August 1, 2015 | The Wall Street Journal

History Contradicts the Dream of Iranian Moderation

Most backers of the nuclear accord with Iran hopefully insist that the theocratic regime will moderate once sanctions are lifted. Plugged back into the global economy, Iran will become less militant. The “pragmatists”—those surrounding President Hasan Rouhani, who supposedly want better relations with the West, will grow in strength; the “hard-liners”—the Islamic Revolutionary Guard Corps and the ideologically ardent clergy—will weaken.

This is an unlikely scenario. Consider what happened after Ayatollah Ruhollah Khomeini,the founder of the Islamic Republic of Iran, died in 1989. Akbar Hashemi Rafsanjani, the mentor of Mr. Rouhani, was elected president shortly afterward and remained in office until 1997. Mr. Rafsanjani, with Mr. Rouhani always at his side, encouraged and welcomed European engagement. A regime of global sanctions did not exist, and American sanctions were far less effective then. Tens of billions of dollars in foreign investment and trade arrived.

The acceptable range of cultural expression in the Islamic Republic broadened, as the entire nation, exhausted by a horrific war against Saddam Hussein’s Iraq, reckoned with the losses. Iran’s internal intelligence apparatus lightened up a degree and became more selective in brutalizing and murdering dissidents. Tehran began accepting educational exchanges with European universities and institutes. Messrs. Rafsanjani and Rouhani, antagonists of the obstreperous Revolutionary Guards, attempted to curtail the military and economic influence of the supreme leader’s praetorians.

Yet President Rafsanjani’s pragmatism produced little economic dynamism. Free enterprise in clerical Iran is an Islamic variation of the state capitalism now practiced in Putin’s Russia: corrupt, nepotistic, constrained and co-opted by internal-security forces, and usually guided as much by politics as profit. The Islamic Republic’s economy is a competition between revolution-loyal mafias feeding off the oil wealth of the state.

As a result, when capital flowed into the country the ruling elite got a lot richer, but average Iranians did not. The astonishing efflorescence of Iran’s young filmmakers in the 1990s is directly tied to this sense of acute economic disappointment, which produced movies with searing allegories that won numerous international awards.

Most important, through it all, terrorism and support for Hezbollah remained a staple of the regime’s statecraft. The bombings in Argentina of the Israeli Embassy in 1992 and a Jewish community center in 1994 happened on Mr. Rafsanjani’s watch. So did the 1996 bombing of Khobar Towers in Saudi Arabia, an attack that killed 19 American servicemen. During this period, the assassination of Iranian expatriates—a specialty of the intelligence ministry, an institution that Messrs. Rafsanjani and Rouhani founded and nurtured—became common.

How will so-called moderation this time around, led by President Rouhani, be any different? If anything, life in Iran after the nuclear accord is likely to become more harsh and politically convulsive.

The Revolutionary Guards are now much more powerful, both economically and politically, than they were in the 1990s. Lifting sanctions will release more than $100 billion in oil revenues, a windfall certain to unleash the appetites of the clerics and the technocrats in orbit around President Rouhani. We will see a feeding frenzy. The White House’s prediction that most of this money will remain in Iran might be solid; it is unlikely, however, to go to the people.

It is possible that Mr. Rouhani will be able to paper over the political and personal animosities among the ruling elite with so much cash. He probably also will try to bridge the differences, using Mr. Rafsanjani’s playbook, by finding common ground overseas. Supporting radical Shiite groups such as Hezbollah—or even radical Sunnis whose shared hatred for the U.S. allows them to overlook their anti-Shiite sentiments—has always been popular with the Islamic Republic’s VIPs.

Further, Iran’s police state is likely to get more aggressive, not less, because of the nuclear agreement. Since the 1990s, Iran’s leaders have learned how dissent can get out of control. As the Washington Post’s imprisoned reporter Jason Rezaian can testify, freedom of speech has contracted since Mr. Rouhani became president.

Failed expectations are always dangerous, and Mr. Rouhani has seriously oversold what the nuclear deal will do economically for the average Iranian. If a bonanza doesn’t arrive, Mr. Rouhani may have trouble in the 2017 presidential election. More dangerous, the lower and middle classes in the cities could begin to find common ground with the college educated. The clerical regime survived the massive pro-democracy street demonstrations in 2009 in part because those protests didn’t draw in the urban working-class, the bedrock of the clergy’s power.

Mr. Rouhani’s political model—an Islamic variation of China’s—is to buy off political dissidence with rising GNP. But the Islamic Republic’s bureaucracies have none of China’s Confucian proficiency and all of its corruption. Internal political uncertainty and the lingering fear of U.S. sanctions will limit foreign enthusiasm for serious investment, even in the energy sector. So will Iran’s constitutionally mandated “buyback” provisions that prevent foreign ownership in oil and natural-gas fields. Iran will need to generate more money than it has since 1979 to have any chance of significantly improving the lot of unconnected Iranians, who now regularly postpone marriage and children in pursuit of fewer, less-remunerative jobs.

The Iranian president certainly believes he’s negotiated a deal in which he can have it all: a mountain of cash, foreign investment and arms, and recognition as a nuclear-threshold state. But the cash infusion will only stress the fault lines of Iranian society if it doesn’t foster nationwide prosperity, making Mr. Rouhani’s lasting legacy one of political volatility. Iran has, lest we forget, tens of millions of people who have grown tired of rich mullahs and Revolutionary Guards who preach an austere, angry, revolutionary faith that is no longer the one most people share.

Mr. Gerecht, a former Iranian targets officer in the Central Intelligence Agency, is a senior fellow at the Foundation for Defense of Democracies.

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