Divided Iran makes peace with its neighbours

This is an audio transcript of the Rachman Review podcast episode: ‘Divided Iran makes peace with its neighbours’

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Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator, the Financial Times. This week’s podcast is about Iran. Our Middle East editor, Andrew England, recently visited the country. Iran’s been facing unprecedented public protests about women’s rights and state violence. Meanwhile, it’s also just concluded a diplomatic rapprochement with Saudi Arabia. So is change finally coming to the Islamic republic of Iran?

Reporter 1
With a handshake, Iran and Saudi Arabia announced on Friday that the two countries are re-establishing relations. The agreement comes after seven years of hostility which had threatened security and stability in the Gulf and helped fuel conflicts from Yemen to Syria. It follows four days of previously undisclosed talks in China between top security officials from the two rival Middle East powers.

Gideon Rachman
The announcement of a diplomatic deal between Saudi Arabia and Iran, brokered by China no less, came as a major surprise to many in the west. But it would be too soon to say that Iran’s presenting a new and peaceful face to the world. It’s been a major supplier of military drones to Russia, used to deadly effect in Ukraine.

Reporter 2
This one apartment building was torn in half with some surviving but others killed in the onslaught of explosions. All this wreckage is because of these metal triangles which form what appear to be Iranian-made kamikaze drones. And while Iran flatly denies it supplied them, the White House has warned Russia’s deepening alliance with Iran is a profound threat to the entire world.

Gideon Rachman
And concerns are rising once again that Iran is closing in on producing nuclear weapons. All this is taking place against the background of domestic turmoil. And that’s where I started my conversation with Andrew England. He’s just returned from Tehran. So how’s Iran changed since he was last in the country a year ago?

Andrew England
The first thing you notice when you arrive and you start moving around Tehran is that there are women not wearing the hijab or the veil. Under the Islamic republic the law has always been that women have to cover their heads, they have to abide by Islamic dress. And in the past, you would see women who dress fashionably, you know, secular women. They’d wear a colourful scarf, but they would make sure that it was covered, they’d make sure their hair was covered. Now, it can only really be described as a very public act of civil disobedience. You know, many women are no longer wearing any form of head covering, a hijab or a veil.

And the other thing that was surprising or that you noticed is that no one takes any notice. So you can be driving in a car and women passing you, driving their cars with no hijab, nobody looks. You can be walking on the street, a woman walks past you with no hijab, nobody looks. It’s become in a very, very short space of time — because these protests only started in September — it’s become a new norm, certainly in Tehran. And we don’t know if it’s gonna last but it’s one of the most visual changes that have happened as a direct consequence of the protests that erupted in September.

Gideon Rachman
So give us a sense of the numbers. I’ve been saying in northern Tehran where you said it was particularly prone — are we seeing like one in 10 women or was it even, you know, most women who aren’t wearing headscarves now? And more broadly, why is the government tolerating it? Because it was a violation of the hijab rules that sparked all this off the killing of Mahsa Amini and all of that. Have they essentially conceded defeat on this narrow issue?

Andrew England
It’s very hard to make sweeping statements, but we were kind of counting and maybe, we sort of counted 30 women, maybe 10 weren’t wearing the hijab in affluent middle-class, what you’d say more secular neighbourhoods. In the south, it was less conspicuous but it was still noticeable. So you know, maybe one in 20, maybe one in 30. I think the point is it’s not just the elite, it’s not just the upper middle class, as you might expect to be removing the veil. It is across different neighbourhoods.

If we go back to the death of Mahsa Amini, she was originally arrested by the morality police for allegedly not wearing her veil properly, even though photographs of her showed that she was. Then she died in the custody of the morality police. So when the protests initially started after her death, the hijab became a symbol of the protest. It’s one of the core tenets of the Islamic republic. It’s not just about the law, it’s about the whole nature of the Islamic republic and what is expected of women. So when people first came out onto the streets, many of them were women, young women, and taking off the hijab and burning that hijab became a very public act of defiance against the regime.

Now the protest then morphed into an anti-regime protest, calls for regime change, calls for the introduction of a secular democracy that became much wider. What the regime did pretty quickly — and this is a leadership that’s dealt with many bouts of civil unrest that came to power through revolution, knows and understands the power of the street. It made small concessions. It reacts in a calibrated way.

