power, that ‘the recent religious movement was one hundred per cent Islamic and was founded by clerics alone’ (Khomeini, 1979: 33). But in fact, as this chapter will show, the revival of Islam in Iran was neither an attempt to return to the 7th century (whatever that could mean – perhaps more an idea of it) nor a rejection of capitalism. Rather,

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the rise of Islam involved the articulation of contradictory motifs that were a reflection of underlying systemic contradictions manifest in social inequalities and marginalizations, among other things. In this context, Iran’s Islamists did not, either in theory or in practice, break from capitalist models of development, in part because they knew they had to adapt to the global order for the state to function. In fact, despite appearances, the Islamist movement in Iran arose within a context that was bound up with processes of globalization, and so was essentially ‘modern’. It was a product of economic and political conjunctures within which the appeal of religious authority as a form of political resistance and opposition arose. While the Islamists claimed to reject the prevailing political models as ‘Western’ and so foreign, all of their policies were at least implicitly based on models drawn from modern nation-state politics, and development within the framework of global capitalism. This was so even when ‘modernity’ and ‘tradition’ were seen as taking particular forms that were both distinct and overlapping, and so would have to be negotiated. This happened as emergent elites sought to find a national path to prosperity that would also be or seem autonomous, and sought to obtain the support of the populace in doing so. This meant at the outset doing so in opposition to a repressive, undemocratic regime that was perceived as too beholden to outside economic interests. This is, in many ways, similar to national liberation movements (against colonialism) in the ‘third world’ that attempted to pursue a socialist path. More or less all of them adopted an ideology of development, and they empowered a national bourgeoisie and/or set of government elites. The Islamic Revolution and the Iranian Republic are not very different in this respect. The case of Iran can be seen as showing how economic development can be realized under conditions of global capitalism, with specific variations owing to the forms given it locally by forces seeking national independence.

Religion, Islam and ideology It is difficult to define precisely what religion is in general or Islam in particular, and this has made analysing its role difficult. Religion can dominate the whole social being of individuals in a society; it contains not only daily ritual practices that have to be obeyed by the believers, but, … it also defines a community, which reacts as a community. For the believer, the dogma and the faith may be the only things that count, along with their external manifestations, the

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rites. But from the standpoint of the role in social life, it is the religious community that is paramount. (Rodinson, 1981: 12) This community acts collectively in that it has leaders, and it defines and changes its internal structures as well as its external relations. The unifying aspect of religion is that it can bring together individuals from different classes, who do not know each other and practice different customs and tribes, into one community. Such a religious community unites them, giving them a sense of community, which is very similar to national feeling. Anderson describes this as an ‘imagined political community’ (1986: 15). It is imagined because the individual members of even the smallest tribes and clans will never meet all their fellow members, yet they are sure that a unity between them exists. The feeling of belonging that this promotes is similar to that experienced by nationalism and can lead to the same kind of self-sacrifice and devotion. The religious community may coincide with a culture or aspects of a culture, but just as it is created, this community changes and evolves; the original ideology may be reinterpreted and revised but the core survives, often in a written form as a sacred text. A key question concerns the way in which religion appeals differently to different classes in society. The adherence to Islam of the poor has contributed to the belief, supported by texts, tradition and dogma, that it champions the deprived and is in this regard somehow liberating. For this reason some see the Islamic Republic as a ‘progressive’ or a radical force. In this light, it is important to interrogate the class nature of forms of modern Islamism and assess its relationship to capital and the state (Marx, 1981; Rodinson, 1981, 1985; Moaddel, 1993; Siegel, 2005). Religion has several functions. It can give hope to those whose real situation seems hopeless – and in the process may serve to reinforce the prevailing conditions by enabling people to better cope with them. It can also become a tool for the ruling establishment to sanctify its laws as divinely sanctioned. Religion, and those who claim to represent religious authority, can be used to encourage believers to submit to divine authority and, by extension, worldly power. At the same time, such conservativism also depends on its ability to maintain its hold over the minds of the people. Thus, religion historically has not only acted as a bulwark of the social order but also, under some circumstances, as a revolutionary force, motivating opposition to the ruling authorities (Sivan, 1985). In the case of Islam, it is important to see that while it dates to 7thcentury Arabia, where it emerged from a trading community in a society organized on a tribal basis, today, in Iran, it is the official ideology of a modern capitalist state. Thus, within the broader perspective of Islam, the

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vitality of the faith has assumed a variety of forms as a result of changes in historical conditions. This is one of the key reasons behind its survival in a country like Iran from pre-capitalist to late modern social forms. The Prophet Mohammad’s ideas were developed during a time of flux, when tribal rule was weakening, leaving a power vacuum that no centralized state had yet filled. The pagan worship of spirits and tribal gods was losing traction in the urban areas, while both Christianity and Judaism were gaining influence among townspeople. The Saudi king welcomed Judaism because it had earlier proven useful in preventing the spread of the invading Christian Abyssinian Empire (Engineer, 1984, 1987). It was in this context that Mohammad first preached what would become the new religion in Mecca, speaking of community solidarity among Arabs and attempting to overcome tribal divisions. His teaching had similarities with existing faiths. Adherents confessed belief in one God, that He spoke through prophets, and that a Day of Judgement would come. They believed in hell and paradise, along with the condemnation of idol worship. Mohammad was a consummate politician as well as a religious leader, and became the legislator for the city of Medina. He built bridges between rival factions and made allies of them, so as to present a united front against enemies. Jews were included in this alliance, as Mohammad never lost sight of his primary role as a prophet sent by God for Arabs of all creeds. He adopted some religious practices from Judaism, including an equivalent to the Jewish Day of Atonement and the tradition of praying in the direction of Jerusalem. His willingness to compromise was vital to the process of overcoming divisions within the community (Petrushevsky, 1985). Islam was able to survive because it could be adapted to appeal to differing class interests. It has enjoyed the financial support of trades people, the bazaari, landowners and the industrialists and bureaucrats of modern capitalism, and it consolidated its role through building seminaries and recruiting students. The religion gained the support of the masses by offering comfort to the poor and the oppressed, and promising them a degree of protection. Such ambiguities have created the scope for various interpretations and an appeal to different classes, especially in times of social revolt, while appealing to ideas that were, at times, contradictory.

The roots of the Sunni/Shi’a divide One of the most important breaks in Islam, which continues to divide Muslims in the region and around the world, is that between the Sunni and Shi’a. The roots of this divide are the crisis of succession after the

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death of the Prophet Mohammad, which was resolved in favour of the Sunni when leading members of the community appointed Abu Bakr (father-in-law of Mohammad and one of the first of his followers).2 The Shi’a faction argued that the Prophet’s kin had the greater right to become the community’s leader.3 They thus supported the succession claim of Ali, a cousin of the prophet. The Shi’a also believe that the first three Caliphs (Abu Bakr, Omar ibn al-Khattab and Uthman ibn Affan) were illegitimate, although at the time they did not openly challenge the prevailing order.4 Under these Caliphs, the ruling elite in the region increasingly gained control of the Caliphate’s wealth, commerce and trade. Their indulgence and extravagance had an incendiary effect on the populace, especially the many poor labourers and landless peasants, resulting in uprisings that culminated in the assassination of Uthman in 656 AD. These uprisings cleared the way for Ali to succeed as the fourth Caliph, but he was opposed by Muawiya,5 the governor of Syria, who argued that Uthman’s death must be avenged. Muawiya had an independent power base in the army, and was thus well placed to challenge Ali’s leadership. He also gained the support of the prophet’s companions (Talhah, Zubayr and others), who were worried that Ali could threaten their interests. The dispute escalated into an all-out war between Muawiya and Ali, but during the conflict, Ali indicated a willingness to negotiate. When they realized that succession to the office of Caliph might be decided by negotiation rather than on principle, some of Ali’s supporters deserted

  The first three Caliphs were related to Mohammad by marriage. Mohammad took more than a dozen wives, largely for political reasons. His first wife was Khadija, the daughter of a rich merchant. The second was Aisha, the daughter of Abu Bakr. He also married the daughter of Omar, the second Caliph, who had been an enemy of Islam at first and who had even attempted to kill Mohammad before his conversion to Islam. See Momen (1987) and Mirfetrous (1989). 3  Mohammad was brought up in the house of Abu Talib, Ali’s father. Khadija, Mohammad’s wife, was the first person to acknowledge the Prophet’s mission and become a believer. Ali became the second. Mohammad’s daughter, Fatima, married Ali. Their children, Hassan and Hussein, were the only grandchildren of the Prophet to survive into adult life. See Tabatabai (1977). 4   Among Shi’a thinkers, Nasr argues that Ali accepted the method of selecting the Caliph by the decision of the majority. Ali himself became the fourth Caliph, but did not accept them as Imams – that is, as those who possess the power and function of giving esoteric interpretations of the inner mysteries of the Qur’an and Sharia (Nasr, quoted in Tabatabai, 1977: 10). 5  Muawyia was the leader and founder of the Umayyed dynasty (661–749) and became the sixth Caliph. 2

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him. These Kharijites (meaning ‘seceders’) assassinated Ali just two years later, in 661 AD. The power struggle intensified further when Muawiya was proclaimed Caliph in Jerusalem, while Hassan (625–670), Ali’s eldest son, was appointed Caliph in Kufa (modern-day Iraq). However, after being out-manoeuvred by Muawiya, Hassan was finally poisoned and killed. The Caliphate then passed into the hands of the Muawiya, or Umayyad, dynasty, with Muawiya’s son Yazid succeeding his father. Ali’s other son, Ali ibn Hussein (625–670), opposed this succession and led his army into war. However, his troops were heavily outnumbered in the battle of Karbala (on the Ninth of Muharram), in which he had hoped to win the support of the people of Kufa. His attempted negotiations with Yazid’s troops also came to nothing, and he was heavily defeated. In 680 AD, the date of Hussein’s death (on the 10th of October) became known as Ashura. Hussein’s death is still commemorated every year in the same month, known as Muharram. If Ali’s assassination had created a major schism between the Sunni and Shi’a, Hussein’s death all but dynamited the tenuous link between the two groups. The Shi’a claim on the leadership was given added legitimacy by what they viewed as the unjust rule of the Caliph. Henceforth, the Shi’a variant of the faith would have an appeal particularly to the oppressed, given their history of having been beaten and suppressed. As a symbol of resistance against oppression, Hussein is referred to in Shi’a as the Seyyed-al Shohada, or ‘Master of the martyrs of all time’ (Fischer, 1980). The martyrdom of Imam Hussein and his followers is glorified by the Shi’a as a supreme example of the necessity of sacrifice for the sake of freedom and evidence of the need for the establishment of justice in society (Shariati, 1972). The concept of Imamat (the belief that Imams are the rightful successors to Mohammad) continues to be a central principle of the Shi’a faith. Both the Sunnis and the Shi’ites subscribe to three basic tenets of belief: that there is One God, that Mohammad is his prophet, and that there will be a resurrection and judgement day. In addition, the Shi’ites also believe that only direct descendants of Ali and Fatima can legitimately be invested with the title of Imam, and only they can rule on behalf of Allah. Unlike the Sunni, for whom imam more generically means ‘cleric’, Shi’ites believe that the Imams are divinely guided and thus infallible. Modern-day duties of Imams include the responsibility to administer infallible, divine justice (Tabatabai, 1977). This was the first of many splits in Islam, with various groups over time claiming to represent Muslims and arguing for a return to the ‘pure’ Islam of Mohammad’s time. Some of these ideas were popularized later

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on and became an ideological cornerstone of the Iranian Revolution. These include, for example, the theory of Velayat-e Faqih, according to which God will never leave his Muslim followers without guidance. After the death of Prophet Mohammad, the Shi’ite Imams became the religious leaders of the Muslim community. Velayat-e Faqih was developed into a doctrine of political leadership to be provided by the Imams, in order to resolve ambiguities surrounding the notion. For the Shi’a in Iran, the Imam Ali and his 11 descendants are the true successors of the Prophet Mohammad. The authority of the Supreme Leader in the Islamic Republic is based on this principle, and thus on the belief that he is the leader of all Muslims around the world.

Islam in Iran The Safavid dynasty (1501–1722 AD) introduced Shi’a Islam in Iran, where it developed its well-defined political structure and created a powerful, politically empowered religious judiciary with major political powers. Prior to this, the largest Shi’ite sect had been that of the Twelvers,6 formed in reference to a line of 12 religious leaders descended from Ali. The last in line was Mohammad al-Mahdi, who disappeared in 880 AD and is believed by Twelvers to be bound to return one day (Nasr, 1977). The Safavids began as quietists7, with beliefs that included both Sunni and Sufi doctrines. Sufism was an ascetic doctrine that had emerged as a reaction to the worldliness of the early Umayyad Caliphate. The Safavids were a Turkic people who preferred the simplicity of Sufism to a richer and more sophisticated way of life. Once they had secured control of Iran, however, the Safavids developed into a warrior dynasty and encouraged the spread of the comparatively orthodox Twelver Shi’a. In this period, the majority of Iranians followed either Sunni or Sufi patterns of belief and worship, while the Sheikhs (a title meaning ‘wise men’) controlled much of the society’s religious life (Nasr, 1974). The Shi’ite clerical   Different sects developed out of Shi’a. For example, those who became known as Zaidis followed Zaid, the grandson of Hussein, and argued for an uprising against evil rulers. Other groups included the Ismailiya, which followed the sixth Imam’s son; the Fatimids, descendants of Fatimeh and Ali; Naizer and Assassin, splinter groups from the Fatimids; Alavi, who believed that Ali was himself God; and the Druze, who believed that the Fatimid Caliphs were manifestations of God himself. See Mortimer (1982) and Momen (1987). 7   The group of clerics emphasized religious obligations, such as prayer and fasting, rather than engaging actively in politics. Khomeini was in opposition to this group before the Revolution in 1979. See Morady (1994). 6

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hierarchy was now directly intertwined with the centralized Safavid state, performing a specific judicial and administrative role. One significant factor in the Safavids’ move to link the state to Shi’a was their intention to use religion as a uniting factor in their stand against the Sunni Ottoman Empire, which was then threatening Iran. Iran’s religious leaders at the time welcomed the authority of the Safavids, hoping that the king would bring order to the society after a long, chaotic period of foreign invasions by Mongols and Tamerlane. The dominance of the Safavids, who claimed that they were God’s representatives on earth (Akhavi, 1980; 1983), resulted in the Shi’ites acquiring special powers. The king appointed Shi’a clerics to control the waqf (religious lands). This provided them with a source of income that enabled them to build religious and educational centres throughout the country. In this way, Shi’a became part of the structure of the dynasty. During the 19th and 20th centuries, imperial expansion by European powers, particularly neighbouring Russia, posed a major threat to Iran. Religious leaders came into direct conflict with the state, which was weak and characterized by political domination by outside powers. Islamists represented themselves as defenders of the national interest, opposing interference by outside forces. They advocated a jihad (holy war), and as a result, Iran fought Russia twice, from 1804 to 1813 and from 1826 to 1828 (Algar, 1970). These conflicts proved to be of very little help, however, as Iran lost both wars and with them some of its Caucasian provinces. The later Islamist agitator, Sayyid Jamal al-Din al-Afghani (1839–97), was aware of the challenges facing Iran and called for a popular religion and political action. He argued that Muslim countries should learn from the West to build national independence and eventually create an independent Islamic power bloc. Afghani’s ideas and influence have remained strong among Muslim thinkers, both Sunni and Shi’a, including notably his idea of Muslims overcoming European domination by uniting and returning to the traditions of the Qur’an (Keddie, 1972). In the 19th and 20th centuries, different strands of Islam developed in Iran in response to the economic and political transformations then taking place, both globally and domestically. The expansion of a European imperial presence in Iran led to a revival of activism that involved both Western reformers and modernizers. This included the Constitutional Movements of 1905–11, even though not everyone involved was sympathetic to the nationalist character of the political struggle. The Constitutional Revolution was a reflection of the growing nationalist movement against imperialist countries, changes in the international political economy, and, most importantly, the influence of the Russian Revolution of 1905. By the end of the 19th century Tabriz, a major city

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in Azerbaijan, was under Russian control. The Russian Revolution gave various groups the confidence to organize against the incompetent Qajar dynasty in Iran. The Islamists, although holding very different views as far as modernization was concerned, were prepared to cooperate politically, if not intellectually. This in itself was a way to adapt on the part of most of the Islamists and the secular modernizers, but the unwillingness of the former to cooperate intellectually paved the way for those Islamists who opposed the adoption of a ‘Western’-style constitution (Martin, 1989). During the nationalization of oil in the 1950s, as during the Constitutional Revolution, the Islamists again showed their ability to adapt and engage with the movement, cooperating with the secular nationalist Mossadegh. Although state reforms were increasingly successful after the Second World War, radical Islamic militants gradually began to emerge as a political force. The events of the 1960s showed that the processes of modernization could themselves motivate new struggles and alignments.

Islamism and populism While it is incorrect to say that Islamism in Iran aimed to return somehow to the 7th century – a clear impossibility – there was some effort to recreate and invoke an imaginary past. As Abrahamian points out, it is incorrect and misleading to speak of ‘fundamentalism’, because, notwithstanding the emphasis on traditional values, the implication in most uses of the term of rejecting the modern world did not apply. Islamism in Iran involved ‘ideological adaptability and intellectual flexibility, with political protests against the established order, and with socio-economic issues that fuel mass opposition to the status quo’ (Abrahamian, 1993: 2) – hardly a purely traditionalist project. Thus, invocations of tradition meant that ‘traditional’ and ‘modern’ could only mean that what was pursued was a hybridization of the two. As discussed in Chapters 1 and 2, capitalist development is never a linear process, as it is always mediated by local institutions with their own history. The different interpretations naturally appeal to those from different social classes. Islamism has grown in societies feeling the impact of imperialism, the rise of a local capitalist class and the formation of an independent capitalist state, and the accompanying transformations of social relations. The conditions involved rapid modernization and the nation catching up from an historical position of national subordination. The principal class base of Islamism is the traditional commercial and professional petty bourgeoisie. In general, they are hostile to the left, to women’s rights and to secularism. Islamism has some similarities with

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‘third world’ nationalism. Postures of ‘anti-imperialism’ express people’s bitterness and anger by focusing these on external forces, to avoid dealing with what otherwise might be recognized as the real enemies at home. Abrahamian compares Islamism with Peronism and similar forms of populism (1993), suggesting that Khomeini’s rhetoric during the 1979 Revolution made him appear more radical than the Marxists. In a similar way, Ahmadinejad put forward arguments almost identical to Khomeini’s in claiming to defend the poor and fight US ‘arrogance’. Like Khomeini, Ahmadinejad supported efforts to protect the property of the middle classes. Abrahamian describes populism as a movement of the propertied middle class that mobilizes the lower classes, especially the urban poor, with radical rhetoric directed against imperialism, foreign capitalism and the political establishment: Populist movements promise to drastically raise the standard of living and make the country fully independent of outside powers. Even more important in attacking the status quo with radical rhetoric, they intentionally stop short of threatening the petty bourgeoisie and the whole principle of private property. Populist movements thus, inevitably, emphasise the importance, not of economic, social revolution, but cultural, national and political reconstruction. (Abrahamian, 1993: 17) Zubaida similarly notes that, while the Iranian Revolution ‘was populist and anti-imperialist, it sported some of the vocabularies and slogans of the left’ (Zubaida, 1989: 40). Differing interpretations of Islam appealed to Iranians from different social classes. This can be seen by comparing the writings of Khomeini and Shariati before the 1979 Revolution, which I will discuss later. Khomeini emphasized the importance of an Islamic government of jurisprudence, while Shariati attempted a fusion of Islam with ‘third worldism’ and Marxism, aiming at posing a challenge to secular political thinkers and offering an Islamic alternative in the context of the modem world (Morady, 1994). Khomeini distanced himself from other Islamists, and although he did refer to classes or even revolution in his writing and speeches before the 1970s, the language changed in the period immediately before the revolution. He began to use the term mostazafan (‘the oppressed’) and mostakbarin (‘the oppressors’), both to demonstrate his awareness of the shift in the political economy and to challenge the Marxists’ influence in society. Calling on Islamists not to stay silent and idle, he urged them to fight:

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The band of traitors and usurpers, the agents of foreign powers, have appropriated the wealth and the fruits of labour of hundreds of millions of Muslims – thanks to the support of their masters and through the power of the bayonet – granting the Muslims not the least right to prosperity. It is the duty of Islamic scholars and all Muslims to put an end to this system of oppression and, for the sake of the well-being of hundreds of millions of human beings, to overthrow these oppressive governments and form an Islamic government. (quoted in Moaddel, 2005: 260) In Khomeini’s thought and language, the necessary transformations were reflections of changes already under way in Iranian society. In this context, he chose to appeal to the general public, and particularly, the meek, the poor, the masses, the powerless and the exploited.

Islamism and social classes The development of capitalism in Iran, especially since the Second World War, brought, along with the rise of a local capitalist class, impetus for the formation of an independent state. Britain and the US used their military presence as a bargaining tool. Having, like some other Middle Eastern states, vast oil reserves, Iran was in a position to encourage the development of some large-scale modern industry. Industrialization and land reform transformed some peasants into owners of modern capitalist farms, while many others were forced to leave their villages for the cities. With the population shift from rural to urban, there was a vast expansion in the number of schools, colleges and universities, but very few jobs for new graduates (Halliday, 1979). As discussed in previous chapters, the oil industry became the key industrial sector following the quadrupling of oil prices in the 1970s. Apart from oil, the national economy remained too small to fulfil the nation’s needs. The state, as the sole recipient of the windfall oil revenues, was able to use them to support and protect both old and new industries in a very competitive world economy. Lacking state support, some of the traditional sectors, such as local handicrafts, were unable to modernize. The bazaar was an important support base for Islamists before and after the Revolution, which also drew followers among landowners, merchant capitalists and owners of small and medium-size industries. In 1963, the Shah proclaimed the ‘White Revolution’. This was a series of measures including land reform and the introduction of voting rights

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for women. Religious leaders feared that these reforms would threaten their position by reducing the role of the clergy in society. While the programme was being approved by voters, Khomeini, then an Ayatollah from Qom, openly criticized the Shah and accused his government of selling out: ‘Iran’s independence, reducing [it] to the level of a colony, and making the Muslim nation of Iran appear more backward than savages in the eyes of the world!’ (Khomeini, 1981: 182). Like his father, the Shah recognized the power of the religious leaders and their influence on society. He could see the advantage in accommodating Islam, provided it was not in a radical form. His actions towards it appeared contradictory. For example, he described his ‘White Revolution’ as propagating true Islamic ideals, but at the same time he undermined the authority of religious institutions by replacing them with civil courts and secular schools. The ruling elite exhibited outward deference to Islam, with the Shah making frequent public visits to holy places in order to present himself as a true believer. He wished to be regarded as ‘God’s shadow on earth’ (one of his official titles), and stated that he was a ‘sincere believer’ with a credence in the power of prayer and miracles (Pahlavi, 1980: 26). At the same time, however, the Shah denounced clergy members such as Khomeini who opposed his rule as being ‘agents of black reaction’ (Taheri, 1991: 246). Some religious leaders opposed the Shah’s glorification of Iran’s pre‑Islamic past and reacted against the society’s increasing Westernization in tastes and habits. American culture was ubiquitous, seeming to infiltrate all spheres of life, including the military, business, clothing and music. As in neighbouring countries that had recently gained political independence, it seemed as if the traditional hold that Islam had over the people was losing out to the influence of the West. Traditional Shi’a religious leaders, including the Ayatollahs Burujerdi, Shariatmadari and Golpayegani, argued for cooperation rather than confrontation with the state, although they did not always escape arrest. Shariatmadari was relatively liberal in his interpretation of Islamic tradition. He believed that religious leaders should act as a guide for the government but not necessarily involve themselves directly in political affairs. In contrast to Khomeini, Shariatmadari argued that in Islam, there was no provision requiring religious leaders to interfere in matters of state (Akhavi, 1980). But he chose to do so, saying in 1978 that the protesters were demonstrating not against the Shah’s views on modernization, but only against the dictatorship itself (Voll, 1982). Some Islamists appealed to the new middle class, the class from which activists as well as intellectuals tend to come. Although conservative by

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nature, they were happy to provide donations for others to fight on their behalf, especially to protect their material interests. For example, before and during the Revolution in 1979–81, the bazaari financed those who could fight the so-called Marxists. They mobilized the poor against the left, and modernists and reformists. While they were always careful not to put their own lives at risk, they did not hesitate to use the poor to help them get the job done. According to Roy (1998), students from secondary schools and universities formed a ‘lumpen intelligentsia’ who were core Islamist supporters. Prior to the 1979 Revolution, the intellectual backbone of the middle class consisted of followers of Ali Sharati (1933–77), who developed an ideology promoting social revolution, and the MKO or People’s Mojahedin Organization of Iran (PMOI), which presented the Qur’an as a progressive, dynamic and revolutionary ideology. Shariati’s impact on Iran’s youth was widespread, and he enjoyed substantial support among the children of the traditional elite classes, especially the bazaari. Shariati relied on the middle-class intelligentsia because they were considered able to: … grasp society’s internal contradictions, particularly class contradictions, increase public consciousness by pointing out these contradictions, and learn lessons from the experience of Europe and other parts of the Third World. (Shariati, nd: 20) As a result of the establishment of the Islamic Republic, a new class emerged, with members of the IRGC playing a pivotal role in supporting the state and managing the economy. Initially, the intention of the government was to organize a parallel military force to challenge any opposition from the so-called counter-revolutionary elements tied to the previous regime. The IRGC was gradually given additional power involving responsibility for managing various projects. Until recently Islamism has also enjoyed the support of the poor, especially in the rural areas where the development of capitalism has undermined their economic and social position. Many were forced to migrate to cities to look for work and to try to improve their standard of living. Tehran and other major cities had grown by more than 50 per cent since 1979. Often the poor found that they had lost their way in the modern city, and experienced a sense of alienation from larger society. The appeal of Islamism in the 1980s thus increased as the economic crisis started to affect the impoverished masses, while the elites were enjoying a luxurious life. Some of the Islamists’ most ardent supporters came from this social group, called mostazafan; they were seen as a counterweight to the corrupt, foreign-linked elite, the mostakbarin.

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State, society, development and Islamism The rise of the modem bourgeois nation-state has generally involved the development of political unity, the extension of communications, the establishment of an exchange economy with markets and a single acceptable currency, the standardization of law and language and the development of bureaucracy and the army to defend the nation’s boundaries from external forces. This was tied to the idea of the sovereignty of the people as a nation, with the state as the representative of all of its citizens under the constitution. Before the 1979 Iranian Revolution, Islamists were uneasy about the modern nation-state and economic development, responding in a diversity of ways, both in content and manner. Their reactions varied from an outright rejection of these as purely Western phenomena, to acceptance of the status quo, with various combinations of both of these approaches. The development of a modern state, a system of law and order and a capitalist economy in a country like Iran also forced the Islamists to formulate a new interpretation of the religion (Akhavi, 1980). Khomeini, in particular, never stood against the need for law and order or the role or authority of the state, arguing that strong state machinery is necessary to prevent chaos: Without the formation of a government and the establishment of executive and administrative organs to ensure that through enactment of the law, all activities of the individual take place in the framework of a just system, chaos and anarchy will prevail, and social, intellectual, and moral corruption will arise. (Khomeini, 1981: 42) Islamists in Iran have historically demonstrated their ability to accept and work together politically with their countries’ rulers, whether in a dynastic or republican nation-state. One example of this is that during the period of Western domination of Iran in the 19th century, members of Islamist parties, such as Afghani, argued that there could be no Muslim unity without reform and independence from Western colonialism. Afghani considered that the ultimate aim was Islamic unity, but the fight against imperialism was for him the most important and immediate goal. During both the Tobacco Movement8 and the Constitutional Revolution,   The Tobacco Movement was a protest led by Islamists in Iran against an 1890 tobacco concession granted to Britain. In 1891 a fatwa, or decree, was issued by cleric Ayatollah Hassan Shirazi against the use of tobacco. The boycott forced the government to retreat from the policy. See Morady (1994).

