Part One Examining the political, social, and economic life of Iran in 1396 inevitably begins with events that surprised analysts both inside and outside the country in the first month of winter. The January volcano, which encompassed around one hundred cities across the country, demonstrated that Iran's crisis had taken on new dimensions and that the Islamic Republic, at the end of nearly four decades of experience, faced questions for which it had no answers.
Accumulation of Discontent In the last two months of 1396, the January volcano sparked heated discussions at media, expert, and academic levels in Iran. There are tendencies that try to downplay this uprising by pointing to the relatively limited number of protesters involved, especially in comparison to the multitude that took to the streets in 1388, particularly in Tehran. Radical ideologues affiliated with the regime also attribute this uprising, as usual, to "foreign interference." Such interpretations cannot be taken seriously. Some officials of the Islamic Republic and even some analysts associated with the so-called "principlist" factions openly emphasize the rapid expansion of the January uprising with "structural-breaking" slogans to many medium and small cities, considering it a major warning for Iran's political system. Abdolreza Rahmani Fazli, the Minister of Interior in Hassan Rouhani's government, stated in an interview with the newspaper "Iran": "In our investigations, we did not find any organization of the protests. In clearer terms, we did not conclude that a group, faction, or opposition organized the protests from outside." Hessameddin Ashna, head of the Strategic Studies Center of the Presidency, views the events of January as follows: "We must believe that these protests were a serious warning for decision-makers... If we do not take these warnings seriously, we will face a catastrophe."
It is no longer a "taboo" to say that the accumulation of discontent in the country provided the ground for the January uprising, even by official figures of the Islamic Republic. Of course, these economic grievances are primarily emphasized by analysts who are tolerable for the regime, while the political roots of the uprising, especially the religious essence of the regime and its consequences for both the daily lives of people and the fate of the country, are kept in the dark or only superficially alluded to as much as possible. The reality is that in the expansion of discontent and the flare-up of protests in January, the country's economic collapse played as significant a role as the political orientations of the Islamic Republic in domestic and foreign arenas and the hardships and pressures imposed by the religious regime on the people, especially the youth.
However, hope did not last long. The "policy packages" faced the same fate as the multitude of past packages and programs. In an atmosphere filled with poverty, corruption, and social inequalities, the "Hope and Prudence" government sank into daily routine, and the ambitious strategy for the country's development was reduced to a few abstract and scattered initiatives. Separating these areas from each other and amplifying a series of factors to the detriment of others does not help in deeply understanding the roots of the January uprising. This uprising is the latest and most evident sign of the deep despair that has engulfed a very large part of Iranian society. It is clear that Iranians, after years of testing, have lost hope for creating change within the Islamic Republic.
In 1396, two very important events played a significant role in accelerating the collapse of this hope: the paralysis of Hassan Rouhani's government and the failure of the "JCPOA".
Paralysis of Hassan Rouhani's Government After eight years of the disastrous presidency of Mahmoud Ahmadinejad, the eleventh government, led by a politician who emerged from the "Islamic House" of Tehran and knew its mechanisms well, took over with the slogan of "Hope and Prudence." The head of the new executive had two major advantages: he was both a "full-fledged product" of the Iranian political system in the post-Islamic Revolution era and, among the senior managers of this system, was much more familiar with politics, economics, and international relations in the 21st century. Another characteristic of Hassan Rouhani was his ability to play among rival factions in the Islamic Republic. He managed to appear as a continuation of the reformist path without provoking the fierce opposition of the so-called "principlist" faction. The new president's capabilities in employing economic and diplomatic concepts, as well as his political skills, convinced a significant part of public opinion that the country could once again hope for reform to escape from deadlocks, even though two previous experiences had failed in confronting the internal deadlocks of the Islamic Republic.
In fact, the economic reforms after the Iran-Iraq war, which were implemented by Akbar Hashemi Rafsanjani during the so-called "Reconstruction" era, stagnated at the end of his first term due to resistance from the core of power. After this failure, Mohammad Khatami, using the "economic team" of his predecessor, turned to "organization" and, despite progress in several areas, overall could not free the economy from its chronic diseases. Following these two failures, the country fell into the tunnel of Ahmadinejad, experiencing greater misery than before.
In 1392, Hassan Rouhani came to the presidency with the promise of wiping the eight-year tragedy from the face of the country. Many who had held decision-making positions in the two periods of "Reconstruction" and "Organization" returned under the banner of "Hope and Prudence." The first hundred days of Hassan Rouhani's administration were accompanied by activity and promises to escape from economic deadlocks. The "policy packages," primarily prepared by his economic advisor Dr. Masoud Nili, once again created hope that the Iranian economy had found its way and that escaping from deadlocks was near. However, hope did not last long. The "policy packages" faced the same fate as the multitude of past packages and programs. In an atmosphere filled with poverty, corruption, and social inequalities, the "Hope and Prudence" government sank into daily routine, and the ambitious strategy for the country's development was reduced to a few abstract and scattered initiatives. Nevertheless, the head of the eleventh government kept alive the belief that his second term would mark the beginning of unraveling the deadlocks; however, the twelfth government, which came to power in Mordad 1396, was unable to create any movement in the severely worn-out structures of the Iranian economy. In fact, contrary to what he promised in his electoral platform for the second term ("Iran Again"), Hassan Rouhani did not achieve success in placing the economy on the track of structural changes to escape from the dominance of oil and the state, and the major economic constraints or "super challenges," as has recently become common, remained in place. Even an achievement like reducing the inflation rate is not the result of fundamental changes in the country's economic structures and, for this reason, appears very fragile. Internal and external shocks could place Iran in the same economic conditions as Hugo Chavez and Maduro's Venezuela.
