Iran - Regional Risks Grow Following Raisi's Death

In the ever-classy Russian Twitter sphere, a joke began circulating shortly after news broke of the death of President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian in a helicopter crash late yesterday in eastern Iran. “President Biden shouts into the telephone, ‘I said President Rossii [president of Russia], not President Raisi!”

Too soon? Certainly. Funnier in the original Russian? We’ll let you be the judge. What’s clear is that, given Iran’s prominent spoiler role in the region and wider world, Raisi’s passing is being dissected in capitals across the world. But alongside diplomats and intelligence analysts, investors have questions too.

Is Iran’s stability in question?

Supreme Leader Ali Khamenei moved swiftly to shore up internal stability following yesterday’s crash. Khamenei personally chaired a special meeting of the Supreme National Security Council (SNSC) and then appointed Vice President Mohammed Mokhber as interim president, in line with the clear succession plan outlined in Iran’s constitution.

The Supreme Leader’s quick moves served to reassure the public and prevent even the appearance of a power vacuum, which might have emboldened internal rivals looking to grab power. Khamenei will exhibit zero tolerance for internal dissent while Mokhber prepares a new election by early July.

How will this change Iran’s foreign policy?

Iran’s sense of vulnerability in the days ahead could make its behavior in the region even more erratic than usual, raising risks for its neighbors and for investors in the region.

The helicopter crash is a highly public failure by Iran’s security services to protect a key leader. It follows shortly on another embarrassment – the very one-sided exchange of missiles between Iran and Israel last month. A regime that counts on fear to maintain its rule will feel exposed after such high-profile humiliations and may react disproportionately to any perceived provocation from abroad. 

Policymakers in Washington, Tel Aviv and elsewhere are well aware of this dynamic and will try not to give Iran any reason to lash out. Nonetheless, investors should be on watch for any erratic movements that could signal an impending escalation.

What does this incident change about Iran’s future trajectory?

Raisi’s early demise will spark a struggle among top clerics to succeed him. Realistically though, only a handful have a chance at winning Khamenei’s favor. Not even interim president Mokhber – who, at a sprightly 68, is seen as too junior – is among the top contenders. 

Nor do reformists have any chance of seizing power. Khamenei has already filtered them out of the upper echelons of the state, ensuring that whoever succeeds Raisi will be cast in his hardline conservative mold.

What is less known is how Raisi’s death will impact another upcoming succession process – the 85-year-old Supreme Leader’s. Raisi was widely believed to be Khamenei’s preferred successor. His death now reopens that race, though Khamenei will look to close it again quickly to ensure his legacy of hardline rule lives on. If Khamenei’s health fails soon, however, parallel successions could widen the range of possibilities for Iran’s political future.

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