Iran Update, March 23, 2023

March 23, 2023, 5:00 pm ET

The Iran Updates are produced by the Critical Threats Project (CTP) at the American Enterprise Institute with support from the Institute for the Study of War (ISW). To receive Iran Updates via email, please subscribe here.

Supreme Leader Ali Khamenei has trapped the Iranian regime by focusing public and government attention on improving the economy—an issue he does not yet appear willing to seriously address. Khamenei confined intra-regime debate to the economy—rather than addressing the socio-cultural issues that fueled the Mahsa Amini protests—and proposed various solutions to Iran’s economic problems during his Nowrouz address on March 21.[i] Khamenei called for privatization, stating that “the most important problem and weakness of the country is the governmental nature of the economy.”[ii] Khamenei additionally acknowledged some critics’ use of the term “khasoulati”—meaning “state-controlled”—to describe the economic dominance of parastatal entities.[iii] Khamenei’s reference to this term confirms that he is aware of some of the arguments made by pragmatic hardliners, such as Parliament Speaker Mohammad Bagher Ghalibaf, about what role the parastatal establishment should play in Iran’s economy. Ghalibaf has explicitly called for parastatal organizations to decrease their involvement in the economy in recent weeks, as CTP previously reported.[iv] Khamenei’s recognition of and lip service to this conversation does not necessarily mean he is prepared to make the difficult decisions involved in seriously prying the economy from the grip of the state-owned economic giants. Meaningful privatization would require an overhaul of the Iranian economy which would likely take years to complete and would cause severe economic disruptions. Khamenei declined to take such measures when former President Hassan Rouhani advocated for them fervently, moreover.[v] It is thus more likely that Khamenei is discussing privatization because he has designated the economy as one of the only acceptable topics of intra-regime debate.

The regime’s intransigence on both economic and sociocultural issues will likely fuel greater instability and unrest. This rhetorical focus on the economy is not enough to address the underlying problems or address protest grievances. Khamenei’s focus on the economy will only lead to public disappointment if he does not plan to seriously reform the economy. The regime has furthermore reiterated its uncompromising stance toward sociocultural issues in recent days, affirming that such issues, such as the mandatory hijab law, are nonnegotiable. Regime officials have intensified their efforts to enforce mandatory veiling, including by announcing plans to reestablish morality patrols, for example.[vi]

Key Takeaways

• Supreme Leader Ali Khamenei has trapped the Iranian regime by focusing public and government attention on improving the economy—an issue he does not yet appear willing to seriously address.
• The regime’s intransigence on both economic and sociocultural issues will likely fuel greater instability and unrest.
• CTP did not observe any protest activity, possibly due to the Nowrouz holiday.

Internal Security and Protest Activity

CTP did not observe any protest activity on March 23. This decreased activity may be due to the Nowrouz holiday.

Economic Affairs

The Tehran Stock Exchange was closed from March 20-22 for the Nowrouz holiday.[vii] The value of the Iranian rial thus remains the same, around 494,000 to one US dollar.[viii] The rial has depreciated in recent days, rising from around 471,000 rials to the US dollar on March 17.[ix]

Nuclear Program

UK-based outlet Middle East Eye reported on March 22 that Strategic Foreign Relations Council (SCFR) Secretary Abbas Araghchi has held secret nuclear negotiations with unspecified Western powers in recent weeks.[x] This report follows online rumors claiming that Araghchi joined the nuclear negotiating team and traveled to Geneva with Foreign Affairs Minister Hossein Amir Abdollahian, likely to revitalize nuclear negotiations, as CTP previously reported and assessed. Araghchi is a career Iranian diplomat who played a prominent role in the nuclear negotiations with the West under the Hassan Rouhani administration. Araghchi serves as a foreign policy adviser to Supreme Leader Khamenei as SCFR secretary. Khamenei established the SCFR in 2006 to serve as his personal advisory board and foreign policy think tank.

The Middle East Eye report claimed that President Ebrahim Raisi was not aware of Araghchi’s negotiations. CTP cannot verify this claim, although it is consistent with online rumors reporting that the Supreme National Security Council (which effectively operates under Khamenei rather than the president) has taken responsibility for the nuclear negotiations from the Foreign Affairs Ministry.[xi]

The regime may be particularly concerned about a European “snapback” decision in the UN Security Council, as CTP previously assessed.[xii] The regime could therefore be signaling its seriousness about negotiations primarily to placate European powers. The Europeans have strongly condemned both Iran’s unprecedented violations of its safeguards obligations as well as its military support to Russia.[xiii] The UK, France, and Germany (the E3) were reportedly prepared to introduce a censure resolution against Iran during the recent IAEA Board of Governors meeting in March 2023—an escalatory step that could refer Iran’s nuclear file to the UN Security Council.[xiv]

Deputy Foreign Affairs Minister for Political Affairs and chief nuclear negotiator Ali Bagheri Kani confirmed reports that he held meetings with E3 officials, as CTP previously reported.[xv] The Iranians are likely trying to assuage Western concerns about Tehran’s external and nuclear activities in order to restart stalled nuclear negotiations, as CTP previously assessed.[xvi] This meeting follows recent Iranian diplomatic activities centered around or adjacent to its nuclear program, ranging from Iran’s commitment to reinstall IAEA monitoring equipment and restoring Agency access to nuclear facilities to pursuing diplomatic rapprochements with several Gulf states and holding talks with Ukraine over Iranian military support to Russia.[xvii] Foreign Affairs Minister Hossein Amir Abdollahian held a telephone conversation with Swiss Foreign Affairs Minister Ignazio Cassis on March 23, during which Amir Abdollahian expressed Iran’s commitment to ending the war in Ukraine likely as part of the same effort.[xviii]