So on the one hand, it uses violence to crack down against protesters. And according to Amnesty International, more than 300 people were killed in the protests, including children. But what they did do is they pulled morality police back from the street. Outwardly, the regime is not showing that it’s willing to make any grand concessions. But at this stage, they are allowing women to not wear the hijab. Still expected to wear the hijab if they go into state buildings, state banks, that kind of thing. But in the street, in restaurants and cafés, they seem to be willing to turn a blind eye.

Gideon Rachman
So Andrew, you’ve visited Iran I think every year, possibly apart from the pandemic, for some time. As somebody goes in and out, how has the atmosphere changed do you think over the last year? I mean, do you feel that this is still very much a heavily kind of repressive state?

Andrew England
When you visit Iran, everything can look very normal. Tehran’s a huge city. It’s got a very urbanised, well-educated population, a young population. You know, you can go to a mall in a wealthy neighbourhood. You know, there are fancy shops, there are nice restaurants.

Gideon Rachman
And this is despite 20-plus years of economic sanctions.

Andrew England
Forty. Yeah, four decades of economic sanctions. I mean, you know one thing the Islamic republic has learned since 1979 is how to survive through successive eras of sanctions, successive eras of hostility with the west, but still managed to keep the economy afloat, still managed to produce goods domestically, still managed to bring imports in, still managing to export. It’s become a bit of a master of sanctions evasion. And of course, there are periods during that four decades since the Islamic Revolution when sanctions have been eased, so you see some western investment. You know, you still go around and you see BMWs in showrooms, you’ll see western clothes brands, Zara for example. We shouldn’t think of this as North Korea. It’s very different to a pariah state which has been completely shut off from the outside world. And many Iranians particularly the urban classes, they’re very outward-looking, want to have better engagement with the west.

So I think since 2021, you’ve seen a change. You felt a change just because when I first went in 2017, the nuclear deal Iran signed with world powers was still alive. People still had hopes that would bring more investment, it would ease some of the economic grievances. There was an election in 2017 when President Hassan Rouhani won a second term basically campaigning on the nuclear deal. And when he won, there was a huge explosion of hope and celebration in the streets of Tehran. Within the Islamic republic, they do have elections. They have elections for the president. They have elections for the parliament. And Rouhani won, and he campaigned on the nuclear deal which did inspire hope that maybe Iran was gonna change direction. Maybe it would be able to re-engage with the west, maybe there would be more investment, better jobs, etc . . . 

That all changed when Donald Trump, the former US president, pulled out of the nuclear deal in 2018 and then imposed waves of sanctions on the republic. Immediately, the nation was effectively cut off from the global financial system. Its oil exports were stymied. The economy fell into recession. The hardliners within the system, who’d always criticised Rouhani for agreeing to the nuclear deal, felt emboldened because ideologically they’re hostile to engagement with the west. And when elections were held again in 2021, the results seemed preordained because Ebrahim Raisi, who was seen as a protégé of the supreme leader, Ayatollah Ali Khamenei, won after all the credible reformist candidates were effectively banned from running. So since then, I think you’ve seen or you felt a sense of hopelessness among people, that there is no chance of reform within. Once the hardliners came in and sort of took over all branches of the state, those hopes seemed to be quashed.

Gideon Rachman
And yet, you know, alongside that very gloomy picture that you paint, there has been now a diplomatic breakthrough, the signing of a kind of rapprochement with Saudi Arabia, the restoration of relations. The Saudis have been at daggers drawn with Iran for a long time, are very close to the Americans. So what does that signal about Iran’s positioning in the world now? Could this be a second possibility of an opening for them?

Andrew England
Iran has long wanted to restore relations. The question was, why would the Saudis agree and what would the Saudis agree to? The key thing here, I think, was China’s intervention. Saudi Arabia seems to have essentially taken China’s word that China, which is the biggest buyer of Iranian oil, the biggest buyer of Saudi oil, will actually guarantee or oversee Iran’s commitments to Saudi Arabia. So I think this is a big win for the Iranians. They’ve made a huge deal of developing regional trade. Saudi Arabia is the biggest economy in the Gulf.

They’ve also done a similar rapprochement with the United Arab Emirates. I mean, I think from the Gulf perspective, from the perspective of Saudi Arabia and the UAE and others in the region, then their biggest fear has always been Iran’s ballistic missile program and its sponsorship of militant groups across the region, the kind of asymmetrical warfare that Iran can use against its foes.

