Rouhani Urged to Boost “Resistance Economy” to Counter New U.S. Sanctions

By Ahmad Majidyar | Fellow and Director of IranObserved Project - The Middle East Institute | Sep 8, 2017
Rouhani Urged to Boost “Resistance Economy” to Counter New U.S. Sanctions

An article in Fars News Agency rejects President Hassan Rouhani’s recent claim that anti-Iran sanctions are irreversible and calls on the government to strengthen Iran’s “resistance economy” to counter new U.S. sanctions. Fars is affiliated with the Islamic Revolution Guards Corps (I.R.G.C.). The author argues that if Washington walks away from the nuclear agreement, the U.S. Treasury and Congress will re-impose all pre-deal sanctions – which will deter international companies and banks from doing business with Iran. He notes that even after nuclear-related sanctions on Iran were lifted in January 2016, the Obama and Trump administrations have taken measures to prevent Iran from reconnecting to the international financial system. “Unilateral sanctions imposed by the United States against our country will not be confined to relations between Iran and America, but they will impact the activities of European companies in Iran.” The author also points out that even if Washington sticks to the nuclear accord, it will keep existing sanctions relating to Iran’s missile program and human rights abuses. “In such a situation, it is imperative to strengthen the resistance economy to counter the sanctions,” it concluded. 

Comment: The term “resistance economy” is often used by Iran’s clerical and military establishments to emphasize policies that help promote self-sufficiency to counter international economic sanctions. In early 2014, Supreme Leader Ali Khamenei issued a decree that outlined general policies for the “resistance economy”  that required the government to diversity Iran’s exports, reduce the country’s dependence on foreign imports of raw materials, and develop knowledge-based high-tech industries. The Supreme Leader has named the current Persian year – which ends on March 20 – the “Year of Resistance Economy: Action and Implementation.” This shows that Khamenei, who has the final say on all state matters, does not want the nuclear deal to divert attention from the regime’s efforts to reduce its vulnerability to external pressures and economic sanctions.

In March, in the run-up to Iran’s presidential election, Khamenei strongly criticized the Rouhani government for failing to effectively stimulate economic growth in the country and called on the president to focus more on self-sufficiency. “If all necessary measures regarding the resistance economy had been implemented, we would have witnessed a tangible difference in the country’s economic conditions and in people’s lives,” he was quoted in the Iranian media.

During the 2013 election campaign, Rouhani’s central message was to negotiate a nuclear deal with the West to remove international sanctions and revive Iran’s economy. But existing U.S. sanctions, coupled with the Trump administration’s tougher approach toward Tehran, have discouraged foreign investment in Iran. Even the country’s G.D.P. has grown and some foreign companies have returned to Iran, ordinary Iranians have not benefited from sanctions relief in a tangible way. But sanctions are not the only problem. The Rouhani government has also failed to tackle endemic corruption and mismanagement that hinder economic recovery in the country. Transparency International Corruption Perceptions Index for 2016 released in January showed Iran shared 131st position with Russia.

The I.R.G.C. is a strong proponent of the so-called “economic resistance” policies because it has benefited from them immensely. The I.R.G.C. has not only evolved into Iran’s most powerful military force but also dominates the country’s key economic sectors, such as energy, construction, telecommunication, media, mining, electronics, automobile, banking, nuclear, and more. While I.R.G.C. leaders claim their involvement in the economic sector benefits the Iranian people and economy, in reality the I.R.G.C spends most of the revenues on military expenditures at home and abroad.

Khatam al-Anbia, and other I.R.G.C.-affiliated companies, benefited greatly from the privatization program of former President Mahmoud Ahmadinejad. In 2006, the company secured deals worth at least $7 billion in the oil, gas, transportation and other sectors. In October 2007, the U.S. Department of Treasury designated Khatam al-Anbia and several other I.R.G.C. companies under E.O. 13382 as part of a plan to counter Iran’s bid for nuclear capabilities and support for terrorism. And in February, 2010, the Treasury took further action against Khatam al-Anbia by designating the company’s commander, General Rostam Ghassemi, and its subsidiary companies. As the Treasury noted, the I.R.G.C. uses profits from Khatam al-Anbia for its illicit activities, including nuclear proliferation and support for terrorism in the region.

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