FT : Iran: the unspoken battle to succeed Ayatollah Khamenei

Iran: the unspoken battle to succeed Ayatollah Khamenei
After the assassination of a leading Revolutionary Guard leader, hardliners believe they have the upper hand

“Bring your people out of darkness into light, and remind them of the Days of Allah,” reads a line in the Koran, Islam’s holy book.

In the space of just five days in January, Iran witnessed two Days of Allah. When Ayatollah Ali Khamenei, the country’s supreme leader, recited the verse to thousands of worshippers last Friday, he reminded them of what he called the blessings brought by the twin occasions.

“The world’s biggest” funeral procession for Qassem Soleimani, a commander of the Islamic Revolutionary Guard Corps for overseas operations who was killed by the US in Baghdad on January 3; and the elite forces’ unprecedented missile strikes on bases housing US forces in Iraq on January 8.

The top leader’s metaphoric language sent a clear message to Iranian politicians — and to the rest of the world. The Islamic republic, analysts believe, will be even more steadfast in its ideological path at home, while in the rest of the Middle East the guards will promote a fresh radicalism.

Mr Khamenei’s steadfast support for the guards — despite their role in the shooting down of a Ukraine airliner that killed 82 Iranians just hours after the attack on the US forces — comes against the backdrop of a tense battle over who will replace the 80-year-old supreme leader when he dies, a decision that will determine Iran’s fate for decades to come. The choice will depend on where the balance of power lies at that time within the Islamic republic. In recent weeks that balance has further tilted in favour of the guards and their hardline supporters.

“We are witnessing the most complicated domestic and foreign games all centred on the issue of succession,” says a reformist analyst. “The [further] empowerment of the guards is a deliberate policy to make them the dominant power so that they can play the main role in the power transition.”

According to many hardliners, the events highlight the need to have another pragmatic leader willing to stand up to the US. They play down speculation from reformists that Iranians will want the next supreme leader to be more of a ceremonial post, rather than another all-powerful figure.

It was Ayatollah Khamenei — as the commander-in-chief of the armed forces — who authorised the first-ever direct missile attack on US forces which was choreographed to demonstrate Iran’s determination to avenge the assassination of Soleimani without triggering a full-blown war. While no American soldiers were killed, Iran sent messages to the US via the Swiss embassy that it would be the first and last strike if the US administration refrained from hitting back.

“Recent developments were like a wake-up call,” says a relative of the supreme leader. “[They] reminded us that the US can get too close to a war with Iran and we need another courageous leader who is able to maintain the country’s stability and power.”

“The country cannot afford to risk a period of trial and error by an unexperienced leader,” he adds.

Iran’s theocratic system is based on velayat-e faqih — rule of jurisprudence under Shia Islam. According to the interpretation favoured by hardline politicians, the religious leader may be selected by senior clergy in the Experts Assembly but he is considered to have been appointed by God to rule the Islamic world in the absence of infallible descendants of Prophet Mohammad.

Reformist politicians, however, reject this religious interpretation. Instead, they say, a leader’s credentials need public legitimacy manifested in national elections.

These different interpretations have been at the centre of Iran’s political infighting since 1989, when Ayatollah Khamenei replaced Ayatollah Ruhollah Khomeini, leader of the 1979 Islamic revolution. Mr Khamenei, who does not have the charisma and high religious credentials of his predecessor, has instead relied on the revised constitution, which gave him an “absolute authority” over all state affairs. Since then, he has helped the guards expand their influence and has turned them into his main arm to exercise power. After recent events, those efforts are now likely to be accelerated, say those close to the regime.

“When, God forbid, Mr Khamenei dies, the guards will completely take over the country so that the Experts Assembly can choose a leader,” says a regime insider. “On that day, the guards will be the top force to influence the choice, curb any possible crises and more importantly preserve the territorial integrity.”

The 120,000-strong guards is Iran’s most organised institution, giving it considerable influence over the succession. It also controls a voluntary force believed to be several million strong, adding to its ability to wield that influence.

It is not merely a military force. Politicians close to the guards are in various institutions such as the leader’s office, the parliament and the judiciary. The force is believed to have interests in telecoms, trade, petrochemicals and other sectors — something President Hassan Rouhani has previously tried to curb by cutting it out of contracts at state-owned enterprises. It has also expanded its cultural influence, from producing movies and documentaries to contemporary art, and runs a feared intelligence service responsible for the imprisonment of pro-democracy activists and dual nationals accused of espionage.

