The outbreak of coronavirus (Covid-19) has impacted the whole world, but its intensity has varied based on the level of preparedness in each country. The efficiency and readiness in each case for managing the crisis have been the key factors separating success from failure in combating the pandemic.
The situation that preceded the outbreak has played a crucial and direct role in determining the scope of its impact. The crisis management strategy, the procedures followed, and the effectiveness of decision-making in each country have all been important factors.
The situation in various countries in the post-Covid-19 world will not only be an outcome of how they tackle the crisis and deal with its repercussions, but also of its overall domestic and foreign policies in the face of this new reality. The coronavirus crisis will leave its mark on the domestic as well as foreign policies around the world.
This paper will examine the case of the Iranian regime, which is already reeling under the weight of international sanctions, the most severe in its history, and the immense strain of domestic social and economic burdens seen most recently in the form of violent protests due to the increase in fuel prices1.
The pre-Covid-19 domestic situation
The situation in Iran before the coronavirus outbreak was not much better than it is now. It was in a state of “suffocation” due to a combination of external and internal pressures, most notably economic sanctions and escalating protests due to the deteriorating living conditions. To make things worse, these pressures coincided with key events, such as the parliamentary elections held on February 21, whose results sent worrying signals to the world about Tehran’s future, both in terms of its management of domestic and foreign affairs.
The elections demonstrated Tehran’s persistence with selectivity, as a rule, allowing only the most loyal and the most hawkish2, to run. This indicated the country’s unwillingness to ease the regime’s authoritarian grip and led to the conservative wing winning most of the seats. The elections also witnessed the lowest voter turnout since the establishment of the Islamic Republic in 1979.
On the economic front, Covid-19 epidemic hit Iran hard in the aftermath of mass protests that erupted in 10 cities in November and December 2019, which left nearly 200 people dead and thousands injured. The protests flared up following a government decision to cut fuel subsidies, resulting in a 50 percent spike in prices, and a worsening poor condition due to the lack of basic services and rising inflation and unemployment.
The Covid-19 crisis erupted when Iran was facing a tough test on the regional front. Following the painful blow suffered due to the killing of General Qasem Soleimani, the mastermind of its many Iranian covert and overt activities designed to further its interests in the region, Iran found itself facing two challenges:
Striking a balance between the need to respond to the US “insult” and avoiding a confrontation with Washington have been the two major challenges for Tehran. Alongside these developments, Iran suffered severely at the hands of the US sanctions in the months leading up to the coronavirus outbreak. It failed in its successive attempts to persuade Washington to lift the sanctions or to compensate for its losses in coordination with other major powers, most notably the European Union.
Economic pressure has also manifested itself in Iran’s foreign relations. The country’s position has vacillated from blaming and assigning responsibility to Europe for failing to counter the US sanctions, and trying to minimize the losses ensuing from sanctions through traditional allies such as China and Russia. In general, it can be argued that Iran’s pre-Covid-19 external environment was unfavorable. Its policies and actions were aimed at achieving two objectives: a relative lull to dodge the sanctions storm and avoid confrontation for which it might be unprepared, and rallying support and resources with the passage of “time”.
The time factor, in this case, means the US presidential elections scheduled for November. Iran is gambling on buying time with the least possible losses while waiting for the election outcome and hoping for Trump’s exit from power, which may lead to a change in the US policy. This potential scenario helps explain why Iran is inclined to seek de-escalation in the region and against the US in particular.
Management of the coronavirus crisis
Tehran has tackled the Covid-19 epidemic with the same crisis management approach it pursued while dealing with other domestic developments. Whether it is political unrest or natural disaster, the challenge has always been the image of the state. Iran’s behavior has been typical of totalitarian regimes, shifting from denial to media blackout with no real crisis management until things got out of hand. When it was too slow to respond it tried to control the disclosure of information. Following have been the key elements of Tehran’s crisis management:
Tehran refused to impose a full lockdown until early April, only to prevent movement between provinces and cities, despite a rapid increase in the number of corona cases. The slow response was not only limited to the procedures but also in allocating the necessary resources to address the crisis. It took several weeks before Rouhani announced that 20 percent of the country’s budget would be allocated to meet the Covid-19 pandemic, in addition to a commitment to bear 90 percent of the cost of treating patients5.
