Why Iran's hardliners won parliamentary elections
The FT's Middle East editor Andrew England explains the impact of US sanctions after hardliners capitalised on hostility from Donald Trump to succeed at the ballot box for the first time in seven years
Produced by Petros Gioumpasis
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ANDREW ENGLAND: Hardline forces in Iran have succeeded at the ballot box for the first time in seven years, partly by capitalising on Donald Trump's hostility and maximum pressure strategy. The parliamentary elections weaken president Hassan Rouhani, who is in his second and final term.
And it further crushes reformers' hopes that the country could open up to the outside world. It also sets the tone for presidential elections next year with analysts predicting another hardline victory. But a low turnout also reflects the disillusionment many Iranians feel towards their leaders across the political spectrum.
At this polling station in Tehran, people turned out in decent numbers. But others, there was just a trickle. I met one twenty-five year old who voted for Rouhani in 2017. Back then, he hoped the nuclear deal Iran signed with [INAUDIBLE] would usher in a new period of prosperity.
Now, he says he was brainwashed. He didn't vote this time, saying all politicians are the same. Such grim emotions are common in a country of 80 million people facing increasing economic hardship.
Trump's sanctions have strangled the government's ability to export oil and push the country into a deep recession.
DONALD TRUMP: The Iranian regime must abandon its pursuit of nuclear weapons, stop spreading terror, death, and destruction, and start working for the good of its own people.
ANDREW ENGLAND: Mr Rouhani said in December that Iran had lost more than $200 billion in revenue and investment as a result of Mr Trump's maximum pressure strategy. Prices soared as inflation rocket up to about 40%. And the Iranian Rial lost more than half its value over the past two years.
The government is struggling for foreign currency, cut off from the global banking network. But shops are still well stocked. Years of isolation in four decades, since the 1979 Islamic Revolution, forced the republic to develop a diversified economy. Iranian companies produce much of the country's food, pharmaceuticals, steel, and cement needs.
And some factories manufacturing household appliances and textiles are expanding. This is all part of the government being forced to push import substitution policies. The car industry, which employs more than 500,000 people, is a prime example.
After Peugeot and Renault pulled out of joint ventures in the country because of US sanctions, the government is desperate for local production to fill the gap and for the sector to remain an important part of the economy. And here at the Iran [INAUDIBLE] facility where the company is ramping up production, in September, it was producing just 900 cars a day. But now it's 2000, and the company plans to go to more than 2,500 1,000 or about 2,500 in a few months.
The reason for the increase is partly due to government support, help from the Ministry of Defence, which is helping produce some of the more technical components you need to produce these cars, and also because of the localization of spare parts. Before, the company was relying more on imports. Now, it's relying more on local production because of sanctions.
It's an example of how Iranian companies are trying to get around the US regime of maximum pressure to ensure they maintain output.
this cannot mask the intense pressure on the economy. Iran's oil exports are vital for foreign currency earnings. Analysts estimate they've plummeted to a few 100,000 barrels a day because of US sanctions. The IMF forecasts zero growth this year.
Most foreign companies have pulled out. Virtually no Western bank will do business with an Iranian entity. And that's despite the fact that most of the world, including European and Asian governments, oppose Mr Trump's decision to pull out of the Nuclear Deal and impose sanctions.
Iranian businessmen are forced to import goods using transshipment hubs in Iraq, Turkey, the United Arab Emirates, and Afghanistan, as they struggle to keep their companies going.
Iran's crisis began in May 2018, when Mr Trump unilaterally withdrew the US from the nuclear deal, which Iran had signed four years earlier. Under the accord, Tehran had agreed to limit its nuclear activity in return for the lifting of many Western sanctions. Iranians were beginning to feel the benefits, as the republic's oil exports soared.
Western companies, including Peugeot and Renault, returned, keen to tap into the country's vast natural resources and large consumer market with a youthful aspirant population. But after pulling out of the nuclear deal, Washington imposed wave after wave of sanctions, and Iran responded by increasing its nuclear activity. The US blamed Tehran for a September attack that struck at the heart of Saudi Arabia's oil industry. As well as sabotage attacks on tankers in the Gulf in May and June.
The US and Iran came to the brink of full blown war in January, after Mr Trump authorised the assassination of general Kassim Soleimani, Iran's most powerful and revered commander. Iran retaliated by firing more than a dozen missiles at Iraqi military bases hosting US troops.
Iranian officials appear resigned to the fact that Mr Trump could now secure another four years at the White House.
DONALD TRUMP: A few days ago we took bold and decisive action.
ANDREW ENGLAND: [INAUDIBLE] General Hossein Dehghan, a military advisor to Ayatollah Ali Khomeini, Iran's supreme leader, told me that Iran did not want war. But he said, Tehran continues to support its regional proxies, and to develop its ballistic missile programme.
The result is that the economic pressures on all ordinary Iranians is only likely to increase. Tensions will remain high throughout the region, the lingering fear it could erupt. Hardliners will be in the ascendancy at the centre of the Islamic Republic's power structures.
Public disgruntlement has exploded onto the streets in recent months. In November, several hundred people were killed, as security forces put down protests triggered by massive hikes to fuel prices. Anti-regime protests erupted again in January, after the government admitted mistakenly shooting down a Ukrainian airliner killing all 176 people on board.
The January protests were notable for the brazen verbal attacks against the elite Revolutionary Guards and the Supreme leader, Ayatollah Khomeini. Perhaps the biggest challenge facing Iran's leaders is managing the country's depleted resources while maintaining social stability.