While the guards may have some influence over Ayatollah Khamenei, analysts say, they remain loyal to him and respect his final say in all affairs. The next leader, however, may not enjoy so much authority.

“The guards are in such a powerful position that no [future] leader will ever threaten their interests,” says Amir Mohebbian, a commentator close to conservative forces in the country. “We are always in an emergency situation and in dire need of stability in a country characterised with historic fears of insecurity.”

The elite forces say they observe a constitutional duty to preserve the country’s frontiers but are also responsible “for fulfilling the ideological mission of jihad in God’s way”.

That translates as the guards believing they have a responsibility to galvanise the country against any perceived US threat to Iran and the Islamic world. Hardliners in Tehran fear the ability of Washington to influence Iran’s politics and suspect that Democrats in the US and reformists in Iran have long hoped to resolve historic differences to shape the Islamic republic’s future.

When Mr Rouhani signed the deal with the US and other major powers in 2015 to rein in Tehran’s nuclear ambitions, concerns grew within the guards about the potential for a loss of Iranian influence within the region. This was particularly worrisome because Mr Rouhani was re-elected in a landslide in 2017 on promises of getting all US sanctions lifted — a clear pronouncement of his desire for rapprochement.

However, President Donald Trump withdrew the US from the accord in 2018 and imposed even tougher sanctions on the country. Mr Rouhani’s signature achievement was erased and with it any ambitions he might have had of becoming the next supreme leader.

“Even if one day we negotiate with the US, the talks will not be with Trump; won’t be strategic [no normalisation of ties] and will be done only by conservatives not reformists,” adds the regime insider. “We need to see changes in [the US] Congress; whether Democrats will pursue a fair policy by which Iran is not under pressure over its missile programme.”

The strategy for now appears to be to play down the tough new US sanctions and mobilise public opinion in the region against Washington and Israel.

“The guards’ identity and power is in opposition to the US,” says a reformist politician. “They know that if they take a step back, Americans will look for them in the backyards of their houses. The guards are increasingly into games which are becoming more violent while still smart [in order] not to risk the regime’s survival.”

Reformists, however, say the guards are overplaying their hand — both in domestic and Middle East politics, with incidents such as the alleged attack on Saudi Aramco facilities last year — which could provoke further unrest at home.

Iranian society is not as obedient as it was three decades ago and potentially less willing to accept a new leader if he is close to hardline forces. Iranians are more educated and have constantly pushed back boundaries, forcing the republic’s rulers to grudgingly allow some opening of the country politically, culturally and socially.

Reformist politicians warn that Iranian public opinion cannot forever tolerate the regime’s risky hostility with the US. The accidental shooting down of the Ukraine International Airlines jet, killing all 176 people on board, is a vivid example. After initial denials, the guards admitted the blunder but only after the US, Canada and Britain had all produced evidence of Tehran’s role in the disaster. The acknowledgment massively damaged public faith in the regime.

Thousands of people in big cities, including university students, poured on to the streets, chanting provocative slogans. They called the leader a “killer” whose guardianship was “null and void” and described the guards as a force similar to Isis. Ayatollah Khamenei did not back down, saying these “hundreds” were irrelevant in the face of “tens of millions” who attended the Soleimani funeral.

“The Islamic republic can tolerate the foul-mouthed, unarmed opposition and is aware that we are going to see protests more frequently but all are manageable,” says the insider. “We are not going to allow pro-reform groups to use the plane incident to overshadow the gains from the funeral of Soleimani.”

The most recent protests follow violent unrest across the country in November, mostly by working-class demonstrators — traditionally backers of the regime. They lashed out at the supreme leader and mounting hardship — including inflation of 38.6 per cent a year and the depreciation of the national currency by about 60 per cent — caused by the US sanctions and massive corruption. The guards brutally suppressed the riots and, according to Amnesty International. opened fire on protesters, killing about 300 people.

But many Iranians have lost confidence in the ability of reformists to make any change. Most reformist candidates are barred from running in February’s parliamentary polls, which is expected to pave the way for a hardline victory.