8

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the Islamists had to present themselves as upholding the integrity of the nation-state against both imperialism and the Shah (Martin, 1989; Kasravi, 2006). The context in which the Islamists found themselves throughout the 19th and 20th centuries was one of the expansion and increasing influence of modern capitalism. This meant that new Western ideas and techniques were seen as competing with older Islamic ones. During the late 19th and early 20th centuries, Iranian Islamists made an effort to reconcile their ideology with the challenges presented by the rapid economic and political changes occurring in the country. Reza Shah’s rise to power in the 1920s was supported by the Islamists in Iran, along with their social base in the bazaar, who sent a message thanking the Shah for saving the ‘Islamic Empire of Iran’ and challenging anarchy in the country (Abrahamian, 1982: 131). Reza Shah’s modern state may have faced serious difficulties without the clergy’s support and that of the middle class in particular (Akhavi, 1980). The development of a modern state by Reza Shah involved the establishment of new secular educational and legal systems, the latter supplanting traditional Islamic law, except in matters of family law. These reforms stripped the clergy of many of its most important social functions. Although the role of the clergy during this period was thus substantially reduced, they could do very little to stop this, choosing either cooperation or staying away from politics altogether (Arjomand, 1984). The evolution of nationalism and the increasing importance of the state in society were significant developments in Iran during the 1940s and 1950s. These were linked, and the independence of the nation-state became a goal for many intellectuals and political activists. Religious activists had to combine the Islamic concept of community (umma) with the competing interests of the nation and the modern state. With the increasing breakdown of traditional society, and the growth of nationalism, anti-imperialism and the (Communist) Tudeh Party,9 the pressure to re-affirm Islam became overwhelming, albeit through presenting it in a different form and style. In the post-Second World War period, nationalism became a dominant force throughout the Muslim world. Among the Iranian clergy, Kashani emerged as the one most active in politics. He became Speaker of Majlis (the Parliament) in 1952 and built substantial support through his anti-imperialist rhetoric and his support for  The pro-Soviet Union Communist Party of Iran was formed in 1941. It had considerable influence in its early years, especially in the early 1950s, during the nationalization of the oil industry. Its influence declined after the 1953 coup against Mossaddegh, but the Party continued to exist, albeit smaller and weaker. It was banned under the Islamic Republic, in 1982. See Abrahamian (1999: 28–9). 9

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the nationalization of oil. The mostly Islamist but also modern middleclass faction led by Al-Ahmad (1923–69) blamed Iran’s backwardness and its failure to industrialize on imperialism. Al-Ahmad then attacked intellectuals for orienting themselves to the Western model and turning their backs on Islam.10 Al-Ahmad’s view was a combination of nationalism and anti-imperialism, which turned out to be a common trend among Iranian intellectuals. The Shah’s state encouraged some Islamists to be politically active, to contain the threat of secular Marxism represented by Tudeh. These developments meant that the state-led modernization of Iran in the 1960s and 1970s, assisted by increasing oil income, was not accompanied by a decline in religion as a force in society. On the contrary, religious centres and publications thrived. More than 5,000 new mosques were built in Iran between 1970 and 1978, and the number of pilgrimages to the holy city of Mashhad increased from less than 500,000 in 1970 to over 10 million in 1978. The number of Iranians who undertook the pilgrimage to Mecca increased from around 8,000 in 1968 to 55,000 in 1978, on the eve of the Revolution. Despite the oppressive measures taken by the Shah’s regime, religious literature with dissident political themes was readily obtainable, as Marxist literature was not (Taheri, 1991). Iran’s population increased from 13 million in 1941 to over 36 million in 1979. In 1941, 29 per cent of the total population lived in the urban sector, a figure that increased to over 40  per cent by 1979 (Morady, 1994: 3). In the period 1900–06, only 2,000 students were enrolled in state schools; however, the education system greatly expanded throughout the 1960s and 1970s, mainly due to a dramatic change in the way that education was provided. As a result, the literacy rate rose from 29 per cent of the total population in 1966 (40 per cent of men and 17 per cent of women) to 48 per cent in 1977 (59 per cent of men and 35 per cent of women) (Parsa, 1989: 80). This change forced Islamists to reconsider their position, as they saw an urgent need to justify their role in a changing society and present a new interpretation of Islam. For example, Bazargan organized the Islamic Association of Engineers, making an appeal that gave the rising, young, but mostly still traditional middle classes a sense of dignity and the encouragement to affirm their identity in a modern Iran. Other groups, such as the PMOI, included mainly middle-class students. Although they presented an image of a radical Islam to the ‘oppressed’, it   Ironically, Al-Ahmad was a member of the Tudeh Party in the 1940s. Later on he left the organization and attempted to rediscover Islam and to find a solution to Iran’s political and economic problems.

10

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was not the oppressed who formed the basis of the PMOI. Instead, the organization was supported mainly by the new middle class, whose roots were in the traditional petty bourgeoisie (Abrahamian, 1989). Before the 1979 Revolution, Islamists generally accepted the importance of the modern state and its institutions, such as parliament, believing that they could voice the ideas of Islam through the Constitutional Assembly. As Algar points out, this allowed them to reconcile both Islam and political theory with the existing reality (Algar, 1972). Religious thinkers like Khomeini, Shariati and Bazargan, as well as the PMOI, found themselves compelled to formulate ideas on the state and society. For example, Khomeini affirmed that: Islamic government is neither tyrannical nor absolute, but constitutional. It is not constitutional in the current sense of the word; ie, based on the approval of law in accordance with the opinion of the majority. It is constitutional in the sense that rulers are subject to a certain set of conditions in governing and administering the country. (Khomeini, 1981: 51) Thus, Islamists actively tried to present an Islamic vision of the future by relating their religion to the current local and global conditions. They were also mindful of competing with the secular nationalist and left-wing organizations for the allegiance of students and middle-class youth, as well as the commercial and professional petty bourgeoisie. Crucially, during the early days of the uprising against the Shah, Islamists had to respond to the revolutionary demands of many people demonstrating in the streets. According to Halliday (2009), ‘the demonstrators of 1978–79 did not want the Shah, but nor did they want a dictatorship of ayatollahs either: they wanted… “independence” and “freedom”.’ The clergy, led by Khomeini, also had to take this into account when dealing with the practical tasks of managing the capitalist state in the aftermath of the Revolution. It took Khomeini and his allies nearly two years to fully impose their authority. The clergy’s take-over was not automatic but faced challenges, including from secular nationalists, Marxists and the Islamist left. These social divisions were mirrored in the post-revolutionary government: Bazargan expressed his concern about the increasing role of Iran’s clergy. He wanted to ensure that political openness and democracy were not threatened by the Islamists. Bazargan’s supporters were ‘moderate’ Islamists associated with the modernizing bourgeoisie, while Khomeini’s social base was made up of clerics, and their roots were in the bazaar. Bazargan favoured a political system such as that in France, but Iran’s constitution combined aspects of that model

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and that of Velayat-e Faqih:11 ‘Between divine rights and the rights of man; between theocracy and democracy; between vox dei and vox populi; and between clerical authority and popular sovereignty’ (Abrahamian, 2008: 163). The Islamists had an ideology that was conservative and traditional in many ways, with both women and men forced to adhere to an ‘Islamic dress code’. They found this very difficult to impose, especially as increasing numbers of young people resented this. Issues affecting women and young people were particular points of tension. Despite religious pressure to portray women as best employed as mothers and wives, in reality many women continued to study and go on to take professional positions such as teachers and doctors. The Iranian theocracy had to change its policy on birth control, as more women were using contraceptives (Moghadam, 1988: 227), even while they were denied equality in such matters as divorce and family law.

Conclusion Islamist movements have influenced Iran’s political economy for centuries. Under domestic, regional and global social pressures, they have presented themselves as progressive, radical or revolutionary. While preserving the religion’s core elements such as its texts and belief in a single deity, they have also managed to both challenge or adapt to economic and political conditions in order to promote their ideals and protect their interests and social power base. Different Islamic groups followed various styles and forms of religious expression during the 1960s and 1970s. The changing conditions ushered in with the influence of capitalist development, the increasing importance of the Soviet Union and other geopolitical changes all had an impact on Islamist activities after the 1960s. Adapting the traditional religious texts through new interpretations became the dominant practice in allowing Islamists to survive in changing conditions. Iranian Islamism drew on its medieval past but did not, and could not, seek to return to it in terms of social, economic or political conditions. It was almost wholly modern, partly because it sought to be, although its adaptations were driven by necessity and the conditions of success. In fact, in this way, it proved remarkably flexible. The conservativism to which it   Velayat-e Faqih, or Guardianship of the Jurist, a claim in Shi’a Islam that gives a faqih, or clerical jurist, custodianship and authority to rule the believers in the absence of the Twelfth Imam, until he returns from occultation. 11

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proved susceptible was most often not traditional but modern and had to do with the continuance and legitimation, which it furthered, of forms of oppression and exploitation. This also had the result of contributing to splits between moderates and radicals (in religious terms), as well as left and right in modern straightforwardly political ones. The tensions within Iranian Islamism were those of society, and reflected the crises and contradictions that the various forces in the Revolution, including those that triumphed, were responding to. It is no surprise, then, that its successes have been fraught or partial, or created new problems in turn. While political Islam is a certain way, or set of ways, of being religious, in assessing its social effects and causes we must consider that it is, even more, a certain set of ways of being political.

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Introduction The Iranian Revolution of 1979 is an ongoing subject for debate among scholars and analysts around the world. It stands as one of the more remarkable world events in the period since the end of the Second World War. It achieved its goals through the use of what, for George Sorel, is the essence of myth: an abrupt break with the recent past that is achieved only by means of ‘expressions of a will to act’ (Sorel, 2005: 28). The main achievements of the Revolution abolished the monarchical rule of the Pahlavi dynasty to set up the Islamic Republic of Iran, with a modern constitution and parliament that also operates within an explicitly theological framework. Compared with other modern uprisings and revolutions, such as those in Russia and China, the Iranian Revolution was notable for the role played in it by religion and religious leaders. In the 1970s, observers ranging from Western social scientists to Iranian government intelligence sources were primarily united in their belief that the Shah’s regime was relatively strong and its opposition forces fragmented. Many scholars believed that there was little likelihood of any instability sufficient to threaten the Shah’s regime. This analysis was based on the existence of improved economic conditions, a strong modern state machinery and political stability, especially compared to the period before the Second World War. As events unfolded in the late 1970s, it became possible for commentators to foresee the overthrow of the Shah’s regime, but very few expected to see Islamists at the forefront of the uprising, let alone to witness the establishment of a state with religious leaders at its core.

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The forces of the Revolution, which involved millions of ordinary Iranians, took on an undemocratic, authoritarian monarchy, which had ruled for 2,500 years. It also threatened the interests of the great powers and their allies, as well as those of brutal regimes in the region and elsewhere in the world. It seemed possible to upset the balance of power in the Middle East by inspiring people to believe that they could overthrow an oppressive government. Scholars in the Orientalist and Islamist schools attempted to analyse the Iranian Revolution entirely in terms of its religious character, without considering the desire, fundamental to that, of the people to have a say in their destiny (Arjomand, 1986). The Iranian Revolution also challenged the general theory that modernization must be accompanied by a declining role for traditional societal forces and an eventual secularization. The Revolution was a product of economic and political conditions that Iran had undergone since the early 20th century. This book thus contests the assumption of a linear development path that must be taken by all countries. Not only did Western capitalism remain hugely influential in Iran, but elements of the pre-capitalist social and political order also continued to play a strong role in society. There was both tradition and modernity, or continuity and change, under the monarchy and the Islamic Republic. This is evident in the way in which the country became integrated with the capitalist agenda, and in the role of traditional forces in the modern period. By 1979, Iran’s economy was globally well integrated, with both the energy sector and the state playing pivotal roles. Half of all Iranians lived in urban centres, and the class structure of the country had been transformed. Some in the new generation of the educated middle class were inspired and influenced by the Russian, Chinese, Algerian, Cuban and Vietnamese revolutions, and strove to be part of a similar popular movement. Islamists did not distance themselves from this process: they articulated new interpretations of Islam, and individuals such as Shariati also formulated a radical form of Shi’a Islam, which challenged capitalism and imperialism. Although analyses of this kind were neither new nor exceptional, as Islamists such as Afghani had put forth such interpretations in the late 19th and 20th centuries, Shariati was addressing members of the younger generation influenced by global economic and political developments. The emergence of a modern middle class resulted from the expansion of capitalism in the 1960s and 1970s, following the experience of the failure of traditional religious leaders in the 1950s and 1960s. During the Revolution, such ideas became part of Khomeini’s revolutionary message and helped him motivate supporters to spread his populist message and mobilize the lower classes, especially the urban poor,

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against the monarchy. Islamists later used similar language and methods to remove political competitors such as liberals and Marxists and to recruit volunteers to fight in the war against Iraq. There are indeed several parallels between Khomeini and other charismatic and populist ‘third world’ revolutionary leaders. They all used similar slogans in criticizing the advanced capitalist countries’ interference in the ‘third world’, and in order to foster revolt and garner support. Whereas populism was instrumental in bringing the Islamists to power and establishing their position, it also had limitations. Populism on its own cannot succeed against all forces, as is perhaps demonstrated by the end of the Iran–Iraq War in 1988 and the negotiations with the West over the halting of nuclear enrichment in 2015. Modern revolutionary movements, including those that triumphed in the establishment of the Islamic Republic, have been hard to define for academics, who have tended to label them and the resulting regimes as having the simple character of being either ‘progressive’ or ‘repressive’. As discussed in the previous chapter, it is simplistic to characterize the Iranian Revolution and the resulting Islamic Republic and their supporters as inherently anti-modernist. Islam has always been open to a range of interpretations, and Islamic leaders have adopted different styles in response to historical, economic, political and social circumstances, both before and after the Revolution. This chapter will argue that in spite of the prominent role of religion and the narrative adopted by religious leaders, the Iranian Revolution was strongly influenced by the impact and consequences of political and economic development, the nation’s geopolitical importance and the continuing role and intervention of the great powers. Islamist leaders had to respond to those conditions in order to expand their support base and to build hegemony. Radical interpretations of Khomeini helped Islamists to win the necessary support among the people before the Revolution. As this chapter will show, establishing and maintaining the Islamic Republic has not been a panacea, as many of the economic and political contradictions that led to the Revolution continue in Iranian society today.

Interpretations of Revolution Islamists tend to think that the Iranian Revolution was an attempt to restore the rightful role of Shi’a Islam in Iranian society by rejecting Western secular culture and reclaiming a vision of Islamic purity (Algar,  1983). Khomeini (1979) claimed that the Iranian Revolution

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reflected the religiosity of Iranian people’s belief and their practices of Islam. Emphasizing the importance of both religion and ideology, Arjomand (1981) suggests that the Revolution was caused by a breakdown of traditional values and structures. During the Shah’s modernization, he argued, rapid social change led to dislocation and disintegration. Arjomand, representing the social movement model, gives primary importance to religious ideology and the legitimate authority of the clergy. Hence, he highlights the special role played by Shi’a Islam and the clergy during the Revolution – they opposed the Shah’s state, which was undermining their position. Under conditions of growing social disintegration, the clergy could legitimize its authority and move from the religious to the political sphere to seize power (Arjomand, 1981). The influence of Shi’a symbolism and imagery, such as reference to the martyrdom of Hussein, as a mobilizing force during the Revolution has also been given serious attention. Hodgkin (1980: 149) also claims that Shi’a ideology made the Revolution possible, due to the ‘authentic, ancient, but also living revolutionary tradition in Islam.’ While there is no doubt that Shi’a Islam was a crucial factor in the Iranian Revolution, it is inaccurate to elevate the role of religion to that of its prime mover. Like most religions, Shi’a Islam has not always acted as a revolutionary force or one combining injustice; it has been quite adaptable ideologically. Religious institutions have always encompassed conflicting views of the faith itself as well as of political, economic and social matters. As discussed in the previous chapter, religion has, at different times, served to both legitimize the ruling elite and to challenger it (Fischer, 1980; Keddie, 1983). The clergy in Iranian politics have both protected their social standing and at times voiced the public’s desire for justice, freedom and independence. For example, the majority of the clergy outwardly endorsed the Constitutional Revolution of 1905, not because it fitted their ideological thinking, but because it represented a popular urban demand that they needed to be seen as supporting. When Sheikh Fazlollah Nouri, a leading Mojtahed, refused to cooperate with the constitutionalists and ended up being hanged, there was little anger shown by his fellow clergy, who did not wish to alienate themselves from the widespread popular support for a constitution (Martin, 1989). This pattern was repeated in the 1950s during the struggle for the nationalization of oil when some clergy avoided political activity until the height of the anti-imperialist uprising. The year 1963 is also significant because Khomeini launched a major political challenge to the regime. To do so, he and other religious leaders employed the symbols of Shi’a martyrdom, yet were unable to mobilize

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workers, students, professionals and peasants to join their protests, and were ultimately defeated by the Shah (Bakhash, 1985). Opposition to the Shah was restricted to some of the bazaari and landlords, who, like Khomeini, disliked aspects of the Shah’s modernization programme, in particular his granting women the right to vote. The mid-1960s marked the growth of the urban poor and the middle class, owing to a transformation in Iran’s economic conditions. It was these new socioeconomic changes that provoked the clergy to start voicing concerns regarding inequality in society. It would be mistaken to think that in 1978–79 the Iranian people were mainly concerned with religious morals and ethics or that they proposed a return to the past. In fact, the popular movement was an umbrella for a combination of demands, including the secular goals of economic prosperity and political freedom. At the same time, it did not entirely reject the role of religion. Skocpol (1989) fits Iran’s Revolution into the schema of other ‘modern’ revolutions in arguing that, despite the differences between the French Revolution of 1789 and that of Iran in 1979, there are remarkable similarities in the overall political and geopolitical dynamics. However, whereas French revolutionary political culture posed a secular alternative to the divine right of the king and aristocratic privilege, the Revolution in Iran was made against a ‘modernizing’ absolutist monarchy and resulted in a theocratic regime. Skocpol argues that the Iranian Revolution appeared to be a product of excessive modernization in the 1960s and 1970s. She criticizes those who describe Iran’s Revolution as highly antimodernist in comparison to other revolutions. The argument that religion is wholly against the process of modernization does not take into consideration the changing character of Islam in Iran. In fact, interpretations of Islam’s political demands during and after the 1960s were themselves in flux in response to the changes and challenges that clerics were facing. Many Islamic thinkers were ardent nationalist proponents of Iranian independence, both economically and politically. The process of modernization and the need for Western technology generated contradictions in society, including among religious and conservative groups that resisted modernization partly in order to protect their social position. But most of these groups came to accept land reform and industrialization when they realized that they could improve their social standing through such measures. In contrast to Skocpol, Nasri (1983) argues that in Iran, post-Second World War modernization did not happen quickly enough to respond to the aspirations of most groups in society. The government failed to respond to the people’s increasing expectations resulting from development and industrialization. This was another way of saying that the Iranian people

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were not against development, but wanted it to be equally distributed so that they would enjoy more of its fruits. This view is also advanced by Halliday (1979: 2–15), who argues that the Shah’s fall happened not because ‘he went too fast for his people’; rather, the regime ‘did not go fast and far enough in the right direction’. Instead, income inequality, neglect of the agricultural sector and lavish arms expenditures were the principal reasons for the Shah’s fall. Abrahamian (1978: 3) contends that neither modernization nor the clergy were among the factors leading to the Revolution: ‘In fact it was a mass movement against deep-seated economic and social grievances with the more anti-regime religious authorities acting as public spokesmen.’ Pesaran (1985) shares this view, claiming that the Iranian Revolution came about: … not because of a sudden and dramatic Islamic resurgence, but mainly as a result of deteriorating socio-economic conditions, ever-rising inequalities and political suppression by the old regime that became intolerable as soon as the masses realised that it was possible to avoid them. (1985: 16) Keddie (1983) considers rapid modernization to have been one of the important causes of the Revolution; however, despite much genuine anti-Western feeling, most Iranians did not reject Western models of modernity. Throughout the rapid development that had taken place since the 1950s, and the urbanization and development of a highly educated populace that it involved, Iranians mostly sought and appreciated the dramatic improvements in their living conditions that resulted. In fact, Keddie (1983) believes that heightened expectations arising from the government’s rapid development policy were among the reasons for the upheaval. Many Iranians were untouched by the improvements in economic conditions, and the inability of the regime to fulfil their expectations resulted in the political conflicts witnessed during the late 1970s. The significance of this argument is that it attributes the Revolution to the desire of many people in Iran for better economic and political conditions rather than the ideology of Shi’a Islam, or something exceptional in the Iranian cultural configuration. Keddie attempts to apply the Davies J-Curve – used to represent the theory of rising expectations – to Iran in 1979.1 She suggests that rapid  The Davies J-Curve is a theory developed by James C. Davies to suggest that revolution emerges out of a long period of economic growth followed by a shorter period of economic decline. See Davies (1974).

1

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economic growth followed by a sharp downturn laid the conditions for revolution, as the effects of recession were especially felt by urban migrants and the clergy, both of which were important social forces during the Revolution. However, Keddie’s argument – that the social struggle and Revolution in Iran were caused by people’s increased expectations not being fulfilled when oil revenues fell sharply – fails to take into account the role of collective action. A revolution requires solidarity and organization, which must both be built up over a period of time rather than appearing all at once at a particular moment. Revolutionary processes are complex, and the outcome is not always predictable. A sharp decline in economic activity may provoke a collective response, but this is only one possible reaction, and it depends as much on how people have come to think as on how they are affected by an economic crisis. It also depends on the role played by social organizations at key moments. The economic expansion of the 1960s and 1970s, fuelled by oil income and Iran’s rapid industrialization, created tremendous change in the social and economic conditions in Iranian society. This created various problems, including increased inequality. Iran became reliant on oil income for its continued industrialization, and this was only possible by turning to the global economy to supply the necessary technology and the food for its growing population. All of this took place in a political environment that was lacking in openness. Compared with Western countries, the development of capitalism in Iran was relatively late. It also tended to be more uneven in its impact and to have a greater interdependence within the world market. A consequence of this was that any shift in the global economic order would have immediate repercussions in Iran. Under these conditions of economic and political imbalance, religion became a refuge for the insecure, underprivileged and dissatisfied. It became an important weapon in the hands of various actors, especially Islamist radicals such as Khomeini, in the fight against privileged groups, which was aided by the political skills and organizational abilities of certain religious institutions and leaders. In general, the factors driving revolutionary change tend to be rooted in economic, social, political and geopolitical conditions and not to arise from religious feeling alone. At the same time, religion is an integral part of popular culture and so not independent of other societal factors. Revolution generally involves the participation and activity of many individuals who are no longer content to accept a passive role in society. The triumph of a revolution therefore necessitates the joining together of several causes and classes. The Islamists led by Khomeini understood this clearly, as is shown in a speech he gave when endeavouring to broaden his appeal:

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I offer my thanks to all classes of the nation: to the religious scholars … to the students … to the merchants and traders … to the youth in the bazaars, universities, and madrasas of the country  … to the professors, judges, and civil servants; to the workers and peasants. You have triumphed because of your extraordinary efforts and unity of purpose. (Khomeini, 1981: 252) The ability to articulate class unity is one task in making a revolution successful that was particularly important in Iran, where conflict and division between classes had become keen and an alliance of classes was needed. The failure of the ruling establishment to operate adequately in the face of strong opposition opened a space in which Islamists could articulate popular grievances. The revolutionaries’ demands included many secular elements, like calls for a republican government with universal suffrage and an elected parliament. Some Islamist leaders had articulated the idea of a republic before the build-up to revolution. In order to show that liberal and Marxist groups were not the only choices for the lower classes, politicians such as Shariati and clergy like Taleghani expressed a radical version of Islam that claimed to represent the ‘poor and downtrodden’. Their radical politics had inspired young Iranian revolutionaries long before the Revolution. Shariati did not live to see the Revolution and Taleghani died immediately afterwards, but of course Khomeini was instrumental in establishing the Islamic Republic, partly on the basis of similar populist appeals.

Popularizing radical Islam In the 1960s and 1970s, many educated young Iranians were influenced by the growing anti-colonialist sentiment worldwide. The politicization of the middle classes, owing partly to this as well as to their country’s rapid industrialization, was not something religious organizations could afford to ignore; they sought ways to re-affirm their religion and its relevance by seeking to give it new interpretations. The new generation of Islamist revolutionaries such as Khomeini and Shariati, and groups including MKO, founded in 1965 by radical Islamist students believed that the only possible way to oppose the Shah was through armed struggle. They attracted mainly young Muslim university students from the traditional middle class (Abrahamian, 1989). Given the centuries-long process of continuity and change in Islam, this was an inevitable response. Islam in Iran has needed to be versatile

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to prosper in a country incorporating many different ethnic groups and cultural histories. The Shi’a sect has long adapted its older religious practices as necessary, even when it meant contradicting some of Islam’s original tenets (Roy, 1980). Khomeini, who emerged as the most important and prominent figure in the 1979 Revolution, began to develop and propose quite radical views of Islam. Aware of the importance and inevitability of the changes taking place in the country, Khomeini (1981) urged his followers to be pro-active, and stated that Islam should be presented: Properly to the people. The religious teaching and institutions must be improved. The syllabus and methods of propagation must be improved; apathy, laziness, despair, and lack of selfconfidence must be replaced by endeavour, hope, and selfconfidence. We must therefore strive to reform, intellectually and morally, the members of the religious institutions. (1981: 136) Condemning the Shah for banishing Islam to the sidelines of cultural life, Khomeini advocated a dynamic religion useful to militant individuals and groups, and explained the relevance of Islam in contemporary society as follows: Islam is committed to truth and justice. It is the religion of those who desire freedom and independence. It is the school of those who struggle against imperialism. (Khomeini, 1981: 28) He vigorously argued that Islam was against not modernization but only imperialism and the dominance of Western powers. His radical language before and during the 1979 Revolution was not necessarily aimed against private property or religion’s main support base, the traditional middle class. Bearing in mind the role of imperialism and Western intervention in Iran in 1905 and the 1950s, Khomeini stated that both ‘East’ and ‘West’ had conspired against Iran for centuries and could not be trusted; only Islam could provide people with a better life (Khomeini, 1985, 1986). The question of the relationships between national and international forces became important in the transformation of national politics. An antiimperialist element was and continues to be one of the most important pillars of the Revolution. The Shah himself had been an ally of the Western powers, having been installed and supported by them following the US-instigated military coup in the 1950s. Having noted the cultural changes that had taken place during the modernization process in the 1960 and 1970s, Khomeini (1981) identified

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as key the role of educated young Iranians. He called on Islamist seminaries to address their grievances directly: ‘By presenting Islam and Islamic government to the university students accurately, they will welcome it’. This message to the intelligentsia was aimed at providing an alternative to secular and Marxist philosophies. He intended to mobilize the middle classes as well as the lower classes, including the urban poor, with radical rhetoric directed against imperialism, foreign capitalism and the political establishment (Khomeini, 1981: 51). Khomeini, however, clearly intended that ultimate sovereignty in all matters, especially in politics, would rest with the religious leaders especially the Velayat-e Faqih, who has the adequate knowledge of the law and justice in society (Khomeini, 1981: 62). Others, such as Morteza Motahhari (1920–79), were also engaged in elaborating new interpretations of Islam. Motahhari claimed that ‘Iranian intellectuals should not have illusions that because religion does not play any role in Europe that its role has ended in Iran’ (Motahhari, nd: 83). Other Islamists such as Shariati presented Islam as a dynamic religion to his educated young followers. Having travelled and studied in Europe, Shariati was inspired by anti-colonial movements in Algeria, Cuba and Vietnam. He synthesized Shi’a and Marxism into a single revolutionary message by using the concept of tawhid (oneness) to argue that acceptance of social divisions and discrimination should be opposed (Shariati, 1979: 77). He argued that ‘true Islam is more than “concerned” about the poor; it is about fighting for justice, equality, and the elimination of poverty’ (Shariati, nd: 14–15). He chose to distance himself from the traditional, conservative clergy by proposing a progressive form of Islam, an ‘Islamic Renaissance’ in which the intelligentsia rather than the clergy would lead society (Shariati, nd: 20). The PMOI set forth a more radical version, claiming that ‘texts are not static and dogmatic commands, but rather guides and inspirations for dynamic change and revolutionary action’ (Mojahedin Organization, 1980: 10). Both Shariati and the PMOI played an important role in winning over many young Iranians to the cause of revolutionary Islam. During the turbulent months of the Revolution in 1978–79, PMOI organized street protests to challenge the Shah’s state. They provided the platform on which Khomeini could stand and proclaim his radical version of Islam during the 1979 Revolution.