To summarize: Iranians experienced the third major failure in the field of economic reforms in 1396, and it seems they have lost their last hopes for economic transformations within the framework of the current regime. If we want to draw on foreign models for assistance, we can say that the Islamic Republic is similar to the former Soviet Union in terms of its degree of receptivity to economic reforms, and there is no longer any news of the hopes once pinned on its "Chinese-ization" (to the extent that one of the famous European media coined the term "Chiran" from the combination of the names China and Iran).
Failure of the JCPOA The "Joint Comprehensive Plan of Action," which was signed in Tir 1394 (July 2015) after exhausting negotiations, generated significant hope among a large segment of the public in the country. For many Iranians, the "JCPOA" was much more than a technical agreement to resolve the conflicts that had arisen over the nuclear issue between Iran and Western powers. In fact, this very complex diplomatic text surprisingly became a symbol of the end of an era in the history of the Islamic Republic.
In the history of Iranian diplomacy, no negotiation has attracted such public attention. It would not be an exaggeration to say that the very complex discussions between the Islamic Republic and representatives of the group known as the "P5+1" significantly elevated the Iranian culture in the realm of international relations. They became more familiar than ever with concepts such as power relations, international organizations, and especially the very essence of negotiations between governments.
At the same time, this familiarity with the culture of international relations was accompanied by great hope for the Iranian public. Hassan Rouhani and Mohammad Javad Zarif played a significant role in creating this hope, and it is likely that both of them, along with the President and Secretary of State of the United States, were sincerely involved in it. Interestingly, a very large segment of international financial circles joined the wave of optimism, and large economic delegations headed to the Iranian capital one after another. A significant number of Iranian analysts (including the author of this note) and foreign analysts also considered the signing of the "JCPOA" as the beginning of a new chapter in Iran's international relations.
The failure of the reform experience in Iran, along with the failure of the "JCPOA" and the outlook for the continuation of the freeze in the country's international politics, are two significant factors that triggered the events of January, making 1396 one of the unforgettable years in the history of the Islamic Republic.
This optimism essentially stemmed from a sentence that was reportedly insisted upon by the Iranian delegation in the first paragraph of the agreement's introduction: the "P5+1" and the Islamic Republic "expect that the full implementation of the JCPOA will positively contribute to regional and international peace and security." For the Western powers that signed the "JCPOA," this single sentence became the basis for an interpretation that later came to be known as the "spirit of the JCPOA." Perhaps the Iranian Foreign Minister had convinced them in behind-the-scenes discussions that this agreement could move the Islamic Republic's foreign policy onto new tracks beyond the nuclear issue or at least have a tangible impact on its regional and international policies; however, Ayatollah Khamenei, the real helmsman of Iran's policymaking apparatus, had a different view of the "JCPOA." From his perspective, this agreement was signed solely to achieve one goal: the end of sanctions in exchange for concessions from the Islamic Republic in the nuclear arena to restore the necessary conditions for oil exports and prevent the collapse of the country's entire economic capacities. Apart from this transaction, in his view, no change, even a minor one, could occur in Iran's discourse and behavior on regional and global stages.
After the signing of the "JCPOA," the Iranian leader insisted on clearly stating his "minimalist" interpretation. Initially, it was assumed that the leader's clarity in defining the specific boundaries of the "JCPOA" was only part of his maneuvers in the domestic political arena; however, after several months, it became clear that the Islamic Republic had not budged an inch from the dogmas of "Islamic diplomacy" that emerged in the post-revolutionary era. We know the continuation of the story: increasing strictness from Washington regarding the "JCPOA" and considerable doubts about the survival of this agreement after Donald Trump's entry into the White House.
There is no doubt that without the "JCPOA," which provided the groundwork for the return of oil production and exports to the pre-sanctions era, the Iranian economy would have faced the risk of "Venezuelanization"; however, the "JCPOA" crisis prevented Iran from becoming a "normal" player in the global economic arena after a very long period. Due to this crisis, the entry of foreign economic delegations into the Iranian capital fell back to pre-"JCPOA" levels, and the country's financial and monetary relations, except in rare cases, could not emerge from the quagmire of sanction-related problems.
In 1396, the hope of Iranians for the "miracle of the JCPOA" completely vanished, and this was one of the factors that led to the "January volcano." A country that hoped to become one of the poles of foreign investment in the world witnessed a 46% drop in foreign investments in the first ten months of the year compared to the previous year.
The failure of the reform experience in Iran, for the third time, along with the failure of the "JCPOA" and the outlook for the continuation of the freeze in the country's international politics, are two significant factors that triggered the events of January, making 1396 one of the unforgettable years in the history of the Islamic Republic.
In the second part of this note, we will address the macroeconomic indicators of Iran in the past year.