To Understand Iranian Foreign Policy, Look at Iran's Politics at Home

Iran’s Supreme Leader Ayatollah Ali Khamenei, a cleric who will turn 80 in July 2019 and has ruled over Iran since 1989, has made a political career out of demonizing the United States. And yet, he knows full well that at some point—whether in his lifetime or after—Tehran has to turn the page and look for ways to end the bad blood that started with the birth of the Islamic Republic in 1979. But Khamenei’s efforts to make the United States a strawman are not easily undone in present-day Tehran, where anti-Americanism is the top political football, as the two main factions inside the regime—the hardliners versus the so-called reformists—battle it out for the future of Iran.

Meanwhile, President Donald Trump’s “maximum pressure” on Iran has made it all but impossible for Khamenei to meet Washington half-way. Accordingly, the best Khamenei can do for now is to wait out the Trump White House. There will be no Khamenei-Trump summits. That much is abundantly clear if one listens to the chatter from Tehran. But the issue of possible relations with post-Trump America is still hotly contested in the Islamic Republic. In the meantime, with Trump’s re-imposition of sanctions from November 2018, Tehran’s hope in the short term is that Europe, together with Iran’s more traditional supporters in Moscow and Beijing, can give Iran enough incentive so that it can ride out the next few years as its economy comes under unprecedented pressure.

The Fight in Tehran over the United States

Khamenei’s speech on January 9, 2019, when he called Trump administration officials “idiots,” was not coincidental or simply a case of his emotions running out of control. There is a fight inside the Iranian regime about whether to talk to the Americans or not. President Hassan Rouhani’s government, along with media that support his ostensibly moderate government, have launched a subtle campaign to argue for talks with the United States. That is at the very least what Khamenei suspects is happening.

Khamenei and his inner circle are not necessarily against talking to Washington, but they want to be the ones who shape, if not control, any process of detente. Khamenei set this course weeks ago when he said, “Even if Iran negotiates again with America, it will not be with Trump.” But it is a policy recommendation that many in the rank of the Rouhani government find to be unrealistic, unsustainable and costly. These people, who Khamenei calls “America-fixated” in his speeches, are warning that by summer 2019 the ongoing socio-economic protests occurring in Iran might get out of control and that Tehran should talk to Trump before it’s too late and more protests in Iran break out.

Over the course of the last year, the price of basic goods has risen rapidly in Iran, an issue that can hurt the regime badly since higher prices will hit the poorer classes disproportionately. The situation is so bad that the Khamenei office is deliberately fabricating stories about how the Supreme Leader is no longer eating red meat in sympathy with the poor. Mohammad Golpaygani, the head of Khamenei’s office who very rarely speaks to the media, said that “wealth distribution has and always will be a key pillar of the Islamic Republic.” Such public relations efforts by Khamenei and his closest associates shows that there is real fear about social unrest due to the rising cost of living, which is a direct result of American sanctions. Official data from Iranian government sources show that the average worker’s purchasing power has declined by 70 percent over the course of the last year. This is terrible news for the regime. Workers and other groups that make up the lower social classes in Iran are viewed by the regime as a critical demographic that needs to be kept politically mollified. Anti-regime mobilization by workers is a hyper-sensitive point, and the problem is not going away despite recent government promises of wage increases.

Given such realities in Iran, and the direct role the United States plays, the inevitability of the American question is not under dispute within the power ranks of the Islamic Republic. In recent months, both Khamenei and Rouhani have on a number of occasions hinted at the resumption of diplomatic ties with the United States. From the top, Khamenei’s comment that the slogan “Death to America” only means “Death to Trump, Pompeo and Bolton,” is obviously meant to keep the door open for future talks with the United States. Rouhani’s comments that dialogue with the America is possible “if it admits to its past mistakes” is also a clear signal that Tehran is preparing the ground to resume talks with Washington as soon as Trump leaves the White House.