The Holy Alliance: Clergy, mosque and bazaar During the monarchical rule of the Shah, secular organizations were given very little space in which to express their ideas. However, the Shah

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tolerated moderate religious leaders, even giving them financial support, which amounted to US$40 million in 1977 (Taheri, 1991: 219). So long as they were not a threat to the regime, the mosques and religious centres would function relatively freely. This, however, was not a guarantee that they could stay out of any political uprising that might emerge. Indeed, during the Revolution, the mosques became vital centres for the radical Islamists to organize and mobilize people, an important space that secular organizations did not have. Many of the 80,000 mosques, run by 180,000 mullahs, used religion as a mobilizing force, presenting it as a moral duty and a symbol of resistance against the Shah. Islamists presented and emphasized the martyrdom of religion and resistance against oppression, tyranny, capitalism and imperialism (Khomeini, 1981). Historical events were re-framed, given an Islamic form, wrapped in a simple language and presented to people who welcomed anti-regime slogans. Furthermore, Khomeini and many other radical Islamists were already seen as victims of the Shah, having been imprisoned or exiled for many years. Other non-clergy Islamist liberals, such as the well-known Bazargan, were also at the forefront of the protest movement. As the crisis deepened, the bazaari, who were the traditional allies of the clergy, provided them with the necessary financing to widen their campaign. The radical Islamists appealed to the anti-Western sentiment felt by Iranians and stoked their anger at years of oppression at the hands of the Shah. Islamic ideology, when combined with promises to fulfil people’s material aspirations, became a very potent message. As Kamrava (1990: 11) put it, there are times when: … all a revolutionary group needs to do in order to attract popular support is to say the right things and to make the right moves at the right time. This was the case in Iran, where the Ulama’s revolutionary propaganda and their ideology were not only easily understandable but also appeared to many to offer the best remedy for Iran’s social and cultural ills. Although an important role is almost always played in revolutions of a charismatic leadership that appears to invoke and respond to the will of ‘the people’, there is also always a need for the movement to have political expression and be well organized if it is to succeed. Thus, for example, no analysis of the Russian Revolution of 1917 would be complete without examining the key part played by the Bolshevik Party in the years before the Revolution. However, it would be one-sided to concentrate solely on this without recognizing the instruments through which the revolutionary parties, and most successfully the Bolsheviks,

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argued their case with the people in revolt: the Soviets. These were spontaneous organizations of workers and soldiers that formed in the major cities and that began to organize the running of the cities and the infrastructure. They were also open forums in which the debate and discussion generated by revolutionary fervour allowed the Bolshevik Party, which at first was relatively small in numbers, to gain hegemony (Trotsky, 1977; Moorehead, 2017). Khomeini’s arguments made sense to those who desired changes in the society. The assumption of the leadership by the clergy was also helped by the role of religious figures such as Motahhari and Talegani who advocated a more significant place for Islamic ideology in the society. These clergy were familiar with Western culture and had modified their ideas to formulate a logical and cohesive response to the Marxist ideas that were influencing many young radicals in the 1960s and 1970s. They presented an active, radical, and at times nationalist and anti-imperialist form of Islam, as opposed to the quietism that was widespread among clerics in the late 1950s and 1960s, and most associated with Ayatollah Seyyed Hossein Borujerdi and Shariatmadari, dominant religious figures at the time. Khomeini opposed quietists and he disagreed with Shariatmadari and other conservative clergy over a number of political issues.2 In the volatile situation of early 1979, Khomeini (then still in exile in Iraq) believed that the time was right for religious leaders to play a greater role in the society. He gradually widened his support among some high-ranking clergy and from broad sections of society including the traditional social base, the bazaari. Khomeini and his supporters were aware of the bazaari’s role in the 1950s, when many of them had supported Mosaddegh’s government. At the same time, he recognized their economic interest and prosperity: ‘I [Khomeini] have been writing for fifteen years and arguing for economic development and social prosperity’ (1985: 40). This also helped him to extended his support from the bazaari, to sections of the working and middle classes by accommodating their concerns – through arguing for an end to a class-divided society, and free elections and freedom of speech after the revolution. He even advocated free speech for secular organisations including Marxists once opposition started to take hold (Parsa, 1989). Without the backing of substantial numbers of people representing other social forces, neither the Revolution nor Khomeini’s   As late as August 1978, when the Shah appointed his new Prime Minister, Ayatollah Shariatmadari asked the people to give the new Prime Minister a three-month trial period to prove himself. See Parsa (1989: 203). 2

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own leadership would have been likely to succeed. Thus, the triumph of the Revolution necessitated a coalition of people from several different classes. The ability to articulate a populist language and build class unity were major factors leading to the success of the Revolution which arose as a result of class conflict, a crisis of hegemony and the failure of the ruling blocs3 to continue to operate in the face of the strength of oppositional forces. These factors are only part of the reasons for the Revolution; in order to succeed, the Revolution must have effective organization, leadership and ideology (DeFronzo, 2015). The revolution is a measure of the forces of both continuity and change at work in modern Iran: continuity, because the Islamists were using religious texts, symbols and the organization of the mosque in order to assume state power, and change, because it used modern themes such as national independence and anti-imperialism in order to win the support of wider sections of society.

From revolutionary theories to practices The dominant class of religious leaders has used Islam to provide guiding principles for managing a modern economy, including education, media and new political institutions. This has legitimized their power domestically, regionally and globally. It has also meant developing new interpretations of Islam and the political ideas invoked to encounter new challenges not faced before. The Revolution and those who favoured it were challenged by political conflict, especially during 1979–80, with rifts between different groups such as secularists and Islamists, leading to the execution of many thousands of young revolutionaries, including PMOI members (Abrahamian, 1989). Like other revolutionary governments, the Islamic Republic has gone through several transitions involving varying styles of governing: from the centrist reformist governments of Rafsanjani and Khatami, to the hardline radicalism of Ahmadinejad, and now the so-called ‘pragmatic president’, Rouhani. Despite various differences in their approaches, the idea of an Islamic Republic has remained fundamental for all of these groups (Ehteshami, 1995). These ideological somersaults were the result of the pressure to meet promises made to the people during the Revolution, adapting to the global economic and political influence and the ambitious new   The terms hegemony and power bloc are used to refer to the system of alliance between several classes and fractions; see Poulantzas (1979: 71). 3

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Constitution of the Islamic Republic. For example, its Article 43 states that the new Republic will create economic independence by eliminating unemployment and the consumption of luxury goods, thus enabling the provision of housing for the poor and rural migrants. It was decreed that Iran would expand non-oil exports to provide self-improvement opportunities to citizens and increase their participation in the leadership of the country, and also that the administration would prevent profiteering from the labour of others and prohibit monopolies and speculation. Two essential points should be noted about these aspirations. First the Islamic Republic, like other revolutionary regimes, has had to shelve, reformulate, re-package and otherwise deliver these objectives in different ways. The leader of the Revolution, Khomeini (1986), did not shy away from changing his initial revolutionary message to include demands that those workers who fought for the Revolution return to work and build their Islamic nation: Today any invitation to strike, or slowdown of work is treason to the country and the Islamic Republic. Today is not like yesterday [during the Revolution] when you were invited to strike. Those strikes were the determining factor in our destiny. We asked you to go on strike to get rid of plunderers from the country, [which] you did. Today is contrary to then … to invite anyone to go on strike is going against Islam and harming the country. Therefore, you have to be aware  … expel those workers who don’t want you to work for your people. (1986: 183) Khomeini’s rhetoric had involved calls for the rule of the mostazafan over the mostakbarin. Having served as an important political weapon to mobilize the Iranian poor against the previous regime, appeals to the mostazafan were later used against competing political groups and organizations, including secular ones such as the Fedayyan-e Khalq Organization (FKO) and MKO.4 They were also used as a rallying cry during the eight years of war with Iraq. Mostazafan became Bonyad Mostazafan va Janbazan (the Foundation for the Disinherited), which replaced the Pahlavi Foundation (once run by the family of the Shah) in

  The Organization of Iranian People’s Fedaian (OIPFM) was founded in 1971 by Bijan Jazan, Hussain Ahmadzadeh and A.P. Pouyan, part of the growing student movement. They were another group that would later come to the belief that only armed struggle could put an end to the Shah’s regime. See Behrooz (2000). 4

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1979. This was a huge and important economic and social complex with over 250,000 employees. To neutralize the challenge posed by the army, many of whose officers still had loyalties to the Shah, the Islamic Republic established the IRGC to defend the Revolution and challenge any counter-revolutionaries. The IRGC grew swiftly from a volunteer force to an important economic and political institution. In the years since 1979 it has been mobilized to attack left-wing groups, to impose Islamic ‘morality’ against women refusing to wear the hijab, and along with the army, to defeat separatist revolts. It oversaw the execution of hundreds of members of opposition groups and defeated the peasants who had occupied land in certain parts of the country. Some of the land was returned to former landlords, while the rest remained under state control (Najmabadi, 1987).

The paradox of political Islam The Iranian Revolution paradoxically contributed to the reshaping of the state by rooting it in religion. Part of what makes this paradoxical is the fact that in Islam, the relevant concept of the people is not the nation of the modern state with its geographical boundaries, but the umma, the supranational Islamic community of believers (Zubaida, 1989). The Revolution implicitly provided religious legitimacy to the nation-state at the expense of the umma. This may help explain why the Revolution did not break from capitalism or the forms of state power that it had inherited. While the Iranian Constitution states that the Supreme Leader – the guide or faqih – does not need to be Iranian, the body that elects them must comprise Iranian citizens (Roy, 1998). In this way and others, the Iranian Revolution is founded on the dual legitimacy of religion and politics, combining Shi’a Islam with notions proper to the nation-state. Iran is the only example yet of an Islamic state emerging as the result of a popular uprising. The same duality is also reflected in the Constitution, which provides for the sovereignty of the popular will, but also entrusts ‘divine sovereignty’ to the Velayat-e Faqih, as determined by the Supreme Leader. Khomeini, the leader of the Revolution, took this role until his death in 1988. Unlike modern states that have a ‘division of powers’ between legislative, executive and judicial branches, the Islamic Republic was divided between religious authorities resting on a basis of Islamic jurisprudence, and popular sovereignty of voters, who vote not as Muslims but as citizens of the nation. Without popular sovereignty, the country would not be republican and may not have much of its popular support. It is true that republican

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and democratic government as we know it depends on a nation-state. The Islamic Republic was constrained to act within the framework of the modern nation-state, based on modern industry, finance, foreign trade, the energy industry and government bureaucracy. Islamists had no choice but to either compromise with secularism or adapt their religious ideas to modern circumstances. This was an unprecedented experiment, not just because Iran has a modern economy, but precisely because the Revolution was both religious and republican, and adapted from tradition some of its values while modernizing them as thoroughly as it could. The role of Valayet-e Faqih was created to interpret and impose Islamic values. The authoritarian system had at its apex the principle of Velayat-e Faqih-e Motlaqeh (the absolute power of the Supreme Leader), but maslaha (expediency) was used extensively to protect the Islamic state. At the same time, the latter needed to engage with international communities and run an industrialized nation under a modern bureaucracy to undertake these functions. The Islamic Republic was under considerable pressure from different political and social forces immediately after the Revolution to present itself politically as both ‘Islamic’ and a ‘republic’. The war with Iraq provided as an opportunity for the regime to divert attention from its issues and to mobilize Iranians against their arch enemy, the ‘infidel’ Saddam Hussein. In addition, with increasing infighting between secular forces and Islamists, the war was a blessing in disguise for the government, which was able to promote it as a Holy War against the infidel, Saddam Hussein, and his Western allies. The war helped the Republic silence any challenge from the opposition and provided a nationalist and religious focus for people to rally around. Khomeini and his supporters could use the war to justify suppressing any opposition to the government, labelling them as ‘traitors’. Only by making the ‘war’ and the ‘Revolution’ virtually synonymous could they continue to send thousands to ‘martyrdom’. This was clearly stated by Rafsanjani in 1985 when he admitted: ‘We have been able to use the war to awaken the people and to fight the problems that threaten the revolution’ (Chubin and Tripp, 1988: 71). Finally, Khomeini accepted UN  Resolution No  598 on 20  July 1988 to end the war, an act he described as having to ‘drink from the poisoned chalice’ (Hunter, 2010: 241). Meanwhile, the exhausted Iranian population had experienced a significant loss of human life, with 300,000 dead and 700,000 injured (Hiro, 2005: 233). By the end of the war with Iraq, changes to the regime’s original policies and ideology were well underway. The much-vaunted themes of self-sufficiency with no dependency on the West or the East, and the project of exporting the Revolution, would soon be replaced by a more moderate assessment. This was articulated by the regime’s mouthpiece,

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the Tehran Times: ‘The undeniable factor is that political, ideological, economic, and social revolutions are now being conducted on a universal scale…. The days of rhetoric and sloganeering are over. [The government] should see the realities as they are and discontinue the practice of yesterday’ (quoted in Iran Focus, 1992). This about-turn must be seen in the context of the social and political developments that had occurred since the Revolution. The Revolution and the eight years of war with Iraq resulted in huge sacrifices, both physically and financially, for much of the Iranian population. The people now demanded material rewards rather than empty promises. Moreover, dissatisfaction had already been voiced by some supporters of the regime themselves, as one put it in 1990: We cannot even meet our daily needs. Of course, the Revolution was glorious, and we must continue to maintain Islam and the Revolution, but I must also survive. (quoted in Morady, 1994: 151) According to the government’s figures, there were nearly 3.8 million people unemployed in 1987 when the war ended, representing 28.6 per cent of the workforce. The lower-income earners who had made the greatest sacrifices felt the impact of the economic crisis most acutely. The post-war reconstruction programme aimed to quickly rebuild economic development, albeit by taking a more liberal approach. During Rafsanjani’s and Khatami’s presidencies, the neoliberal policy of promoting the free market, free trade and privatization, plus encouraging foreign investment, stimulating the stock market and reducing subsidies, were all aimed at promoting capitalism. The shift to a market-oriented policies generated its own problems, particularly in further widening the class divisions in Iranian society. For ordinary Iranians, this was a cause of resentment against the new technocrats who had gained tremendously from Rafsanjani and Khatami’s neoliberal market reform.

Swinging from radicalism to reformism Ahmadinejad’s rise to power reflected the crisis domestically and an inability to find a solution to it. Ahmadinejad portrayed himself as a simple man who had led a very humble life, in comparison to others such as Rafsanjani. Like Khomeini before the Revolution, he promised to provide easy access to credit and to build new houses for the poor.

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Ideologically, Ahmadinejad represented the traditional middle class and the poor in the rural and urban areas in Iran. He replaced subsidies with targeted social assistance and a cash transfer system, which were well received, especially by the poor, because the income generated from ending food subsidies was used to provide them with cash. The intention was to underscore the importance of making sensible economic decisions, and it was an astute move designed to maintain the support of the poor. Ahmadinejad had the backing of Khamenei and the IRGC because he was able to challenge the liberal Islamists such as Khatami. He later fell out of favour, however, because he was suspected of developing his independent power base beyond the control of Khamenei. Ahmadinejad increasingly used nationalistic rhetoric to appeal to his voters, distancing himself from traditional Islamists. After serving as President for two terms, Ahmadinejad’s promises to the poor began to seem untenable, as international sanctions started to significantly erode people’s standard of living and quality of life. In 2013, unemployment reached 4 million, with 39 per cent of the 14–29 age group being out of work (Mohammadi, 2013). Iran’s economy was facing ‘stagflation’, with a growth rate of minus 5 per cent and inflation running at 44 per cent (Erdbrink and Gladstone, 2013). While Ahmadinejad survived the political upheaval that followed the presidential election in 2009, millions of Iranians protested in major cities following allegations of widespread vote rigging in support of Ahmadinejad during the presidential election. By the time of the presidential election of 2013, once again the limits of the radicalism of Ahmadinejad were reached, owing to the economic difficulties at home and political crises in neighbouring countries, including Iraq, Syria and Yemen. There was growing resentment from ordinary people and even from Ahmadinejad’s most ardent supporters. The Islamic Republic had to re-adjust its approach to ameliorate economic hardship and restore political stability. Rouhani was an established figure within the security service when he ran for President in 2013. He loosely identified himself as an Islamist ‘reformist’, concerned with a broad range of ideas, including a rapprochement with the West. He avoided any criticism of the Supreme Leader or mass mobilization against radical Islamists. The growing pressure from outside Iran, and especially crippling sanctions, forced the regime to look for a new direction in its domestic and foreign policies. Apart from the growing resentment of a large part of the population, there were broader social fissures, as demonstrated by campaigns against individual freedom ranging from the mandatory wearing of the hijab, access to social media and freedom of speech. Inherent divisions within the establishment were increasingly visible,

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but Rouhani’s unwillingness to challenge the right-wing faction in the establishment frustrated his supporters. With Rouhani winning a second term in 2013, and the Revolution now reaching its fourth decade, the Islamic Republic faced a confluence of crises involving multiple political, economic and cultural issues. While some of these were caused by external pressures, including President Trump announcing US withdrawal from the ‘5+1’, there has also been continuing bickering within the establishment over the direction of the Revolution. During the Revolution, the radical Islamists provided an ideology of resistance and promised an alternative economic and political set-up. However, with time, much of the structure of society has remained the same as before, with class division at the heart of today’s Islamic Republic. For example, wealth distribution, economic hardship and environmental crisis impacting both the poor and the middle class have been some of the causes of protest movements under Rouhani’s presidency.

Conclusion Like other such events, the Iranian Revolution inspired and gave hope to ordinary people in Iran and around the world, to the effect that it is possible to uproot a dictator and seek a better society. The ideology of the Revolution was a complex combination of nationalism, political populism and religious radicalism. The movement had all the indications of following secular political ideas, but gradually the Islamist leaders were able to take control of it. They used religious ideology to rationalize and justify the internal power structure and legitimize capitalism rather than challenge it. The ideology was not an Islamic model as such, but a combination of secular and religious systems. The Revolution looked to both the past and present – that is, it included both traditional and modern interpretations of politics and society. This was no different from other popular revolutions worldwide, which also incorporated elements of the past. The differences here included that the state took a different shape, that of what was in some respects a theocracy, giving significant roles to religious figures to steer politics, economy and society. To achieve hegemony, the Islamists had to win a cultural battle for their authority in society and hope to provide economic necessities to their social support base. This effectively meant defending the interests of the dominant class, and secondarily a set of social forces that included the traditional middle class that now dominates the state and society.

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This had to be achieved by developing certain theoretical and practical accommodations to win over the wider population. During this process, the Islamists never fully isolated Iran from the world order, and they constantly negotiated and compromised with various domestic, regional and global powers. When necessary, the administration sought consensus, and on occasion used brutal force, even against earlier supporters including Mir-Hossein Mousavi (a former Prime Minister) and Mehdi Karroubi (a former Speaker of parliament), who have both been under house arrest since 2011 following an alleged ballot rigging attempt to ensure Ahmadinejad’s re-election as President. During the Revolution, the responses from both secular and Islamist leaders were mixed, but most of them agreed with the removal of the Shah from power. Khomeini presented a radical interpretation of revolutionary change that was no different from the paths of other ‘third word’ revolutionary leaders. He appeared to be a kind of ‘third world’ nationalist whose anti-imperialist politics were dressed in religious language. What followed after the imposition of an Islamic government was the gradual removal of the opposition to his power and the imposition of restrictions on women’s rights. The religious authorities that took power managed certain ideological shifts, without which it may have been impossible for them to build and maintain hegemony. Although the Revolution deviated from its promise for Iran to become the leading democratic country in the Middle East, the Islamic Republic was unable to tamper with its economic base. Instead, the new leaders had to use their religious legitimacy to embrace capitalism and the market. Given such constraints, as well as the varied and competing class interests of both the more conservative and more reformist political forces, Iran has been subject to the constant push and pull of geopolitical and global economic conditions, with different political figures fighting to maintain or build their power positions. The Islamic Republic has survived for over four decades, but this has not been so without huge challenges. It remains to be seen how the Islamic Republic will navigate itself out of the current crisis, sanctions and Coronavirus (COVID-19) putting the state under considerable pressure, or whether Iran will be witnessing another turn in its approach to global order.

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6

State and Political Forces in Post-Revolutionary Iran

Introduction Earlier chapters presented an analysis of the material forces underpinning the contemporary Iranian political economy. This chapter describe the nation’s ideological and political superstructure, and relate the uses made of religion and its development in response to economic, political and social developments historically. This chapter will trace the inception of the Islamic Republic and the evolution of the post-revolutionary Iranian state. In doing this, I will examine the underlying causes of the development of what may be called a ‘hybrid’ system, combining elements of democracy, totalitarianism and authoritarianism, which developed after the Revolution (Abrahamian, 2008). This system emerged at the end of the secular regime of Mohammad Reza Shah Pahlavi, replacing it with a theocratic regime, in a process in which a mass revolutionary movement played a crucial role. The confusion over the nature of this system has continued to puzzle academics and political analysts; indeed, it is the only model of theocratic government in the world today that resembles a traditional theocracy. While ‘totalitarian’ governments are said to claim absolute power in public life, authoritarian governments tend to allow a limited degree of pluralism, which can be compatible with elections. The founding leader of the Iranian Revolution, Khomeini, was explicit in suggesting that in his ideal state, power would reside with the ulama. In the absence of the Prophet and his cousin, Ali ibn Abi Talib (who ruled 656–661), whom Shi’ites consider to be the first Imam, the effective government of the fourth Caliphate, the ulama, should lead the community.

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In many respects, the nation’s development has been driven by both revolutionary ideals and the Islamic Republic’s pursuit of its survival through recourse to pragmatism in national, regional and international contexts. Following the political convulsions in 1979, there was growing pressure from different secular and Islamist forces demanding more democratization. The religious/secular hybrid character of the system was partly the product of revolutionary demands. Although this resulted in political difficulties for the Islamists, they were united in their goals and vision of the ideal society. The differences in opinion have included the question of whether or not to accept the role of a ‘Supreme Leader’, as I will discuss later. Indeed, the differences among the various factions forced the government to introduce a new institution, the Expediency Council, which was meant to resolve institutional conflicts between the main factions. As seen in the previous chapters, political factionalism has deep roots in Islamic history and has been a continuing feature of Muslim societies, starting with the dispute following the death of Mohammad over his succession. Although his father-in-law became leader, the Shi’a faction holds that the leadership belongs rightly to the descendants of the Prophet’s kin. They support the succession claim of Ali, and an early convert to Islam, who also had married Fatima, Mohammad’s daughter. This has continued as different strands of Islam have developed with different interpretations. Since the Iranian Revolution, political Islam has become a significant force in various countries, including Iraq, Yemen, Sudan, Malaysia and Turkey.1 The clergy, led by Khomeini, was able to achieve control of the state that no Sunni or Shi’a government had managed to accomplish before. The consolidation of the theocracy involved building popular support through a combination of consensus building and coercion. In adapting to new economic, political and social conditions, the Islamic Republic in the process gradually relaxed many of its earlier ideals. Reflecting the greater importance of non-religious concerns, many people in the Islamic leadership ended up in being in opposing camps despite ostensibly being in the same one. This transformation in outlook can be linked to a political ethic in which the ideological pretensions of the Iranian state to Islamist social values and laws had to be reconciled with the pragmatics of statecraft in an era of rapid globalization. Rouhani’s new narrative of Iranian identity  The term ‘political Islam’ has become a central point of reference for various political activities, movements and arguments. The term is associated with the Iranian Revolution and the ascription to the religion of a project of management of the state, instead of being concerned only with personal piety, beliefs and ritual practices.

1

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is outward looking and neoliberal, and involves a willingness to engage with the nation’s former enemies. Although the survival of the Republic’s nezam (establishment) remains a priority for nearly all Islamist political forces in Iran, including reformists, internal divisions and struggles for power continue to imperil the development of a strong Iranian voice in the global political arena. The state, while being led by Islamic leaders, has continued to maintain a class rule that reflects the position of global elite. This meant that the political superstructure had to be reshaped to fit the new system, as the Islamists would fill the power vacuum within the new political institutions.

Between republican and Islamic institutions Islam today remains the official ideology of the modern capitalist state that is Iran. Ironically, when Islam was founded, it was the dynamics of trade and financial regulations that first gave it a material as well as a theological and ideological basis. Islam is usually considered by outsiders to be deeply traditional, to project a return to a mythical past, to oppose ‘Western’ ideas of modernity and to seek to establish an Islamic community based on Sharia law. One of the fundamentals of Islam, which predates the nation-state, is the idea of the umma, the pan-national Islamic community that embraces all Muslims everywhere. Yet the Islamic Republic has since its inception acted more or less like any other nation in the global order, even though it claims legitimacy from God. The nation’s leadership in the post-revolutionary period has operated through both coercion and consensus, and in such a way that the state has been able to claim a mandate to govern from the subordinate classes. Islamists in Iran emphasized the concept of nationhood to direct attention away from class interests. Using populist language, Khomeini rallied sections of the poor and working classes to join gangs of Hezbollah, many of whom later joined the IRGC or Basij. Since the Revolution, they have mobilized to attack leftist groups, imposed Islamic ‘morality’ on women refusing to wear the hijab and joined the army to defeat separatist revolts. They oversaw the execution of hundreds of separatist minorities and defeated the peasants who had occupied land in certain regions, including Turkmen Sahra. After the peasants were ousted, some land was returned to former landlords while the rest was held under state control (Najmabadi, 1987). It took Khomeini and his allies nearly two years to impose their authority. The clergy faced challenges from secular nationalists, Marxists

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and the Islamist left. Bazargan expressed his concern over the increasing role and power of clergy managing the state. Significant for understanding the distribution of power within the Iranian system are the dynamics between an array of political institutions that bridge the divide between the religious and the secular. Nonetheless, it is important to avoid a too clear-cut demarcation between the notions of religious and democratic legitimacy. As noted above, the emergence of the revolutionary Iranian state resulted from the interaction of complex social, political, economic and religious forces, which can only be properly understood through a historical understanding of the Iranian state. Figure 6.1 illustrates the entrenchment of institutional relationships between religious authorities and political elites. The judiciary, which comprises jurists appointed by the parliament, can be thought of as existing in a feedback loop to both the religious clerics and parliamentarians. Throughout these interconnecting bodies, Iran’s written constitution became a hybrid of Velayat-e Faqih and the modern democratic ideals most associated historically with the French Revolution. The hybridization of the Islamic Republic’s political system is a product of the uneasy relationship between secularism and religious authority in the narrative of the Iranian state, as it sought both religious authorization and democratic sovereignty and legitimacy. Islamists acted to ensure that secularist impact and its role would be limited, by appointing Khomeini as Supreme Leader immediately after the Revolution, in accordance with the doctrine of Velayat-e Faqih. The Islamic Republic has thus included a combination of elements of democracy and oligarchy. The President, elected directly by the people, is head of the government but is not head of state. He chooses his ministers and signs legislation. The President and his ministers are responsible to the parliament. Parliament can call any of them in to answer questions and can remove ministers if it chooses. A pluralism of government institutions can render problematic the question of who rules as well as allowing different interpretations of the role of the governmental institutions. The governmental system of the Islamic Republic combines features of absolutism and democracy, and religious and more purely political legitimacy. The Valayat-e Faqih is at once the highest religious and the highest political one. This became a problem after Khomeini’s death, when a successor had to be chosen. His successor Khamenei lacked the expected religious credentials. In theory, the Assembly of Experts elects and removes the Supreme Leader, but in practice, the matter is far more complex (Ansari, 2005). Along with the lack of cohesion among the various state institutions, this has often been an obstacle to the functioning of the regime and has led to power struggles.

