3) We could be witnessing the death throes of the Islamic Republic. The Islamic Republic is in a perfect storm, and sanctions have hurt their economy. Tehran’s hopes that European and Asian countries would ignore U.S. sanctions have fallen short, as businessmen calculate that they cannot risk U.S. penalties regardless of what their own governments wish. Politicians and diplomats trade in words, but businesses must be beholden to their shareholders and bottom lines. None of this should surprise, of course, as the same exact debates occurred against the backdrop of President Bill Clinton’s 1994 and 1995 executive orders and the passage the following year of the Iran-Libya Sanction Act. The only difference between then and now is that Iran’s currency is also in freefall.
The problem is not just economic, however. The Islamic Republic’s old guard is dying of old age, and Supreme Leader Ali Khamenei realizes he may not be far behind. Unlike in 1989—the last time Iran had a leadership transition at the very top—there is no clear successor nor confidence within the system that transition will be smooth. More likely is a stalemate or even a military coup which would subordinate the clerics to the generals. Islamic Republic or not, that has been the norm throughout the bulk of modern Iranian history.
Both Khamenei and the Revolutionary Guards know that they are largely unpopular inside Iran. But, as Iranians resent the ruin brought to their country by forty years of clerical rule, they remain fiercely nationalistic. Khamenei and the IRGC, therefore, might try to precipitate a crisis with which they can rally Iranians around the flag.