July 26, 2022 | The Wall Street Journal

Ayatollah Khamenei’s ‘Resistance Economy’

Iran’s supreme leader has an isolationist vision that makes it hard either to coerce or to cajole him.
July 26, 2022 | The Wall Street Journal

Ayatollah Khamenei’s ‘Resistance Economy’

Iran’s supreme leader has an isolationist vision that makes it hard either to coerce or to cajole him.

Excerpt

Nuclear talks between Iran and the great powers are once more at an impasse. The ostensible cause of the latest stalemate is America’s insistence that Iran’s Islamic Revolutionary Guard Corps remain on its terrorist list. But there’s much more to the story. Under Supreme Leader Ali Khamenei, the Islamic Republic is undergoing one of its most significant transformations since the inception of the theocracy in 1979. The cleric, who has outlived and outmaneuvered all challengers since he succeeded Ayatollah Ruhollah Khomeini in 1989, is revamping the country. His actions have generated popular protest and elite disaffection. In tense times, the clerical regime has difficulty responding to diplomatic initiatives. It hunkers down.

Mr. Khamenei has long held a vision of Iran immune to foreign pressure. He prefers organizing commerce into what he calls the “resistance economy,” in which the Islamic Republic reduces its dependence on oil revenue, segregates itself from global markets, and relies on internal resources and demand. “I strongly believe that the key and remedy to the country’s problems stands in promoting internal production,” Mr. Khamenei told a group of supporters three years ago. “Those who look to help from the outside for enhancing production and the economic situation should know that the solution is promoting internal production.”

To keep Iran a leading Islamic state, Mr. Khamenei favors economic surgery. Spending must be cut so Tehran can better withstand foreign financial pressure. Iran also has to pare the onerous subsidies that have long drained its treasury. The Islamic Republic operates an elaborate welfare state that provides services and goods at discount prices. The clerical regime has often tinkered with subsidies. Past presidents resisted deep cuts for fear of popular backlash. Not Ebrahim Raisi, a disciple of Mr. Khamenei, who rose through the republic’s police state because of his zeal and ruthlessness.

Mr. Gerecht, a former Iran targets officer in the Central Intelligence Agency, is a senior fellow at the Foundation for Defense of Democracies. Mr. Takeyh is a senior fellow at the Council on Foreign Relations. Follow Reuel on Twitter @ReuelMGerecht. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.

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Issues:

Iran Iran Global Threat Network Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance