2015 will bring about crucial and positive developments as well as challenges for the Iranian government. One of the tenets of the Iranian political system is unpredictability, nevertheless, projections can still be made.
Iran's economy will likely deteriorate and face an austere budget in 2015 in comparison to 2104, when Rouhani's administration managed to move Tehran out of a recession. According to the IMF, Tehran will need oil prices to be near $131 a barrel to cover its spending. Yet, Iran is will likely to manage this economic challenge by applying some strategies such as cutting subsidies, increasing taxes, and depreciating the foreign exchange rate.
The good news from the perspective of the Iranian leaders will be an increase in exports and imports, particularly with Russia, China and some European countries thanks to the extension of the nuclear talks. The shift to use national currencies in foreign trade, instead of the dollar (for example with Russia with regards to food imports), will also facilitate bilateral trade.
The limited sanctions reliefs will also assist Iran in addressing its budget and increasing non-oil exports in 2015. As the Enterprise Ireland delegation is planning to visit Tehran this year, European countries and business companies will look further for avenues to invest in Iran and increase business deals.
Iran's regional bilateral cooperation with some countries including Turkey and Iraq will also likely heighten. President Erdogan's visit to his "second home," Iran, in 2015 could mark an increase in bilateral trades as well as heightened strategic cooperation between Tehran and Istanbul. Iran and Iraq will also be establishing a joint bank, the Islamic Regional Cooperation Bank for Development and Investment, to increase trade transactions and facilitate bilateral trades to over $20 billion in the next three years.
In 2015, Iran could make a breakthrough in its long-range missile technology by developing and testing intercontinental ballistic missiles (ICBM) which could reach the United States. Nevertheless, it is crucial to point out that this advancement in missile technology is aimed more at a defensive or deterrent strategy rather than an offensive one.
Another potential breakthrough is linked to Iran's air defense system and its long range surface-to-air missile system through the Bavar (Belief) 373 program. Iranian leaders are planning to unveil an anti-missile defense system, considered to be similar to the the Russian S-30 air-defense missile system, or with "higher capabilities than the (Russian) S-300" according to the Brigadier General Farzad Esmayeeli.
Strategic Priorities Will Remain Intact
The significant drop in oil prices has led some experts to point out that Iranian leaders will soften their position towards Tehran's main strategic priorities, such as nuclear negotiations and support of President Bashar al Assad, in order to come out of isolation and economic sanctions.
Nevertheless, economic duress is less likely to fundamentally shift Iran's regional hegemonic ambitions, as well as alter the stance of Iran's Supreme Leader, Ayatollah Ali Khemenei, and the senior cadre of Iran's Revolutionary Guards towards their top regional strategic priorities. History has shown that even when Iran's economy became chaotic a few years ago, Tehran's stance towards supporting Assad, boosting Hezbollah, influencing the ruling Iraqi Shiite coalition, and continuing its nuclear program, did not alter. Even with the economic challenges, Iran is planning to increase its defense spending and IRGC budget by 50 percent. In addition, Iran gave $3.6 billion in credit to buy oil and $1 billion for non-oil products to the Syrian government.
In other words, economic challenges will not justify strategic shift or accommodations from the perspective of Ayatollah Khamenei.
The next critical issue is meeting the nuclear deadline of July 2015. Iran and the six global powers, known as the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States) failed to strike a final and comprehensive nuclear deal on November 24, 2014. But, will Iran and P5+1 seal a final deal in 2015?
The gap between the Islamic Republic's demands on its nuclear program and those of the West's (primarily the United States) is too deep to bridge. A final nuclear deal in July 2015 is unlikely. Iran will continue to demand immediate lifting of the economic sanctions while the U.S. will call for a gradual removal of sanctions as Tehran shows that it is meeting the requirements of the final nuclear deal. However, it is likely to observe a de facto extension of the interim nuclear deal in 2015.
Due to some of the convergence of strategic and geopolitical interests between the US and Iran, back channel diplomacy, direct and indirect military or intelligence cooperation between Tehran and Washington is likely to increase. However, a full U.S.-Iran rapprochement, such as the Cuban deal, will not be achievable this year.
The other crucial issue is Tehran's relations with Damascus. Iran's foreign policy on Syria will continue to be based on a zero sum doctrine. That follows that any change in the Syrian political system will be considered a geopolitical, strategic, and ideological loss for the Iranian leaders. As a result, the Iranian financial, military, intelligence, and advisory assistance, as well as involvement of Qud's forces in Syria will be steady in order to preserve the power of Tehran's long-standing ally.
When it comes to Iraq, Iran's social, political, religious, and economic influence in Baghdad will deepen mainly due to the incapability of the Iraqi forces to quell the fighters of the Islamic State. Iran's effort to organize Shiite militia groups in Iraq, and possibly create another Hezbollah in Iraq in 2015, is also not out of realm of comprehension.
Finally, the drop in oil process and extension of nuclear talks will empower the voices of hardliners vis a vis the government of Hassan Rouhani. Domestically speaking, although Iran's economy will likely deteriorate in 2015, economic challenges that ordinary people will face, is less likely to result in significant unrest as the government will use its central bank and other strategies such as depreciating the exchange rate in order to alleviate the pressure on the ordinary people.
Majid Rafizadeh, an American scholar and political scientist, is president of the International American Council on the Middle East. He is originally from Islamic Republic of Iran and Syria.
This post first appeared on Al Arabiya.