This month, Iran saw some uncertainties increasing, triggered by ‘presidential’ news. First, former Iranian president Akbar Hashemi Rafsanjani died. Rafsanjani was president from 1989 to 1997 but remained an influential figure after his presidency. He was a key force in moderate Iranian politics and his parting is seen as a blow to moderate president Hassan Rouhani who stands for re-election in May 2017. Secondly, US president Trump took office after a campaign marked by strong anti-Iranian rhetoric. Only a couple of days in office, Trump already signed an executive order (known as the Muslim ban) barring people from Iran (as well as Iraq, Libya, Somalia, Sudan, Syria and Yemen) from entering the US for 90 days. The US also called for an emerging UN Security Council Meeting on Iran following a ballistic missile test.
Impact on country risk
Factional tensions between moderates and conservatives are increasing inside the country due to the upcoming presidential elections and the high age of the Ayatollah. This has resulted in an unprecedented level of allegations of high-level government corruption of the inner circle of Rouhani. The president is also facing mounting criticism due to the slow return of foreign investments and the reluctance of international banks to finance deals after nuclear sanctions were lifted. Rafsanjani's death is seen as an additional blow for Rouhani’s re-election. Nevertheless, the latter’s prospects to win a second term in May remain reasonably strong as there is no obvious conservative candidate. The election of Trump entails the biggest uncertainty for Iran. Trump stated during his campaign that he would “dismantle the disastrous nuclear deal” but also that he would “enforce it like you've never seen a contract enforced before”. The recent call for an emergency UN security meeting might prove to be a first step of the new US policy under Trump. However, the potential improvement in the US-Russian relationship could mitigate the risk of an escalation in tensions between Iran and the US. In addition, the Trump administration may find the deal hard to unwind or to push through harsh US (extraterritorial) sanctions as these risks backlash with the EU, the UK, Russia and China. Nonetheless, new US sanctions are not unlikely and international banks will probably remain reluctant towards Iran due to concerns over the potential harsher policy of the new US administration.
Analyst: Jolyn Debuysscher, email@example.com