But the hardline camp fears that the ultimate aim of Rouhani is to use the issue of sanctions and the necessity to find a way to talk to Washington as a pretext to shoot for a larger reform process of the nature of the Islamic Republic. Such fears have even led to talk about the Iranian parliament, the Majlis, impeaching President Rouhani and removing him from office. Those hardline parliamentarians who have set this process in motion have about 15-20 votes out of the 290 members of the Majlis. An impeachment is therefore not possible at this moment in time. It is, however, important to note that the rivals of Rouhani in the Majlis do not really want to impeach him. They know it is not an option for one simple reason: Khamenei has shown no interest in seeing Rouhani removed until his term in office comes to an end in 2021. Instead, Rouhani’s rivals have a different aim in mind with the impeachment process. That is to tarnish Rouhani’s reputation as much as possible, and such an impeachment motion helps keep a negative light on Rouhani. Hence the aim is to smear Rouhani’s image so as to undermine his political future after the presidency. Not to be forgotten is that Rouhani is today considered as a viable candidate to succeed the 80-year Supreme Leader Khamenei when he passes away, a prospect that the hardline camp likely will fight tooth and nail.

Besides slinging mud at opponents, the hardline camp has no real solution to Iran’s deep structural problems. In early 2019, Khamenei himself introduced the idea of “Islamic Republic 2.0.” It came as a lengthy statement on the 40th anniversary of the “Islamic Republic” and advised younger Iranians on how to keep the revolution alive. It was anything but a “strategic” rescue plan. Instead, it was the usual sort of statement that Khamenei always gives. He defended the Islamic Republic and only marginally admitted that the regime makes mistakes as well. In regard to domestic policy and the ideology of the regime, there was otherwise absolutely no sign of admission of guilt by him or that Tehran needs to change course in any way. The same intransigence was also evident in his remarks about foreign policy. Khamenei again said that “there is no point in talking with the Americans” as they cannot be trusted, and he also said the Europeans are not much more reliable than the Americans. This statement by Khamenei ignores that Iran is actively pursuing better relations with the Europeans. Overall, the speech was heavy in flowery language but offered nothing new and has already been widely condemned by many circles in Iran as a sign of Khamenei’s detachment from reality.

Europe, Russia and China to the Rescue?

At the Munich Security Conference in February, Iran’s Foreign Minister Mohammad Javad Zarif made it clear where Iran stands vis-à-vis Europe. He said Europe is not doing enough to facilitate trade with Iran—which Tehran sees as a must to keep Iran in the 2015 nuclear deal—but that Tehran knows that the Europeans are standing up to the United States on the question of saving the nuclear deal. In other words, this was a public approval of European efforts. Zarif also said that the Europeans have a choice to make: to protect their own sovereignty or to do exactly as the United States asks them to do on any major international issue. He knows full well that this is a message that will go down well among the Trump-wary Europeans. Zarif also said that the “Islamic Republic” is not perfect and there is much more that can be done to improve human rights in Iran. He then said, to the largely Western audience, that many of Europe’s other allies in the Middle East also have human rights problems but that does not stop Europe from working with them.

Finally, Zarif explicitly stated that Israel wants war with Iran. If one looks at Zarif’s key points together, it is clear that his principal aim is to convince the Europeans to keep engaging with Iran. According to Zarif, the Iranian state as it stands offers the best available scenario for negotiations, and working with Iran slowly, while ignoring American and Israeli pressures, is far better for European security than war with Iran. It appears that the Europeans agree that talking to Iran—despite all the differences that exist—is the best option. Meanwhile, during his attendance in Munich, Zarif in fact never excluded the possibility of future talks between Iran and the United States. The United States had sent the largest delegation ever to this Munich Security Conference, and some leading members—such as former Vice President Joe Biden—are openly in favor of rejoining the nuclear deal of 2015 that President Trump abandoned in 2018.

