Iran: Scenarios for deep reform or regime change

Iranians have been taking to the streets to voice their dissatisfaction with the country’s leadership. Over the past decade, several protest movements have sprung up in Iran, only to ultimately be stamped out. Any attempt at achieving regime change will meet stiff resistance.

An Iranian family poses for a selfie during 40th-anniversary celebrations in Tehran of the Islamic Revolution
An Iranian family takes part in celebrations in Tehran’s Azadi Square to mark the 40-year anniversary of the Islamic Revolution in February 2019. Though protest movements have swept the country several times over the past decade, the regime still enjoys significant support from the middle class, who fear the instability inherent in changing the system. © dpa

In a nutshell

  • Protest movements in Iran so far have lacked key elements
  • Economic reform would hurt Iran’s most powerful groups
  • The supreme leader-IRGC partnership is very effective

This report is the second in a three-part series on Iran from GIS Expert Professor Dr. Amatzia Baram. Find the first, on Iran’s leadership structure, here. The final installment, due to be published in the coming weeks, will focus on Iran’s strengths and weaknesses.

Since November 2019, a series of demonstrations has gripped Iran. The protesters are mostly young, under 40 years old. They are not attached to the ideology of the regime, which came to power before they were born. As I pointed out in my previous report examining Iran’s leadership structure, these young people judge their current leaders by comparing their promises with their practices – the result has not been favorable.

The success of such demonstrations, either now or in the future, is far from certain. Until now, they have all lacked five key components. First, there has been no general strike. A strike in the oil sector would have an especially severe impact, but that has not happened. Second, the blue-collar demonstrators and the middle class (a big part of the 2009 protests) have not formed an effective alliance.

Fear of chaos

For such movements to succeed, a psychological metamorphosis would be necessary, in which the middle class sees the blue-collar demonstrators less as a threat and more as a potential ally. Like many other medium-sized entrepreneurs, the bazaar merchants – known in Persian as the Bazaaris – who under the shah were independent both economically and politically, are today dependent on the ruling regime to a surprising extent. This is one of the secrets of the regime’s longevity. Anywhere between 20 and 30 percent of the population – the Bazaaris, the upper-middle class, some of the middle class, government officials, and military officers – belong to this regime-dependent group.

The regime is not only protected by the IRGC, but also by a few million families that depend on it for stability.

With this kind of public support and fear of potential chaos that could disrupt their stable and fairly prosperous existence, the regime can afford to send troops against masses of demonstrators, and even to mow down thousands of them and arrest many more. In other words, the regime is not only protected by the Islamic Revolutionary Guard Corps (IRGC or Pasdaran) and the Basij militia, and the police rapid reaction units, but also by a few million families that depend on it for economic benefits and even just stability.

Third, the protesters have had no effective leadership. True, from 2009 to 2011, they had two high-profile spokesmen, Mir Hossein Mousavi and Mehdi Karroubi. Today both are under house arrest, and neither ever became an effective field leader.

Fourth, no armed units ever joined the demonstrators. The IRGC, Basij and police rapid reaction units have been loyal to the government. Bound by economic interests and unit camaraderie, they will likely remain loyal. Most of the army is stationed on the country’s borders. It is not clear who can change this formula.

Still, a split in the police, other secondary security bodies and the military is possible. If this happens, then the demonstrators will suddenly have the fighting divisions they need.

Finally, until now, there has been no serious split at the top of the ruling regime. Despite differences between, for example, former President Mohammad Khatami (1997-2005) and Supreme Leader Ayatollah Ali Khamenei, the former never cut ties with the regime or supported any movement for regime change. In 2019, President Hassan Rouhani, though he recommended a softer approach to the protests, eventually bowed to his superiors and did not object to brutal repression.

Reform: not in the cards

If the leadership wanted to reduce the young generation’s alienation from the regime substantially, it would need to introduce significant social and economic change. First up would be increasing economic efficiency and productivity. It could do this by transferring the Revolutionary Guard’s civilian industrial, commercial and financial assets to state ownership under professional management. Alternatively, it could sell those assets at real market value to private entrepreneurs. Some could be sold to foreign investors. Funds generated this way could be reinvested in the economy, especially in infrastructure.