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Figure 6.1: Structure of power in Iran Democratic legitimacy

The Supreme Leader

Republican institutions

Parliament Head of Military

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The Expediency Council • 34 members appointed by the Supreme leader • Mediates between Parliament and the Guardian Council • Power to override any bills

Head of IRGC

Head of Judiciary

The Guardian Council • Vets President, Assembly of Experts and parliamentary nominees • 6 legal scholars appointed by the Supreme leader

Elected Approved Source: Based on Iran Chamber Society (2020) and Moslem (2002)

Approved

President Elected every 4 years

Approved Appointed by President

Cabinet

• 6 jurists proposed by judiciary every 6 years but approved by parliament Approved

Appointed

Elected every 4 years

Elected every 4 years

Assembly of Experts • Elected every 8 years • 88 clerics • Appoints, removes and monitors the performance of the Supreme leader • Meets twice a year

State and Political Forces in Post-Revolutionary Iran

Head of State Broadcasting

Religious legitimacy

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The fusion of democratic and religious elements and the differing roles of Valayat and Islamicity have made the political system complex and contradictory. New governmental bodies have also been added. These include the Assembly of Experts (Majles-e Khobregan or Majles-e Khebregan-e Rahbari),2 formed in 1979 with the mandate to supervise Khomeini’s rule. Also founded at the Republic’s beginning, the Guardian Council (Shora-ye Negahban) approves or rejects candidates for the parliament and presidency, and also monitors legislation. In 1988, the Expediency Council (Majma Tashkise Maslahate Nezam) was established to mediate disputes between the Guardian Council and parliament (see www.maslehat.ir). All of this has contributed to factionalism. There were also the Revolutionary Guards, the IRGC, which remained in the control of the clergy; their role was strengthened in 1988 when Khamenei became Supreme Leader (Boroujerdi and Rahimkhani, 2018). Khamenei favoured this group because he wanted to widen his social base and curtail the dominance of the reformists, especially Rafsanjani. At first, the theocratic leaders in Iran defined an Islamic society as one governed by Islamic values and law, as applied in both the public and private spheres. This included matters of personal choice such as dress (regulated by a dress code), and the kinds of music and films people could listen to or watch. However, it became difficult to identify what these would be. The combination of formal and informal factional alliances with formal institutions of power has sometimes resulted in the development of a dangerous balance within the government, as different factions have sought to impose their agenda as official state policy. Ideological differences then emerged between the so-called conservatives and reformists (or ‘liberals’). These variations reflected their different relationships to social and economic forces and different forms of association with the state.

Descent into factionalism As discussed in previous chapters, Islam has some uniform characteristics, but as a political and social movement it is diverse, varying among countries in both its social context and political significance. In Iran, as in Pakistan and Saudi Arabia, Islamism is an ideology of state hegemony. In other countries including Egypt and Syria it has been articulated

  This is made up of 88 members and is in charge of choosing and supervising the activities of the Supreme Leader (see www.khobregan.ir/FA/Default.html). 2

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by opposition groups. Similarly, people can derive wholly different interpretations from the same texts – in terms of leaders, ranging from the conservative quietism of Burujerdi and Shariatmadari to the activism of Khomeini. In political terms, there are as many ‘Islams’ as there are movements claiming to be Islamic (Harman, 2010). In the immediate aftermath of the Revolution, there were two broad political groupings, each with distinct approaches to the idea of the Islamic Republic and the appropriate direction for the economy. One side called for a normalization of development along capitalist lines, with a free market and collaboration with the West. The other sought greater state involvement in the economy, with trade control and ISI. This later group, led by Khomeini, dominated the political sphere; they were astute enough to succeed in the face of competition from secular Marxist organizations and radical Islamists such as the PMOI. Different Islamist groups promoted different economic, political and social policies. In the early days of the Revolution there was the Islamist right, comprised mainly of conservative clergy and bazaari traders, the radical wing, represented by Mir-Hossein Mousavi, which had its social base among the poor, and the more pragmatic right led by Rafsanjani, which represented major business interests. These all vied to exert influence. Over time, opinion coalesced into two broad and opposing factions. Despite the ebbs and flows of their political fortunes, these broad groups have continued to determine Iran’s politics, with some representatives altering their positions over time. One example of this is Mousavi, who, having changed sides, stood as a pragmatic reformist candidate in the 2009 presidential election, as discussed below. Following the death of Khomeini in 1988, Khamenei was appointed as Supreme Leader, supported by Rafsanjani and the 25 members of the Constitutional Reform Council. Khamenei was not a Grand Ayatollah or even a Mojtahed, so the Council passed constitutional amendments to allowing him to succeed. They also abolished the position of Prime Minister, instead giving the President a bigger role. Khomeini, while alive, had tried to resolve contradictory demands coming from factions within the religious establishment, elaborating on an undifferentiated notion of an Islamic populace, using the term ommat (community) instead of ‘nation’. In addition to religious forces, he included the bazaari and mostazafan. Once his movement became institutionalized after the Revolution, it became divided into various factions, reflecting different class interests. The post-revolutionary government continued to rely on the state capitalist approach furthering the industrialization of the economy, combining an ISI strategy similar to that used by the Shah, in the name

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of what Khomeini called khod kafa’i (self-sufficiency). This did not bring much success, due to the war against Iraq and the declining price of oil in 1986. The lack of success of this state capitalism opened a space for the Islamist right, supported by bazaari who favoured free market politics.

Conservative alliances Iran’s conservatives are a broad coalition encompassing some major differences. They share the belief that the religious leadership based on Velayet-e Faqih should govern the state, including the application of (Qur’anic) Sharia law. The idea is that the laws of the state would include some things that are enjoined or forbidden under religious law. The conservative groups include Jame-e Ruhaniyete Mobarez (Community of Struggling Mullahs), Jemiyete Motelefe-e Eslami (United Islamic Community) and Peyrevan-e Khatte Emam ve Rehberi (Followers of the Line of the Imam and Religious Leader). Over time, a younger generation of radical conservatives emerged, represented by Ahmadinejad and an association known as Abadgaran (Developer).3 Hardened by battle during the long war against Iraq, this group and its supporters are suspicious of any further détente with the West. They have criticized the traditional conservative clergy, particularly for the loosening of cultural restrictions and the widespread corruption that took place under their watch. This group has a broad social base, but in general represent the landowners, religious seminaries, bazaar merchants, small and medium-sized industrialists and the traditional middle class, particularly in the rural areas. Khamenei has remained closely aligned ideologically with the conservatives. Using the patronage system, as Supreme Leader he has vetted members of the Expediency Council and consistently supported those who are important to his power base, which includes the IRGC and Basij. Income from oil has been used to provide significant spending power for the IRGC and right-wing groups such as Bonyad Mostazafan va Janbazan, which are given tax exemptions and government subsidies. They receive special access to credit and foreign exchange and are protected from private sector competition. No numbers can be provided because these foundations are not required to publish accounts and they report only to Khamenei, who personally appoints their heads. These   A coalition formed in 2003 and consisting of a number of individuals and groups representing conservative ideas and supported by the IRGC. 3

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foundations are linked to those bazaari merchants who make their money in the import–export trade, through the Islamic Coalition Council led by Habibollah Asgar-Oladi.4 Despite this apparent alignment, there remain variations in their respective approach to both the economy and society. The right-wing conservatives advocate an open economy with a strong private sector, supporting the traditional middle class and bazaari. The left wing of the conservatives, represented by Hezbollah, insist on greater state involvement in the economy and society. They also denounce conspicuous consumption, associating it with ‘decadent’ Western values. In the foreign policy arena, they advocate an anti-US stance and closer collaboration with North Korea, China, India, Russia, Syria, Hamas in Palestine and Hezbollah in Lebanon. They have been actively driving segregation of the sexes within the education sector, including in universities, the mandatory wearing of the hijab (veil) and the use of state power to enforce adherence to traditional values. Economic and political pressure from both domestic and international sources has created cracks in both alliances, as some conservatives have softened their political position. In particular, some have moved to abandon two of the key principles of Iran’s foreign policy after the Revolution, the ‘export of the revolution’5 and ‘neither the West nor the East’. This change is also manifest in support for reversing Iran’s nuclear strategy.

Moderators and moderations The ‘pragmatists’ and ‘reformists’ together also form a broad alliance of individuals and groups headed by Rafsanjani, a key ally of Khomeini, and the Islamic Republic’s chief architect. The reformists were initially a coalition of 18 groups,6 which included intellectual strategists such as Abdolkarim Soroush, Hajjarian, and most

  A key ally of Khamenei, a senior member of Iran’s Expediency Council and one of the wealthiest Iranians in the inner circle of the establishment. 5   For 10 years after the Revolution, the Islamic Republic attempted to export the Iranian Revolution beyond its boundaries. Since the end of the war with Iraq in 1988 this has changed fundamentally. See Morady, 1994. 6   Sometimes referred to as Dovom Khordad. In Persian this means 23rd May, which is the day the reformist movement (made up of a coalition of 18 groups and political parties) united to support Khatami’s programme of democracy. 4

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importantly, Ayatollah Hossein-Ali Montazeri,7 the man regarded as Khomeini’s heir apparent before criticism of him over human rights abuses in 1989 (Keddie, 2006). Unlike the conservatives, the pragmatists and reformists moved away from theological orthodoxy in recognizing the importance of the economy for the new state’s survival. Their social base consists of big business, religious technocrats, the modern middle class and Islamist liberals. The pragmatists and reformists have advocated the free market, privatization, improved relations with the West, Russia, China and India, and an end to anti-imperialist rhetoric. After successful negotiations with the West over Iran’s nuclear programme, this group promoting the removal of restrictions on foreign investment to encourage the inflow of foreign capital. Hoping to align Iran more closely with international capitalism, to reduce the country’s reliance on state subsidies, to promote free trade and to stimulate the stock exchange. Rafsanjani’s position was also a reflection of the acute economic crisis that the Islamic Republic was facing after the war. He represented a new social group of technocrats and nouveaux riches. They were determined to push for pro-market policies instead of relying on the bazaar economy and improved relations with neighbours in the region. Rafsanjani used as keywords towse’eh (development) and islahat (reforms) instead of khod kafa’i, while redirecting the Islamic Republic towards free market capitalism. The shift in policy included, as elements of economic ‘restructuring’, foreign trade liberalization, removing price controls, eliminating subsidies, privatization and deregulation. Rafsanjani encouraged the new generation of industrial capitalists to engage in profit-making enterprises. He also engaged in some amount of nepotism – his own children were given a special position in top industries in the country, thereby making their fortunes. His sons were appointed to key positions in the oil industry, and one as head of the Tehran Metro construction project. One of his brothers became head of the country’s largest copper mine while the other controlled the stateowned TV network. The bazaari also benefited from Rafsanjani’s market reform programme. Asgar-Oladi expanded his control of the export of pistachios, cumin, dried fruit and caviar, and the import of sugar and home appliances (Klebnikov, 2003).

  Montazeri was the most prominent Shi’a scholar and one of the most important architects of the Revolution. His disagreement with Khomeini over human rights issues led to him being sidelined in 1989 (for further information, see his personal website, www.amontazeri.com/farsi/default.asp). 7

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Despite the relative openness in the economy and society, the state remained firmly in control of the major industries, especially in the energy sector. The emergence of a new business class was a challenge to large institutions such as the Bonyads, which were mainly controlled by conservative clergy. Khatami appealed to the Constitution in insisting on economic and political openness, without which he feared that the Islamic Republic might not be able to survive. He called for more representative government, individual freedoms and civil rights. When Khatami was first elected President in 1997, it seemed that a shift in the balance of forces was taking place. He won with overwhelming support receiving an overwhelming mandate from the nation’s youth. It appeared that Iran was moving away from conservative interpretations of Islam toward a more liberal and republican approach. One of the key thinkers in the reformist faction is Soroush, who has become critical of the principle of Velayat-e Faqih. Immediately after the Revolution, Soroush played an important role in the Council of the Cultural Revolution, a body that formulated the ideology of the Islamic Republic in the early days. His ideas appealed to modern Islamist intellectuals who hoped to carry out reforms not just within the government but that were also meant to improve the environment for liberal interpretations of Islam, and that would appeal to secular students, women and journalists. Soroush, like Shariati before the Revolution, sought to shift the way religion was understood as well as how it was applied socially and politically. Soroush pointed to the broad contours of an Islamic democracy that was different from that favoured by conservative Islamists (Kamrava, 2008). During his presidency, Khatami called for a ‘dialogue of civilizations’ instead of a ‘clash of civilizations’ postulated by Huntington (1993). Khatami called for the swift adoption of modern notions of freedom, by making new ‘interpretations of the religion through which it would not contradict freedom’ (1998). Soroush believed that it was possible to reconcile religious doctrine with modern ideas of freedom, liberty and rationality: Religious morality would be the guarantor of a democracy, where the rights of the faithful to adopt religion would not vitiate the democratic, earthly, and rational nature of the religious government. (Soroush, 2000: 154) Khatami’s reforms of the Islamic Republic were a desperate attempt to respond to both pressure from below and growing dissension within the ruling elites to safeguard the regime. He had no intention of transforming

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the theocracy into a different form of government but sought to manage it from within. In the early 1990s, one of Khatami’s most ardent intellectual supporters, Hajjarian, called for ‘political development’ (towse’e-ye siyasi). He considered this as a vital precondition for economic growth (Bayat, 2007). Soroush went so far as to call for the Office of the Supreme Leader to be an elected position (Arjomand, 2009). This constituted a major threat to conservative power, and especially to Khamenei’s role as Supreme Leader. In response, the conservatives handicapped Khatami and his reformist supporters, by limiting his power through state institutions such as the judiciary, which was headed by Mohammad Yazdi, a prominent right-wing conservative and ally of Khamenei. Despite the continuing conservative attacks and Khatami’s political shortcomings, the Iranian public continued to support him. As a young Iranian expressed this desire during the 2001 election: ‘I think everybody in the world wants everything that we want … it’s not different from other countries. Freedom’s freedom; everybody knows what that is’ (quoted in Muir, 2001). Conservative clergy anxious about the threat posed by the reform movement tried appealing to the judiciary, the armed forces, the Guardian Council and the Supreme Leader. They even resorted to violence, assassinating some of the reformist intellectuals and political dissidents. They closed down the prominent reformist newspaper Salaam. In July 1999, students reacted by staging a protest, and the Basiji used violent force to suppress them. This was a turning point in the reform movement, and it tarnished Khatami as a defender of democracy and freedom. He not only refused to support the students but also accused them of being ‘provocative, and a threat to the national security’ (Amuzegar, 1999). Khatami continued to enjoy the support of much of the population, especially the youth. He won a second term in the presidential election, but with a smaller majority. As he had very little institutional support, and given his unwillingness to take on the conservative clergy, many youth, intellectuals and activists became disillusioned with the reform movement. Its eventual loss of support for the reform movement came as no surprise, particularly among the poor, who watched as wealthy Iranians continued to benefit. The wealth inequalities and the administration’s inability to deliver political freedom were exacerbated by broader international events sparked by the September 11 terrorist attacks in 2001. The reformists, in particular Khatami, had no intention of replacing the Islamic Republic with anything else, but only hoped that they could reform it. They were also faced with the threat of losing control if the movement from below was eventually to turn into a force challenging the whole system. Hence, they turned into a safety valve for the Islamic Republic, enabling it to

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prolong its survival. There is no doubt that the fear of political instability may also have hurt the interests of the class that gained tremendously from Rafsanjani’s and Khatami’s reform programmes in the years after the end of the war with Iraq. Eventually, the reformist bloc was challenged by an alliance of the conservative front under the new name, Usulgarayan (‘principalists’), that claimed that they were defending the principles of the Revolution (Posch, 2009).

Contest for power The intensification of factional fights within the regime, Khatami’s failure to bring effective reforms and the US threat inspired the conservatives to promote Ahmadinejad. In the 2005 election campaign, Ahmadinejad returned to the populist rhetoric of 1979 and its revolutionary slogans, attacking the rich ‘oil mafia’. Like Khomeini, he presented himself as a simple ‘man of the people’. As the July 2005 election approached, a large section of the population felt let down by the failure of Khatami to deliver on his promised economic and political reforms. It was a time of high unemployment, inflation and limited political freedom. Newspapers were being closed down, and journalists and student leaders imprisoned. While many Western and Iranian observers predicted that ex-president Rafsanjani would emerge victorious, much of the populace blamed him for their economic difficulties and the persistent political and social injustices in the country. Along with huge voter abstention, this allowed Ahmadinejad to defeat Rafsanjani in the second round of the elections, with 62  per cent of the votes. Although a surprising result, this showed growing resentment among the poor of wealthy Iranians who had benefited from Rafsanjani’s and Khatami’s neoliberal policies. This was clearly expressed by a university graduate living in a rural area, explaining his reasons for voting for him: ‘Ahmadinejad has been able to stand firm against Hashemi Rafsanjani; this is the key reason why I voted for him. He is fearless in criticizing him!’8 Although he did not become directly involved in the election campaign, Khamenei favoured Ahmadinejad, who also gained the support of segments of the lower classes that were organized through right-wing Islamic organizations such as Ansar-e Hezbollah. Consequently, the   Anonymous source, quoted in a private interview in Iran, July 2009.

8

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conservative faction around Khamenei (including the bazaari), chose to promote Ahmadinejad as someone who could protect their interests. Ahmadinejad’s victory in 2005 sowed the seeds for change on many fronts, prompting a radical move towards sloganeering and confrontational rhetoric in national and foreign politics, reminiscent of the early days of the Revolution. Initially, Khamenei repeatedly gave his implicit support to Ahmadinejad by avoiding any public attack on him. There were certainly differences between them, as demonstrated by Khamenei ordering Ahmadinejad’s First Deputy Minister, Jamshid Mashaie, to resign from his cabinet just days after his appointment. However, they shared a strong connection with the same broad group of supporters with whom they were popular, and this contributed to maintaining their alliance. The temporary alliance between Ahmadinejad, Khamenei and the IRGC represented a move away from the republican, secular and democratic elements within Iranian politics. Their power rested on the two pillars of the security forces and the oil industry, which comprised the main support base for the regime. The IRGC became increasingly visible and influential in the political process, owing to the deliberate policy of both Ahmadinejad and Khamenei. At the same time, questions remained as to how long this alliance could last. In order to strengthen his power base, Ahmadinejad offered members of IRGC and Basij positions within the government. Of the 21 ministerial positions in his first cabinet, nine were assigned to former members of the IRGC and the Basij. More than half of the 30 provincial governors he appointed came from these organizations. The economic power of the IRGC grew rapidly, especially in the area of manufacturing and real estate.

The ‘deviation current’ Ahmadinejad was victorious again in 2009, but not without political cost. Many Iranians were imprisoned or lost their lives in the protests that followed – the largest the Islamic Republic had yet witnessed in its history. The Green Movement (Jonbesh-e Sabz) was a coalition of forces led by Karroubi and Mousavi during and after the 2009 presidential elections. It consisted of interest groups from different social backgrounds, including both the modern middle class and a section of the working class, and with various ideals and aspirations. The core leadership included reformists, clergy and academics, who claimed to be championing a non-violent civil rights movement and repeatedly emphasizing that theirs was not a revolutionary movement. They remained committed to the Islamic

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Republic with its Constitution, and broadly accepted the framework of capitalism (Morady, 2011a). Before the announcement of the outcome of the election in 2009, Khamenei moved swiftly to declare Ahmadinejad the winner, an action that decisively enabled Ahmadinejad to set the agenda. In the heat of the ensuing political struggles, Khamenei also imposed his political authority rather than waiting on the legitimate democratic process. This was a clear indication that power in the Islamic Republic was very much vested in him. Khamenei, Ahmadinejad and the IRGC maintained unity in the public eye until after the election. A political crisis was sparked when, immediately after the election, Ahmadinejad appointed his protégé, a former intelligence officer in the Revolutionary Guards, Esfandiar Rahim Mashaei, as his First VicePresident. Mashaei’s strong nationalist sentiments were reflected in the populist language he used when declaring that ‘Iran is first and then Islam’ (Tabnak, 2009). This was important in widening the party’s appeal and winning over other social forces such as the urban middle class, even at the risk of angering the conservatives in their own camp. Ahmadinejad and his supporters were accused of forming a ‘deviant current’ (jaryan-e enherafi). However, this did not stop them from continuing to present their vision of Islam, a move away from the Supreme Leader. Having obtained a mandate from the electorate, Ahmadinejad began to weaken Khamenei’s power base by intervening in an area that constitutionally was closed to him. He sacked the Khamenei-appointed Foreign Minister Manouchehr Mottaki and replaced him with Ali Akbar Salehi. Ahmad Janati, the head of the Guardian Council, accused Ahmadinejad of ‘deviating and acting against the country and the Supreme Leader’ (Kamali Dehghan and Borger, 19 May 2011). The conflict between Ahmadinejad and Khamenei intensified under increasing pressure from Western economic sanctions.9 The Ahmadinejad government’s policy of cutting subsidies and replacing them with targeted social assistance hit the country’s poorest people worst, as prices soared for basic goods, including bread, meat, sugar and eggs.10 The purpose of cutting subsidies and replacing them with targeted social assistance was to ensure that the poorest would be able to cope with the   Since the 1979 Iranian Revolution, the US and its allies have imposed sanctions on Iran for various political reasons, beginning with the hostage crisis of 1980. In 2006, a UN resolution imposed sanctions after Iran refused to suspend its programme of uranium enrichment for nuclear energy. 10   The subsidy system in Iran started before the Revolution, when major food products and energy were subsidized. Figures vary for how much this cost the country, but it is believed to be about US$100 billion per annum. See Taghavi (2010). 9

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inevitable price hikes in basic goods. The additional revenue gained from ending subsidies was meant to be used to expand Ahmadinejad’s social base, by moving away from hand-outs given to every family regardless of income. This seemed to be an astute move designed to maintain the support of the poor. However, the outcome was quite different, because a combination of economic mismanagement and Western-imposed sanctions started eroding people’s standard of living. The election fall-out demonstrated the instability of the state and the deep crisis within the Iranian ruling elites. Given the fragility of the bloc that had united to defeat the reformists, the struggle for power began to take a new shape. By the time of the 2013 presidential election, Iran’s economy was in stagflation, combining zero growth with high inflation. In addition, Iraq and Syria, the nation’s two most important allies, were both engaged in civil wars, putting the country in a vulnerable condition.

Neoliberalism The 2013 presidential election once again unleashed different social forces battling for victory at the ballot box. The fact that the Guardian Council tolerated Rouhani demonstrated that they preferred not to employ repression at the time, especially as the country continued to suffer from the effects of the 2009 uprising. In addition, it became clear that stability was far more vital at a time when Iran was going through a difficult time because of the imposed sanctions. Hassan Rouhani, a so-called moderate, won the first round with 50.7 per cent of the vote. His closest challenger, the moderate conservative candidate, Mohammad Bagher Qalibaf, a former Revolutionary Guard Commander and the Mayor of Tehran, received only 16.6  per cent. Saeed Jalili, the nuclear negotiator under Ahmadinejad and a hardline conservative, won only 13.3 per cent. These results showed beyond doubt that the majority of Iranians wanted a different approach to politics. Rouhani’s presidency has injected new hope domestically as well as regionally and globally. It has also meant a shift in tone in engaging with the world community. He promised that under his presidency he would ‘open all the locks which have been fastened upon people’s lives during the past eight years.’ He added: ‘You, dear students and heroic youth, are the ones who have come to restore the national economy and improve the people’s living standards. We will bring back our country to the dignity of the past’ (quoted in Singh Roy, 2013: 11). Using the key as a symbol of the clergy, Rouhani, who was educated in Scotland and was now a powerful politician, claimed that he had the

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key to all of the problems that Iran was facing, including the need for dialogue with the West. While presenting himself as a reformer, he was essentially centrist. Although Iran has been in a considerable economic crisis because of the sanctions, he has not criticized the Supreme Leader or encouraged a mass mobilization like that of 2009, and nor has he strongly criticized the levels of corruption. Like the reformist Presidents Khatami and Rafsanjani before him, he has continued to liberalize Iran’s economy through privatization, deregulation and limited public spending. He hoped that opening up Iran’s state-owned industries to foreign capital would make them more efficient. The state under Rouhani, by trying to implement a laissez-faire economic programme, effectively amounts to a return to Rafsanjani’s time. His team of advisers included American- or Western-educated neoliberal economists. Under the name of ‘The Institute of Planning and Management Education and Research’, they serve as a free market think tank. Rouhani did not shy away from implementing an IMFapproved Structural Adjustment Program (SAP), welcoming the advice and expertise that they could receive from the IMF in return. Focusing on international and domestic private investment, Rouhani hoped that neoliberal programmes minimizing state involvement would improve infrastructure development and job creation. Rouhani’s approach to his more traditionally conservative radical opposition has been to maintain a balance of power between different competing factions, including the reformists. During the nuclear negotiations with the major powers, factional tensions remained relatively low. However, since 2015 the hardliners, especially the IRGC, worrying about their economic interests, have been aggressively criticizing Rouhani’s liberal reforms. Like Khatami, Rouhani found it difficult to deliver on his policy promises, reduce corruption and improve Iran’s relations with the West. His inability to influence major state institutions had been his government’s Achilles’ heel. What made it difficult to improve Iran’s crisisdriven economy has mainly been the rivalry between different factions. Before Rouhani became president, he was aware of the threats that the Islamic Republic is facing both at home and abroad. Despite his repeated rhetoric of reforming the political civil society, he was conscious that this may threaten the whole foundation of the theocracy. He has dedicated his political career to defending a religious-political system that meshes with the global capitalist agenda. He has always made a concerted effort to demonstrate his willingness to work with the international community, including the US, to ensure them that the Islamic Republic is flexible enough to work within this system. He has presented himself as the ultimate arbiter for bringing about such a transition.

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Different Islamists within the theocratic leadership have formulated new interpretations of politics, economy and social values, at times moving away from their original ideals. None have managed to deal with systematic corruption, the biggest threats facing the Islamic Republic. Khamenei has compared this to a seven-headed dragon, where cutting off one head still leaves a remaining six. On the eve of the 1979 Revolution, Khomeini depicted Iranian society as divided into rich and poor as two antagonistic classes. The majority of Iranians still struggle to meet their basic needs, and more than half of the population live below the poverty line.

Conclusion The establishment of the Islamic Republic in 1979 has seen both continuity and change. The theocratic state has continued to exercise physical power over Iranian people, and has been vital both in society and in directing the economy. With a huge and complex bureaucracy, the state has been very much involved in national economic planning and providing services with a strong military and security force to manage its borders. The state, based on both religious and secular principles, with a written constitution and regular elections, provided voters with limited political choices. Its parliamentary and presidential elections are similar to some Western countries, albeit controlled by the state, to ensure the ruling power is protected and maintained. The state, ultimately, has defended the interests of a particular class. In order to do this, leaders of the Islamic Republic have presented various interpretations of religion to ensure consistency with the capitalist path of development. In doing this, they have shaped the state to fit with the demands of politics, the market and the nation’s role within the region and in the world. Despite different interpretations, the Islamic Republic’s leaders have been consistent in their approach in aiming to ensure that the theocracy must survive at any cost. While their electoral approaches have distinguished radicals from reformists, it is clear that both wish to protect the regime. Indeed, Hajjarian, considered the reformist’s strategic mastermind, has admitted that if there had been free and fair elections, neither the reformists nor the conservatives would have had much chance of survival (see www.kargozaran.net). The Islamic Republic has recast the existing state, and its relationships to the economy and society, to maintain its position of power through a fusion of past and present. This has not meant a break from the global order, but accepting and confirming it.

