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Brian Jacobsen

Understanding Iran’s role in the Middle East (excerpt)

On the Trading DeskSM6-27-13
By Brian Jacobsen, Ph.D., CFA, CFP®, Chief Portfolio Strategist

Are big changes coming in Iran? How could the next few years look in the Middle East as a result of the recent Iranian presidential election? Dr. Haleh Esfandiari, Director of the Middle East Program at the Woodrow Wilson International Center for Scholars, joins Dr. Brian Jacobsen, CFA, CFP®, chief portfolio strategist with Wells Fargo Funds Management, LLC, in this excerpt of On the Trading DeskSM from Friday, June 21, 2013.

Listen to the full interview.

Can you give us a brief description of the role of the president in Iran?
The presidency in Iran carries a lot of weight, especially when it comes to domestic issues. And that’s why Mr. Rouhani, the next president of Iran, was able to make a great number of promises on domestic issues to the people, although a bit vaguer when it comes to foreign policy issues.

President Ahmadinejad was a rather polarizing figure in global affairs. Is the new president likely to be any different?
I think very different. Mr. Rouhani, during his campaign and even from the first press conference he gave, sounds much more moderate, and he seeks accommodation and understanding with the outside world, so a very different tone than his predecessor.

I’m curious about the sanctions against Iran, restricting their ability to export oil to the rest of the world. What kind of effect has that had on the Iranian people and the economy?
No doubt sanctions have had an effect on the everyday life of Iranians. And the sanctions have also disrupted the Iranian economy, and as a result, Iran’s currency has lost almost half of its value. It just picked up slightly after Mr. Rouhani was elected. It’s very difficult for Iranian banks to conduct international transactions. And the Iranian local industry has suffered because there are no spare parts coming its way. I think the message of the people, by electing Rouhani, was to try and get out of these sanctions. And I think a message that the United States and the Western countries can send to the new president is to make sure not to impose new sanctions.

You spoke earlier about some of the pledges or promises that President Rouhani has made on domestic and foreign issues. Which promises or pledges are likely to pass, and on what timeline might they pass?
First of all, I think the president-elect in Iran is going to put together, as he described in his press conference, a cabinet made up of technocrats—people who have served, probably his colleagues, during President Khatami’s tenure. Because they were marginalized for the last eight years, they had joined the private sector, so therefore they have an experience in the private and public sectors. So he will bring them in. He will try and reach out to some of the conservative members of the regime, in order to have a more nuanced government that can tackle the economic, security, and social problems that Iran is suffering from. I think in the social sphere, he is going to open up. He will try and move out the moral police from the street. He will try and stop the interference of security in people’s private lives. He will leave alone the young men and women who try and mix and mingle in the streets. He will try and restore the universities that have lost quite a bit of their academic standard. He would reach out to people who have been marginalized under Ahmadinejad—university professors, journalists. He will try and introduce freedom of the press once again, freedom of speech, freedom of assembly. But this is not something he can do within the next two, three months. It’s long term. Maybe it will take a year. But these are going to be incremental steps that he will try and take. On the economic issue, I think he will try and reach out to the West and find a way of accommodating all the countries that have imposed these four or five different rounds of sanctions on Iran and try to at least get some of the sanctions—immediate sanctions—lifted.

A lot of very exciting things are happening to perhaps have a brighter future for Iran. Before we leave, Dr. Esfandiari, we’d welcome a parting thought to help shape our understanding of the Middle East and Iran, in particular.
I think if we take a look at the Middle East, the Middle East from Egypt to Iraq, from Syria to Tunisia, is in turmoil. And this is a time, I think, for an intelligent leadership by the heads of the countries, for the countries of the Arab Spring, to live up to the promises of the Arab Spring. We need a wise policy by the U.S. toward the Arab Spring. On the other hand, in the region, we need also a very intelligent leadership to get over this huge problem this region is facing.

Well, I cannot thank you enough for helping to contribute to that conversation. In fact, I’d like to direct our audience to WilsonCenter.org for more insight from you as events unfold in the Middle East. For now, Dr. Esfandiari, thank you for joining us here On the Trading Desk.
Thank you very much.

The views expressed are as of 6-27-13 and are those of Chief Portfolio Strategist Brian Jacobsen, Dr. Haleh Esfandiari, and Wells Fargo Funds Management, LLC. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. Any and all earnings, projections, and estimates assume certain conditions and industry developments, which are subject to change. The opinions stated are those of the author and are not intended to be used as investment advice. The views and any forward-looking statements are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.

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