A mural showing a Revolutionary Guard soldier in front of a sinking U.S. ship
A mural on the island of Hormuz depicts an Iranian Islamic Revolutionary Guard Corps soldier walking away from a sinking U.S. Navy ship. Initially created as an elite bodyguard unit, the IRGC has grown in stature and is now the second-most important center of power in the Iranian regime. © dpa

Eliminating no-bid contracts would be another important move. One reform that President Rouhani contemplated but could not implement was to substantially reduce or cancel the huge entitlements enjoyed by the clerics (through their charitable organizations, the bonyads, which control about 20 percent of Iran’s gross domestic product), as well as by the IRGC and the mid- to senior-level officials. Doing so would not only release significant funding for investments, but it would also give the public the sense that the regime is not denying the masses their fair share of national wealth. Significantly reducing food, gasoline and other subsidies is also essential.

To offset the losses incurred by the poor when the subsidies are eliminated, carefully targeted support for needy families would have to be put in place (the existing system is inadequate). There is also a need to encourage entrepreneurs, thereby strengthening the middle class. Most of all, there is an urgent need to deter official corruption. This process can start with trials of officials suspected of economic crimes. It is of crucial importance for the regime to win the trust of the middle class as it is to win the trust of the blue-collar workers.

All of these issues are purely domestic, and they are consistent with late Supreme Leader Ayatollah Ruhollah Khomeini’s ideology of saving “the oppressed.” However, there is no strong movement, let alone a single leader, and this includes even the supreme leader himself, who can strong-arm the groups mentioned above into giving up their special privileges. The mullahs, the IRGC and most officials will never agree to such reforms. At least in the foreseeable future, then, deep socioeconomic reform in Iran is not in the cards.

Costly foreign policy

When it comes to foreign policy, the economic cost of Iran’s involvement in Iraq is low, while the benefits are substantial. Iranian economic hegemony in Iraq is hugely profitable: its exports to Iraq reach over $9 billion annually, with hardly any imports. If we add Iran’s use of Iraq as a security buffer zone and a land route to Syria and Lebanon – as well as a base from which cheap missiles may be launched against Israel – Iran has every incentive to stay in Iraq.

The same, however, cannot be said for Syria, Lebanon, the Gaza Strip and Yemen. In all, Iran has been spending many billions of dollars annually in these places. Tehran spends an estimated $1 billion in Lebanon each year, while in Syria, from 2013 to 2019, it likely spent between $30 billion and $105 billion. These are heavy financial burdens. Keeping Iranian networks in many other countries is costly too. Reducing those expenses or eliminating them could significantly benefit the Iranian economy. Indeed, all the protest movements from 2009 to 2019 have demanded such reductions. (It is unclear if this is a demand of the protests that have occurred so far in 2020.)

Ayatollah Khomeini’s legacy of spreading the Islamic Revolution is still etched in the minds of many in the elite.

Yet there is no chance of such a turnabout. First, Ayatollah Khomeini’s legacy of spreading the Islamic Revolution is still etched in the minds of many in the elite, mainly the senior mullahs and the IRGC, with Ayatollah Khamenei leading the way. Second, Tehran sees these territories’ strategic value as crucial for the country’s survival.

In addition to Khomeini’s legacy of spreading the Islamic Revolution, Tehran’s expansionist strategy is driven by a dual urge. It is impossible to deny Iran’s straightforward imperial impulse: every adult Iranian is deeply aware of their country’s glorious imperial past. At the same time, though, the Iranian leadership is also genuinely fearful about foreign aggression against the independence and territorial integrity of their country. In the 20th century alone, parts of Iran were occupied by the United Kingdom, the Soviet Union and Iraq. The United States’ Central Intelligence Agency toppled a democratically elected government. This traumatic history is etched in Iranian memory.