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7

The Dynamics of US–Iran Relations: Background, Evolution and Consequences

Introduction Iran’s relations with the US have gone through ups and downs since 1945, and with the Revolution it went from being a friend and ally to an enemy. Indeed, it was not just the Iranian Revolution that reshaped the geopolitics of the region; the Soviet invasion of Afghanistan, which took place the same year, also radically altered the strategic equation. The economic transition of Iran since the end of the Second World War has been remarkable, as it has moved from being on the margin of the global political economy to being an influential state in the world system (Halliday, 1979). A key to this transition has been the role of energy, involving both local and global actors, including states and international companies. Iran holds a strategic location, with the world’s fourth- and secondlargest reserves, respectively, of oil (after Venezuela, Saudi Arabia and Canada) and gas (after Russia), a population of over 85 million (three times larger than both Iraq and Saudi Arabia), a developed infrastructure and a relatively strong state and military force. As energy became a vital resource for global capitalism, the Persian Gulf states, including Iran, were able, with their enormous income from oil, to embark on huge development projects. This involved these states becoming fully incorporated into global capitalism, with its single market. However, political power continues to be largely in the hands of archaic elites (Halliday, 2001). With the transformation of the region, endogenous

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elites have begun playing a greater political role, both domestically and within the region. With the Persian Gulf becoming vital to the world economy, the region has been the site of a contest between competing powers, with the US dominating since 1945. The Iranian Revolution disturbed the balance that had existed before, with the US losing its most important ally in the region. In the early part of the 20th century Britain and France dominated the Middle East, while later, and especially since the end of the Cold War, the US has been the undisputed superpower. In this role, it has relied on allies in the region, such as Israel, Saudi Arabia, Turkey, and until 1979, Iran. The growing importance of energy, and especially income from it, has encouraged some of the states in the region to seek to extend their influence beyond their borders (Hanieh, 2011). This has effectively made them sub-imperialist powers collaborating closely with imperialist ones.1 Their regional power has depended on their collaboration with the US in particular. However, this has not meant a complete subservience to imperialist forces as Iran has played one superpower against another since 1979. Since the Revolution, the Islamic Republic’s leaders, under considerable pressure from popular movements, portrayed the nation as allied to neither the East nor the West, claiming it instead as the leader of the Muslim world. In the early years after the Revolution, this represented a challenge and even a threat to the Soviet Union, the US and other Muslim countries, including Saudi Arabia, Turkey and Egypt. In time, the Islamic Republic, under economic and political pressure, began to act more pragmatically. This included agreeing to a cease-fire with Iraq to end the war in 1988 and accepting the proposal of the five Permanent Members of the UN Security Council (China, France, Russia, the US and UK) to halt its nuclear programme. The US’s approach towards Iran since the Revolution has been predominantly antagonistic, imposing comprehensive sanctions. This approach was softened during former President Obama’s administration, partly based on factors such as the US’s attempt to maintain global dominance in the face of challenges from emerging powers, notably

 Sub-imperialism emerges as a result of capitalist development in the centres and peripheries. With the transformation of capitalism over time, new centres of accumulation emerge, with different states aspiring to have political and military influence in vital geopolitical location in the world (Rowthorn, 1971). 1

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China. The failure of the US to achieve outright victory in Afghanistan and Iraq – resulting in the emergence of ISIS (Islamic State of Iraq and Syria) – along with wider difficulties in the Middle East, such as in Syria, have also contributed to this shift. Hopes of better relations were dashed when Trump became President of the US and withdrew from the Joint Comprehensive Plan of Action (JCPOA), the nuclear accord with Iran.2 He called for a return to comprehensive sanctions in an effort to pressure Iran to reduce its influence in the region. The US and its allies were worried about Iran’s ambitions and influence in Lebanon, Syria, Yemen, Gaza, and the possibility of it developing ballistic missiles capable of reaching as far as Israel. Growing geopolitical competition between the US, Russia, China, and regional powers such as Iran, Saudi Arabia and Turkey, was also part of the context for these anxieties. In the Middle East as elsewhere, the drive to internationalize capitalism has encouraged new investment, and brought new markets and resources, producing further economic integration with the capitalist world system. The area has also been a site of military competition, first among the great powers and later also among regional powers (Callinicos, 2003). Various countries in the region have shown a desire to extend their influence, at least locally, including the UAE with only 9.5 million people and Qatar with 2.7 million. Some have followed Washington’s line, while others have focused more on the pursuit and defence of their own interests. Inevitably, some tensions and conflicts have resulted. The Islamic Republic’s leaders have shown ideological flexibility and wielded interpretations of events that have enabled them to survive different crises. Rather than pursuing any ambitions of a substantial break from the global order, they have adapted their approach to foreign policy. This chapter and the following will assess the Islamic Republic’s foreign and regional policies, focusing mainly on its relations with the US, which have had a huge influence on Iran’s foreign policy since the Second World War. This has also coincided with Iran becoming a vital energy producer internationally. Thus, the Islamic Republic’s foreign policy is considered in the context of capitalist development and the nation’s relationship with other regional and global powers.

  The joint plan between the great powers (the US, Russia, China, the UK and France) and Iran (‘the 5+1’) hoped to provide an opportunity for the Islamic Republic by ending its nuclear enrichment.

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Geopolitical tumult: compliance and defiance Powerful Western states, including Portugal, Britain, Russia, France, and after the Second World War, the US, have competed, and gone to war, to try to impose their hegemony in the Middle East. The geopolitics of the region have changed dramatically since the discovery of oil in Iran in 1908, as a result of its significance in the world economy since the First World War. During this period Iran came under the hegemony of, first Russia, then Britain, and finally the US. The oil price hike in the 1970s shifted the whole equation in the Persian Gulf region. Due to their oil income, Iran and Saudi Arabia emerged as competitors for regional hegemony. This competition, within the wider context of various regional security challenges, has turned the area into an attractive market flooded with various products, including the latest military weaponry. Iran’s relationships with global and regional powers have gone through several phases. When Britain lost its global hegemony after the Second World War, the US and the Soviet Union became the world’s only superpowers. Iran, Israel and Saudi Arabia played a vital role in protecting US economic and political interests by keeping the US’s competitors, first the Soviet Union and later Russia and China, from enjoying much influence in the region. Under the Pahlavi dynasty, Iran grew to become a powerful defender of its own interests and those of its Western allies, particularly the US, in the Middle East. Post-revolutionary Iran emerged as a player on the world stage that is fiercely resilient and independent, even defiant, with religion apparently playing a role in its political behaviour. The history of Western intervention in Iran during the 20th century helps in explaining the political behaviour of post-revolutionary Iran. The country’s history has been marked by repeated interventions by Britain, the Soviet Union and the US. Britain and the US also organized the coup against Mosaddegh’s elected government in 1953, and their backing of the Shah thereafter. This created a suspicion of the West that was such that whatever faction had prevailed in 1979 would unquestionably have come under pressure from below to change the nation’s approach to foreign policy. The ending of the Cold War in 1991 also challenged US global hegemony in the region, in part because of the increasing influence in the region of Russia and China, the former having regained some of the influence that the Soviet Union had earlier lost in Central Asia, Eastern Europe and now Syria. Increasing pressure from sanctions and the threat of an invasion by the US drove the Islamic Republic to work closely with Russia, China and

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the EU to counter this threat. Along with various interventions, this has played an important role in Iran’s foreign policy, as well as facilitating its influence and ambitions in the Persian Gulf and, after the Cold War, Central Asia. The struggle against foreign intervention has been a major motivator for nationalists, Islamists and leftist revolutionaries alike. Indeed, among the pillars of the Iranian Revolution ideologically were anti-imperialism and the struggle for independence (esteghlal) from foreign shackles. For the US, the loss of Iran as a result of the Revolution was a strategic defeat. In this context, Washington’s support of Iraq by providing intelligence and financial aid during the Iran–Iraq War was no surprise. As with the US’s close ally, the religiously conservative and autocratic Saudi Arabia, strategic interests have proven more important than ideology. With the establishment of the Islamic Republic, state and religion became theoretically inseparable, and this affected how the nation’s power was projected. At times themes of Islam, nationalism and anti-imperialism were all intertwined, and this was reflected in Iran’s foreign policy. A good example of this is Iran’s support for anti-imperialist struggles around the world regardless of their ideology: in the Muslim world both Sunni and Shi’a; secular socialists in Iraq and Syria; Armenia in its dispute with Azerbaijan; Palestine against Israel; and Cuba, Venezuela and Bolivia (Morady, 2012; Morady and Luján, 2012). This is partly a reflection of the lasting influence of the political movement that was born in the Revolution. Support for these political struggles elsewhere has been undertaken for a combination of reasons, including Iran’s wish to counter the influence of the US and its allies such as Israel, Iraq (until Saddam Hussein was overthrown) and Saudi Arabia, while asserting the nation’s role as a regional power. With religion becoming part of the state, Iran became a threat to the influence of Saudi Arabia, which also claims to represent Muslims around the world. Having ready access to oil income helped the Islamic Republic finance and build alliances with various forces in the region opposing the influence of the US and/or Israel, including in Lebanon, Syria, and more recently, Iraq. The end of the Cold War and the subsequent emergence of other energy-producing countries in the Caspian Sea basin provided a new opportunity for Iran. It hoped to extend its influence in what became known as the wider Indian Ocean Region (IOR), by providing a corridor between it and Central Asia. Iran is a bridge between emerging countries such as India and the Central Asian region with its rich resources. The US, Russia and China have also shown their interest in this. In 2009, the US Secretary of Energy, Bill Richardson, said, ‘we have to make sure

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that we turn this region westwards’. The neoconservative US intellectual Robert Kaplan (2009: 23) claimed, ‘it is access to the Indian Ocean that will help define future Central Asian politics.’ Such considerations lay the beginnings of a new post-Cold War ‘Great Game’ between the world’s major powers. When George W. Bush became President in the US, neoconservative intellectuals, while they did not differentiate between various Islamic ideologies, whether Shi’a or Sunni, identified similarity in the form of Communism still present in North Korea; this found an echo in Bush’s infamous declaration about a so-called ‘axis of evil’. During his presidential campaign, Trump criticized Bush’s 2003 Iraq invasion for its cost, while emphasizing that he would ‘put America first’. Although Iran is still seen by much of the US public as an enemy nation, in fact the relationship is complex, and the two nations have worked together against common enemies such as the Taliban in Afghanistan and ISIS in Iraq and Syria. While Iran is widely considered by US policymakers and political intellectuals as a destabilizing force in the region, today the real challengers to American power and interests are China and Russia. Like the Shah’s regime, the Islamic Republic has attempted to position Iran between the global powers and reassert its influence in the region. Despite his close relations with the US and the West, the Shah also maintained amicable relations with the Soviet Union. The latter was involved in various industrial projects, including Iran’s nuclear facility in Bushehr, to be discussed later.

US hegemony and its global challengers With the end of the Cold War and the collapse of the Soviet Union, some commentators pointed to a fundamental shift of economic and military power in favour of the West, and the US being the single global superpower. This was argued by conservative policy-makers and thinkers including John Bolton, Dick Cheney, Samuel Huntington, William Kristol, Richard Perle, Donald Rumsfeld and Paul Wolfowitz. Some analysts, such as Francis Fukuyama (1992), depicted the new era as ‘the end of history’, with the undisputed triumph of the ‘liberal idea’, and a new global hegemony based on it. In his 1992 book The End of History and the Last Man (1992), Fukuyama declares that the only route to modernity is the neoliberal democratic path under global capitalism. More than 10 years after the end of the Cold War, the invasions of Afghanistan in 2001 and Iraq in 2003 demonstrated the US administration’s

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commitment to a ‘long war’ to ensure US global hegemony. Having faced what John Esposito (1992) referred to as a ‘threat vacuum’ after the collapse of the USSR, the US had – to the relief of its geo-strategists – identified a new threat in the form of a ‘civilization’ – ‘radical’ Islam – with which it could and must actively clash. It was thought that the ‘War on Terror’ ‘will be an essential element in preserving American leadership in a more complex and chaotic world’ (Callinicos, 2003: 70). However, in the Persian Gulf and elsewhere, the US did not realize the complete dominance it sought. With American-led global capitalism after 2007–08 facing a deep economic crisis (part of a cycle that it had entered in the early 1970s) (Brenner, 2002), many analysts and strategists recognized that the US was actually a declining power. One of the key features of the global economy in the last three decades has been competition between different growth centres, including Western Europe, North America and East Asia, and states such as Russia, China and India, for economic and political power (Callinicos, 2003; Harvey, 2003; Kiely, 2007; Woodley, 2015). Indeed, it is precisely this feature of the contemporary world that encouraged US strategists to project US power before it was too hemmed in by the developing multipolarity. Despite their very different politics, there is a similarity here between the Clinton, George W. Bush, Obama and Trump administrations, which have all pursued a militarization of the state while cutting social benefits. Beneath the various ideological differences, the wider question here is that of a ‘realism’ that is concerned theoretically with the role of hegemonic or dominant powers in ensuring the stability of the international system. Known as ‘hegemonic stability theory’, this view holds that a dominant power must possess the resources necessary to control and stabilize a unitary world order. In this perspective, the hegemon is usually seen as a benign force capable of supporting the stability and security of other states, regardless of the differences between them (Kindleberger, 1973). The theory holds that as long as the dominant power provides a public good, other states have an incentive to cooperate (Gilpin, 1981). Susan Strange challenges realist hegemonic stability theory when she points out that this is an ‘Anglo- American’ perspective, and the role of the benevolent hegemon in the international system tends to be exaggerated as the theory overlooks the extent to which the concern of the dominant nations for their own economic and political interests limits their ability to effectively oversee the stability of the international system (Strange, 1987). Further, while the US is militarily still the sole superpower, it cannot exactly dictate what other countries will do, and, as former Secretaries of State Henry Kissinger (1994) and Zbigniew Brzezinski (2008) have both argued, it faces the power of regional blocs like the EU and the rising

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economic and military power of China. And, as others have argued, various economic, political, cultural and social forces involving smaller states also play a role in the stability of the international system. The events of 9/11 showed US and Western vulnerability. When Barack Obama became President, the US had been engaged in the Afghan War for nine years, while in Iraq, the post-Saddam Hussein state was still unable to establish security and order in the country. The financial and human costs of these wars proved far greater than the US government had initially expected.3 This resulted in a loss of support for these wars among the US and allied Western populaces. Recognizing this, Obama’s administration implemented a different strategy, working in partnership with other nations including India, Brazil and even various Muslim countries around the world. Under the Trump administration, US policy moved away from the liberal international order of the post-war era through protectionist measures that have included withdrawing from the Trans-Pacific Partnership (TPP) (aiming instead at competition with China), renegotiating the North American Free Trade Agreement (NAFTA), and dropping the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. Trump announced that he would consider new trade deals with the EU and China. It is too early to compare the contemporary period to the beginning of the 20th century, when economic nationalism first became prevalent. Trump’s policy shift could lead to a conflict with manufacturing and exporting giants such as China and Germany. In 2010, China became the world’s second-largest economy, overtaking both Germany and Japan. This, along with China’s investments in various countries including in the Middle East, has opened space for it to have a geopolitical impact. China, however, has not reached parity with the US in military force, and it still needs the US to protect international shipping, especially in securing oil from the Gulf. China has chosen a strategy of non-intervention and trying to keep everyone on its side. It backed the nuclear deal with Iran and it opposed US intervention in Syria, although not in Iraq. Whatever the intentions of the US, the world economy is very integrated, while Chinese growth has been pulling up Africa and Latin America by importing their raw materials, and investing heavily in   The initial estimated cost of the war in Iraq was US$50–$60 billion; by February 2010, the actual cost had topped US$706 billion and was expected to rise further (Herzenhorn, 2009). The estimated cost of the Afghan War was more than US$222 billion by July 2009, and was also expected to rise. 3

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transportation infrastructure, connecting China with a newly independent Central Asia and Europe, under its ambitious New Silk Road. In contrast to Trump’s hawkish attitude to trade, Chinese President Xi Jinping has declared that China will: ‘promote trade and investment, liberalization and facilitation through opening up – and say no to protectionism’ (BruceLockhart, 2017). With Russia, China and EU countries working hard to maintain a suitable political role around the world, including in the Middle East, the model of a single great power able to impose its hegemony globally appears simplistic. While the US remains the world’s major power, there are also competing global and regional powers with the need to defend and project their interests. In addition, the US’s attempt to isolate Iran diplomatically, economically and politically has forced the Islamic Republic to counterbalance this threat by looking for allies among other major powers, including China, Russia and Europe. Faced with Iran’s counter-diplomacy, the US has looked to moderate Arab countries to ensure the security of its key ally Israel as well as its own economic interests. To achieve this, the US has increased its military presence in key parts of the region. Under George W. Bush’s presidency, the US pursued an expansionary policy in invading Afghanistan and Iraq, while his successor Barack Obama was reluctant to deploy US military forces. Indeed, he pulled most of them out of Iraq, where only a few thousand have been deployed since the initial rise of ISIS. Trump has been far more aggressive towards Iran, hoping to decrease Tehran’s influence in Iraq. Under Trump’s presidency, the US continues to have the world’s highest defence budget, at US$610 billion, followed by China at US$228 billion, Saudi Arabia at US$69.4 billion and Russia at US$66.3 billion, as of 2017. Since 2008, Chinese defence spending has increased by 31.2 per cent, while the US has increased its spending by only 0.1 per cent, Germany by 4.3 per cent, the UK by 9.1 per cent and Italy by 21 per cent. According to the Stockholm International Peace Research Institute (SIPRI), in the Middle East military expenditure increased by 6.2 per cent in 2017. Saudi Arabia arms spending for the same year increased by 9.2 per cent, to US$69.4 billion, the third-highest military expenditure in the world. In contrast, Iran’s military spending increased by 19 per cent in 2017 to US$12.3 billion (SIPRI, 2018). Iran’s geopolitical position in the region makes it an important actor that none of the major powers can ignore, but Tehran is entangled in a very complex domestic and geopolitical conundrum over whether or not to return to normal relations, ending its anti-US stand, which has had a huge financial cost.

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US–Iran relations The first contact between Iran and the US was in 1851. Under the shadow of the British and Russian empires, whose power it sought to counterbalance, Iran approached the US to purchase warships to patrol the Persian Gulf coast in order to protect its merchant fleet (Yeselson, 1956). In the 1930s, Reza Shah, to consolidate power, developed close ties with Germany, causing some anxiety to the British and the French. In 1935, in a decree, he changed the country’s name from Persia to Iran, which in Farsi means ‘Land of the Aryans’. Iran was occupied by both Britain and the Soviet Union during the Second World War, forcing Reza Shah to abdicate in favour of his son, Mohammad Reza Pahlavi. In nationalizing oil in 1951, Iran’s Prime Minister Mosaddegh tried to avert the threat from Britain by moving closer to the US. He failed to win US support because of growing anxiety in Washington over the possibility of Soviet intervention in Iran. The fragmentation of Mosaddegh’s social base weakened his government and helped bring it to an end, along with the 1953 coup organized by the US and Britain. After the Second World War, the US replaced Britain as the world’s most important power, and Iran fell under its sphere of influence until the Revolution in 1979. With its geographical location and energy supplies making it increasingly crucial for the global economy, Iran played a vital role in the stability of the Middle East and support for US interests. As late as 1977, US President Jimmy Carter applauded the Shah of Iran, suggesting that it was due to his leadership that Iran ‘is an island of stability in one of the more troubled areas of the world’ (quoted in Hiro, 1987: 1). In 1980, the 1969 ‘Nixon Doctrine’, under which the US provided ultimate security guarantees to its allies but called on them to ‘assume the primary responsibility’ for their own defence, was replaced by the ‘Carter Doctrine’, which emphasized the use of ‘any means necessary, including military force’ to protect US interests in the Persian Gulf region (Middle East Research and Information Project, 1980: 21). This required expanding the US’s regional alliances, and the other Gulf countries, in part feeling threatened by Iran’s revolution, allowed the US to establish some 40 military bases on their soil. With the establishment of the Islamic Republic, the new constitution gave power to the Supreme Leader to make the final decision on the direction of Iran’s foreign policy. However, the decisions about such vital issues as relations with the US have been far more complicated, partly because of the role of competing forces, as well as domestic and global economic and political conditions that have influenced the Supreme Leader’s decision. These have not always been driven by material and ideological interests.

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The Supreme Leaders have had the complex and difficult task of keeping the balance between different factions to maintain the stability of the system. In the early years, the revolutionary Islamist leaders broke off relations with Israel, left the Central Treaty Organization (CENTO), which included Iraq, Turkey, Pakistan and Britain, and recognized the PLO. In November 1979, when militant students supported by Ayatollah Khomeini stormed and occupied the US Embassy in Tehran, the US responded by stopping the shipment of US$300 million worth of spare parts that Iran had purchased and, within weeks, froze US$10 billion in Iranian assets abroad (Mostyn, 2001). It also stopped importing Iran’s oil, which at the time stood at 900,000 barrels a day. By May 1980, Japan, Britain and Royal Dutch Shell had all joined the boycott of Iranian oil, amounting to a loss of revenue for around 800,000 barrels a day (Fisher, 1990). The Iran–Iraq War then came as a welcome opportunity for the US and its allies to weaken both of these two regional powers and the threat presented by a revolutionary Iran to conservative Gulf States like Bahrain, Kuwait and Saudi Arabia. Iraq’s invasion of Iran in September 1980 was at first seen as ending the perceived threat of the spread of revolution. Iraq had the support of the US as well as Arab states in the region, the US and some Iranian ex-generals in exile. Zbigniew Brzezinski, US National Security Adviser, declared in April 1980: ‘We see no fundamental incompatibility of interests between the United States and Iraq’ (Gordon, 1981: 154). US support for Iraqi President Saddam Hussein in the Iran–Iraq War pushed Iran towards alliances with Syria and the Shi’a party Hezbollah in Lebanon. Damascus is only an hour’s drive from the Lebanese border and the Israeli-occupied Golan Heights. Their alliance was based not on any historical or cultural affinities, but on pragmatic political considerations. During the eight years of its war with Iraq, Iran was able to regain its initial losses of land and even to annex part of Iraqi territory. This prospect much alarmed both the West and Iran’s neighbours, and the situation worsened along with the conflict in Lebanon and the ensuing hostage crisis after Hezbollah kidnapped several Western workers. In late 1986, the US, under Ronald Reagan, hoping to bring a section of Iran’s ruling elite closer to the West, tried to appease Iran by offering it much-needed arms in exchange for the release of the hostages, an effort later dubbed ‘Irangate’. Members of Iran’s ruling political elite – including Rafsanjani – had willingly met with US representatives in Tehran, including the leading figure in ‘Irangate’, Colonel Oliver North. A radical Iranian Islamist group led by the cleric Mehdi Hashemi revealed the ‘Irangate’ affair in a Lebanese magazine in 1986. Consequently, Hashemi and several of his associates were arrested and later executed. The ‘Irangate’ scenario showed the Islamic Republic’s leaders’ willingness to

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be pragmatic. As a result of the affair, members of the government came under heavy attack, and Khomeini himself had to intervene to silence them. According to Rafsanjani, Khomeini knew about the deal and could have decided to arrest Robert McFarlane, Reagan’s National Security Adviser, ‘but such action did not fit the Imam’s mind, so we decided to let the gentlemen leave in good health’ (Morady, 1994: 147). Economic pressure mounted on Iran, as the price of oil fell from about US$30 a barrel in 1980 to as low as US$10 in 1986. The US moved towards supporting Iraq and went as far as shooting down an Iranian Airbus, leading to 290 civilian deaths in July 1988.4 Under considerable pressure the Islamic Republic finally accepted the end of the war. The ceasefire, on 18 July 1988, boosted Saddam Hussein’s confidence to the extent that he began to believe that Iraq could become a regional power. Indeed, he did not wait long before invading Kuwait, a Western ally, in 1990. This action led other US allies in the region, including Saudi Arabia, to express concern about Iraq’s ambitions. The US-led coalition forces, supported by Saudi financing,5 undertook the first ‘Gulf War’,6 which resulted in massive destruction in Iraq. This was a blessing for the Islamic Republic, as it removed not only one of its biggest regional challengers in the Persian Gulf, but also installed in the Iraqi government a Shi’a opposition party influenced by Iran. The Islamic Republic’s approach changed following the war, and with a more moderate line emerging towards its regional neighbours, primarily in response to unavoidable local and global economic and political conditions. The Foreign Minister at the time, Ali Akbar Velayati, pointed out that: … [the] objective of the slogan [“Neither East nor West”] is the negation of alien domination and not a snapping of communication…. Nowadays, negating political relations with other countries means negating the identity of the countries. (cited in Ramazani, 1990: 61) US pressure on Iran continued after the Gulf War ended, with comprehensive sanctions; even the threat of invasion remained. To counterbalance the US threat, Tehran sought to make use of regional   An Iranian civilian passenger plane en route from Tehran to Dubai was shot down in 1988 by a US Navy cruise missile, killing all 290 people on board. 5   It is believed that Saudi Arabia provided US$36 billion towards the cost of the war. 6   The war was waged by US-led coalition forces against Iraq’s invasion of Kuwait in 1990. 4

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and international organizations that were not totally subject to Western domination. These included the Non-Aligned Movement (NAM), the Organization of the Islamic Conference (OIC),7 OPEC, the Economic Cooperation Organization (ECO),8 an organization for economic cooperation between Bangladesh, Egypt, Indonesia, Nigeria, Iran, Malaysia, Pakistan and Turkey (D-8 group), the Shanghai Cooperation Organization (SCO),9 and the Conference on Interaction and ConfidenceBuilding Measures in Asia (CICA).10 The US policy of containing Iran by presenting it as a ‘rogue state’, or part of the supposed ‘axis of evil’ proclaimed by George W. Bush in 2002, and by imposing sanctions, led Iran to strengthen its relationships with China, India and Russia. At the same time, the rise in the global demand for energy, particularly among emerging powers, in the first decade or so of the 21st century, benefited oil-producing countries. Tehran’s relationship with the emerging powers can be seen as the product of two important factors: first, its belief that interstate rivalries between the US, China and Russia would pit one against the other; and second, the desire for alliancebuilding with countries driven by opposition to the major powers. China, Russia and India have also used Iran as a bargaining chip to obtain concessions from the West, especially the US, over Taiwan, Pakistan and now Syria. For the time being, Russia needs Iran’s presence in Syria to balance the power dynamic in the region in relation to Saudi Arabia and Turkey. Iran has played a vital role on the ground in pushing ISIS from Syria.

