When Iran elected hard-liner Mahmoud
Ahmadinejad as President last June, it
looked as if Tehran might finally have a
united conservative government capable of
moving forward on everything from business
projects to the diplomatic front. But just
months after Ahmadinejad took power, the
conservatives are fighting among themselves,
paralyzing the government. Executives, once
eager to invest in Iran's vast oil and gas
resources, are preparing for a long wait.
Business was worried about Ahmadinejad, the
relatively unknown former mayor of Tehran,
but there was an attractive side to him. At
49, he was youthful, enthusiastic, and
untainted by a long history in Iran's seamy
politics. Now his zeal and inexperience are
proving liabilities. His provocative
statements have worsened Iran's
confrontation with the West over Tehran's
nuclear program, scaring foreign investors.
Fleeing funds
At the same time, the President's erratic
domestic policies are spooking local
investors. They're worried about
Ahmadinejad's populist proposals for
spending Iran's expected $35 billion or so
in oil revenues this year, such as handing
$1,100 to every newlywed couple. And
Ahmadinejad has been tapping inexperienced
unknowns for top positions. Parliament has
rejected his first choice as Oil Minister,
Ali Saeedlou, as lacking background in
Iran's key industry. Iranians are shipping
money to Dubai and dumping shares in the
Tehran Stock Exchange, whose index is down
20% since the May campaign.
Ahmadinejad looked like the sort of
President that Iran's top religious
authority, Ali Khamenei, wanted. They come
from the same ideological quadrant. But far
from a love fest, Tehran is rife with rumors
of angry phone calls from Khamenei to
Ahmadinejad. In early October, Khamenei
decreed that the Expediency Council, a
powerful unelected body, would have overall
supervision over the government. The move
had two motives: to blunt Ahmadinejad's
power and to boost the council's chairman,
former President Hashemi Rafsanjani, whom
Ahmadinejad defeated in the election.
Rafsanjani has made clear his disdain for
Ahmadinejad's approach. On Sept. 30, he
warned Iran's nuclear negotiators that "you
need diplomacy and not slogans."
Tensions may continue because the President
comes from a different mold than Khamenei
and Rafsanjani, elderly clerics who were
associates of the late Ayatollah Ruholla
Khomeini. Ahmadinejad hails from the
Revolutionary Guards and other shock troops
of the 1980 revolution. He is critical of
the older generation for taking financial
advantage of their proximity to power. But
his anticorruption witch-hunts are making a
shambles of government.
So will Ahmadinejad's emergence be the
event that leads to the regime's demise?
"The Islamic Republic's survival instincts
are very good," says Siamak Namazi, an
Iranian consultant who is now a public
policy scholar at Washington's Woodrow
Wilson International Center. Instead,
Khamenei will take on a bigger role. He is
already running the nuclear portfolio and
trying to avoid a showdown with the U.S. and
Europe while not giving up Iran's nuclear
ambitions. He may succeed because neither
Russia nor China want U.N. sanctions on
Iran. Still, Iran looks to be squandering a
golden chance. Instead of cashing in on a
propitious moment, it is barely skirting new
disasters.
