On Wednesday, the Supreme Leader called for Iran’s “resistance economy” to overcome Western sanctions, with the development and increase of indigenous production, diversification of exports, and reform of financial markets.

But what is Ayatollah Khamenei’s political strategy in repeating the demand for “economic jihad” at this moment, with President Rouhani facing challenges from hard-liners and Iran engaged in nuclear discussions with the US and other powers?

Michel Makinsky interprets for EA:

At first glance, the Supreme Leader’s celebration of “resistance economy”, in which Iran proclaims its triumph over US-led sanctions, appears to be a hollow declaration. After all, Tehran’s recent economic policies, implemented by the Ahmadinejad, have added to problems rather than solving them. Ayatollah Khamenei’s “economic jihad” also seems to offer the potential for conflict with his current President, Hasssan Rouhani, who has opted for a more liberal orientation while promising to deal with the mismanagement of the Ahmadinejad years.

That reading, however, underestimates the Supreme Leader. Khamenei, in his carefully-calibrated manner, is offering support for Rouhani while maintaining the language of resistance and jihad.

This language is a consolation prize for hard-liners who have been trying to regain position after their loss in last year’s Presidential election and Rouhani’s success in getting meaningful nuclear negotiations with the US and other powers. Khamenei has endorsed those discussions — and continues to support them despite his declared pessimism about an outcome and harsh language about US dishonesty. In part, his words on the economy give him cover for that endorsement.

At the same time, the Supreme Leader’s “resistance” permits him to give a tacit nod to Rouhani on programs such as privatization and the remedy of Ahmadinejad’s tangled approach to subsidy cuts. It also permits the President to pursue “corruption”, even as that effort takes down Ahmadinejad allies like the billionaire Babak Zanjani and threatens others.

Michel Makinsky is Lecturer at France Business School in Poitiers and Associate Researcher IPSE in Paris. He is the editor of L’Economie Réelle de l’Iran au-delà des Chiffres (The Real Economy of Iran Beyond Statistics), published by l’Harmattan this month.