Risk Management Report: Iran

POLITICS: Iran was declared an Islamic Republic in 1979, following the overthrow of the shah. Supreme leader Ayatollah Ali Khamenei sits at the top of the political system, his power checked by an elected president and parliament; the conflict between theocracy and democracy dictates much of the internal dynamic. The election in June 2013 of President Hassan Rouhani, who is more moderate than his predecessor Mahmoud Ahmadinejad, has proved a transitional moment in the republic’s external relations. The upward trend arrow on Iran’s political risk grade reflects the potential for further progress in talks between Iran and the major world powers on how to resolve the long-running nuclear crisis, which has seen the international community heavily sanction Iran to try to stop it building a nuclear weapon (something Tehran denies it is doing). An interim agreement was signed in Geneva in November 2013; more than a year later, there is still no permanent deal but, given how much is at stake, there is reason to hope agreement will be reached in 2015. Iran’s leverage with Shiites across the region, especially in Syria and Iraq, makes it a key regional player, albeit one opposed by the Sunni Gulf monarchies, who accuse Tehran of stirring dissent in their own Shiite communities. If nuclear talks remain on track, a tentative rapprochement with the Gulf Co-operation Council (GCC) states should continue over the coming year, however.