As the virus spread, Tehran was forced to take measures to mitigate its economic repercussions, issuing on March 15 a set of decisions that included direct financial assistance to some 3 million poor families worth between 200,000 and 600,000 Iranian tomans (42,000 tomans is worth $1) per family. This was complemented by a deferral of the payment of basic service fees for three months and granting tax exemptions to private sector companies participating in efforts to address the epidemic.
The Central Bank of Iran took several decisions in early April, which included providing 75 trillion tomans to support economic activities and projects affected by Covid-196. The measures taken by the Iranian government were as a consequence delayed and fragmented and could not prevent the virus from turning into an epidemic. The Bank’s actions also did not mitigate losses caused by the outbreak.
Media professionals, activists and ordinary citizens have been arrested on charges of spreading rumors and peddling false news. According to official statements, nearly 1,000 cases of online crime were registered by the end of March7, prompting the Iranian authorities to set up a task force dedicated to online tracking and responding to news and statistics circulating on coronavirus8.
The criticism came not only from the opposition, but also figures from within the regime. Some of them were even high-ranking officials, such as judiciary chief Ebrahim Raisi and former presidential candidate Mohamed Baqer Qalibaf (who ran against Rouhani). Both these officials criticized the delayed response and the ineffectiveness of the actions taken9.
Besides adding a religious color, Tehran has been politically channeling the Iranian anger and panic directly at the US by portraying it as a party responsible for the crisis. This was the continuation of its traditional political discourse that accuses Washington of being responsible for the suffering of the Iranian people over the past decades. In a brazen conspiratorial interpretation, Iran’s Supreme Leader Ali Khamenei explicitly accused the US of being responsible for the coronavirus crisis and even stated that it has manufactured the virus to specifically target Iran: “It was made specifically for Iran using the genetic data of the Iranians”12.
The crisis has also been tactically used to rally people at home. The Rouhani government requested a $5 billion loan from the International Monetary Fund (IMF) after the latter announced emergency financial assistance to the affected countries. This was the first time that Iran had requested a loan from the IMF since 196013.
Iran’s management of the Covid-19 crisis14 suggests that the authorities are more concerned about the stability of the regime than the elimination of the coronavirus. Its approach points to the following lacunae:
The government’s management of the crisis has revealed a significant gap between the condition of Iranians, their actual needs, and the extent to which leaders and officials are aware of it. The consensus among Iranians is that government policies, resolutions, and measures are detached from the reality on the ground. We cannot simply assume that there is one common objective shared at both the official and popular levels, which is to eliminate the epidemic and protect the health and lives of Iranian citizens.
The rapid spread of Covid-19 in Iran has impacted at two levels:
Nevertheless, a poll conducted by the Iranian Student Association of Portland (ISAP) revealed that Iranian citizens have felt discriminated against in the measures taken to contain the pandemic, which favors regime officials. According to the poll, 76 percent of Tehran residents believe there is discrimination between the people and officials in terms of the provision of medical services 15.
The second direct impact, which concerns the Iranian public, was the shock of the rapid spread of the virus at unexpected rates. That shock had a profound impact on the popularity of the regime in Iran. The way the crisis was managed in its early days exhibited a high degree of indifference to the lives of Iranians, leaving the authorities in dire need of restoring Iranians’ confidence16.
Iran’s essential sources of national income have been hit hard by the coronavirus pandemic. In addition to the direct costs of dealing with the virus, religious tourism and the oil trade have been affected, which in turn has led to a sharp depreciation of the local currency. While the official price of the US dollar is 4,200 tomans, it has reached 16,000 tomans in unofficial estimates17.
It is pertinent to note that these estimates are from early March before the crisis worsened and Iran’s ranking rose in the list of most-infected countries. With the prospect of this situation lasting for a month or two, until early June, the negative economic impact of the crisis will greatly exceed those early estimates.
