It is now even more difficult to read the main cause of instability in the Middle East. Iran is one of the primary reasons why international investors are hesitant to make large capital commitments to the region, as evidenced by its latest missile strikes on Israel. This uncertainty was increased by the death of President Ebrahim Raisi in a helicopter crash on Sunday.
In the Islamic Republic, the president's role is not as important as it may seem. The position, which is elected every four years, has been occupied by reform-minded people like Hassan Rouhani and hardline conservatives like Raisi, who assumed office in 2021. Since taking office in 1989, Supreme Leader Ali Khamenei has had a significant impact on foreign policy issues and the majority of significant decisions.
Even so, Raisi is partially to blame for Iran's recent 40% inflation and falling currency. US sanctions will continue to burden whoever assumes power since they prohibit Tehran from exporting the 3 million barrels of oil per day that it is theoretically capable of. The broken domestic economy that they will inherit also includes a significant portion of its operations under the control of the military organization known as the Islamic Revolutionary Guard Corps (IRGC), which is also sanctioned by the US.
This background discourages international companies from investing in Iran, with the notable exception of Beijing, which purchases the great majority of the country's daily oil exports of 1.6 million barrels. But Raisi was a strong favorite to succeed the 85-year-old Khamenei as Supreme Leader.
The Assembly of Experts, a body of 88 people whose members held their most recent election in March, chooses the Supreme Leader. It is growing more conservative in light of the historically low 41% voter turnout and the ban on moderate candidates like Rouhani. There is a chance that the assembly will choose to support the son of the Supreme Leader, Mojtaba Khamenei, or a candidate who is thought to be too close to the IRGC. Both would not be well received by many Iranians.
However, the greatest unknown is how Iran, which has not had a Supreme Leader for more than thirty years, would respond to key geopolitical issues like a possible clash with Israel. Khamenei's longevity may help allay investors' concerns about potential developments in the Middle East, regardless of his rhetoric. The only replacement that would have been considered a known quantity is no longer there due to Raisi's death.