Looking ahead to the 2021 presidential election, some political observers believe the successful candidate will need to be a young, ideologically-motivated hardliner.

Potential contenders have not yet become part of public discussions — nor have the names of candidates for the position of supreme leader. Political groups are fearful that their preferred options could become victims of so-called “tall poppy syndrome” if they gain too high a profile at this stage.

In private, speculation is rampant about who the guards will favour. Given recent events the odds have shortened on Ayatollah Khamenei’s second son, Mojtaba, though he remains low-profile in his religious and political life.

The 51-year-old teaches at a senior level in Qom, the centre of learning for Shia Islam, five days a week, giving him the status of a ranking cleric necessary for the supreme leader’s role. Thanks to a mindset similar to his father, the relative says, he has good insight into political and military issues and “is into [a] knowledge-based economy”.

“He has good relations with the guards,” the relative adds. “He may not have the authority of his father, but the guards cannot dictate to him.”

The regime insider plays down perceptions that such a choice could make the Islamic republic look like the hereditary monarchy that it ousted more than 40 years ago.

Another potential candidate is Ebrahim Raisi, the hardline judiciary chief who lost the 2017 presidential election to Mr Rouhani and has since campaigned against corruption.

“What determines the choice of a leader will be the costs and benefits of political quid pro quo between various interest groups,” says a conservative analyst, who believes that this will favour the guards. “Political groups and the society should think this wheel will turn in their favour.”

The positioning among potential candidates is taking place at a time of change in Qom. The seminaries played a vital role in the victory of the revolution and are now the second most important institution after the guards. However, the most senior clerics in Qom are of advanced ages.

Grand Ayatollah Hossein Vahid Khorasani, the most senior cleric, is 99. Others include Lotfollah Safi Golpayegani, 100; Hossein Noori Hamedani, 94; Naser Makarem Shirazi, 92; and Mousa Shubairi Zanjani, 91.

While the clergy’s main concerns are over people’s religiosity, which has weakened under the Islamic republic over the past four decades, the guards are determined to be the central ideological and political institution that can choose the next clerical leader to rule Iran and expand influence across the border in Iraq.

“Whatever Americans do it benefits us, including their wars in Iraq and Afghanistan and now the killing of Soleimani,” says the insider. “Our country is run by the Last Imam [the Mahdi, believed by Shia Muslims to be missing] who decides about ‘the Days of Allah’ and will help us choose a great leader when the day comes.”

>>> What to look at today - 23rd of January 2020

Stocks, crude oil prices and the yuan slumped on Thursday on concerns about the impact of the new China virus on corporate sales and economic growth. The yen edged up with Treasuries.
On the last trading day in China before the nation’s epic travel season for the lunar new year holidays begins, the country’s stocks tumbled about 3%. With China moving to shut down travel in and out of the epicenter of the novel coronavirus, Wuhan, the threat to businesses from airlines to retailers is becoming clear. The risk is emerging just as evidence mounts that the global economy had turned a corner; strong Australian job numbers Thursday sent that country’s dollar climbing.
US After Hours SLM +17.8%, TER +8.9%, PTC +8.2%, CTXS +4.6%, TXN -1.4% among notable earnings/guidance movers, PAYC +4.7% on S&P 500 addition news

Nikkei -0.98% Hang Seng -2.11% CSI -3.44% Shanghai -3.07% Shenzen -3.85%

Eur$ 1.1085 CNH 6.9312 CNY 6.9319 JPY 109.55 GBP 1.3136 CHF 0.9685 RUB 62.0220 TRY 5.9321 WTI$ 55.65 -1.93%

S&P -0.18% EuroStoxx -0.40% Dax -0.45% FTSE -0.18% SMI -0.35%

Macro :
- Brexit Deal Clears U.K. Parliament, Ending Years of Deadlock
- Davos’s Global Elite Are Laggards in Stock-Market Performance