For Iran to keep the door open to Washington makes plenty of geopolitical sense. Take Tehran’s diplomatic and economic dependence on Russia and China, which the Iranians are simply not too happy about. In recent months, one of the most discussed foreign policy issues in Tehran has been whether Iranian and Russian cooperation in Syria is about to officially end. The Iranians had been pleased that Moscow had announced it would not participate in the allegedly anti-Iran conference that was held in Poland in February. In that same time period, Russian Deputy Foreign Minister Sergei Ryabkov said that “Iran and Russia are not allies in Syria” and that “Russia supports Israel’s territorial integrity.” These comments were not a surprise to Tehran but were predictably troubling from Tehran’s perspective as the Russian position had now been expressed openly for the Iranian public to digest. This was followed by a top Iranian parliamentarian’s statement that “Russia turns off the [Russian-supplied] S-300 anti-missiles systems [in Syria] whenever the Israelis attack Iranian assets in Syria.” Such realities showcase ongoing tensions in Iranian-Russian relations.

Iran’s relations with China are not waterproof either. Despite much hope in China, the Iranian authorities are alarmed by a massive drop in trade in recent months. Trade between the two countries came to $1.7 billion in January 2019, which represents a sharp fall of 54.8 percent compared with trade in last year's corresponding period. Both Iran and China are exporting less to each other. Despite visits to China by a long list of top Iranian officials since the Trump administration re-imposed sanctions on Iran, Tehran is expecting that trade with China will continue to suffer as the Chinese are careful not to anger Washington too much by ignoring American sanctions on Iran. The irony is that Tehran had hoped that Beijing would more or less ignore American sanctions since they are not subject to international agreement and are only a demand from Washington.

Trump’s Big Test on Iran

In Washington, many are now of the opinion that the Trump administration’s “maximum pressure” policy toward Iran has failed. The danger is that President Trump also accepts this reality and then has to decide on his future course. He has three main options: to attack Iran’s military (directly or indirectly), to cut a deal with Iran or to keep things as they are, which is that sanctions stay in place but nothing more will be done.

On the first point, there is a very small chance that Trump will confront the Islamic Republic militarily. Unless Iran does something extremely provocative, then Trump will not want to engage in a military conflict. It wouldn’t do much good for him politically at home just before the 2020 U.S. presidential elections. There is a chance for some limited U.S. military action against Iran, particularly in Syria, but not a full-out war. Meanwhile, at the moment there is almost no chance that Khamenei would want to reach a deal with Trump outside the nuclear framework of 2015.

This means that the United States will most likely decide just to keep the sanctions on Iran, do little else and hope for a new Iranian revolution instead. The problem for the United States is that the Europeans and others are looking for ways to undermine the U.S. “maximum pressure” campaign. Most notable, the Europeans have unveiled a payment system for trade with Iran that will go around U.S. sanctions. Tehran still wants to see far more European action aimed to help Iran overcome American sanctions and pressure. In particular, Tehran wants to see more trade, for the Europeans to resume buying Iranian oil and for the Europeans to much more effectively and speedily start channels for financial (banking) transactions between Iran and Europe. Tehran also wants the Europeans to stop pressing Iran to end its missile program, which it has repeatedly refused to do.

In other words, the Iranians believe that it is an opportune moment to push the Europeans for serious concessions. In this effort, Khamenei plays the role of the “skeptic” inside the Iranian regime, but the overall strategy of Tehran is to keep negotiating with the Europeans in the hope that Europe will ultimately find ways to work out an arrangement with Tehran while Trump is in office. This might very well work out; however, the ruling class in the Islamic Republic is still only delaying the inevitable: when and how to begin the process of de-escalation with the United States.

Alex Vatanka is a Senior Fellow at the Middle East Institute. He is the author of the forthcoming book The Making of Iranian Foreign Policy: Contested Ideology, Personal Rivalries and the Domestic Struggle to Define Iran’s Place in the World. Follow him on Twitter at: @AlexVatanka.