Ideology of Contraction or Culture of Expansion

A political analysis of Iran’s possible diplomatic opening, the political economy of authoritarian pragmatism, and its relationship to future-oriented Pahlavism

Mr Peyman Bakhshayesh, MD, PhD, MBA
Trauma Surgeon and Political Commentator

Original manuscript: 16 June 2026 · Revised edition: 13 October 2026

Political and conceptual essay drawing on institutional sources, reporting and political-economy scholarship

Scope: This is a scenario-based interpretation written from the standpoint of 16 June 2026. It separates contemporaneous reporting, documented background and the author’s political judgments. Economic liberalisation and democratisation are treated as different processes.

Abstract

This article seeks to analyse the present moment in Iran not merely as a diplomatic agreement, but as a turning point in the political economy of the Islamic Republic. The central assumption of the article is that the Islamic Republic, after military pressure, economic exhaustion, social discontent and a change in the balance of power inside the ruling structure, may move from an "ideology of contraction" toward a kind of "culture of expansion." By ideology of contraction, the article means a policy that pursues regime survival through closing society, enemy-centred politics, rentier economics, mobilisation of ideological loyalist forces and a proxy regional presence. By contrast, culture of expansion means the relative opening of the economy, reduction of external tension, attraction of capital, greater movement of people, normalisation of regional relations and the preference for pragmatism over ideological slogans. Yet the article argues that such a turn does not necessarily mean democratisation or a complete transition. On the contrary, the analysis considers that a form of security-based and oligarchic pragmatism is also a serious possibility. The reported memorandum of understanding between Iran and the United States, the discussion of reopening the Strait of Hormuz, easing sanctions pressure, nuclear negotiations and the possibility of a reconstruction programme may all indicate the beginning of a new period. But uncertainty over the text of the agreement, the position of the IRGC, the network of foundations, the missile programme, proxy issues and the real capacity of foreign investment prevents any definitive conclusion. The article concludes that future-oriented Pahlavism, if it emphasises an open economy, secularism, institution building, balanced relations with the West and the region, and the use of the capacities of global capitalism, has no inherent contradiction with the principle of economic opening even if implemented by the Islamic Republic. The main contradiction is not between opening and future-oriented Pahlavism, but between sustainable opening and the corruption, oligarchy and security structure of the Islamic Republic.

Keywords: Islamic Republic, Iran and United States agreement, political economy of Iran, Islamic Revolutionary Guard Corps, Persian Gulf, future-oriented Pahlavism, authoritarian pragmatism, foreign investment

Introduction: The Postwar Moment and the Problem of Change

In the political history of the Islamic Republic, major crises have usually produced two different outcomes: they have either pushed the ruling system toward greater contraction, harsher repression and deeper ideological rigidity, or they have forced it to display a form of tactical flexibility in appearance and behaviour. The present moment in Iran is important because both possibilities are present at the same time. On the one hand, international reports speak of the signing of a memorandum of understanding between Iran and the United States that is intended to return the Strait of Hormuz to normal passage and to prepare the ground for wider negotiations on sanctions and the nuclear programme. On the other hand, the full text of this memorandum has not yet been published, and many important clauses, including those related to enrichment, missiles, the proxy network and foreign investment, are either in the realm of unofficial reporting or are part of future negotiation (Reuters, 15 June 2026).

This is where a distinction must be drawn between "real transformation" and "tactical change." Any political system may retreat in order to survive, but not every retreat amounts to structural reform. Over the past decades, the Islamic Republic has repeatedly shown that it can display flexibility at the level of diplomacy while preserving its core at the level of domestic power distribution, rentier economics and the security system. The central question of this article is therefore this: after the reported agreement and the changing balance of power in Tehran, is Iran genuinely moving from an ideology of contraction toward a culture of expansion, or is it merely reorganising a pragmatic authoritarianism to preserve the system?

The answer offered by this article has two layers. At the first layer, it can be said that external and internal pressures have pushed the Islamic Republic toward a type of pragmatism. If war, sanctions and regional isolation make the cost of survival greater than its benefit, even an ideological system is forced to set aside part of its slogans. At the second layer, however, pragmatism does not necessarily lead to freedom, sustainable development or a competitive economy. Pragmatism may also appear as the reconstruction of authoritarianism, meaning that the ruling system opens the doors of the economy only to the extent that capital and legitimacy enter, while the structure of power, monopoly and rent remains untouched.

