The upcoming Iranian parliamentary election will likely result in higher representation for hardliners. But we do not expect any change in regional geopolitical or oil supply risk to result directly from this.
Despite tremendous economic stress, the Iranian political system (and the central role of the Islamic Revolutionary Guards) is intact. Nevertheless, Iran still wants economic sanctions relief.
The US does not feel any urgent need to grant sanctions relief and the more comfortable the incumbent US President is about his re-election prospects the less he needs to score a "foreign policy" win.
Neither Iran nor the US want a full-blown war, but the proxy battle (e.g. in Iraq) will continue until there is a return to the negotiating table. Regional powers lack the ability to change this state of affairs on their own.
Parliamentary elections in 2020, presidential elections in 2021 - the same deep-state though
Iran's parliamentary elections on 21 February 2020 will, on the surface, likely result in a strengthening of the representation of hardliners and a weakening of the bargaining hand for moderates (whose leader, President Hassan Rouhani, reaches his own two-term limit in 2021). The prior vetting of candidates, in accordance with constitutional norms, by the Guardian Council, has made this likely by removing many reformists (including 90 current members of parliament). Furthermore, expectations of voter turnout are low given the indications of apathy expressed in a recent opinion (from ISPA) and the public urging of Supreme Leader Khamanei for voters to participate.
But this does not mean that Iran's leadership is any less motivated strategically to seek relief from sanctions or tactically to balance flexing its muscles (to establish bargaining power before any negotiation over sanctions relief) with avoiding blocking all avenues for negotiation (either by precipitating a conflict it cannot control, proceeding too far on nuclear development or pushing those on the fence regionally and internationally to side with Iran's most hawkish foes).
Whether there is the appetite for such negotiation in an election year in the US, and with incumbent President Trump favourite to win re-election, is another matter.
Economic distress in Iran is severe - but that does not mean the political system is about to collapse
Iran is under enormous pressure: all economic variables are deteriorating under the pressure of sanctions, two of its regional client states are struggling (Iraq and Lebanon), domestically a raft of diverse protests have occurred, one of its most senior military commanders (Qassem Soleimani) has been assassinated and a succession may be looming with its Supreme Leader aged 80 and reportedly suffering from long-term illness.
But none of this means that the political system is currently any closer to internal collapse than at any point since the 1979 Revolution.
- The deep-state centred around the Islamic Revolutionary Guard Corp enjoys some insulation from the economic downturn (pay and benefits are maintained for its members and its control of the borders likely allows it to profit from trade in legal and contraband items) and its leadership was recently refreshed (Major General Hossein Salami, aged 60, was appointed by Supreme Leader Ayatollah Ali Khamanei in April, replacing Mohammad Ali Jafari who had led the IRGC since 2007).
- Iran has successfully withstood every domestic mass protest movement (whether political, such as the Green protests against the conduct of presidential elections of 2009, or economic in origin, such as the strikes against the fuel price hikes of November 2019).
- Iran has also successfully demonstrated its ability to give some of its regional opponents cause to reconsider the extent of its ability to defend its aligned interests (e.g. the preservation of the Al Assad government in Syria) and project offensive threat (the precision attacks on Saudi Aramco assets) and has partially exploited differences among international countries which inhibits the creation of the sort of broad coalition the US built prior to the 1990 Gulf War (in addition to the non-alignment of the US with Russia or China over Iran, there are tensions between the US and the EU and, to a lesser degree, Japan).
- An externally-driven collapse (i.e. war or invasion) is also unlikely. We have previously argued that while the prospects of a lasting detente between the US and Iran is unlikely and the likelihood of proxy conflict, e.g. in Iraq, is high, the likelihood of a full-blown war is low.