Nuclear deadlocks The Islamic Republic’s multilevel power struggle with various economic and political interests has been reflected in its relations with the US. At stake are not only foreign policy questions but also policy changes that   An international Islamic intergovernmental organization, founded in 1969, which now has 57 nations as members (see www.oic-oci.org/). 8   Formed in 1985 by Iran, Pakistan and Turkey to promote economic, technical and cultural cooperation among its member states. 9   Founded in Shanghai in 1996, it is an inter-governmental mutual security organization. Members include China, Kazakhstan, Kyrgyzstan, Russia and Uzbekistan (which joined in 2001). Iran, India, Pakistan and Mongolia are observers with the intention to join at some point in the future. 10  An inter-governmental forum proposed by Kazakhstan’s President in 1992 to promote peace, security and stability in Asia. The organization’s members include India, Iran, China and many Asian countries. 7

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could have a profound impact on the domestic politics and the future character of the Islamic Republic as a whole. Some powerful institutions such as the IRGC and the Office of the Supreme Leader have tended to see any changes in US policy on Iran as having a direct impact on their economic and political interests. Thus, Iran’s relationship with the US has been shaky because of the political costs to the regime of making any changes, and whenever reformists in Iran have tried to find a way to reconcile their differences with conservatives, they have hit a wall. As discussed in previous chapters, the Islamic Republic is the product of a revolution whose competing actors have diverse economic and political interests. The ferocity of factional disputes and contested political battles have shaped all policy outcomes in Iran. This has made it difficult for any individual or group to completely influence policies without compromising. Despite wide variations in rhetoric and tactics, since the 1979 Revolution, both Iran and the US have consistently pursued diplomatic engagement with each other in various forms, regardless of the changing political situations in their respective countries. The US administration has had to deal with the complicated conundrum of how to deal with Iran, in terms ranging from isolation to threats to conciliation. Having failed to gain concessions from the US under the presidencies of both Rafsanjani and Khatami, Ahmadinejad’s government took a radical approach in the hope of gaining major concessions. He immediately ordered the resumption of Iran’s nuclear programme. Both Ahmadinejad and Khamenei believed that Iran was entitled to enrich uranium, just like India, Pakistan and Israel, which all already possessed nuclear weapons. Despite repeated accusations from both the US and Israel, Khamenei argued that Iran had no intention of possessing nuclear weapons: The Iranian nation has never pursued and will never pursue nuclear weapons. There is no doubt that the decision-makers in the countries opposing us know well that Iran is not after nuclear weapons because the Islamic Republic, logically, religiously, and theoretically, considers the possession of nuclear weapons a grave sin and believes the proliferation of such weapons is senseless, destructive, and dangerous. (Quoted in Oborne and Morrison, 2013) According to The Christian Science Monitor, the West, especially the US and Israel, had (by 2011) been claiming for over 25 years that Iran was close, possibly as little as only three years away, from having a nuclear warhead. In 1992, Benjamin Netanyahu, Prime Minister of Israel, declared Iran to

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be between three and five years away from producing nuclear weapons, and claimed that the threat had to be ‘uprooted by an international front headed by the US’ (Newsweek, 10 April 2013). In 1998, Donald Rumsfeld stated to the US Congress that ‘Iran could build an intercontinental ballistic missile – one that could hit the US within five years.’ President George W. Bush continued this narrative, warning in 2007 that an ‘Iran with nuclear arms would lead to “WWIII”’ (quoted in Peterson, 2011). Ahmadinejad hastened the development of nuclear energy, boasting that Iran’s nuclear programme was a ‘locomotive without brakes’, following Washington’s threat that ‘all options are on the table, including invasion’ (Morady, 2011a: 7). Iran, which remained a member of the Nuclear Non-proliferation Treaty (NPT), nonetheless continued its negotiations with the West. The UN Security Council resolution agreed to impose sanctions on Iran for refusing to suspend uranium enrichment in 2006 (MacAskill, 2010). Initially targeted on investment in the oil, gas and petrochemical industries, as well as the IRGC, these sanctions were later expanded to include banking and shipping insurance, threatening Iran with difficulties in financial dealings outside its borders. By the time of Iran’s presidential elections in 2013, the country faced huge difficulties because of decreasing oil exports, which had been reduced from two million barrels a day to less than one and a half million (Mohammadi, 2013). All of this was gradually creating a cleavage within the ruling establishment. Pragmatists, reformists and even some of the conservatives were working hard to strike a deal with the West based on establishing a middle ground between the prevailing factions. Rafsanjani and Rouhani expressed their dissatisfaction publicly by labelling Ahmadinejad’s policies as self-destructive, paranoid and against Iran’s national interests.

Reconciliation and reaction The Western pronouncements on Iran’s nuclear ambitions were part of a plan to force acceptance of US terms or face increasing pressure, including the threat of military intervention. This could consolidate US influence from Turkey to Central Asia, which is strategically key because of the oil reserves in the Caspian Sea basin. The resistance of Iran, Russia and China to US and Western intervention in Syria must be viewed in this context, as they all have feared any further increase in US influence in the region. The US did, however, reduce its forces in the Middle East around this

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time, while increasing them in the Pacific (what became known as the ‘Strategic Pivot’). The US sought to maintain a balance of power that would keep in check the conflicting interests. In this respect, Obama proved more militarily cautious than his predecessor Bush. As Obama put it in a speech at the West Point Military Academy: US military action cannot be the only or even primary component of our leadership in every instance. Just because we have the best hammer does not mean that every problem is a nail. (Holland, 2014) In fact, Obama’s government was largely concerned about the rise of China, and by this time the US’s main competitor. China certainly has the potential to challenge US geopolitical and military dominance in the Asia-Pacific region, although other nations such as Japan and India have a stake there too. Under increasing economic difficulties Iran decided to find a way to negotiate a deal. Khamenei carefully navigated every step of the nuclear deal. Irrespective of their rhetoric, all of the factions were united in the belief that this would support Iran’s economic integration within the global order that was finally achieved under Obama. Trump announced the US’s withdrawal from the nuclear deal unless Iran stopped supporting the Syrian regime, Hezbollah in Lebanon and Hamas in Gaza. Trump has threatened to block access to the US market to companies that do business with Iran. Reactions in Europe have included France’s Finance Minister Bruno Le Maire saying that the US is not ‘the economic policeman of the planet’ (Brunsden and Peel, 2018). However, in reality, almost all of the European countries toed the US line. Given the monetary value of European countries to Iran, it is unlikely that Iran will be able to benefit from any rift between the US and the EU. Although the EU was not one of Iran’s major trading partners, Iran provided fuel to European countries, particularly Italy, and Iran in turn imported manufacturing and transportation equipment. A withdrawal of European companies such as Renault, Airbus, Siemens or Total had negative consequences for Iran.

Conclusion Since 1945, Iran’s foreign policy has been dominated by its relations with the West, and particularly the US. Its strategy towards the US has

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swung between convergence and divergence, depending on changes in the political situations in Iran and in US policy. By the 1960s, Iran’s ambition to become a regional power was beyond doubt, although both the Revolution and the Iran–Iraq War were partial interruptions of it. With its economic resources and military power, Iran has been proactively engaged in the Persian Gulf, Central Asian and IOR, in search of influence and economic benefits. Other international powers, particularly the US and Western Europe, and in the region, Saudi Arabia, Israel, Turkey and Egypt, are aware of this and have all been determined to limit Iran’s influence. Iran’s biggest asset beside its oil resources is its geopolitical location. The main obstacle to it being a major actor in the region and beyond has been Tehran’s tumultuous relationship with Washington and the inability and/ or reluctance of any other country to fill the gap by balancing out US power. It may take an effort for both Iran and the US to resolve all their differences and resume proper diplomatic relations. This path, however, seems the only alternative for Iran at the moment, with its growing economic difficulties. Any reconciliation between Iran and the US would have to take place against the background of the renewed challenges that American power faces in the world. Increasing pressures on the US economy and the rise of China as a great economic power have been important reasons for the US to reformulate its foreign policies, including towards Iran. With the Coronavirus (COVID-19) epidemic making a major impact on the world economy, and especially on developing countries, Iran has been hard hit with both the disease and in dealing with its ailing economy. China, the powerful engine in the world, has been shaken by the severity of crisis, with its economic growth expected to be reduced. This could mean cuts in imports and especially energy from Iran and the other oil-producing countries. Despite an appeal from the Islamic Republic to relieve sanctions, Trump’s administration has refused their demands (Tisdall, 2020). The growing difficulties that are partly a result of the sanctions have put much pressure on the Iranian government, causing internal rifts between political groups. This may mean that, in the current circumstances, Iran’s foreign and regional policy approach is vital not just for the survival of the Islamic Republic, but also for averting the threat of a war or invasion, and coping with the growing regional instability and internal and external displacements of people.

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Regional Influence and Ambitions Introduction The Middle East has provided the world with no shortage of crises in the last century and this one so far. Both the current political standoff between the US and Iran and the civil wars in Yemen and Syria demonstrate the degree to which these events have a long history. From the late 18th century until the First World War and the disintegration of the Ottoman Empire in its aftermath, the region has been a battleground for competing Western powers. Since the discovery of oil in Iran, one of the key concerns for the great powers has been, and remains, oil and its strategic influence. Iran’s territory and population are among the largest in the Persian Gulf. It has a huge economic potential and the capability of exercising great military power. Iran’s aspiration to be a regional power is partly a response to the perceived threat of imperial domination since 1979, especially by the US. The US, having expanded its military presence, with Donald Trump attempting to force Iran into subordination to Washington’s will, has been the main cause of anxiety for the government of the Islamic Republic, which sees this as a threat to its security, stability, regional status and even survival. Before the 1979 Revolution, Iran was an important ally of the West, including the US after the Second World War. Since 1979, Iran has been seen by the West, especially the US, and its regional allies such as Saudi Arabia, as a destabilizing actor with a radical message. The character of Iran’s regional policies has caused anxiety and been a constant source of controversy among other states in the region, especially Saudi Arabia, the UAE and Israel.

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The Middle East has attracted various international actors to invest, and they have flooded it with different products, including the latest weapons. Iran has been at the heart of this process, and it has had to constantly adjust and re-position itself in relation to geopolitical shifts and changes. Since 1979, the Islamic Republic has had to implement a foreign policy with a largely balance-of-power strategy, in order to both maintain its own security and increase its influence. In part because the Shah had been supported by the US administration since the 1953 coup organized by Britain and the US, Iran has identified itself ideologically with anti-imperialist causes, and this notion was placed at the heart of the Revolution. The leaders of the Islamic Republic had to identify a way to naturalize Washington’s continuing threats of sanctions or invasion. Despite all of the obstacles that it has faced, Iran has survived as an Islamic Republic, weathering such crises as a destructive eight-year-long war with Iraq and the US vilification of Iran that was most colourfully represented by George W. Bush’s designation of it as part of an ‘axis of evil’, more than a decade after the end of the Soviet system that Ronald Reagan had called an ‘evil empire’. In the face of all of its adversaries, Iran has, in many ways, expanded its influence in the Middle East and even accelerated its pursuit of the ambition of becoming a regional power with a leading role in the Muslim world. The two most important events that have shaped Iran’s geopolitical position in recent decades are, first, the end of the Cold War and the declining influence of post-Soviet Russia in Central Asia and the Middle East, and second, the US invasions of Afghanistan in 2001 and Iraq in 2003, which removed both the Taliban and Saddam Hussain, both, coincidentally, also arch enemies of Iran. This also brought Saudi Arabia closer to the US as an ally in the region, countering Iran’s influence. This chapter will consider Iran’s influence, and its recognized present and future role in the region and beyond. It will focus on the Persian Gulf region and Central Asia, and will also consider the role of Iran geopolitically in relation to the West and in particular the US, and to regional powers such as Saudi Arabia and smaller states like the UAE and Qatar.

Great and regional powers The interaction between great and regional powers, and the dependency of the latter on the former, has played an important role in shaping the global political economy, including that of the Persian Gulf, since at least the early 20th century. Theoretically, the balance of power should act

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as a deterrent, promoting containment and equilibrium (Miller, 2004). In reality, however, the latter has depended uncertainly on economic and political conditions regionally and globally, and on events that may threaten to change them. With the development of capitalism in the Middle East, facilitated by energy resources, some of the states in the region have emerged as important actors in the world-system. Their growing role, due to both their vital resources and the financial muscle they possess as a result, partly shifted the centre of capital accumulation from the core capitalist countries, turning the region’s states into sub-imperialist forces within the global system. The core capitalist countries must now cooperate with the ruling elites of the states in the ‘periphery’. The latter no longer play a passive role, producing raw materials and serving as a market for the manufacturing products of metropolitan powers. The transformations of capitalism in the periphery in the later 20th and early 21st centuries in the Middle East and especially the Persian Gulf countries have altered the global system (Hanieh, 2011). With a growing need in the world for energy, the importance of producing countries has increased, and not just as suppliers. The income from energy has become vital to capital investment around the world. Hence, the Gulf countries’ role in the world division of labour has shifted to being sources of not just oil but also capital. The Persian Gulf countries are now fully capitalist. The ruling institutions in the Gulf countries reflect regional class formations and have gradually evolved over time to represent the class in power. The individual states maintain their own identities and interests, but are dominated by large conglomerates operating on a regional scale. Due to political circumstances, Iran’s economic relations with the other Gulf countries have been a matter of ebb and flow. Dubai has traditionally been a centre for Iranian business operating offshore, and the UAE’s trade with the Islamic Republic was worth US$19 billion in 2018. However, tensions in the region and US sanctions have put a strain on Iran’s relations not only with the UAE but also with the rest of the Middle East. The fragile relations have affected the number of Iranians living in the UAE, which declined from 117,000 in 2016 to 73,000 in 2019, while the number of its visitors there fell by one-half, from 700,000 to 350,000, in the same period. No doubt the collapse in the Iranian rial in 2018 was an important factor in Trump’s decision to withdraw from the nuclear accord in May 2018 (England and Kerr, 2019). Despite its growing economic difficulties, Iran has acquired influence in Iraq, Yemen, Palestine and Lebanon, while Saudi Arabia’s influence has been with Egypt, the UAE, Bahrain and Jordan. This competition has been supported by the great powers, including the US, Russia and

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China. Sometimes the Islamic Republic has been able to court favour with China and Russia in trying to ward off the US threat. Before the establishment of the Islamic Republic, the US had sought to limit the threat of Soviet influence in the region by maintaining good relations with Iran and Saudi Arabia. The Iranian Revolution of 1979 and the Soviet invasion of Afghanistan in the same year radically altered the strategic equation in the region. Iran had been the US’s key ally and, after Israel, its most trusted one in the Middle East. Since the dissolution of the Soviet Union after the Cold War, the US attempted to expand its influence with the former Central Asian Republics of Azerbaijan, Kazakhstan and Turkmenistan. However, with the recent revival of Russia, the equation has started to shift, not just in Central Asia but also in the Middle East. Russia is now a major player in Syria and has good relations with the Islamic Republic of Iran. Immediately after the Revolution, in an attempt to counter the threat posed by the US and its neighbours, the Islamic Republic sought to take an active role in the NAM, the OIC and the SCO. Later, Iran sought closer relations with the emerging powers of China, Russia, India and Brazil, hoping to balance the power of the US. The flourishing discourse of globalization after the end of the Cold War, and the resulting climate of optimism, suggested to some the ‘triumph’ of market-oriented liberalism. The independence of the former Soviet Central Asian Republics presented a welcome opportunity to Iran, as it both diminished the threat of ex-Soviet Russia and constituted a new field of possible Iranian influence. The Islamic Republic’s leaders also found this cause for a new concern, as the US’s power was no longer balanced by that of the USSR as it had been. Iran would have to turn to other alliances for this purpose, in a global context that was now multipolar rather than bipolar. The Islamic Republic developed closer relations with China and India, provided both countries with energy supplies, and hoped to use them to build a bridge between the Gulf and the vital and attractive markets of Central Asia. With global economic growth shifting to East and South Asia, Iran found its geopolitical position enhanced. It could now become a vital bridge for India’s products to be exported through the Persian Gulf to Central Asia. The opportunity for Iran to play a greater role has remained limited due to continuing US pressure on it through sanctions, as well as the ways in which various alliances tend to be countered and balanced by others, in what can often make for complex calculations. China’s emergence as a force in the world economy has involved increasing its operations in the Middle East, Africa and Central Asia. Its activities have included investing in oil fields and providing military

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assistance, intelligence and training. China’s engagement with the New Silk Road is an attempt to promote trade along this ancient pathway1 by developing a number of infrastructure projects, railways, ports and pipelines. The New Silk Road is expected to connect China with Central Asia, Russia and Europe by land, and through the Maritime New Silk Road to the coastal regions of South Asia, the South Pacific, the Middle East and Eastern Africa. No doubt because of its geographical location, Iran plays a potentially vital role in this project. Under Bush’s watch, the US’s foreign policy approach was to continue its strategy of containment of both Iran and Iraq. He considered both countries as threats to the security of the US’s interests and its allies in the Persian Gulf region. In order to preserve regional stability, Washington sought to prevent both Iran and Iraq from fully developing their military capabilities, and so threatened both countries with invasion and sanctions. The Bush administration adopted what it called ‘The Project for the New American Century (PNAC)’.2 This was an attempt to expand US domination of the Persian Gulf to also include Central Asia. This region was fought over by Russia and Britain in the 19th and 20th centuries, and then by the Soviet Union and the US from the end of the Second World War until the late 1980s. The changes in the economic and political situations in the region since the early 1990s have included the growth of business activities in the UAE and Qatar, both possessing huge financial muscle enabling them to influence political activities in the region. In this context, the security of the Persian Gulf region has become more important than ever. Contrary to the Bush administration’s stated reasoning in authorizing the invasion of Afghanistan and Iraq, rather than bringing stability and democracy to the region, the evidence is that these interventions had the opposite effect overall. When Barack Obama became President in 2009, he set forth a new doctrine of diplomatic engagement. It aimed to take a new direction, including opening negotiations with its arch enemies Iran and Cuba. In the nuclear dispute with Iran, and in a visit to Cuba in 2016, Obama showed his willingness to make changes to US foreign policy. This was an attempt to perform a balancing act between the regional powers, in   This is an ancient trading route linking Eurasia from West to East and the Mediterranean Sea. In March 2017, Chinese president Xi Jinping pledged US$124 billion for the New Silk Road. 2   This is, in many ways, a continuation of the American Century (AC). The latter was used to characterize the US’s increasing economic, political and cultural influence globally. The PNAC (1997–2006) was an attempt to promote US hegemony throughout the world. It influenced Bush’s foreign and military policies and national security as well as the invasion of Iraq (Callinicos, 2003). 1

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lieu of direct intervention, and was understood as a call to support Iran’s role in Iraq as well as Saudi Arabia’s in Yemen. The JCPOA between the great powers (the US, Russia, China, Britain and France) and Iran (‘the 5+1’) hoped to provide an opportunity for the Islamic Republic by ending its nuclear enrichment. Both Iran and the US hoped to facilitate closer relations, involving collaboration in areas where there was strategic convergence between them. Indeed, this was indicated by Iran’s support of the US in both Afghanistan and Iraq. Washington’s approach also meant that the Gulf countries should take greater responsibility for their own affairs and security. As Shapiro Sokolosky, from the Brookings Institute, suggested, the US’s ‘long-term goal is not to get into bed with Iran. Rather, it is to use the relationship with Iran to get out of bed with Saudi Arabia’ (Sokolosky, cited in Iannuzzi, 2015). Whatever the merits of this, Obama’s plan was to implement a foreign policy that would protect US interests without placing too many constraints on its military and economic power. This was supposed to put Washington in a good position to maintain its influence, but its cost was becoming difficult to maintain. China’s economic growth, with its huge foreign currency reserves, has put the US under considerable pressure. Its response under Obama was to re-orient significant parts of its foreign policy towards the Asia-Pacific region. This ‘Strategic Pivot’, as it was called by Obama, was recognition of the growing importance of the region as well as China. Under Trump, the nuclear agreement that Obama had reached with Iran was at first kept (and later abandoned), while the sense of optimism largely dissipated. The US’s closer relations with Israel and Saudi Arabia was in an effort to challenge Iran’s superiority in the region. Trump has also pushed to expand arms sales to the region, with no sign of an end to the civil wars in Syria, Iraq and Yemen. The region has become the site of a permanent state of conflict, with arms manufacturers appearing to be the biggest winners. The involvement of Russia and Iran has provided material support to the Syrian regime in the fighting in that country, and has helped to tip the balance in the Assad government’s favour. For Russia, this is part of a process of re-asserting its hegemony around its borders.

Militarization of the region Capitalist development has generally involved military competition between rival powers and the exporting of military equipment. Arms production is one of the world’s biggest and most profitable industries. There has been a major expansion of capitalism in the Persian Gulf region

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since the global increase in oil prices in the 1970s created a large market for the West to export its arms. Local armies became more important, while conflict between major powers continued. The region’s powers see spending on the latest weapons as a way of demonstrating their strength and reinforcing their bid for hegemony. The military stockpiling in the region started before the Iranian Revolution, and was largely due to the critical geopolitical location of the Persian Gulf, including the importance of its huge energy resources. It had a considerable impact on the recognized legitimacy of these regimes, both in the Middle East and globally. This includes Iran detracting from Saudi Arabia’s role as representative of the Muslim world. At the same time, US political and military presence in the Persian Gulf, including in Qatar, the UAE, Bahrain, Kuwait and Iraq, contributed to increasing resentment and radicalization among the peoples of these nations. Since the end of the Cold War and the invasion of Kuwait by Saddam Hussein in 1990, the Persian Gulf countries have become the most attractive market for Western arms traders. According to figures released by SIPRI, in 2014 Saudi Arabia, with a population of 32 million, spent £54 billion on weapons, more than any other country in the developing world. The UAE, with a population of only 9.2 million, spent £15 billion and Qatar, with 2.2 million, spent £16 billion. The six nations of the Gulf Cooperation Council (GCC) (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE), with the US as their main supplier, together spend far more on their militaries than Iran (SIPRI, 2015). For various reasons, mostly involving Western sanctions and a lack of surplus capital, Iran has been forced to rely on its own resources in developing its domestic military industry. Military power can be considered as conferring on the nation and its people both status and strength. Arms sales have also brought, from exporting countries, advisers, technicians and the establishment of military bases around the region. In the face of various internal, regional and global crises, huge build-ups of sophisticated weapons have become a political necessity for the rulers in the region: both to boast of their latest modern weapons and hoping to shield them from internal and external threats. The balance of military spending has favoured the GCC, which is shaped by the level of US commitment and power projection capability supporting its Arab security partners. This has meant closer relations and growing exports of arms, especially to Saudi Arabia, since Trump became US President in 2017. Domestic conflicts in countries like Iraq, Syria and Yemen, along with Iran’s growing strategic influence, have also been important factors in arms spending in the GCC.

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The Islamic Republic’s regional influence Iran’s role and influence as a regional power dates from the days of the Shah. Its size, economic resources and population have also played a role. With the establishment of the Islamic Republic in 1979, Shi’a Islam became part of the equation. However, the Islamic Republic has been pragmatic enough to explicitly reference this in its approach to regional policy. It sought to avoid giving any reason to Saudi Arabia or the UAE to perceive it as a threat in the region, at least until the invasion of Iraq by the US in 2003. In the immediate aftermath of the Revolution, Iran found itself at odds with much of the region, including Saudi Arabia, Kuwait, Sudan, Egypt and Israel. Other nations in the region and the Arab and Muslim worlds remained friendly with Iran, including Syria (Saddam Hussein’s competitor), South Yemen, Algeria and Libya among Arab countries, as well as Pakistan and Turkey. The threat posed by the Iranian Revolution and its possible impact on the Shi’a minority in Saudi Arabia constituted for Saudi Arabia a reason to support Iraq during its eight years of war with Iran. Following the Iran–Iraq War, the Islamic Republic changed some of its policies towards other countries in the region. With the moderate government of Rafsanjani in power, relations with Saudi Arabia, Kuwait, Bahrain and the UAE improved. Economic reconstruction proved far more vital for the regime than revolutionary rhetoric, and for this purpose stability in the region was a priority. Saddam’s invasion of Kuwait in 1990 put Iran in an even better position and changed the whole regional balance of power. Iraq’s invasion of Kuwait was considered a direct threat to Kuwait’s sovereignty by all of the GCC nations, including Saudi Arabia. For the Islamic Republic, this proved a mixed blessing. On the one hand, the occasion appeared to vindicate its claims about Saddam’s aggressive behaviour during the Iranian war with Iraq, and also to demonstrate how wrong the GCC had been to support Iraq during the war. It also highlighted Iran’s role as a regional power by delegitimating its recent rival. At the same time, the crisis led to increasing tensions and facilitated, in part by legitimating, the intervention of Western powers in Iraq and so in the Persian Gulf region. The Islamic Republic condemned Iraq’s invasion of Kuwait, and embraced the UN  Resolution supporting the restoration of Kuwait’s sovereignty by the Western alliance troops. This was a completely different approach to the stand that the Islamic Republic had taken during the early years after the Revolution opposing Kuwait’s ruling al-Sabah family. The first Gulf War removed Iraq as one of the most important regional powers, leaving for the West, and in particular the US, only Saudi Arabia,

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the largest and militarily strongest country in the GCC, to protect its interests in the Persian Gulf. In addition, Washington also increased its presence by expanding its military forces in and around the Gulf as well as in Central Asia. The other countries with military bases that remained important allies of the US in the Middle East were Israel and Turkey.3 Israel has played a vital role but with a changing character in the Middle East. It is an important ally of the US and since 1948 has received US$131 billion in economic and military aid (at current prices) (Thomas, 2017). Israel has become one of the most advanced nations in the world it terms of its high-tech sector, which attracts about 15 per cent of the world’s capital investment in cyber security. US–Israeli military cooperation has been meant in part to ensure that Israel will maintain a military edge over its regional rivals. The Islamic Republic, which has played ideological cards when it suits its purposes to do so, has tried to take the central stage within the Muslim world in the forces potentially arrayed against Israel. At the same time, Iran has also supported non-Muslim countries around the world including Armenia, a nearby, largely Christian, country, and socialist countries such as Venezuela and Cuba. The Islamic Republic has typically balanced ideological considerations on the one hand and geopolitical realism on the other, in its efforts to maintain its influence and pursue its ambitions in the region. Geopolitics have been more important than religion or ideology in determining Iran’s alliances, which have often aimed primarily at strengthening the respective countries’ abilities to defend themselves against Western pressures. As the Islamic revolutionary zeal cooled over time, Rafsanjani and Khatami gave less importance to ideological considerations in aiming to improve Iran’s relations with countries in the region. But Iran did also seek to lessen the involvement in its neighbourhood of Western forces. And it took advantage of cultural links and power vacuums to develop ties with the Central Asian countries that had once been Soviet Republics, as well as with Iraq and Afghanistan after the US-led invasions of those countries. After 9/11, the Islamic Republic moved closer to Europe, and for two reasons: to drive a wedge between the US and Europe, and to counter the continuing threat of pre-emptive strike and regime change articulated by the Bush administration, which considered Iran part of its ‘axis of evil’ alongside Iraq and North Korea.