Keep an eye on :
- ACS SM : ACS Agrees to Sell Solar Photo-Voltaic Projects in Spain to Galp
- ALV GY : *PG&E WINS BACKING FROM ELLIOTT, PIMCO FOR BANKRUPTCY EXIT PLAN
- ATL IM : Di Maio Says Italian Government Must Go Forward
- AUTN SW : Autoneum FY Currency-Adjusted Sales up 0.7% Y/y
- AZN LN : $7 Billion Swedish Fund Manager Mulls Bigger Bet on AstraZeneca
- AZN LN : AstraZeneca to Invest Over PLN1.5B in Poland: 300Gospodarka
- SAN SM : Banco Santander Raised to Buy at UBS
- BSLN SW : Basilea: Derazantinib Convincing Activity in Preclinical Models
- BAYN GY : Bayer Gets Approval for Darolutamide in Japan
- BARN SW : Barry Callebaut EMEA Head Garavaglia to Leave Company
- BEAN SW : Belimo Full Year Sales Meet Estimates
- BNP FP : BNP Paribas Appoints New Co-Heads of Global Markets in Americas
- CENER BB : Cenergy Holdings Unit Awarded EU43 Million Contract for Skiathos
- CWC GY : Cewe Stiftung Prelim Full Year Ebit High End Of EU58 Mln
- COLL SS : Swedish FSA Summons Collector Chairman Over Credit Losses: SvD
- DLG IM : De’ Longhi Names Massimo Garavaglia Chief Executive Officer
- EDP PL : EDP Says 2019 Electricity Production Fell 7% on Low Hydro Output
- ENGI FP : Engie to Sell 74% Stake in Indian Solar Assets to Edelweiss
- FCAU IM : Fiat Chrysler’s First-Round Win in Mahindra Fight to Be Reviewed
- GALP PL : ACS Agrees to Sell Solar Photo-Voltaic Projects in Spain to Galp
- GET FP : Getlink SE Full Year Revenue Meets Estimates
- GVNV NA : GrandVision Fourth Quarter Organic Sales +6% Vs. +4% Q/q
- HAL NA : HAL Fourth Quarter NAV/Shr EU163.36
- HOT GY : Hochtief Sees ~EU800m Impact of CIMIC Reorg; FY Div +16%
- HUBN SW : Huber + Suhner Full Year Revenue Misses Lowest Estimate
- LLBN SW : Liechtensteinische LB Prelim FY Net Income About CHF123 Mln
- LHA GY : Lufthansa Is Said to Mull Listing of Jet-Maintenance Business
- NEM GY : Nemetschek Shares Fall Post-Market on Baader Double Downgrade
- ORNBV FH : Orion Gets Marketing Authorization for Darolutamide in Japan
- REP SM : Repsol Says 4Q Output Rose to 730,000 barrels per day
- SK FP : SEB FY Operating Result Growth Higher Than Expected, Sales Miss
- SEQUA BB : Sequana Medical Offering Prices 3.17m Shares at EU6/Share
- SLIGR NA : Sligro Full Year Ebitda 4.8% Above Estimates
- STM FP : STMicro 4Q Net Revenue, Gross Margin Beats Highest Ests
- TRVX NO : Targovax 12.6m Share Offering Said to Be Covered, Targovax Offering Prices 12.6m Shares at NOK8/Share
- HO FP : Naval Group to Name Thales COO Pommellet as CEO: Les Echos
- UNIR IM : Unieuro Holders Italian Electronics to Offer 3.51m Shrs, Holder Prices 3.5m Shares at EU13.25/Share

>>> Europe : Brokers Upgrades & Downgrades - 23rd of January 202

>>> Up
* BAE PT Raised to 750 pence from 655 pence at Berenberg
* BAT Raised to Equal-Weight at Morgan Stanley
* Daimler Raised to Hold at SocGen; PT 47 euros
* Dassault Aviation Raised to Outperform at Exane; PT 1,410 euros
* Ferrari PT Raised to 180 euros from 120 euros at Citi
* Gjensidige Raised to Hold at ABG; PT 188 kroner
* NN Raised to Buy at HSBC; PT 42 euros
* Renishaw Raised to Overweight at Morgan Stanley; PT 4,500 pence
* Rightmove Raised to Neutral at JPMorgan
* Sandvik Raised to Buy at SocGen; PT 230 kronor
* Schaeffler Raised to Buy at Citi; PT 11 euros
* Unicaja Raised to Buy at UBS
* Zurich Ins. Raised to Buy at HSBC; PT 480 Swiss francs

