(Bloomberg) -- Things were looking up for Iranians like Mohammadreza Azali. Two months after the nuclear deal was struck in 2015, he started an English-language technology news website in Tehran as the reformist politicians he supported opened up the country.
Then came the election of Donald Trump.
The U.S. president’s decision to withdraw the U.S. from the agreement has given succor to the hard-line skeptics whose mantra all along has been that you can't trust the Americans. It leaves the Islamic Republic torn between those who want change like 30-year-old Azali and those who want to take the country down a more conservative path.
Thousands of young Iranians backed President Hassan Rouhani, believing he could put an end to international isolation and sanctions that had been crippling the economy. But the moderates are under attack from those opposed to engaging with the West.
The leading conservative daily newspaper in Iran, Kayhaan, railed against Rouhani for not abandoning what’s left of the nuclear agreement, which still has the support of European countries. Iran should trash it and end western interference, it said.
“Iranian hard-liners couldn’t have wished for a better ally than the Trump administration,” said Ali Vaez, Iran director at the International Crisis Group in Washington. “The system still needs Rouhani and his team of economic technocrats and smiling diplomats to keep the country afloat. But it will make sure that the end of their term marks the end of their political careers.”
Rouhani, 69, won power in 2013 by promising to plug Iran back into the global economy. The accord to limit Iran’s nuclear capabilities in return for rapprochement with the West was a landmark breakthrough. Implemented in January 2016 to cheering crowds in Tehran, it showed he had confronted the conservatives and gained the approval of Iran’s Supreme Leader.
He was re-elected last year with an enhanced majority, but his landmark initiative was already unraveling after failing to deliver the economic dividend the government promised and opposing factions were rounding on him. Frustrations spilled over into unrest in December and January.
“The reformists have lost credibility -- period,” said Fouad Izadi, an associate professor at the Faculty of World Studies at Tehran University and a critic of the nuclear deal. “Rouhani was pushing for the agreement the hardest. There’s now going to be a paradigm shift in terms of how he conducts foreign policy.”
Already there have been signs of Rouhani being drawn into open battles with elements of Iran’s state that oppose his policies.
A week ago, he rebuked a decision by the judiciary to ban the popular messaging app Telegram saying that such decisions should be made with “the real owners of the country, the people.” Judicial authorities have pushed ahead with the ban anyway.
As for the nuclear accord, Rouhani warned of consequences for the U.S. that would lead to “historic regret.” He also said, though, that Iran will keep complying with the deal with the five remaining participants -- the U.K., France, Germany, China and Russia. Iranian Foreign Minister Mohammad Javad Zarif will meet with his British, French and German counterparts on May 15 in Brussels.
Key now is what the Europeans do to salvage it, said Shahnaz Ramaram, a reformist member of the city council in the conservative stronghold of Mashhad, a city in northeast Iran. “It helps weaken the reformists and moderates, but of course only if the Europeans fail in their ability to preserve the nuclear deal,” Ramaram said.
Trump confirmed on Tuesday his widely expected move to pursue fresh sanctions on Iran. He said it would eventually lead to a better deal.
In the Iranian Parliament on Wednesday, lawmakers burned the American flag as well as an apparent copy of the deal’s text, an act that was mirrored in some city council chambers across the country.
Amene Shirafkan, a political activist and journalist who stood in Tehran’s local council elections last year, is concerned about the damaging political fallout – and the reformists are in the firing line.
“With great difficulty and hard work they managed to return their voice to Iranian politics after years in hiding,” Shirafkan said. “Now it’ll be like a marriage between Trump’s policy and Iran’s hard-liners.”
Reformists in Tehran said they hope years of sanctions mean the country has built up a resilience and will stay on track. Others are concerned the conservatives will prevail and Iran will walk away from what remains of the nuclear deal after the promised foreign investment failed to arrive.
Izadi at Tehran University said some factions on both sides will unite to confront the old enemy as the problems mount up for the country. The currency, the rial, has plunged in value and there’s also the specter of a banking crisis.
It leaves Rouhani supporters like Azali wondering what’s next for him and his Internet company TechRasa.
“We wanted to build a bridge between Iran and the outside world to tell people overseas what was happening here,” he said. “Trump’s arrival has thrown a lot of stones in our way.”
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