Also, among the enormous impact is the exposure, weakness, and fragility of Iranian state institutions, not only in terms of their financial potential and resources but also their efficiency and the ability to manage a crisis. It can be argued that the crisis dealt a severe blow to the cohesion and confidence in the Iranian government’s ability to take control of the situation as well as ensure the security of the ruling elite and the surrounding networks of interests and influence. Questions have been raised due to the death of several current and former officials and clerics, a grave outcome that might influence their cohesion in the future and dampen trust among members of the ruling elite, regardless of the hierarchy. This is evident in the criticism within the ruling circles, from lower to upper echelons.
The domestic front
There is no doubt that dissatisfaction among Iranian citizens will increase in the post-coronavirus crisis, especially if the authorities do not take concrete steps to ease their situation. Therefore, the approach will be to contain discontent and lighten the public mood by using its media outlets and propaganda machinery, which rely largely on the clergy and those media channels influenced by their views along with newspapers and conservative websites.
This defensive policy will exploit the current crisis in Iran, and the attitude of various countries toward it, to amplify the “positive” government response, downplay Tehran’s significant human and economic losses, and promote a narrative which will emphasize that if the crisis management had not been effective, the scale and scope of the loss would have been far worse.
Moreover, the authorities will try to use statistics and Iran’s position in the list of the most affected countries to somehow tout it as an achievement by the government. For a few weeks, Iran was ranked third in the number of infections, deaths and spread of the virus after China, the US, and Italy. Since the outbreak, it has not moved out of the list of five countries most devastated by the virus, alongside France and Spain.
Despite China being the source of the pandemic, Tehran will promote at home the idea of comparison with Washington, Paris, Madrid, and Rome, the most advanced countries with their technological and economic resources. The Iranian comparison will focus on rankings and numbers, without considering other differences, such as the openness of these countries and the scope of their interactions with the world in terms of trade and human rights. The government’s message will underplay the extent to which Iran has a common denominator with these countries in terms of the delays in responding to and underestimating the crisis in its infancy.
On the economic front, Tehran will also face significant challenges as a result of the heavy burden the pandemic has placed on various sectors. This starts with the need to compensate for the direct financial losses caused by the decline in tourism and travel. There is also a need to develop short and medium-term plans to improve the efficiency of the health services sector, which has been exposed due to coronavirus. There is always the additional challenge of resuming economic activities, which have been disrupted by the crisis.
Iran’s oil sector losses remain its most daunting challenge. The country’s oil export earnings are expected to decline this year between $2 to $2.5 billion (assuming an export volume of 200,000 to 250,000 barrels per day at $30 per barrel)18. Recent developments in the global oil market point to worse scenarios with oil prices heading for a significant decline of $20 per barrel. Global oil demand has also declined significantly due to a sharp drop in global trade. Tehran will incur a significant share of the losses due to that decline given the slowdown in the Chinese economy, as Beijing is a major importer of Tehran’s oil 19.
With Iran’s fiscal deficit and the impact of a 20 global economic recession, the most likely option for Iran’s decision-makers is to take the austerity route to deal with the economic aftereffects. In Iran’s context though the characterization of “austerity” is relative as the country is already implementing a policy to that effect due to sanctions and lack of direct financial income. As a consequence, there are indications that austerity will be doubly entrenched in what looks like a war-economy, which could aggravate further an already growing popular anger.
The external front
During the coronavirus pandemic, Iran’s behavior showed a cooperative discourse that amounted to eliciting “sympathy” from the international community. However, its regional policies have ranged from relative appeasement before the pandemic spread, to escalation and projection of power, following the logic of “offense is the best defense ”. This has particularly been the case with issues where it has the tools to influence without incurring significant burden or losses.
Since this has been Tehran’s behavior during a crisis, while it suffers huge economic and political consequences, it is expected that during the next phase of the crisis, and after it ends, Iran will develop the policy of offensive initiative. This could lead to stepping up of pressure on Yemen and Iraq, and possibly in Lebanon. The goal will be to assert its role and presence, to make direct gains, secure a privileged position, and strengthen its influence in the short term.