  Since 1945 the US has relied heavily on Israel to play an active role in managing the most vital area of the Middle East (Rose, 2004). 3

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This has also been true of the failure to find and implement a resolution to the Palestinian question, stemming in part from the failure of Arab nationalism in the 1950s and 1960s. While several states in the Arab world, including Egypt, Iraq and Saudi Arabia, have continually promised to address this issue, the situation in some ways has only become worse. The Palestinian question has, to some extent, become a political football engaged in by Arab regimes according to their own particular interests. Egypt, which has the largest population in the Arab world and is one of the most important US allies, gave in to Washington’s pressure to sign a peace accord with Israel in 1979. The pro-US regimes of Saudi Arabia and the other Gulf monarchies have financially supported groups that were close to their own ideological line. For the Islamic Republic, this provided an opportunity to demonstrate to the Muslim world its willingness to stand up for Palestinians, promoting its own interests by capitalizing on that popular issue. The Wahhabi ideology of Saudi Arabia involves a strict interpretation of Islam, which has served to maintain the al-Saud family’s hold on power. Qatar’s Emir has taken a different approach, supporting an open and moderate form of Islam similar to that of Egypt’s Muslim Brotherhood, and like it, much disliked by the Saudis. Depending on political circumstances, the Islamic Republic has considered the Brotherhood less of a threat than its arch rival, Saudi Wahhabism. The Arab Spring of 2010–11 that swept the region from Tunisia to Egypt and beyond was driven by popular resentment of the austerity imposed by the IMF and the Western-backed authoritarian regimes throughout the region. Their impact shook the region, including the Gulf countries of Bahrain, Kuwait and Yemen, all of which have a largely Shi’a population. This constituted another opportunity for ideological intervention by the Islamic Republic. The geopolitical implications of the demands for change were such that neither the US nor Saudi Arabia were prepared to meet them at the time. Saudi Arabia sending troops to Bahrain appeared to demonstrate the threat represented by the protest movements (Bronner and Slackman, 2011). The Islamic Republic was blamed for contributing to growing discontent because of the presence in Bahrain of a Shi’a population making up more than half of the nation’s people. However, power there is mainly concentrated in the hands of Sunnis. The largely Shi’a protest movement in Bahrain eventually resulted in Saudi intervention to keep power in the hand of the Sunnis, the faction more friendly to the Saudi kingdom. Iran’s growing influence in Iraq, where Shi’a Muslims are the dominant group, was something that Saudi Arabia, the UAE and their Western allies preferred not to tolerate; with their support, there was a rise in

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militancy in Iraq of the until-then marginalized Sunnis. With the rapid growth of Sunni radicalism, the Iraqi army proved unable to defend the country. Without the support of both Iran and the US, it would have been difficult for the Iraqi government to maintain control even over Baghdad (Esfandiary and Tabatabai, 2015). Iran’s alliances with Syria, Iraq, Yemen and Lebanon have placed Tehran in a stronger position in the Greater Middle East to enhance Iranian power and influence and use it to settle conflicts on terms it finds favourable. This has enabled the Islamic Republic to move the frontline of struggle beyond Iran’s national boundaries, thereby providing a security shield for it. The other Gulf countries, particularly Saudi Arabia, have found this a matter of concern, along with the nuclear deal. While the Obama administration negotiated and signed an agreement with Tehran limiting its development of nuclear energy, Trump pulled the US out of the treaty, and has supported Saudi Arabia, the UAE and Israel against the Islamic Republic. Iran’s role in the region has been based on its geopolitical interests. Iran is concerned that Syria, Hezbollah and Iraq could act as a shield around Iran for an Israeli ground attack on the Islamic Republic. Due to Russia’s involvement in Syria, the scenario shifted, with Moscow now playing a greater role than Iran in ensuring the survival of Assad’s regime. Russia does not wish to see the US achieve complete domination of the region. For Russia, the port of Tartus in Syria is the only naval supply, maintenance and fuelling port on the Mediterranean that it controls. In Syria, Russian and Iranian forces have both prevented the total collapse of Assad’s regime. Saudi Arabia, the UAE and Israel, all anxious about Iran’s influence, were concerned to find that the end to US hostility towards Iran under Obama’s presidency put Iran in a far better position geopolitically. Saudi Arabia is the most important country in the GCC. Oman is a close friend of Iran and played a key role in facilitating the negotiations between Tehran and Washington over Iran’s nuclear program in 2012. The country in the region that is close to Saudi Arabia is Bahrain, thanks in part to Riyadh’s military intervention in support of the Bahrainian monarchy during the Arab Spring. The Saudis engaged in a diplomatic and economic offensive against Qatar, forcing its Emir to support the Saudi line against Iran. However, Qatar’s economic ties with Iran could not be easily interrupted, especially in their co-development of the South Pars Persian Gulf natural gas field, the main gas field in the Persian Gulf, which is shared by the two countries. Hence, Qatar has been very careful in its relations with Iran because of the importance to it of this resource.

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The situation between Saudi Arabia and Iran became intense in the wake of the execution of one of the leading Shi’a clerics by the Kingdom in January 2015. There were protests in Iran, and radical Islamists occupied the Saudi Embassy. Riyadh called for an end to its diplomatic relations with Iran. Its allies, the UAE and Qatar, condemned Tehran for not protecting the Saudi Embassy, and followed suit by downgrading, although not ending, their diplomatic representation.

Iran and its Central Asian neighbours Since the end of the Cold War, the independence of the Central Asian countries and the emergence of China and India as major economic and political powers have conferred far more importance on Iran’s geopolitical position. Radical Islamization has also had an impact on Tajikistan, Uzbekistan and Azerbaijan, while Russia also continues to influence these countries. Since the end of the war with Iraq, the Islamic Republic has made concerted efforts to develop its relations with the new ex-Soviet Central Asian countries. It has sought to build a bridge there between North and South, linking the huge energy resources that both the Persian Gulf and Central Asia possess with the geographical corridors that Iran provides for trade, both between these two rich regions and India and China. Because of its strategic location and resources, Iran’s participation is fundamental in the larger regions that it borders or is part of, in managing the continuing conflicts and ensuring regional stability. Changes in the Islamic Republic’s approach were part of putting its national interests above the revolutionary and idealist themes of Islamism. This meant an opportunity to stabilize its tension-driven relations with its Central Asian neighbours, in the face of their fears of the US replacing Russia in influence in the region. In addition, Iran hoped that maintaining good relations with Russia, an important power and arms supplier, would help it to neutralize the continuing threat of the US. Until very recently, Iran’s emphasis on building these relationships had two important dimensions. One of these was the opportunity to lessen its international isolation and build relations with its new neighbours as a means of reducing the burdens of the US containment policy; the other was maintaining good relations with a key arms supplier, Russia, and not pursuing policies in Central Asia that would antagonize it. These remain key considerations in the post-sanctions landscape. Taking advantage of its strategic location, the Islamic Republic has developed a transport infrastructure from Central Asia to the Persian

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Gulf. Along with Afghanistan, Iran has been very active in establishing several free trade zones. Iran has also encouraged provincial authorities to establish relationships with their regional counterparts in other countries. The common interests of the countries in the region, especially India, China and Russia, have encouraged them to expand transit facilities to enhance trade between themselves and the IOR. India has been involved in developing the port of Chahbahar, building railway tracks to the Afghan city of Zaranj. This is important to Iran, as Chahbahar is its closest access point to the Indian Ocean. The transit route between countries here is situated in the northern part of the Indian Ocean and Central Asia. The growing commercial sector located in the free trade area in Chahbahar links India’s commercial capital, Mumbai, to the Middle East and Central Asia. The link between Chahbahar and Iran’s main rail network may become as important as Pakistan’s port of Gwadar. A Chinese initiative of US$50 billion to develop the Gwadar port is part of a similarly ambitious plan to develop a route to the Middle Eastern and Central Asian markets (The Economic Times, 4 May 2017). China also sees the Islamic Republic as a key partner in its vital project, the New Silk Road, which is represented as revitalizing the ancient Silk Road of imperial China. This is important not only for Iran but also for the Central Asian countries, in supporting the facilitation of trade between the countries. China, being the largest market for Iranian exports, centred around crude oil, and Iran’s second largest importer, has helped the regime enormously in the context of the ongoing heavy sanctions. The key problem for the Islamic Republic of its ideological representation has played a role here. On becoming independent, Central Asian countries have been suspicious of the new leaders in Iran, anxious that their influence would strengthen radical Islamism in their own countries. However, they soon became aware that the threat to their stability did not come from Iran’s Shi’ite revolutionary forces, but from domestic Sunni Muslims who were influenced by the Taliban and ISIS, as well as by economic inequality in their own countries. But Iran has strong strategic reasons of its own to advance the development of this corridor. Despite the opportunities for the expansion of trade across the central Persian Gulf and IOR, the Islamic Republic has faced a number of challenges: the politics of the Central Asian countries are very much influenced by nearby Russia, which remains a close ally. While Russia and China have ostensibly supported the Islamic Republic, in reality they have been happy not to see Iran turn into a major regional power. The Islamic Republic has been under sanctions of various degrees of severity since 1979, although China and Russia have generally continued to engage with Iran notwithstanding this. In Syria, Iran had allowed its

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military base in Hamedan to be used by Russian fighters to carry out strikes against ISIS. Until then, Iran had not allowed any foreign forces to use its bases. This was in accordance with one of the main slogans of the Iranian Revolution, ‘Independence, Freedom, Islamic Republic’. The pragmatic decision to allow this to happen is one example of rationality prevailing over ideology in the Islamic Republic. At times, Iran has shown flexibility in cooperating with the US, as in 2001 in facilitating the removal of the Taliban from Afghanistan (Saghafi Ameri, 2009). For historical and other reasons, Iran has played a vital role in Afghanistan since the US invasion in 2001. Iran has expanded trade between the two countries through the port of Chahbahar, which provides an access point to the Indian Ocean for landlocked Afghanistan. A stable Afghanistan is important for the security of Iran in tackling the refugee problem, removing the threats of the Taliban and ISIS, and blocking the flow of drugs. As long as relations between Iran and the US remain poor, a US administration will likely place obstructions in the way of the Islamic Republic’s greater involvement, not just in Afghanistan but also in the IOR more broadly. Chinese investment in the New Silk Road has taken account of Iran’s role in this. While Russia has reservations about China’s growing influence on its periphery, it has started working with China under the New Silk Road to facilitate greater links between the two countries through the Central Asian countries. This would strengthen Chinese, Russian and Iranian positions in Central Asia and beyond. With Trump’s aggressive foreign policy, Chinese and Russian influence provides a counterweight for other countries in the region to resist and possibly challenge US domination.

Conclusion Given the continuing threat from the US since the Iranian Revolution, the Islamic Republic has employed both ideological and pragmatic tools in its regional approach. To maintain its power, the Islamic Republic has had to adjust to the requirements of the international system, abandoning the early ideals of revolution for pragmatism. Iran’s strategic geographical position, resources, size and population have been both an opportunity and a curse, although Iran has shown the potential and capacity to play a critical role in a complex and unstable region. Iran’s regional strategy was partly shaped by US miscalculations in Afghanistan and Iraq, both weak neighbouring states. The invasion of

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Iraq turned into an opportunity for Iran, with its Shi’a allies playing an important political role in the country. The Islamic Republic has drawn some security from the rivalries between powers in the global political economy. Post-revolutionary Iran has enjoyed some influence in the region, although this has not been without difficulties. It has faced multiple and interconnected crises at home and abroad. Under the severe economic pressure caused by sanctions, the Islamic Republic has looked to China and Russia in seeking to both balance and combat the threat of the US. The growing economic crisis in Iran has made the continuing financial and military support to its loyal groups in Iraq and the Syrian regime difficult. Hence, Iran has to find a balance between its internal security and economic stability with its regional policy in an unknown environment.

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Conclusion This book has described the processes and contradictions of capitalist development in Iran before and after the 1979 Revolution, and has examined the role of Islamists historically. The central theme of the book has been the uneven character of capitalist development in Iran and the ways in which Iran’s integration into the world-system has not involved uprooting traditional forces. Hence, the process has involved both continuity and change. Iran’s development and its integration into global capitalism have been facilitated by the role of energy, especially since 1970. With the growing importance of energy in the world, the oil-producing countries have not only developed but also become fundamental players within the worldsystem. Along with the other Gulf countries, Iran has turned into a dynamic centre of global political economy, benefiting from the financial muscle it has been able to wield as a result (Hanieh, 2011). This has given these countries the power to act relatively independently, although they have remained firmly dependent on the global market within the world division of labour, as oil producers and importers of raw materials. In the case of Iran, the country’s economy has become vulnerable to both economic fluctuations in the price of energy and political events, as is evident in the current economic crisis, with US sanctions on Iran. Since the Revolution in 1979, the energy sector continues to be firmly under theocratic control, albeit within the neoliberal world market. While the form that this neoliberal model has taken in Iran is different from that of many ‘third world’ countries, here, as elsewhere, there have been attempts to privatize national industries and to remove subsides for some commodities. The political implications of energy have also been noticeable, since the discovery of oil early in the last century. Oil has been central to Iranian politics ever since, including in the attempt to nationalize it

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in the 1950s, and the current embargo imposed by the US on Iranian energy. The Iranian Revolution did not change this fundamental character of Iran’s economy, the role of the state or its relations with society. In a way, the theocracy has simply occupied the position that used to be filled under a secular king, although the political superstructure has been shifted along with the codes of behaviour imposed by the Islamists. Hence, the replacement of the secular state with a theocracy, although it meant a break, did not mark a return to the traditional practices stemming from 7th-century Islam. To legitimize their role before and to maintain their power differential, Islamists have put forth various interpretations of an Islamic politics from the seeming radical to the so-called moderate. In order to survive, nearly all of the leaders of the Islamic Republic adapted to the demands of the world-system. Since 1979 the Islamic Republic has continued Iran’s development through industrialization, urbanization and the growth of education. This has left unsolved various economic, political and social crises, particularly those involving Iran’s income inequality in both the urban and rural sectors, and poverty. The state, with its bureaucratic machinery and various institutions, has very little accountability or transparency. The continuing crisis of wars in the region and Iran’s role within them has put considerable pressure on the regime, its economy and the army, to take a direct or indirect role in the conflicts in Afghanistan, Iraq, Syria and Yemen. Finally, the ongoing conflict with the US since the Revolution has hindered the country’s development. It remains to be seen how the response to the current crisis will affect the Islamic Republic and the considerable pressure it is now under. Over 40 years after the Revolution, the Islamic Republic is at a decisive crossroads. Interconnected crises of domestic, regional and foreign policy have put the regime under pressure. The Islamic Republic may now be facing its greatest tests to date: the unknown future of JCPOA, the difficulties of a domestic economic recovery, deep public dissatisfaction, with growing dissent and public protest, and factional divisions among the Islamists in power. Although this is not the first time that the Islamic Republic has reached a critical juncture, having survived the 1980–88 Iran–Iraq War, the death of Supreme Leader Ayatollah Khomeini in 1989 and the US–Iran crisis, it was able to overcome previous challenges through a high degree of unity among the political elite. This has changed, as the crisis at home is rupturing the unity among them, and factionalized Islamists are fighting for their own position in power. In what follows I summarize the main themes and conclusions of this book, which can be considered in three broad sections: the uneven

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development of Iran’s political economy before the 1960s; economic development between 1960 and 1979; and the state and society under the Islamic Republic since 1979.

Capitalism and the state Throughout the 20th century Iran was not able to escape the influence of the great powers that had penetrated the entire world economically. The prime mover in the process of Iran’s integration into the world market was the role of energy, and there were two reasons for this: (a) the recovery of the world economy after the devastation of the world wars; and (b) the growing importance of energy in the world market. This made Iran vital within global capitalism. Energy provided Iran with an opportunity to manage its process of development without depending heavily on income from taxation, borrowing from international financial institutions or foreign investment. Unlike Japan, India, Egypt, Turkey and most Latin American countries other than Venezuela, oil provided the economic basis of development for Iran and for the Gulf region. Iran’s growing income from oil was a blessing in disguise for a state that had been under considerable economic and political pressure – its status as an oil-producing nation has made the country dependent and subject to fluctuations in demand and prices for energy in the global market. The consequences of development since the discovery of the oil in the region have included attracting foreign capital to invest both in the energy sector and in other areas of the economy. The UAE, Qatar, Saudi Arabia and Iran are all examples of the rapid and remarkable development that has taken place in the region. Income from energy has also created a political force whose interests were different to other social classes in all of these countries, including Iran from the time of the Shah to the Islamic Republic. While the state was playing the dominant role in the transition, state employees, the new bourgeoisie and top military personnel began to develop into a new ruling class. They were determined, with the support of the great powers, to remain in power at any cost. In the post-war period, the industrialized countries had more opportunities to invest. Developed with the encouragement of the US, the state programme of land reform in Iran, although important politically, did not generate the surplus needed for industrial and urban development. The US hoped that doing so would bring the necessary stability to one of its most important allies in the region. Politically, the transformation meant that the Iranian state had to become relatively independent in order

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to manage its internal affairs, while at same time it helped the US expand its influence in the region. Although the Iranian state today is remarkably different from that of the 1950s, the growing role and influence in the region of the great powers has continued. Since the end of the Second World War, following the decline in the role of Britain, geopolitical competition over the region has been dominated by the US, with China and Russia as its two main competitors for hegemony. Given the influence of the neighbouring Soviet Union, it became vital to the West that Iran remain a close ally of it, and particularly the US. Hence, the development and stability of Iran in the post-war period became crucial for the US. This, however, was not enough to guarantee internal political stability, as the Iranian Revolution subsequently demonstrated. The Iranian state grew in leaps and bounds from having a few institutions and ministers in 1920 to 90,000 civil servants and 13 ministries in 1941. The state machinery since the post-war period has grown tremendously, with a huge army that is able to control the nation’s geographical boundaries. The state has also been fundamental to Iranian capitalist development, both under the monarchy and theocracy. The Iranian Revolution was above all a product of the transformation of Iranian society in the 1960s and 1970s, and the rapid urbanization and expansion of education, which produced various social tensions. No doubt without this transition the Islamists could have continued the political influence they had enjoyed in 1905, or the 1950s or 1960s, but they would not necessarily have held the balance of power. The growing resentment against the monarchy and its support by the great powers was possible because of the rapid growth of cities and the labour movement. Even Islamists such as Khomeini had to adjust their official ideology to fit the new political environment that developed in Iran after 1950.

Consequences of development The Iranian Revolution did not happen because of the inability of society to accommodate itself to modernization and development. On the contrary, the Revolution was a reflection of the strength of ideology in adapting to a changing world, enabling an opposition that could challenge its secular competitors. However, cultural values alone were not the only factors in the overthrow of the monarchy; the unevenness of economic transformation, caused by Iran’s integration into global capitalism, and the continuing role and influence of the great powers, were just as important.

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The Iranian Revolution also represented the growing desire of a vast majority of the nation’s people for real change in society, including towards freedom, democracy and equality. The movement in 1979 drew on both modern and traditional forces, ranging from oil and industrial workers, teachers, the bazaari and the clergy and mosques. The demands for democracy were not necessarily associated with religion or religious leaders, but they were the key demands among the Iranian people. The religious leaders accommodated themselves to secular demands, even when they sometimes appeared to contradict their own ideology. The Islamists, before and after the Revolution, had to face and respond to the economic, social, political and cultural changes that by 1979 Iran had already undergone. The concept of ‘Islamic’ is a variable that can take on many meanings, involving, politically, conflict and opposition, consensus and cooperation, or both. Islamists accommodated and adapted ideologically to the forces of capitalism and global order, as well as the demands of the masses, in various ways and forms. Islamists have always sought to articulate a new vision of society. Their manner of doing so depended on their economic and political position in society. They went from opposition to the Shah’s regime to, after the Revolution, cooperative efforts to help the Islamic state navigate the nation’s capitalist development. Individual leaders such as Khomeini and Shariati, along with various reformists and radicals, have all appealed with different meanings and results to some ‘true Islam’. The Revolution was certainly not universally welcomed by other countries around the world; it was opposed by the US, which had been Iran’s most important ally, and approached warily by neighbouring countries in the region, anxious that the Revolution might inspire their own people to rebel. In this context, the Western countries led by the US tried to engage with nations in the region in search of a way to neutralize this threat. The Iran–Iraq War and the continuing economic sanctions are good examples of how the US, Saudi Arabia, Kuwait and Iraq collaborated in trying to ensure that the influence of Iran was contained.

Islamism in power The Iranian Revolution raised hopes for prosperity, justice, democracy and an egalitarian society in a country, and a region, that had long been ruled by autocrats. In fact, the notion that traditional forces would emerge as a force to manage a modern economy had been considered unthinkable. The Revolution showed the relevance of Islamism not just in Iranian society but also in the modern world. At the beginning of the 1970s,

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when Iran was undergoing rapid modernization, it was widely predicted that religion would cease to be an effective force in the society by the end of the decade. Yet religious institutions such as the mosque, along with the political skills of some of the clergy, were vital to the overthrow of the Shah. This meant that the economic modernization was accompanied by only a limited political modernization, as religious elites took power. The replacement of the secular state with a theocracy was a major event in both Iranian and world history. For many, the Revolution represented a revival of Islam, while for others an Islamic Republic represented a new horizon in modern politics, a model that the other Muslim countries could follow. With time, and facing the reality of managing the political economy in a complex world, the Revolution changed its direction. The leaders of the Islamic Republic have had to respond to new challenges, both domestically and globally. Their approach to the role of the state in the political economy was modern. And although the postrevolutionary government, influenced by the mass movement, had called for radical social change, under the constraints of domestic conditions and pressures from the global economy these plans were gradually withdrawn in favour of adapting to the existing capitalist system. The state remained the major actor in the economy and continued to have a rentier character: as under the Shah, it continued to receive huge oil rents, eliminating the need to impose high taxation domestically. The oil revenue enabled the state to undertake a large programme of public expenditure, including spending on arms. At the same time, Iran has remained on the periphery of the world economy. Although a major regional power, the Iranian state has remained fundamentally reliant on the world economy. The Islamic Republic found itself resorting to autocratic rule, with very little popular participation in the political process. The regime has legitimized its rule with evocations of past glory and appeals to competence, although when it seemed necessary, it has also used appeals to tradition, culture or religion as well as a news media that has sought influence beyond the nation’s borders, by broadcasting in other languages, including English and Arabic. The Islamists in power promised an equitable distribution of income and social justice. It is clear that the Islamic Republic has failed to deliver on this, a fact that the different protest movement appears to demonstrate since the revolution. The distribution of income as measured by the Gini index of household wealth is lower than in other countries in the region, and unemployment has continued to be over 10 per cent (quoted in Donya-e-Eghtesad, 17 November 2017).

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As the radical elements among the ruling elite gradually moved towards a pragmatic and modernizing approach, export of the Revolution and the creation of a Muslim community no longer seemed relevant in the face of severe economic crisis and the threat of political disruption. When the regime announced the end of the war with Iraq in 1988, the consequent resumption of relations with the West allowed for relatively more openness in society. The regime made what seemed necessary concessions in the process, while Iranian Islamists developed various interpretations of the religion’s moral and political demands. The ‘theocratic’ state has continued to mobilize its forces to defend Iranian capital when it seemed necessary, including when their own hegemony seemed threatened. The end of the war and emergence of relative stability encouraged a different discourse including on the economic development and democratization of Iran. Under Khatami’s presidency a ‘reformist’ faction attempted to respond to the aspiration of the revolution of the system being shaped by democratic principles. ‘Hardliners’ resisted these changes. The two groups monopolized the political space between them for over three decades, their dispute setting the terms of the agenda for domestic and international policies. But the struggle between them ignored any wider representation of people’s socioeconomic and political aspirations. The reformists, despite an electoral victory, failed to deliver on the economic and political demand of their supporters. The hardliners crushed the Green Movement violently in 2009 (see Chapter 6). Ahmadinejad’s populist approach and his disregard of domestic and international political powers became too much for the Islamic Republic leaders, including Khamenei, to manage. This opened the space for Rouhani to introduce his discourse of reconciliation between reformists and hardliners. He hoped to lessen the domestic and international rifts, including with the US, through a path of moderation. After winning his second term, Rouhani’s effort failed abysmally, both domestically and internationally. Iran’s economy has since been in deep crisis, with economic sanctions remaining in place. Protests against the ongoing socioeconomic difficulties and Rouhani’s failure to remedy them occurred in various cities and towns in 2017–18 and again in 2019. Their slogans included ‘Reformists, hardliners, the game is over’; some even called for the return of Pahlavi regime. Rouhani has also failed to find a way to work with the unelected state apparatus, including Iran’s Supreme Leader Khamenei, over economic and foreign policy. Khamenei and the hardliners are anxious that any more political liberalization would challenge their values and political position in society. Under internal unrest and external pressure, the Islamists must now find some way to avoid a further downward spiral of a crisis that could potentially threaten the foundations of the regime.

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Great powers and geopolitical conundrums Competition between different states in the region hoping to ensure that their economic and political interests are maintained has caused much tension. Iran has been involved in fierce competition for hegemony in the region with various other powers. Of course, with the growing role of energy in the world, the nation’s importance has only grown, and it remains a vital part of the energy supply chain of global capitalism. With regard to Iran, the Western powers were initially driven by the need to ensure the availability of energy. They were keen to set up intermediate capitalist states that were strong enough to play a major supporting role in securing that. Iran, Turkey and Saudi Arabia were all considered to be regimes that supported first British and later US interests. In return, the US provided the necessary military support, including bases and economic aid. These regimes, which were in various ways all quite repressive, could not maintain their own power without the support of the great powers, which could include organizing military coups, as in Iran in 1953. The 1979 Iranian Revolution caused much anxiety for both the great and regional powers. Islamists took a radical approach towards the US and its allies in the region. The response was to impose sanctions. These have forced the Islamic Republic to look to Chinese and Russian support to offset threats from the US. Iran has also tried to build alliances with nations that have an anti-imperialist vision, regardless of their ideology. The US invasion of Iraq in 2003 helped the Islamic Republic increase its military and political influence in Iraq, and also, inadvertently, in Syria, Lebanon and Yemen, building a security wall against possible military threats from Israel in particular. The involvement of the Islamic Republic in the Syrian civil war has added to apprehension on the part of Saudi Arabia, the UAE and Israel. This was also one of the factors behind Trump’s withdrawal from the nuclear deal with Iran. The strength of Iran has brought two regional powers, Saudi Arabia and Israel, closer to each other, in the hope of curtailing the Islamic Republic’s influence and possibly enhancing their own national security. Iran, Turkey, Saudi Arabia and Israel have all been competing fiercely for dominance in the region. Apart from Iran, all of these countries are dependent on continued US military support or bases in their territory and the export to them of arms, providing a necessary security shield in the region. At this time, it is not clear what the outcome of the conflict between the US and Iran will be. With the failure of a nuclear agreement, the increased impact of sanctions means that Iran faces its greatest challenges

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since the Revolution. It is not clear how long and how well Islamic Republic leaders can weather the current storm that the country is facing.