The Iranian leadership therefore sees Iraq, Syria, Lebanon and even Yemen (with its access to the Bab el-Mandeb strait) as necessary defense requirements, something like the traditional buffer zones of the great empires of the past. The Iranian experience in Syria provides reason to suspect that Tehran is also bent on converting as many Sunni Muslims and Alawites as possible to Qom-style Shia Islam.

One cannot seriously expect this Iranian regime to abandon its expansionist policies. The extermination of Israel belongs in another, a purely religious realm, but this goal, too, is difficult to abandon because it represents Ayatollah Khomeini’s legacy no less than his political theory of the Governance of the Islamic Jurist (Wilayat al-Faqih).

Supreme Leader Khamenei seems to be weakening somewhat recently, though he remains the most powerful political figure by far. The symbiosis that has developed between him and the commanders of the IRGC looks unshakeable. Mindful of the importance of the loyalty of the IRGC and the clerical class, Mr. Khamenei is unlikely to introduce any of the reforms mentioned earlier. Only if the economy goes into freefall will he approve of anything more than superficial changes.

Who will be his successor? At the moment, it seems that the successor most popular with the senior clerics and the Revolutionary Guard is Ayatollah Ebrahim Raisi, the current head of the judiciary. As far as anyone can tell, he is an even more zealous proponent of the system than Mr. Khamenei. Unless the regime is in immediate danger of disintegration, it is unlikely that the IRGC will agree to a more moderate supreme leader. This is not in their nature and will not serve their narrow, but crucially important interests.

Only an extreme situation can convince the regime to give up its nuclear ambitions.

Could the regime offer concessions to end the U.S. sanctions? It is likely that a credible American military threat of retaliation against further attacks on Gulf Arab vessels, oil installations or American targets will deter Tehran from further direct military action.

It is impossible to tell how long Iran will continue its various proxy wars. But even if these wars stop, Tehran could settle for enriching more uranium. There is no indication so far that Ayatollah Khamenei and the Revolutionary Guard are ready to step down and agree to negotiations before the U.S. ends the sanctions. Here, too, only an extreme situation can convince them to give up their nuclear ambitions for good.

Even though it seems that President Rouhani and the foreign ministry have a more flexible position, they do not count for much. Most of the senior clerics and the IRGC see the nuclear option in the same way that they see Iran’s territorial expansion: as a guarantee against attack. They see Kim Jong-un’s North Korea pursuing nuclear weapons and compare it with the disarmed Libya of Muammar Qaddafi, and they draw the logical conclusion. Moreover, they believe that Israel has a nuclear arsenal and they want one, too. Such an arsenal would also give the regime a much-needed boost in prestige domestically.

No about-face

When Ayatollah Khomeini came to power in 1979, he designed a constitution that, while appearing democratic, channeled all power to him. All the institutions were, in the final analysis, under clerical control. The clerics, for their part, were rewarded handsomely, but also handcuffed. Constitutionally speaking, the Revolutionary Guard was to be a small unit of bodyguards. This began to change during the Iraq-Iran War: it was the IRGC, not the army, that stopped Saddam Hussein’s military in its tracks.

The Supreme Leader’s role and authority have changed little, but the Revolutionary Guard have pushed the clerics down a rung on the ladder of power and have replaced them as the second-most important authority in Iran. Many Revolutionary Guard veterans and even some serving senior officers are Iranian nationalists rather than radical Islamists. They are ready to relax the religious rules of public behavior and somewhat liberalize the economy. For now, however, they are clearly in the minority. Most clerics consider such moves as a betrayal of Islamic tenets of faith and fear that a concession on the dress code, for example, will create expectations for further retreats.



Save a near-catastrophe, the senior clerics, most of whom are very conservative, and the Revolutionary Guard are unlikely to introduce radically different socioeconomic and security policies. The present system serves them well. Very limited cultural liberalization, though, may take place. However, if the American-imposed embargo remains in force for several years, if the economy shows signs of disintegration, if the mass demonstrations continue to erupt increasingly frequently and putting them down becomes increasingly bloody, if some police and army units join the demonstrations, the leadership will have to recalculate its social, economic and security tack, or risk regime change. So far, such an about-face cannot be seen on the horizon.

Related reports

Scroll to top