The presidential elections in Iran on 14 June 2013 presented external observers with two major surprises: The peacefulness of the campaigns and the near-landslide victory of the moderate-reformist Hassan Rohani.

Domestically this huge turnout for Rohani, who won the absolute majority during the first round of elections, is significant in several ways: First, the moderate-reformist opposition in Iran seems to be more united and was able to mobilise their supporters more effectively. This is also hallmarked by the withdrawal of the other important reformist candidate Mohammad Reza Aref who dropped out of the race and endorsed Rohani in order to increase the chances of the moderate-reformist camp. Furthermore Rohani has the support of the important former presidents of Iran Rafsanjani and Khatami, both leaders of the current moderate-reformist opposition.

Additionally he had the support of the former Green Movement, which gathered under the colour of purple this year;this indicated the support of large sections the young urban middle-classes. But the high turn-out of more than 50% in the first election round also proves that he must have had significant support amongst the working-class population and the rural population accommodating the wish of most Iranians for economic reforms.

The fast acknowledgement of Rohani’s victory by both, the ministry of the interior which is in charge of the election-process and the supreme leadership around Ayatollah Khamenei, is also a sign, that the conservative factions have recognisedthat they must not interfere with the elections this time after the post-ballot disaster of 2009 and 2010. Especially the supreme leadership knows about the importance of legitimate election-results for the Iranian population as well as for the international community.

The split among the conservatives, who were represented by five out of six candidates during the 2013 elections, may have deterred conservative voters and definitely helped Rohani and the moderate-reformist camp. Another possible consideration for voters during the elections may have been the sanctions which were laid on Iran by the western community following previous president Mahmoud Ahmadinejad’s confrontation with the west during the nuclear-talks and his erratic-aggressive politics towards the west and Israel. The sanctions have cost the state of Iran billions in oil and natural gas revenues, hurting the Iranian economy significantly. Further the export-embargo has led to a significant increase in prices on imported goods. Since Iran only has a small capacity for refining crude oil it has to import fuel for cars, heating and cookers as well. Subsequently the prices on fuel increased drastically as well, hurting the poor working-classes the most.In addition the exploding living-costs, caused by inflation and the inability of Ahmadinejad to address these problems appropriately may have driven voters away from conservative candidates. Those voters may hope that a moderate-reformist president Rohani may be able to alleviate especially those problems connected to the sanctions.

The runner-up in these elections, Teheran’s mayor Mohammad Bagher Ghalibaf, a moderate conservative, has especially suffered from the split vote in the conservative camp, but also from the fact that he did not have a real agenda and his relative obscurity outside Teheran.In conceding immediately to Rohani’s victory, he has contributed to a stable and legitimate regime change.  Ghalibaf being a moderate and realist, he might even be a supporting factor in the new government’s possible reforms and as the mayor of Teheran he would be a valuable ally.

But with all enthusiasm concerning Rohani’s election one has to keep in mind that he faces great challenges internally as well as externally. To make matters worse, the biggest domestic problems are closely linked to the confrontation between Iran and the western community.

The most urgent domestic problem Rohani has to address are the inflation, especially the rising prices of fuel and basic food products. The rising food prices have made meat nearly unaffordable even for middle-class families. This also affects the whole branch of food services, especially small food business like kebab stands. The bread prices doubled in the recent years. The root cause to these exorbitant prices can be traced to the hyper-inflation which plagues the country and to the devaluation of the Rial which makes the few possible imports very expensive. Rohani has to address these problems very soon into his term. The stabilisation and desired reduction of food prices is essential in maintaining a broad base of support amongst the Iranian population; an important factor if Rohani wants to push any reforms.

Another problem the new president faces are the rising costs for household and car fuels. Here he finds himself between a rock and a hard place, since the previous administration has subsequently reduced the subsidiaries on gasoline and Iran does not have sufficient capacities to produce enough refined petroleum products for the domestic market. Rohani’s administration can and probably will not back down from the cuts in fuel subsidies, but must find a way to alleviate the financial burden from a society which is very dependent on individual car transportation. For that they have to invest heavily into the oil refining industry to reach the goal of servicing the whole domestic market with refined petroleum products.

Both problems are closely linked to Iran’s international standing and its foreign relations. So solutions can only go together with alleviations of the sanctions on Iran, especially in matters of oil-export and international financial trading.

Other domestic problems can be addressed independently from the sanctions, but certainly not ‘en passant’. As a first concession to the reformist groups in Iran, Rohani has to release political prisoners, some of them in arrest since the uprising of the Green Movement in 2009. An additional sign of goodwill should be the loosening of the restrictions of access to the global web, especially those media which were so instrumental for the Green Movement. Although the supreme leader and the guardian council would probably not be very happy to allow this, they are likely to have learned their lessons from 2009 and 2010, especially with their mixed experiences with the Ahmadinejad administration.

