For Iran, 2013 could be one of the most challenging years-both at home and in relations with the outside world-since the 1979 revolution. The Islamic Republic faces the potential of stronger economic sanctions and even an Israeli and/or U.S. military strike because of its intransigence in complying with U.N. resolutions on its nuclear program.
But the world's only modern theocracy also must deal with twin domestic challenges-- deepening malaise among the young and increasing tensions among the political elite. Both could be important factors in the presidential election scheduled for June 14, which will feature a new slate of candidates since President Mahmoud Ahmadinejad will have served the two-term limit. Home-grown problems could outweigh the regime's foreign policy woes.
The Nuclear Controversy
Iran and the world's major powers have all indicated an interest in a new round of diplomatic talks in 2013 to end the long standoff over Tehran's controversial nuclear program. The gap is still enormous, however, after three rounds in Istanbul, Baghdad and Moscow in 2012. The big question is whether Supreme Leader Ayatollah Ali Khamenei is truly interested in making a deal-and on terms that will also satisfy the United States, Britain, China, France, Germany and Russia.
Khamenei is not easily swayed by pressure. He has survived imprisonment and lived through the revolution, assassination attempts, the eight-year Iran-Iraq war, popular uprisings, and decades of sanctions. He views Iran's uranium enrichment program not only as a natural and legal right, but also a measure of Tehran's success against the United States. In 2012, he often publicly talked about the U.S. "decline" in the Middle East, reflected in part by the fall of three pro-American rulers with other U.S. allies wobbling. Tehran also spins the so-called Arab Spring as an "Islamic awakening" modeled on its own Islamic revolution.
Despite what he says publicly, however, Khamenei is also savvy enough to know that the same political changes represent new challenges for his regime as well. Syrian President Bashar Assad, Tehran's most important Arab ally, is under siege from a protest movement that turned into a surprisingly powerful military campaign. The spillover impacts Lebanon's Hezbollah, which also faces its own unique problems. And other regional powers, most notably Turkey, are increasingly questioning Iran's geopolitical aspirations.
The Economy
Iran begins 2013 with growing economic woes that may be an important calculation in Khamenei's decision. He needs tens of billions of dollars in oil revenues to maintain a vast and often loyal network that has maintained his rule as Iran's ultimate leader for the past 23 years. But the world's toughest sanctions, soaring inflation, and the plummeting value of Iran's currency produced the perfect economic storm in 2012. And Tehran's economic crisis will not end any time soon.
Iran's oil exports declined by as much as one-half in 2012, a factor that could produce additional pressure from key Khamenei constituents, including the Bazaar merchant class and the powerful Revolutionary Guards.