Foreign Policy and Diplomacy

Strategic Foreign Relations Council Chairman Kamal Kharrazi met with Lebanese Hezbollah Secretary General Hassan Nasrallah in Beirut, Lebanon on March 23 to discuss recent regional developments.[xix] Kamal Kharrazi and Council Secretary Abbas Araghchi met with Lebanese Foreign Affairs Minister Abdollah Bou Habib and Lebanese Parliament Speaker Nabih Berri on March 22.[xx] Kharrazi and Araghchi previously met Syrian President Bashar al Assad, Foreign Affairs Minister Faisal Mekdad, and Religious Endowments Minister Mohammad Abdul Sattar in Damascus on March 19-21, as CTP previously reported.[xxi]

Foreign Affairs Minister Hossein Amir Abdollahian held a phone call with Saudi Foreign Affairs Minister Faisal bin Farhad al Saud on March 23.[xxii] The two agreed to meet with one another as soon as possible and discussed preparation for the reopening of embassies. This call follows the normalization of relations between Iran and Saudi Arabia on March 10, as CTP previously reported.[xxiii] The Gulf Cooperation Council (GCC) declared its support for the Iran-Saudi rapprochement on March 23.[xxiv]  

Russian Foreign Affairs Ministry Spokesperson Maria Zakharova announced that Iranian Foreign Affairs Minister Hossein Amir Abdollahian will travel to Moscow to meet with Russian Foreign Affairs Minister Sergei Lavrov on March 29.[xxv] Zakharova stated that the two ministers will discuss Iran’s nuclear negotiations and mutual cooperation with respect to Syria, Afghanistan, the Caucasus, and the Caspian Sea.

External Security and Military Affairs

Unnamed Arab and Turkmen members of Iraqi parliament threatened in a joint statement on March 22 to withdraw their support for the State of Law Coalition-backed election law.[xxvi] Iraq’s parliament voted on five out of 20 amendments to the election laws on March 19.[xxvii] Kurdish parliamentarians from Kirkuk Province voted in favor of the proposed amendments following an agreement to remove Article 35 from the list.[xxviii] Article 35 would require voter identification cards for residents of Kirkuk. The Arab and Turkmen parliamentarians from Kirkuk province who signed the joint statement claimed Parliament had removed Article 35 contrary to a pre-negotiated list of demands and threatened to withdraw their vote supporting the remaining election laws.[xxix] Head of the United Turkmen Front Arshad al Salih warned that protests will erupt in Kirkuk if parliament votes on the remaining election laws without re-adding Article 35 to the agenda.[xxx]

Interior Minister Mohammed al Shammari led a delegation to Dhi Qar Province on March 23, likely to deter future anti-election law protests.[xxxi] Shammari chaired a meeting with his delegation and local security officials on March 23 and announced the Interior Ministry’s plan to deploy additional police forces and vehicles to the province ostensibly as part of a modernization effort.[xxxii] Shammari’s announcement is likely a warning to potential protesters in Dhi Qar Province. Protests against the election laws and government corruption previously erupted in Nasariyah, Dhi Qar province on March 22. Protesters set fires in the street and set fire to the local State of Law Coalition office building.[xxxiii] The Dhi Qar election office announced that it will suspend all operations until further notice, possibly indicating that additional protests are planned to take place in the Province.

Iraqi political figure Moqtada al Sadr ordered eight senior Sadrist officials to remain in Iraq during Ramadan in a public statement, possibly to warn Shia Coordination Framework leadership against interference in Dhi Qar.[xxxiv] Sadr announced that he and these officials will meet to discuss “important matters.” Sadr has historically benefited from high popular support in southern Iraqi provinces like Dhi Qar.[xxxv] Shammari’s announcement to send additional police forces to Dhi Qar province coincides with Sadr’s announcement and suggests that Sadr may seek to block Popular Mobilization Forces—a loose umbrella group of pro-Iranian militias—from exerting additional influence in Dhi Qar. Sadr had previously suspended all Sadrist militia operations in Diyala in a likely attempt to avoid direct confrontation.[xxxvi]

Al Araby and Eye of Euphrates claimed that two unidentified drones targeted an Iranian convoy in eastern Syria on March 22.[xxxvii] Al Araby claimed the drone strike targeted a convoy of six vehicles traveling to Iran’s Imam Ali base through the al Hari border crossing in Albu Kamal district, Deir ez Zor province.[xxxviii] The Imam Ali base is the largest Iranian military base abroad. The IRGC has used the facility to store drones and missiles and can house thousands of fighters there.[xxxix] An anti-regime Twitter account published a video purportedly of the alleged strike.[xl] CTP cannot independently verify the contents of the video. Israel Alma—an Israeli think tank—claimed that the strike targeted the Imam Ali base, citing ”local reports.”[xli] Iranian state media attributed the drone strike to Israel.[xlii] The drone strike follows recent Israeli airstrikes against Iranian and Iranian-backed forces throughout Syria. Israeli combat aircraft targeted an Iranian weapons depot at Aleppo International Airport on March 21, as CTP previously reported.[xliii]