Rouhani’s Re-Election: A Victory for Moderate Iran, and its Entrepreneurs

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It’s the economy, stupid. At least, that was the word on the streets of Tehran this Friday, as around 70% of Iran’s 80 million people elected their next President.

The Middle Eastern state has been beset by issues of nuclear arms, human rights and regional conflict in recent years. But it was money that dominated pre-election chatter–specifically whether ordinary Iranians had seen more as a result of Hassan Rouhani’s historic brokering of a deal with the West to curb its atomic arms program in 2015.

That news brought with it the end of international sanctions crippling the economy. Many cheered, not least a small but tenacious clique of tech entrepreneurs who have managed to carve out careers in one of the world’s most isolated states.

Even then local business leaders told Red Herring that Iran’s tech success counted far more on domestic issues, such as prohibitive military service and greater societal freedom, that sanctions. Fast forward to Friday and it seems little has been done to alleviate those ills.

Economic growth has been estimated at 6.6% by the International Monetary Fund. But most of that has come from oil exports boosted by the sanctions drop. GDP per capita, at $5,936, still sits well below a 2010 high of $6,455. Unemployment has shot up to 12.7% and Iran’s housing sector has shrunk 13%.

Despite this Rouhani, a moderate, beat hardline opposition to win 57% of the vote on Friday, avoiding a run-off. That has handed him a mandate to continue pushing Iran towards the rest of the world, and better tame its aging theocracy: Supreme Leader Ayatollah Ali Khamenei has yet to congratulate Rouhani on his victory.

That is good news. Iran’s problems stem from its economic isolation, the answer to which is not religious fanaticism. The country has some great entrepreneurs, and straddles continents. Should Rouhani further reject the hardliners’ “backward” policies, as he calls them, those men and women will get a chance to show their mettle on the world stage.

Accelerators and domestic VCs are becoming more than a pipe dream. And four more years of Rouhani’s tentative turn westwards will surely keep the sanctions away, and money coming in.

ISPs can revamp Iran’s frail web infrastructure. Education will modernize. Eventually Iran will follow the path of formerly isolated states in central and eastern Europe, that today excel in tech. Only, with an 80m population it can become an even bigger player than any of them.

Change will not come immediately. Iran is still a regional pariah. And this week’s speech in Saudi Arabia by US President Donald Trump, which singled out Rouhani’s government for fueling “the fires of sectarian conflict and terror” has done little to ease business with Silicon Valley or anywhere else.

But Rouhani’s success is a huge step in the right direction–and proof, if any were needed, of ordinary Iranains’ desire to connect with the world and to succeed on their own terms. Among them there are thousands of tech entrepreneurs waiting to be discovered. These are exciting times for a sleeping giant.