>>> Down
* BAE Cut to Neutral at Exane; PT 670 pence
* Compass Cut to Hold at HSBC; PT 1,915 pence
* Continental AG Cut to Neutral at Citi
* ConvaTec Cut as Shore Sees Post-Turnaround Investment Risks
* Entra Cut to Hold at ABG; PT 160 kroner
* Essity Cut to Hold at ABG; PT 335 kronor
* Handelsbanken Cut to Hold at Berenberg; PT 95 kronor
* Harvia Cut to Sell at Handelsbanken; PT 9.50 euros
* KAZ Minerals Cut to Hold at VTB Capital; PT 520 pence
* Lancashire Cut to Reduce at HSBC; PT 551 pence
* Mail.ru Group GDRs Cut to Hold at Renaissance Capital; PT $26
* Nemetschek Cut to Reduce at Baader Helvea; PT 62.50 euros
* Renault Cut to Sell at Citi; PT 30 euros
* SIG Combibloc Cut to Neutral at Goldman; PT 15.50 Swiss francs
* Tokmanni Group Cut to Hold at Handelsbanken; PT 14 euros
* Wm Morrison Supermarkets Cut to Sell at Goldman; PT 175 pence

>>> Initiation
* Agripower France Rated New Buy at MainFirst; PT 13 euros
* Aston Martin Rated New Buy at Citi; PT 600 pence
* Elior Group Reinstated Buy at HSBC; PT 15.60 euros
* Galp Rated New Neutral at Oddo BHF; PT 16.50 euros
* Immobel SA Rated New Buy at Berenberg; PT 87 euros
* Intershop Rated New Buy at MainFirst; PT 670 Swiss francs
* Partners Group Rated New Sell at Berenberg; PT 607 Swiss francs
* PSP Swiss Rated New Buy at MainFirst; PT 155 Swiss francs
* Sodexo Reinstated Buy at HSBC; PT 113 euros
* St James's Place Rated New Outperform at Autonomous Research
* Swiss Prime Rated New Hold at MainFirst; PT 113 Swiss francs

>>> Call

>>> US After Hours Summary: SLM +17.8%, TER +8.9%, PTC +8.2%, CTXS

After Hours Summary: SLM +17.8%, TER +8.9%, PTC +8.2%, CTXS +4.6%, TXN -1.4% among notable earnings/guidance movers, PAYC +4.7% on S&P 500 addition news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SLM +17.8%, TER +8.9%, PTC +8.2%, CTXS +4.6%

Companies trading higher in after hours in reaction to news: EYE +11% (amended Walmart management & services agreement adding new vision centers), PAYC +4.7% (to join S&P 500)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: PRA -4.2% (reports preliminary loss estimates; sees $37 mln of adverse development in Specialty Property & Casualty segment), RJF -3.2% (light volume), FUL -2.4%, TXN -1.4%

Companies trading lower in after hours in reaction to news: KRTX -12.6% (still looking around for catalyst), XENE -3.4% (commences public offering of common stock), IMGN -3.4% (proposes public offering of common stock), MSON -2.9% (commences underwritten public offering of its common stock), ACRE -2.4% (launches public offering of 4.0 mln shares of common stock), CRON -2.3% (discloses resignations of COO David Hsu and Chief Commercial Officer William Hilson), AUTL -1.6% (commences public offering of 7.25 mln ADSs in the US), MGY -1.2% (downgraded to Neutral at Credit Suisse), NK -1.2% (modestly pulling back from today's 15% move higher)

>>> APT US -Strength attributed to ongoing reports about spike in sales of surgi

Strength attributed to ongoing reports about spike in sales of surgical masks in China amid coronavirus outbreak scare
- CNBC's Eunice Yoon tweets: "Masks selling for as much as $100 for box of 20 in #China due to #WuhanCoronavirus. @AlibabaGroup Taobao, @JD_Corporate pledge to try to stop price gouging $BABA $JD. Authorities call on vendors not to overcharge, promise higher mask production over #LunarNewYear pledge to try to stop price gouging $BABA $JD. Authorities call on vendors not to overcharge, promise higher mask production over the Lunar New Year"

FT : Can you swallow the idea of lab-grown meat?

