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The covid-19 crisis could strengthen Iran’s ‘invisible government’

An increased social welfare role for groups within Iran could undercut the rationale for U.S. sanctions

A pedestrian walks in central Tehran on March 15. (Ali Mohammadi/Bloomberg News)

Could the coronavirus pandemic bring about regime change or a major behavioral shift in the Islamic Republic of Iran? U.S. policy hawks and a wide range of regime critics are increasingly convinced it might. That’s not likely, however; this view misreads the influence of Iran’s nonelected political institutions.

Rather than regime change, the coronavirus pandemic and escalating U.S. pressure appear more likely to reinforce the position of Iran’s religious and military institutions. Here’s what you need to know.

Since the government announced the country’s first covid-19 case in late February, Iran has ranked among the top 10 countries affected by the virus. But unlike other countries hit hard by the pandemic, Iran has an economy that was already on the edge of collapse. Mismanagement and corruption, U.S.-led sanctions and falling oil prices had brought Iran its highest stagflation rate in its modern history — with 41 percent inflation in 2019 — along with a negative 7.6 percent growth rate and a 20 percent national budget deficit projected to double this year. Widespread protests over economic conditions rocked the country in recent months.

New data shed light on the dramatic protests in Iran

The U.S. has not eased up on sanctions

As with many other areas of government, the Trump administration’s official policy on Iran is designed to undo policies made by the Obama administration. The Trump administration pulled out of the nuclear deal that Iran signed in 2015 with the United States, China, France, Germany, Russia and Britain. By leaving the deal, the United States launched a maximum-pressure campaign, including severe economic sanctions, to force Iran to constrain its interventions in the Middle East.

The Trump administration has refused demands from Iranian leaders — as well as from European leaders, House and Senate members, and Democratic presidential candidate Joe Biden — for temporary sanctions relief. Last month, the U.S. government opposed Iran’s request for a $5 billion emergency loan from the International Monetary Fund. Iran’s government claims the sanctions leave Iran hard pressed to handle the pandemic and the post-pandemic economic fallout.

The U.S. State Department and its Persian social media have sought to convince the Iranian people that Ayatollah Ali Khamenei, Iran’s supreme leader, and his subordinate foundations have the resources to fight the pandemic, so there is no need for external funds. In March, a State Department covid-19 Disinformation Fact Sheet noted the regime has considerable assets that could be allocated to the health-care needs of the population. In the meantime, the United States has offered medical assistance. Iran rejected this proposition, using the argument that the United States should unblock Iran’s assets and remove sanctions instead of offering humanitarian aid.

What are the signals from the Iranian public?

Iranian citizens have not turned out to boldly demonstrate support for sanctions relief. In the three-year run-up to the 2015 nuclear agreement, in contrast, each step forward produced street celebrations in Tehran — in part because of hopes for sanctions relief. In March 2016, Iran elected a pro-deal parliament, and national optimism was at its height.

Iran’s election wasn’t about moderation or democracy. It was about how Iran will re-engage with the world.

But in 2020, Iranians appear to harbor a deep mistrust of their government — as evidenced by the lowest-ever turnout in the February parliamentary election. Iran saw nationwide unrest in November and a bloody government crackdown on protesters. As a result, there is not a solidified public force in favor of the government’s demands that the United States ease up on economic sanctions.

How the crisis strengthens Iran’s ‘invisible government’

The Islamic Revolutionary Guard Corps as also joined in coronavirus-related measures. The military organization gradually expanded to become a huge entity involved in every aspect of the government, including intelligence, banking, media, construction and health care. The Revolutionary Guard recently offered a safety net to 3.5 million low-income families — which means that more than 11.5 million people, in addition to the corps’ staff and militia volunteers, will be financially dependent on the Revolutionary Guard.

Bonyads, public charities in Iran that control substantial financial resources, may also see a stepped-up role. These charities fall outside the executive branch and under the management of the supreme leader, who appoints their heads. The Imam Khomeini Relief Foundation, which already supports 4.3 million people, expects dramatic increases in the number of pensioners asking for assistance because of the coronavirus crisis. Iran’s government also invited the Execution of Imam Khomeini’s Order, a holding company that manages billions of dollars in Iranian investments, to supply hospitals and to utilize its assets to address the poverty resulting from the loss of millions of jobs. Providing this assistance would give these organizations heavy leverage to dictate the political behavior of its beneficiaries.

With little hope of receiving international financial assistance or even a release of Iran’s blocked foreign assets, Iranians generally have embraced the expenditure of resources controlled by the supreme leader for public benefit. Reformist politicians such as President Hassan Rouhani welcomed these measures, acknowledging that the government cannot foot the massive costs of this national disaster alone.

How did the U.S. get to the brink of war with Iran?

But this kind of involvement has consequences that could complicate the Trump administration’s calculus on Iran. The need for the Revolutionary Guard and bonyads’ intervention in undertaking executive duties, such as supplying food to the poor, providing health-care services and paying allowance to low-income families, will certainly increase. Iran’s economy will deteriorate further in 2020, with oil income sharply falling. The IMF projects a negative 6 percent growth rate in 2020.

It’s too early to assess how Iran’s government will be transformed through the increased involvement of the Revolutionary Guard and other nonelected bodies of the Islamic Republic — which seems likely as the government continues to struggle with funding limitations.

But what is clear is that this expansion of Iran’s “invisible government,” and the retreat of the elected government from public affairs, will continue. And that could be problematic for the U.S. strategy, which has long aimed to empower Iran’s elected bodies. This new development also contradicts the stated purpose of the Trump administration’s imposition of sanctions, which were meant to normalize Iran’s behavior.

Instead, U.S. sanctions appear likely to diminish the efficiency and functionality of Iran’s already weakened elected government, while advancing the dominance of the Revolutionary Guard and other nontransparent organizations in running every aspect of Iranians’ lives. The result could well be a more militarized, single-party, expansionist government in Iran.

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Amir Hossein Mahdavi holds graduate degrees in international conflict resolution from Brandeis University and Middle Eastern studies from Harvard University. A scholar of Iran’s political and economic affairs, he previously served as an editor at several of Iran’s news outlets.