Iran has a comparative advantage in implementing this approach. Most importantly, it does not directly engage on these fronts, neither militarily nor politically. Rather, it relies on proxies and allies from parties directly linked to these issues. This approach limits Iran’s vulnerabilities to any possible escalation at a time when all its economic, human, and political resources are mobilized to address the coronavirus crisis at home. It is also important to remember that the resources originally allocated to Iran’s role in these domains come mainly from the budgets of the Revolutionary Guards’ economic entities and projects, which are not included in the civil allocations in the state budget.
Tehran is expected to use the crisis to improve the image of the regime by promoting its ability to overcome the crisis despite sanctions and what it considers to be a US “intransigence” against it. Furthermore, it will portray the situation as if Iran had defeated Washington in the “battle of coronavirus”, sending an implicit message reaffirming Iran’s persistent message toward the region as a whole, and the Gulf countries, in particular, that banking on the US power is a dangerous option and that Washington is unable to address major crises as they arise.
Tehran has been quick to exploit the crisis at the economic front to press its case for lifting or at least partially easing of sanctions. It has also tried to rally the support of allied and neutral parties for this purpose while focusing on getting external assistance and loans, particularly from international institutions. Iran’s request to borrow from the IMF faces internal and external obstacles, which may stand in the way of securing the loan, fully or partially. The move reflects the economic impasse that has forced it to seek the help of those major international financial institutions that conservatives and hardliner factions with Iranian opinion like to dismiss as mere instruments of “arrogant powers”.
These developments suggest that Iran may modify its boycott policy of those institutions. It may even try to take advantage of their assistance and use the engagement with these institutions to reduce the pressure of US sanctions. This, in turn, may mean that Tehran has a new and still unclear policy of dealing with external pressures – particularly the economic ones – from the global economic system, both directly and in its broader regulatory framework.
Iranian Foreign Minister Javad Zarif has addressed the UN Secretary-General with a lengthy official letter focusing on the difficult situation Iranians face due to the coronavirus outbreak. He attributed the US sanctions against Iran as a major obstacle facing the country already struggling with the coronavirus. Zarif requested that the letter be included as an official document in the UN General Assembly as well as in the Security Council21.
It can be argued that Iran’s policies, that have unfolded or crystallized during the Covid-19 crisis, have several key common features. They are more keen to ensure the stability of the regime than achieving any other objective, including overcoming the pandemic itself. This takes precedence over improving the health situation and the mood of the Iranians. Iran is keen to use all available tools to weather the storm with minimal political and acceptable economic losses.
Iran is expected to press the international community to mobilize resources, especially economic, to help the country avoid the consequences of the crisis and to mitigate its direct financial losses, at least in part. At the same time, it will continue to raise the banner of hostility against the US and hold Washington responsible for the poor economic, service, and social conditions by claiming that the Iranians are suffering due to sanctions.
Perhaps pursuing this approach was the reason behind Tehran’s rejection of the US offer to help it tackle the coronavirus crisis22. It called for the lifting of sanctions as a single basic demand even though Tehran knew it was not going to be easy. The motive behind this position was to exacerbate tension with Washington in order to mitigate the crisis’s negative impact on the popularity and stability of the regime.
Judging by the history of Iranian foreign policy over the past four decades, it is expected that Iran may pursue more interventionist policies and active offensive moves in the region. This may be particularly evident in its use of agents or allies to ease the pressure on the regime and divert attention from its domestic and foreign woes. Such moves are already unfolding on the Yemeni front.
While the world is busy confronting the coronavirus pandemic, and Iran itself is suffering as a result, the Houthis in Yemen have resumed missile attacks on Saudi Arabia. Such attacks may increase in the future, and we may see military operations and political moves by pro-Iranian groups and forces in Iraq, Lebanon, and Syria. They may together seek to demonstrate that Iran has emerged from the coronavirus crisis, stronger, more powerful, and influential.
Djavad Salehi-Isfahani, The Coronavirus Is Iran’s Perfect Storm, Foreign Affairs, 18 March 2020.