Can you swallow the idea of lab-grown meat?
The notion of ‘growing’ a steak in a test tube sounds like science fiction. But our food habits change

This month I met Joshua March, a young British entrepreneur who dreams of disrupting our idea of “meat”. Specifically, he is working with biochemist Jess Krieger to cultivate animal flesh in laboratories for mass consumption.

Yes, you read that right. Since time immemorial, humans have thought of “meat” as something natural, an animal that ran around before it was killed and cooked. But Krieger has spent the past six years working at Kent State University in Ohio, growing individual chunks of meat in a lab.

They have now created a start-up, Artemys Foods, to mass-produce their wares. “We’re on a mission to empower humanity to eat sustainably,” March told me over a breakfast of avocado toast and old-fashioned natural bacon in New York.

“We believe the only way to change how the majority of people are eating meat is to be able to give them real meat — without the negative consequences caused by growing actual animals, whether impact to the environment or animal welfare.”

Krieger adds: “Plant-based meat gets some of the way [to remove meat from the diet] . . . but it will never be able to fully replicate the sensory experience of eating a really great piece of meat. [This technology] creates this, with the same or better nutrition. Eventually, eating meat from actual animals will be seen as an archaic practice only carried out by a minority.”

Artemys is not the first to experiment with cultivated meat. In 2013, the world’s first lab-grown burger, created from cow cells by a scientist at Maastricht University, was eaten at a news conference in London. Mosa Meat, the company created in the wake of that project, recently received investment from a US venture capital fund to help bring the product to market.

The question for all entrepreneurs in this area is whether consumers can swallow the idea. When I originally heard about lab-grown meat, my first thought was “yuck”. The idea of “growing” a steak or chicken leg in a test tube sounds like a scene from science fiction, not haute cuisine. But, on reflection, I realised that my reaction was also somewhat odd or, at least, inconsistent.

Many of us already consume ultra-processed or modified foods that could be considered “unnatural”, such as packet soups, reconstituted meat products or sweets like bubblegum. If you look at how our attitudes towards food have already changed, it is clear that they are grounded in culture more than nature.

Half a century ago, it was assumed that it made sense to use as much science as possible in food. In the 1950s, some considered white bread and other processed foods to be superior to the unrefined variants.

Later, frozen ready meals were seen as sophisticated. Indeed, when scientists created genetically modified crops, this was hailed by many as a brilliant “green revolution”, since it promised to raise agricultural yields.

But then came the backlash. Since the turn of the century, a trend for more natural, organic food has grown, with consumer protests in Europe against GM food. More recently, vegetarian and vegan diets have become popular, not just due to health and animal welfare concerns, but also because scientists have noted the contribution of livestock to global carbon emissions.

Companies such as Beyond Meat and Impossible Foods have developed plant-based alternatives that are fast gaining traction. Indeed, the trend is so strong that even traditional meat businesses, such as Tyson Foods, are getting involved.

At this week’s World Economic Forum’s meeting in Davos (buzzing with chatter about plant-based start-ups), the organisers told local catering services that “protein must be served in reasonable portions” of 120g-140g. One day of the conference has been designated entirely meat free.

There is an irony here: even as plant-based alternatives to meat become trendy, they are arguably making food less “natural” and less “organic”. Impossible’s non-meat “burger”, for instance, uses complex chemical processes involving yeast to replicate the molecules found in meat.

What is peculiar — if not contradictory — is that the rocketing sales of these meat-like products somehow reinforces the idea that consuming “meat” or a pretend version of it is inevitable for humans; which, of course, is something the vegan movement was created to contest.

Given all this, I no longer think cultivating “real” meat in a lab is weird. Admittedly, it won’t be easy for some consumers to accept, particularly if they’ve spent the past decade buying organic. “A vocal minority of people in the west are still concerned about [genetically modified food],” admits Krieger.

However, as she points out, attitudes are shifting. “We now have a generation of consumers who have grown up with technology infusing all areas of their life [and] younger generations especially are concerned about how the foods they eat contribute to climate change.”

Of course, nobody knows whether Artemys can actually commercialise these bold ideas — or see off the numerous other start-ups looking to ride this “green” wave.

The key point is this: given that our attitudes towards food have already fluctuated in the past half century, there is no reason to think they will not alter significantly again. What seems utterly weird one day has a strange habit of becoming so normal that we never notice how our cultural assumptions have changed.