Outlook The Islamic Republic of Iran has survived many storms, including various political movements and the 2009 upheaval that nearly threatened the foundation of the regime. The current economic crisis, which is the result of both sanctions and mismanagement, could well threaten the Islamic Republic’s survival. On 15 November 2019, a price increase of 300 per cent for fuel led to a protest movement in more than 100 cities throughout Iran. This was the most dramatic expression of anger since 1979 against the systematic corruption, lack of political and social freedom and the power of the clerical elites, particularly Khamenei. Reuters reported that 1,500 people were killed, including 400 women, as well as members of the security forces and police. Reuters claimed that the order to fire came from Khamenei, who told Iranian state officials, ‘The Islamic Republic is in danger. Do whatever it takes to end it. You have my order’ (quoted in Reuters, 23 December 2019). While the regime justifies its brutal actions with reference to ‘imperialism’, all the evidence suggests that the people on the streets came from the same population groups as those who were once the social base of the regime. They have turned their backs on the regime because of their economic suffering and the incompetence of the Islamic Republic to deliver their basic needs. The 2019 protest movement was significant because it was mainly concentrated in the poor working-class areas. Desperate to control the situation, the state used brutal repression and shut down the internet and international communication (Amnesty International, 25 November 2019). Aware of the widespread and growing discontent, Mousavi issued a statement from house arrest. He accused the government of unprecedented crimes in attacking the protesters, and putting the blame for those who had been killed or injured on the Supreme Leader with absolute powers. He compared the Islamic Republic to the monarchy before the Revolution, when he asserted: The killers of the year 1978 were the representatives of a nonreligious regime and the agents and shooters of November 2019 are the representatives of a religious government,” he said. “Then the commander in chief was the Shah and today,

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here, the Supreme Leader with absolute authority. (Fassihi and Gladstone, 2019) Adding to the growing economic difficulties, Iran has had to face a global epidemic of Coronavirus (COVID-19). Under pressure Rouhani’s government has been forced to appeal for international aid as well as a loan of US$50 billion from the IMF, which was opposed by Trump’s administration (England and Bozorgmer, 2020). COVID-19 has, however, given some needed respite from the political pressure that the Islamic Republic was under as a result of growing political protests. Given the Islamic Republic’s precarious situation and exhaustion of the neoliberal policies of both ‘reformists’ and ‘hardliners’, the two factions that have dominated Iranian politics since the Revolution, the country is entering a new phase. The leaders of the Islamic Republic are losing their credentials even among their own supporters, while there is no readily available faction within the regime to mediate between the people and the government. It remains to be seen whether anything other than violence could help the Islamic Republic maintain its rule. There are several different ways in which the regime might overcome the current economic and political crisis, although the current Trump administration’s growing pressure may leave little or no room for manoeuvre. Rouhani’s government took a big risk in negotiating a deal with the US in the hope of developing a better relationship with the West. However, the Islamic Republic has failed to accomplish what it had wanted to, while recognition of this has united the nation’s leaders in wanting to resist what Washington wishes to dictate. The US hopes that the pressure of sanctions will eventually lead to the growing unpopularity of the regime domestically, which, at the moment, seems to be happening. The US air strike on Baghdad International Airport in January 2020, killing General Qasem Soleimani, commander of the Quds Force, the elite expeditionary of the IRGC, has changed the equation. Soleimani had played a crucial role, along with the US, in removing their common enemy, ISIS, from Iraq and Syria, but at the same time Washington sought to curtail Iran’s regional influence. The US attack was a retaliation to a siege by a paramilitary group on the American Embassy in Baghdad, for which allegedly Iran, and in particular Soleimani, were responsible. In fact, the paramilitaries involved in attacking the US Embassy were not completely controlled by either the Iranian or the Iraqi government (Haass, 2020). Mounting pressure could force the Islamic Republic to accept the US terms and negotiate a new agreement, not just on nuclear energy, but also involving whatever set of demands the US administration might

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propose. This could turn out to be politically the biggest risk that the Islamic Republic has taken since 1979. This is due in part to its ideological dependence on motifs of anti-imperialism. The Islamic Republic could turn to reformists such Khatami, formulating and applying a pluralistic version of Islam. But to most Iranians, Rafsanjani, Khatami, and now Rouhani represent failed projects. In fact, Khatami admitted this recently, when he noted, ‘Today, it is very difficult to call the people to come forward and vote again’, and claimed that it is unlikely that ‘people would listen or participate in an election’ (quoted in Radio Farda, 2019). A growing number of reformist Islamists, who once played a significant role during the Revolution, have become critical of the regime. Soroush and Mohammad Mojtahed Shabestari, in challenging the regime, have called for a guarded secularism, hoping that this would safeguard the spirit of Islam (Soroush, 2000). It is possible that the Islamic Republic may revert to more draconian measures against political activities and freedom of the press, as it did in November 2019. There has, in fact, been growing dissent, including among government and political leaders, and there has been open criticism of the most prominent Islamists. The Islamic Republic has used fierce force against labour movements, arresting and imprisoning their leaders. Amnesty International’s recent reports show that the regime has been arresting and torturing union leaders in order to silence their demands (Amnesty International, 2019a). The February 2020 parliamentary elections were won overwhelmingly by the radical faction led by IRGC. Despite their victory, the election demonstrated growing disillusionment with the entire regime. As a young Iranian pointed out to a Financial Times journalist, ‘There is no difference between candidates, either a reformist or a hardliner, any more. They will not speak up for us’ (Khalaj, 2020). As a result, turnout was reduced in 2016, according to the state media, from 62 per cent to 42.6 per cent. The next step for the IRGC is to ensure that they will win the presidential election in 2021. With Parliament and presidential power, the IRGC will be firmly in control of the state. This will not always be easy for them to hold on to, however, as there is very little cohesion within the current political elites including the IRGC, army and clergy. Finally, the potential for a major political transformation is also possible if new mass movements emerge on a scale large enough to topple the regime. This requires an opposition that is capable of mobilizing and winning the support of a wide public. For this, it would need a programme that is viable and convincing. Since the 1950s, Iran has experienced various secular opposition political movements, most of which have failed

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to build momentum and win over a majority of the people. The prospects for the emergence of a more democratic society are now, in fact, far more realistic than ever. While there is no embryonic organization at this time capable of posing a systematic alternative to the Islamic Republic’s rule, under conditions of continuing crisis one could well emerge.

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Index A Abadgaran (Developer) 100 Abrahamian, E. 62, 63, 71, 78 Abu Bakr, Caliph 58 Afghani, Sayyid Jamal al-Din 61, 67 Afghanistan 10, 47, 111, 116, 118, 119, 132, 133, 134, 142 agriculture 13, 19 Al-Ahmad 69 Ahmadinejad, Mahmoud and conservatives 100, 105–6 election of 6, 27–8, 90, 105–7 and Khamenei 27, 90, 105–6, 107, 151 and nuclear programme 29, 123–5 policies of 28–9, 48, 89–90, 106, 107–8 and populism 63, 105, 151 post-election protests 90, 106 and Rafsanjani 125 and Rouhani 30, 125 and United States 48, 124 Algar, H. 70 Ali 58–60 Allied occupation 16, 38 allocation state 36 Amnesty International 155 Amuzegar, J. 104 Anderson, B. 56 Anglo-Iranian Oil Company (AIOC) 17, 39 Anglo-Persian Oil Company (APOC) 33–4, 37–8 Ansar-e Hezbollah 27, 105 anti-colonialism 80, 82 anti-imperialism 2, 21, 23, 33, 63, 68–9, 81, 115, 130

Arab Spring 138 Arabian and American Oil Company (ARAMCO) 39 Arjomand, S. 76 arms industry/supply 134–5, 140 spending on 41, 78, 119, 135 see also military Asgar-Oladi, Habibollah 101, 102 Ashura 59 Assembly of Experts 96, 97, 98 authoritarianism 36–7, 74, 88, 93, 138 autocratic rule 150 ‘axis of evil’ 27, 47, 116, 123, 130, 137

B Baghdad Airport attack 154 Bahrain 131, 135, 136, 138, 139 banking 15, 21, 22 Basij 27, 95, 100, 104, 106 bazaar/bazaari and conservatives 27, 101 importance of 13, 20, 24, 64 and Khatami 27 and Khomeini 84, 99 post-revolution 24, 25, 27 and Rafsanjani 102 and religion 20, 57, 64, 66, 68, 77, 83, 84, 99–100 and Revolution (1979) 66, 83, 84, 99 Bazargan, Mehdi 23, 69, 70–1, 83, 96 Beblawi, H. 36 Bill, J.A. 17, 38 birth control 71 Bonyad Mostazafan va Janbazan 86–7, 100, 103

173

CONTEMPORARY IRAN

Borger, J. 107 Britain 46 and Central Asia 133 historical role in Iran 13–14 military coup 18, 40 occupation of Iran 15, 38, 120 and oil industry 17, 33–4, 37–8, 39, 114 repeated interventions 114 and US 16, 38–9, 40 Bruce-Lockhart, A. 119 Brunsden, J. 126 Brzezinski, Z. Burujerdi, Ayatollah 65, 99 Bush, George W. 27, 47, 116, 117, 119, 125, 133, 137 Bushehr plant 47, 116

C Callinicos, A. 117 capitalist development 11–32, 147–8 alternative model 5–6 arrival and impact of capitalism 12–16 core and-periphery states 131 impact of the West 4, 5, 13–14 industrialization 19–21 and nationalism 16–21 oil industry 11–12, 13, 15–16 overview of 2–6 in Persian Gulf 131 regional influence and ambitions 131 Reza Shah’s modernization 15–16 theocracy and development 21–31 underdevelopment 3 uneven development 4, 18–19, 35, 42 and world economy 3–4, 5, 13, 30–1, 35–6, 150 see also post-revolutionary state and politics Carter, Jimmy 120 Central Asian region 115–16, 132–3, 140–2 Central Treaty Organization (CENTO) 121 Chahbahar, India 141, 142

China defence budget 119 imports from 29 New Silk Road 119, 133, 141, 142 nuclear cooperation agreement 47 relationship with Iran 29, 114–15, 118, 123, 132, 141 rise of 118–19, 127, 132–3, 134 and Russia 142 and Syria 125 and United States 116, 118, 126 Christian Science Monitor, The 124 Chubin, S. 88 class see social class Cold War 16–17, 18, 114–16, 130 collective action, role of 79 colonialism 14, 67–8, 80, 82 Communism 3, 15, 16–17, 18n4, 68, 69 Conference on Interaction and Confidence- Building Measures in Asia (CICA) 123 Constitution of the Islamic Republic 85–6, 87, 96, 99, 103, 120 Constitutional Assembly 70 Constitutional Reform Council 99 Constitutional Revolution (1905–11) 14, 61–2, 76 Council of the Cultural Revolution 103 coups 3, 15, 18, 23, 34, 40, 114 COVID-19 epidemic 127, 154

D D’Arcy, William 37 Davies J-Curve 78–9 Dehghan, S.K. 107 dependency theory 54 Dos Santos, T. 3 dress code 71, 98, 101

E economic sanctions see sanctions education 41, 68, 69, 101 Egypt 39, 131, 138 Ehteshami, A. 28 Eisenhower, President 40 Esposito, J.N. 117

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European Union 115, 118, 126 Executives of Reconstruction 24–5 expectations of population 78–9 Expediency Council 94, 97, 98, 100

F factionalism 22–3, 98–100, 109, 124, 146, 154, 155 Fedayyan-e Khalq Organization (FKO) 86 Financial Times 155 France 46, 77, 112, 126 Frank, A.G. 3 free trade zones 141 French Revolution (1789) 77 fuel prices 153 Fukuyama, F. 116 fundamentalism 54, 62

G gas industry 12, 28, 48, 111, 139 gender segregation 101 Generalissimo of Reconstruction 24–5 Germany 119, 120 Gordon, M. 121 Green Movement 106–7, 151 Guardian Council 25, 26, 97, 98, 107, 108 Gulf Cooperation Council (GCC) 135, 136–7, 139 Gulf War (first) 122, 136–7

H Hajjarian, Said 27, 101, 104, 110 Halliday, F. 3–4, 70, 78 Hashemi, Mehdi 121 hegemonic stability theory 117 Hezbollah 101, 121, 126, 139 Hiro, D. 120 Hodgkin, T. 76 Holland, S. 126 hostages 121 Hull, Cordell 38 Huntington, S.P. 103 Hussein, Ali ibn 59 Hussein, Saddam 88, 121, 122

I Iannuzzi, R. 134 Imamat 59 imperialism 14, 61–2, 67–8, 69, 81, 112, 115 anti-imperialism 2, 21, 23, 33, 63, 68–9, 81, 115, 130 import substitution industrialization (ISI) 11, 19–20 imports 11, 15, 19–20, 29, 41 India 29, 123, 132, 140, 141, 142 Indian Ocean Region (IOR) 115–16, 141 industrialization 19–21, 64, 77, 79, 146 inequalities 34, 42, 50, 55, 77, 78, 79, 104, 146 inflation 29, 43, 90, 108 Institute of Planning and Management Education and Research 109 intelligentsia 66, 82 International Monetary Fund (IMF) 6, 29, 35, 46, 48, 109, 138, 154 Iran-Iraq War (1980–88) cease-fire 46, 122 as ideological struggle 23–4 and Iranian territory 121 and oil industry 44, 45–7 post-war reconstruction 24–5, 89 and Revolution (1979) 88 and United States 23, 24, 46, 115, 121 Irangate 121–2 Iranian Revolution see Revolution (1979) Iraq ambitions of 122 Gulf War (first) 122, 136–7 Iranian influence in 131, 138–9 and Saudi Arabia 136 and United States 23, 24, 46, 115, 116, 118, 119, 121, 133, 134, 135, 152 See also Iran-Iraq War (1980–88) IRGC (Islamic Revolutionary Guard Corps) 22, 24, 26, 27 2020 election 155 and Ahmadinejad 28, 90, 106 future of 155 income from oil 100 and Khamenei 100, 106 power of 28, 66, 87, 98, 106 and Rouhani 109 and Soleimani, Qasem 154

175

CONTEMPORARY IRAN

ISIS 123, 141, 142, 154 Islamic Association of Engineers 69 Islamic Coalition Council 101 Islamism 2–5, 53–72 and European imperialism 61–2 and factionalism 23, 98–100 ideology of Islam 55–60 Islam in Iran 60–71 Islamism in power 149–51 and modernity 54,55, 62, 69, 70, 74, 81, 150 and nation-state 67–8 and new interpretations of Islam 69 and Orientalism 54 political Islam 87–9, 94 and populism 62–4 portrayal of 54 and Revolution (1979) 4–5, 75–6, 80–5, 87–92, 146, 149–50 and social class 56, 57, 62–6 state, society and development 5–6, 67–71 Sunni and Shi’a divide 57–61 theocracy and development 21–31 see also post-revolutionary state and politics Israel 39 and Iran 23, 115, 121, 139, 152 and nuclear programme 124–5 role in the Middle East 137 and United States 114, 115, 119, 134, 137, 138

J Janati, Ahmad 107 jihad 61 Jihad-e Sazandagi 22 Joint Comprehensive Plan of Action (JCPOA) 113, 134, 146 judiciary 26, 87, 96, 97, 104

K Kamrava, M. 83 Kaplan, R. 116 Karroubi, Mehdi 92, 106 Kashani, Ayatollah 17–18, 40, 68 Keddie, N.R. 78–9

Khabar Online 29 Khalaj, M. 155 Khalilzad, Zalmay 47 Khamenei, Ayatollah Ali and Ahmadinejad 27, 90, 105–6, 107, 151 and conservatives 100–1 and corruption 110 and economics 25 and nuclear programme 124, 126 protests against power of 153 religious credential of 96 and Revolutionary Guards 98 and Rouhani 151 as Supreme Leader 99, 100 Kharijites 59 Khatami, Mohammad 25–7, 46, 47, 103–5, 137, 151, 155 khod kafa’i (self-sufficiency) 100 Khomeini, Ayatollah Ruhollah and factionalism 23, 99 influences of 5 Iran-Iraq War (1980–88) 46, 88 Irangate 122 and Islam 54, 63–4, 70, 81–2, 84, 92, 96 and Mohammad Reza Shah 43, 65, 76–7, 81 and oil industry 43 and populism 95 post-revolutionary state and politics 70, 93, 94, 95–6 Revolution (1979) 74–5, 75–6, 79–80, 81–2, 86, 92 and the state 67, 70 Kissinger, H. 47, 117 Kramer, M. 54 Kuwait 122, 135, 136

L land reforms 19, 22, 41, 64, 147 Le Maire, Bruno 126 Lebanon 121, 131, 139 legal system 68, 96, 97, 100 liberalism 23, 25–7 Literacy and Health Corps 41 literacy rates 1, 69 Luciani, G. 36

176

INDEX

M Maritime New Silk Road 133 Marshall Plan 38 Marxism 2, 5, 63, 66, 69, 82, 84 Mashaei, Esfandiar Rahim 107 maslaha (expediency) 88 McFarlane, Robert 122 Mehr News Agency 30 Meissner, H. 36 middle classes 27, 63, 65–6, 69–70, 74, 77, 80, 91, 101 military militarization 41, 134–5 power 117–18, 126, 127, 129, 133, 135, 137 presence (US) 119, 120, 126, 129, 135, 137 spending on 41, 119, 135 see also arms; IRGC (Islamic Revolutionary Guard Corps) Moaddel, M. 64 modernization and Islam 54,55, 62, 69, 70, 74, 81, 150 and oil industry 34, 35, 41–2 and Revolution (1979) 77–8 and Reza Shah 15–16 Mohammad, Prophet 57, 58 Mohammad Reza Shah and causes of the Revolution 76, 78, 80, 81, 82–3 cult of personality 42 and Khomeini 43, 65, 76–7, 81 and Mossadegh 18 and oil industry 42–3 and religion 65, 76–7, 81, 82–3 replaces father 16, 120 and Soviet Union 116 and Western powers 81, 116, 120 White Revolution 19, 64–5 Mojahedin-e Khaleq Organization (MKO) 5, 66, 86 Montazeri, Ayatollah Hossein-Ali 102 Morrison, D. 124 Mosaddegh, Mohammad 17–18, 33–4, 39–40, 84, 120 mosques 69, 83 mostakbarin (oppressors) 63–4, 66, 86 mostazafan (oppressed) 63–4, 66, 86–7, 99

Motahhari, M. 82, 84 Mousavi, Mir-Hossein 92, 99, 106, 153–4 Muawiya 58–9 Muir, J. 104 Muslim Brotherhood 138

N Nasr, S.H. 58n4 Nasri, F. 77–8 nation-state 67–8, 87–8 National Front 17–18, 39, 40 National Security and the Economic System of Iran 30 nationalism evolution of in Iran 68–9 and foreign policy 115 and oil industry 39–40 rise and failure of 16–21 third world nationalism 63, 75, 92 nationalization oil industry 17, 39–40, 49–50, 120 scale of 22 neoliberalism 6, 11, 25, 28, 30–1, 35, 89, 102, 108–10 nepotism 102 Netanyahu, Benjamin 124–5 New Silk Road 119, 133, 141, 142 nezam (establishment) 95 Nixon Doctrine 120 nomads 13 Non-Aligned Movement (NAM) 123, 132 North American Free Trade Agreement (NAFTA) 118 North, Oliver 121 Nouri, Sheikh Fazlollah 76 Nuclear Non-proliferation Treaty (NPT) 125 nuclear programme/deal 102 and Ahmadinejad 29, 123–5 history of 47 and United States 29, 31, 47, 49, 113, 123–6, 131, 134, 139

O Obama, Barack 31, 112, 117, 118, 119, 126, 133–4, 139

177

CONTEMPORARY IRAN

Oborne, P. 124 oil industry 11–13, 33–51 and Ahmadinejad 28, 29 and alliance building 115 boycott of 34, 39, 40, 121 and Britain 17, 33–4, 37–8, 39, 114 early impact of 37–40 exports of 36, 37, 41, 44, 45, 48, 121 and foreign capital 147 impact of discovery 15–16 implications of the resource 33–7 and Iran-Iraq War (1980–88) 44, 45–7 and Khomeini 43 and modernization 34, 35, 41–2 nationalization 17, 39–40, 49–50, 120 and politics 42–4 post-Revolution 44–51 price of 11, 34, 35, 41, 42, 43, 45, 114, 122 production levels 40–1, 43 and Rafsanjani 25 redistribution of oil wealth 41, 42 reduced dependence on 44–5 and regional hegemony 114 revenue from 15, 18–19, 20, 25, 34, 35–6, 37, 41, 43, 44–5, 45, 48, 147 and sanctions 29, 48 and uneven development 40–4 and United States 38–9, 40, 121 Oman 139 ommat (community) 99 Organization of Petroleum Exporting Countries (OPEC) 34–5, 123 Organization of the Islamic Conference (OIC) 123, 132 Orientalism 5, 36, 54, 74 Osanloo, Mansour 29

P Pahlavi dynasty 3, 114 Pakistan 141 Palestine 23, 131, 138 peasantry 19, 64, 95 Peel, M. 126

People’s Mojahedin Organization of Iran (PMOI) 66, 69–70, 82, 85 Pesaran, H. 78 Peterson, S. 125 petty bourgeoisie 62–3, 70 pilgrimages 69 political Islam 87–9, 94 popular sovereignty 87–8 population 3, 69 populism 62–4, 74–5, 95, 105, 107, 151 post-revolutionary state and politics 93–110, 150–1 conservative alliances 100–1, 105, 105–6 contest for power 105–10 and factionalism 98–100, 109 moderators and moderations 101–5 and neoliberalism 108–10 pluralism of institutions 96, 97 power structure 96, 97 pragmatists and reformists 101–2 republican and Islamic institutions 95–105 state capitalist approach 99–100 prices 25, 41, 107–8, 153 private sector 22, 27, 28, 100, 101, 102 Project for the New American Century (PNAC) 133 protests (2019) 153–4

Q Qajar dynasty 14, 15, 62 Qalibaf, Mohammad Bagher 108 Qatar 133, 135, 138, 139, 140 quietists 60, 84

R radical Islam, and Revolution (1979) 63, 69–70, 80–5 Radio Farda 155 Rafsanjani, Akbar Hashemi and Ahmadinejad 125 election of 24, 27, 105 factionalism 99 failure of 155 Iran-Iraq War (1980–88) 46, 88 nepotism 102

178

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post-war reconstruction 24–5 as reformist 101, 102 and regional influence 136, 137 and United States 46, 121–2 Ramazani, R.K. 122 Reagan, Ronald 121–2 reformist movement 101–5, 151, 155 regional influence and ambitions 129–43 aftermath of Revolution 136 balance-of-power strategy 130 Central Asian countries 140–2 challenges 141–2 and end of Cold War 132 great and regional powers 130–4, 152–3 invasion of Kuwait 136 of Islamic Republic 136–42 militarization of the region 134–5 post-war 136 and transport infrastructure 140–1 rentier state 6, 35–6, 36, 150 Reuters 153 Revolution (1979) 73–92, 148–50 and capitalist development 21–31 causes of 73, 76–9, 85, 148–9 enormity of 73–4 interpretations of 75–80 Iran-Iraq War (1980–88) 88 Islamists’ view 75–6 and modernization 77–8 and oil industry 43–4 and paradox of political Islam 87–9 and populism 63 and radical Islam 80–5, 92 rising expectations theory 78–9 role of collective action 79 sacrifices of 89 Shi’a Islam 76–7 and social class 74–5, 79–80, 82, 84–5 and swing from radicalism to reformism 89–91 from theories to practices 85–91 and United States 115, 149, 152 Revolutionary Guards see IRGC (Islamic Revolutionary Guard Corps) Reza Shah 3, 13, 15–16, 49, 68, 120

Richardson, Bill 115–16 rising expectations theory 78–9 Rodinson, M. 55–6 Rouhani, Hassan and Ahmadinejad 30, 125 and economic difficulties 154 election of 29–30, 90–1, 108 failure of 151, 155 and Khamenei 151 policies of 30–1, 48–9, 91, 94–5, 108–9, 151 and United States 30–1, 49 Roy, O. 66 Rumsfeld, Donald 125 rural to urban migration 19, 64, 66 Russia and Central Asia 133, 140, 141 and China 142 defence budget 119 nuclear programme 47 relationship with Iran 114–15, 123, 131–2, 141–2 Russian Revolution 15, 61–2, 83–4 and Syria 125, 134, 139 as threat to US 116 wars with Iran 61 see also Soviet Union

S Sadr, M.B. 5 Safavid dynasty 60–1 Said, E. 54 sanctions 47–9 and Ahmadinejad 29, 48, 107–8 and China 141 continuous 141 impact of 29–30, 48–9, 90, 107–8, 125, 127, 132, 152–3, 154 and Rouhani 30, 31, 49 and Trump 31, 113, 127 Saudi Arabia and Arab Spring 138 arms spending 135 defence budget 119 execution of Shi’a cleric 140 and Iraq 122, 136 oil industry 16, 39, 45 and Qatar 139

179

CONTEMPORARY IRAN

Saudi Arabia (continued) and regional hegemony 114, 115, 135, 139 and United States 38, 39, 114, 122, 130, 132, 134, 152 Wahhabi ideology 138 Second World War 16, 38, 120 secularism 23, 26, 53–4, 62, 65, 68, 69, 70, 77, 80, 86, 88, 155–6 post-revolutionary state and politics 94, 95–6 separatist revolts 87, 95 Shabestari, Mohammad Mojtahed 155 Shanghai Cooperation Organization (SCO) 123, 132 Sharia law 100 Shariati, A. 5, 63, 66, 74, 80, 82, 149 Shariatmadari, Ayatollah 65, 84, 99 Shi’a Islam xiv adaptation of 81 and Arab Spring 138 in Bahrain 138 development of different sects 60n6 introduction of in Iran 60–1 in Iraq 122 and Revolution (1979) 76–7 roots of divide with Sunni 57–60 and Saudi Arabia 140 Singh Roy, M. 108 Skocpol, T. 77 social class and Islamism 56, 57, 62–6 main class base 62–3 middle classes 27, 63, 65–6, 69–70, 74, 77, 80, 91, 101 petty bourgeoisie 62–3 post-revolutionary state and politics 95 and Revolution (1979) 74–5, 79–80, 82, 84–5 social movement model 76 Sokolosky, Shapiro 134 Soleimani, Qasem 154 Sorel, G. 73 Soroush, Abdolkarim 101, 103, 104, 155 South Pars Persian Gulf natural gas field 139

Soviet Union and Central Asia 133 Mohammad Reza Shah 116 occupation of Iran 38, 120 repeated interventions 114 as superpower 114 and United States 16–17, 18, 114–16, 120, 130, 132 see also Russia Stockholm International Peace Research Institute (SIPRI) 119, 135 Strange, S. 117 Strategic Pivot 126, 134 strikes 28–9, 43–4, 86 Structural Adjustment Program (SAP) 109 students 27, 66, 69–70, 80, 82, 104, 108 subsidies 25, 41, 90, 107–8 Sufism 60 Sunni Islam xiv, 57–61, 138–9 Supreme Leader 99 absolute power of 88, 120–1 basis for authority of 60, 96 as elected position 104 role of 23n8, 87, 88, 94, 97, 100, 151 and United States 120–1 Syria 121, 125, 132, 134, 139, 141–2, 152

T Taheri, A. 65 Taleghani, Mahmoud 5, 80, 84 Taliban 46, 130, 141, 142 tawhid (oneness) 82 Tehran Times 89 theocracy and development 21–31 and liberalism 25–7 post-war reconstruction 24–5 radical turn 27–9 see also Islamism; post-revolutionary state and politics third world nationalism 63, 75, 92 Tobacco Movement 67 Trans-Pacific Partnership (TPP) 118 Transatlantic Trade and Investment Partnership (TTIP) 118 transport infrastructure 15, 140–1

180

INDEX

Tripp, C. 88 Trump, Donald approach of 31, 113, 117, 118, 119 and arms sales 134, 135 and Iraq 116 and nuclear deal 31, 49, 113, 126, 131 US defence budget 119 Tudeh Party 18nn4–5, 68, 69 Turkey 152 Twelvers 60

U UAE 131, 133, 135, 136, 139, 140, 152 ulama 15, 18, 83, 93 Umayyad 59, 60 umma 68, 87, 95 unemployment 25, 29, 41, 89, 90 United Nations 29, 46, 48, 88, 125, 136 United States 111–27 and Ahmadinejad 48, 124 approach of 16–17, 112–16, 120–5, 142, 152 attack on Baghdad Airport 154 ‘axis of evil’ 27, 47, 116, 123, 130, 137 and Britain 16, 38–9, 40 and Central Asia 133 and China 116, 118, 126 Embassy seizure 44, 121 and Europe 137 future of relationship 154–5 and geopolitical tumult 114–19 hegemony of 16–17, 112, 115–19, 147–8 Irangate 121–2 Iran’s counter-diplomacy 119 and Iraq 23, 24, 46, 115, 116, 118, 119, 121, 133, 134, 135, 136–7, 152 and Israel 114, 115, 119, 134, 137, 138 military coup 18, 40 military presence 119, 135, 137 nuclear programme/deal 29, 31, 47, 49, 113, 123–6, 131, 134, 139 occupation of Iran 38–9 and oil industry 38–9, 40, 121

and Rafsanjani 46, 121–2 reconciliation and reaction 125–7 and regional powers 133–4, 152 and Revolution (1979) 115, 149, 152 Rouhani 30–1, 49 and Saudi Arabia 38, 39, 114, 122, 130, 132, 134, 152 and Shah 18 Soleimani, Qasem 154 and Soviet Union 16–17, 18, 114–16, 120, 130, 132 as superpower 16–17, 114 USSR see Soviet Union Usulgarayan (‘principalists’) 105 Uthman ibn Affan 58

V Velayat-e Faqih 60, 71, 82, 87, 88, 96, 103 Velayat-e Faqih-e Motlaqeh 88 Velayati, Ali Akbar 122

W Wahhabi ideology 138 War on Terror 117 White Revolution 19, 64–5 women, position and rights of 64–5, 71, 101 World Bank (WB) 6, 35, 46 world-system theory 3–4 World Trade Organization (WTO) 47

X Xi Jinping 119

Y Yazdi, Mohammad 26, 104 Yazid 59 Yemen 131, 138, 139

Z Zubaida, S. 63 Zweiri, M. 28

181