The other thing that’s crucial for Saudi Arabia is trying to exit the war in Yemen, where it’s been fighting Houthi rebels, which are backed by Iran since 2015. Riyadh accused Iran of providing the Houthis with missiles and drones, which are then fired into the kingdom. And, you know, hundreds of attacks have been launched by the Houthis at Saudi Arabia over the last five or six years. And the last thing Crown Prince Mohammed bin Salman wants is these kind of attacks when he’s spending hundreds of billion dollars on mega projects and trying to develop Saudi Arabia as a regional trade/finance hub and trying to attract tourists.

I mean, a year ago, Saudi Arabia was hosting the Formula One Grand Prix in Jeddah and a missile came in, hit a target in Jeddah and there are plumes of smoke going across the city when it was hosting a global event. So he really wants to stop that and he really does now, we believe, want to exit Saudi Arabia from that war in Yemen. And the Saudis believe that having the Iranians use their influence over the Houthis is going to be crucial to that and the ability to stop those attacks coming in from across the border in Yemen. But at the end of the day, it’s still gonna be very much a cold peace.

Gideon Rachman
We’ve tended to see in the west a bit through the lens of this effort to isolate Iran. If they’ve now got a deal with Saudi Arabia brokered by the Chinese, are they showing to the west, well, we have other ways of making our way in the world. And how much possibility is there for Iran?

Andrew England
Yeah, I think that the symbolism is important. Like you said, I think it’s very important for Iran to be able to show to the west one, that they can repair fences with their regional neighbours, that they can develop relationships with regional states even as they’re under sanctions, even as they’re in this hostile situation with the west. I think that’s very important and Saudi Arabia is important symbolically. It’s also important, I think from Iran’s perspective, if we assume that in this deal they’ve got some sort of Saudi commitment to tone down Saudi-related media coverage of Iran. I mean, one thing that the Iranians were adamant about during the protests was that the unrest was being stoked by their enemies. They would have been true to Saudi Arabia in that. They would have blamed Saudi-linked media outlets for stoking the demonstrations.

Gideon Rachman
Including one based in London, where the journalists appear apparently under threat.

Andrew England
Yes, Iran International, you’re talking about Iran International, would tell you that they are an independent broadcasting house, that they are not state-linked. The station is owned by a British Saudi national. But in Iran, it’s very much seen as an opposition channel. And Iranian officials would very much tie it to Saudi Arabia. It’s a satellite TV channel, so a lot of people in Iran can watch it through satellite. So that’s an important thing.

The other thing that the Iranian authorities are very keen to do is to bring some stability to the rial. You know, the rial has lost about half its value against the dollar in the last two years. Inflation is running at 47 per cent. And a lot of people think that the economy could be that spark for the next bout of unrest if these economic pressures continue.

They’re very open now about developing an economic partnership with Russia. And this is something we’ve seen pick up momentum since the west imposed waves of sanctions on Moscow after Putin invaded Ukraine. Now you have two, you know, sanctioned countries sharing a hostility towards the west. And Iran can offer Russians, you know, advice about sanctions evasion. We were told that Russia has now become the biggest foreign investor in Iran. So there’s clearly a win-win there.

And then just after the Saudi-Iran deal was announced, Ali Shamkhani, a senior Iranian security official, visited the United Arab Emirates, which has a historical position as a trading partner. And again, that’s seen as very important for Iran. One, to have these trade channels open. The UAE is often seen as a place where sanctions evasion can take place. And you gotta remember these sanctions are international sanctions. A lot of them are sanctions imposed by the US during the Trump administration. So I think, one, they want to show that they can repair their relations, but also it’s vitally important for them now to develop these regional trade corridors and with Asia and with Russia, you know, as they continue to be under certainly what was the world’s strictest sanctions regime. I mean, it is incredible how many sanctions have been imposed on the republic since 2018. We’re talking hundreds. Hundreds and hundreds.

Gideon Rachman
Yeah. So all of that suggests that Iran may be finding a kind of new place in the region. But at the same time, this old fear of Iran developing its nuclear weapons programme is back on the table. And again, talk that they’re very, very close, that the Israelis may be thinking about a military strike now. You know, I’ve heard that so many times over the last 20 years, but it does seem quite heated now. First of all, what do you think is going on there? And secondly, how does it fit into that picture of an Iran that actually is trying to improve its international position?

