Iran has held legislative elections on February 21 and will have its second round on April 17. In total, Islamic Consultative Assembly which is the main Iranian legislative body is composed of 290 seats whereas 146 are needed for a simple majority. The elections were participated by several political actors with differentiated economic approach towards the major problems in Iranian economy, while some coalitions did not base their campaign on economic issues. What’s in stake with the parliamentary offer when it comes to economy in Iran? Could Iran fruitfully cooperate with the EU in economy/financial affairs through INSTEX mechanism?
Being the middle range regional power, Islamic Republic of Iran plays a crucial role within the Middle East region. Due to its heavy ties with the West (dominantly the USA) Iran is being under economic sanctions which were imposed several years ago. Nevertheless, the EU keeps high ratio of good cooperation with it, especially in trade and financial sector. According to the Eurostat, EU countries exported €2.14 billion of goods to Iran in 2017, decreasing almost to half from €4.57 billion in the same period in 2018. The EU Member States have imported €420 million of Iranian goods from January to June of 2019, showing 93 percent increase from €6.1 billion in the first half of 2018. While Germany, France, Italy, and the Netherlands were respectively the major exporters to Iran; Germany, Spain, France and Italy were the top importers from the country in the said time span, this year. The European Commission reports that trade with Iran is subject to the general EU import regime, since Iran is not a member of the World Trade Organisation (WTO) and no bilateral agreement exists between the EU and Iran. It thus supports the goal of Iranian accession to the WTO, a necessary step for Iran to trade globally as an effective and reliable actor.
Two main factions participated these elections – conservatives (consisting of People’s Coalition, Council of Islamic Revolution Forces, and Front of Islamic Stability), as well as of reformists consisting of Friends of Hashemi, Eight Reformist Parties
Reuters describes Council of Islamic Revolution Forces as the “biggest hardline group”, which includes former members of the elite Revolutionary Guards and their affiliated Basij militia as well as other loyalists of Khamenei. This group is expected to dominate the assembly. In accordance with the same analysis, Front of Islamic Revolution is seen as the most extreme of the Islamic fundamentalist camp. It is affiliated to one of the most radical figures in the Iranian religious establishment, Ayatollah Mohammad Taqi Mesbah-Yazdi. Even though the “hardliners” have won the elections, New York Times reports that Iranian society stands at an uncharted crossroad and the regime is bringing the apparatus of the state under the control of what it considers to be its most loyal elites, one election at a time. In a politically, economically and regionally tumultuous environment, doing so would allow an orderly transition to the next supreme leader. As Al Monitor reports, it is asserted that US sanctions are responsible for 30% of the economic hardship Iranians currently face, and he blamed the other 70% on “mismanagement of the country. “Hinting at the kind of legislation the new parliament would pass to address this, Ghalibaf said, eighty percent of our economy is public [government operated or originated], and the public sector is inefficient, corrupting, and has the highest costs with the least benefits.”
Whoever wins the elections, it will need to maintain fruitful cooperation with the EU side through INSTEX mechanism, which was created exclusively for trading with Iran. At the beginning of the 2019, Federica Mogherini exposed her views that the EU will continue to accompany the work of its Member States involved to make this vehicle (INSTEX) operational as soon as possible in close coordination with the Iranian counterparts. The European Union continues to be committed to the full and effective implementation of the JCPOA in all its aspects as long as Iran continues to implement in full all its nuclear commitments, as set out by the agreement. The International Atomic Energy Agency (IAEA) has confirmed in thirteen consecutive reports that Iran is fully abiding by its commitments under the agreement.