The supreme leader and the guardian council may be the biggest obstacles for Rohani’s tenure. The conservative leadership opposes all measures which could challenge their strong position. Although Rohani is a cleric and has ties to the leadership of the clergy, he has certainly antagonised many of them by his outreach to the reformist camp. To experience successful reforms and to firmly root them with the state, Iran would need a reform of the powerful assembly of experts which elects the supreme leader and in turn is elected by public vote. Currently only clerics are allowed to stand for elections and the guardian council is allowed to veto candidates. Earlier reform attempts have been thwarted in 2006. But now the general political climate and especially the age composition of the assembly could help. The average age of assembly-members is above 60 years and many are much older. This will result in by-elections due to death or resignation.

As a member of the clergy and a former functionary of the assembly of experts, Rohani may mobilise moderate clerics to stand for election and his position may even mobilise voters to elect more moderate candidates. A more moderate assembly could mean a more moderate supreme leader in the future and possibly a shift of power from the clergy to the political establishment. The main reason that could happen is once again age: Ayatollah Khamenei is nearly 74 years old and may die or resign within the next few years. The next assembly elections are scheduled for 2015, two years into Rohani’s first term. If Khamenei resigns or dies during the next two years, it is not impossible that a more moderate cleric, maybe someone younger, who was not a member of the first generation of functionaries of the Islamic Republic, becomes supreme leader and appoints a new guardian council.Admittedly this argument includes a lot of “ifs” and “whens”,but it remains a realistic option.

Another challenge the new administration has to face is the on-going brain drain. Due to the bad economic situation, political oppression and international isolation, a lot of well-educated Iranians are leaving their home country to find job opportunities and/ or political exile in other countries. The reasons are manifold, but especially the lack of well-paid jobs, the moral and political oppression by the old, conservative leadership and certainly the discrimination of well educated women in some spheres are the main problems. Rohani’s administration has to invest heavily in infrastructure, academic employment opportunities and the service and IT sector to accommodate the job demand.

Furthermore reforms must be initiated to promote a more moderate approach on “morale” and to promote equal rights for women in all spheres. Even if the political climate would change to a much more liberal one, the economic problems which partly drive the brain drain would remain. Additionally Rohani has to keep a balance between political liberalisation to please the educated middle classes, populist nationalism in order not to lose the working classes and religious nationalism to accommodate the clergy. However, economic reforms and investments could alleviate a lot of pressure from the first two groups. Nevertheless, there are groups, like the Revolutionary Guards which control parts of the economy, which might oppose some economic reforms. Rohani would have to appease them, for example through extensive investments into infrastructure construction, a filed in which the Revolutionary Guards are very active through their engineering and construction companies.

Last but not least, and this is probably the part where the external observer’s view is the most opinionated, there is the issue of human rights and minority rights. While human rights abuses towards political prisoners and members of the opposition may become an issue to be solved by the Rohani administration, minority rights are a whole different story. Maybe some changes in the civil rights of women, especially in cases of rape, mistreatment and supposed adultery could be possible, although unlikely in the near future. There may even be some ease for religious minorities, such as Christians or Jews, but communities which are diverting from Shia mainstream are still seen as heretics and apostates by the mainstream clergy. There will also be no changes in the policies towards homosexuality, certainly no legalisation, but also no end of persecution and prosecution. As long as the current clergy, and that includes the supreme leadership, the guardian council and the assembly of experts, are alive, those issues will remain highly problematic in Iran.

All in all Rohani will face a lot of problems in his term which started after his inauguration on August 3rd 2013. The domestic situation is marked by huge economic problems, like rising inflation, lack of consumer goods, shortage of gasoline and high under- and unemployment. Further, a well-educated middle class demands social and democratic reforms, while a deprived working class is in dire need of a stabilisation of prices and a growing economy. Rohani is basically forced to manoeuvre a political minefield which in part was laid out by his predecessor Mahmoud Ahmadinejad, but the fact that he was able to unite the moderate-reformist opposition behind his candidacy is cause for hope.

On the other hand Rohani has to govern the country for at least three years with a conservative dominated parliament and probably against the supreme leader, if he lives that long. While he will likely have a free pass for economic reforms, if he can appease the mighty Revolutionary Guards, social and possible democratic reforms will probably be retained until 2015 and 2016, when the moderate-reformist camp has a chance to place more moderate clerics into the assembly of experts and to capture the parliamentary majority.