Andrew England
On the nuclear front, the idea of Iran developing a nuclear weapon is obviously a prime concern of the US, of European states. And so they would put the human rights aside, they put the missile programme aside and just focus on the nuclear issue. I mean, there were hopes, if you go back to August and September, there were hopes that in a month of indirect talks between Iran and the US to revive the accord, the 2015 nuclear accord, you know, might actually pay off.

The EU presented a draft proposal that all the signatories agreed to except for Iran. So that immediately created tensions on the nuclear front. There was a huge frustration in the European capitals, in Washington that they thought they might finally get this deal over the line to revive the nuclear deal and at least bring a temporary halt to the nuclear crisis. But they blamed Iran for rejecting it.

That coincided with the outbreak of protests in Tehran when the west became heavily critical of Tehran’s crackdown on the protests, further increasing tensions. And then, of course, you had the allegations that Tehran was selling armed drones to Russia, which it used in its war in Ukraine.

So you had this kind of period over a month, two months, three months when tensions really escalated and the west essentially said there’s no way we can engage the republic. Now, what Iran tends to do when tensions become more fraught is to kind of raise the stakes. If you think when the nuclear accord was in place, the limits on uranium enrichment were 3.67 per cent. So whilst the nuclear deal was there, its enrichment of uranium was very controlled.

After Trump pulled out of the nuclear deal in 2018 it waited a year and then it started to respond. And Tehran’s response was to actively increase its nuclear programme, and pretty aggressively. It went from 3.67 per cent purity enrichment to 20 per cent and 6 per cent. So people have been concerned for a long, long time that why is a nation that insists its nuclear programme is for civilian purposes enriching uranium at such a high level?

Now, recently it was leaked that the International Atomic Energy Agency, which is the watchdog that monitors Iran’s nuclear programme, had discovered particles of uranium enriched at 84 per cent. Eighty-four per cent is very, very, very close to weapons grade. People generally say weapons grade is about 90 per cent purity. Essentially, I think when Iran feels it’s backed into a corner or it feels that it needs to show the west that we need to be taken seriously. That’s what we’ve seen since 2019 by Iran increasing the development of advanced centrifuges, the purity of uranium enrichment, all these things which have continually kind of raising the stakes in what has become a nuclear crisis. Now at this stage, nobody is saying that Iran is in the process of developing the capacity for a nuclear weapon, but it is enriching uranium at levels so close to what would be required for a nuclear weapon that the concerns in the west have been raised dramatically.

Gideon Rachman
So to conclude, this is a regime that’s very long-lived. It’s been around now for more than 40 years. Do you think that something is about to give either internationally or domestically? Or is this just, you know, another twist and turn in this long-running story of the Islamic republic, which is gonna be with us in some shape or form, possibly for decades to come?

Andrew England
Never underestimate the resilience of this regime, of the Islamic republic. It’s shown again and again that it can defy the sceptics, defy the naysayers who predict its downfall. It survived Trump’s maximum-pressure campaign. Huge amount of pain for ordinary Iranians who suffered the economic consequences. So there’s a lot of social pressure there, there’s a lot of economic pressure there. It’s not a pretty picture at all. And, you know, ordinary Iranians have suffered a lot over the last four, five, six years, some would say even longer, economically and socially.

But it’s a brave man to bet on the demise of the Islamic republic. It is pragmatic. It can be ruthless, and you know, it still does have domestic supporters within the republic. We just saw in February on the 44th anniversary of the Islamic Revolution, there were huge crowds in Tehran and other cities. It was one of the biggest gatherings for the anniversary of the Islamic Revolution we’ve seen in recent years. So there is a conservative segment of society, a religious segment of society that still does support the regime. And then, of course, in the background, you’ve got the whole succession issue, because Ayatollah Ali Khamenei is 83 years old. You know, he’s mortal. At some point, you know, his time will come. And then the whole question about who replaces him as the supreme leader and the supreme leader is the ultimate decision maker. That could have a huge, huge impact on the direction Iran takes going forward. So there are many unanswerables. I think what we can say is that Iran is a deeply polarised society and it’s not clear yet which direction the leadership will decide to take.

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Gideon Rachman
That was Andrew England of the FT ending this edition of the Rachman Review. Thanks for listening and please join me again next week.

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