Method and Conceptual Framework

This essay uses qualitative, scenario-based analysis. It draws on public reporting, institutional publications and political-economy scholarship; it does not claim to measure public opinion or establish a causal forecast. Three kinds of statement must remain distinct: the historical background that can be documented, the negotiating positions reported in June 2026, and the possible consequences inferred by the author. Statements by officials describe their positions; they do not, by themselves, establish agreed treaty obligations or successful implementation.

The concept of "ideology of contraction" in this article refers to a policy based on closing the fields of politics, economy and society. This policy uses the foreign enemy for internal cohesion, places the economy in the hands of quasi-state and security institutions, replaces competition with rent, and uses regional proxies as instruments of bargaining and deterrence. By contrast, "culture of expansion" does not simply mean political liberalism. An authoritarian government may also turn to a culture of economic and diplomatic expansion for reasons of survival. Therefore, expansion in this article means the relative opening of pathways for capital, travel, trade, negotiation and society, not necessarily a democratic transition.

The concept of a "limited access order" can also help explain this situation. In such an order, the ruling coalition controls access to rent, contracts, licences, security and public resources for specific groups, and manages violence through this arrangement. Within this framework, economic reform becomes difficult when armed or quasi-state elites themselves benefit from a closed economy (North, Wallis and Weingast, 2009). In practice, the Islamic Republic has moved away from a classical state economy toward a mixture of state, IRGC, foundations, quasi-private companies and opaque networks. The central question, then, is not whether the ruling system can open a few economic doors, but whether it can abandon the logic of rent and monopoly.

The Iran and United States Memorandum: From Reported Fact to Strategic Ambiguity

Reuters reported on 15 June 2026 that Vice President J. D. Vance said a framework agreement had been signed digitally and that its text would be released that week. He also said that no funds had been transferred in exchange for signing. These are attributed reports of what a US official said at the time; they should not be conflated with the later formal signing or treated as proof that all disputed provisions had been resolved (Reuters, 15 June 2026).

The analytical importance of a memorandum lies in the distinction between an initial framework and an implemented settlement. A framework can stop an immediate escalation, restore channels of negotiation and buy political time without resolving nuclear verification, sanctions, navigation or regional security. For that reason, claims about a precise enrichment ceiling, the termination of a missile programme or an end to all proxy support require specific documentary evidence. They cannot be inferred from the announcement of an agreement alone.

The economic dimension was nevertheless significant in the reporting available on 16 June. Reuters, citing a senior US official, described proposed oil-sale waivers covering related banking, transport and insurance services, with benefits tied to Iranian performance. The policy question is whether conditional relief could support productive reconstruction and ordinary livelihoods, or whether the institutions controlling access to foreign exchange and contracts would capture most of its benefits. A proposed waiver is not equivalent to a completed transfer, unrestricted investment or permanent sanctions removal (Reuters, 16 June 2026).

A very important point arises here. Under the JCPOA, Iran's enrichment ceiling was set at 3.67 percent, while arms control institutions and the International Atomic Energy Agency later reported enrichment rising to 60 percent. In March 2025, the Agency stated that Iran was the only non-nuclear-weapon state enriching to such a level, and that this had created serious concern (International Atomic Energy Agency, 2025). Therefore, if the new agreement returns Iran to low-level and civilian enrichment, it would represent a major strategic shift. But until the official text is released, it cannot be stated with certainty whether the exact ceiling is "below three percent" or whether another form of limitation and verification has been envisaged.

The same distinction applies to long-range missiles and armed regional partners. A negotiating demand, an official’s interpretation and an enforceable commitment are different things. This essay therefore treats changes in missile and proxy policy as questions for verification and as tests of strategic change, not as accomplished facts. A sustained reduction in coercive regional activity could improve trust; renewed confrontation could undermine an economic opening. Neither outcome follows automatically from a diplomatic announcement.

Distinguishing Levels of Certainty in the Agreement Data

The Shift of Power in Tehran: From Ideological Guardianship to Pragmatic Security

Foreign negotiations cannot be understood apart from the distribution of power in Tehran. Reuters reported on 10 March 2026 that the Revolutionary Guards had played a decisive role in Mojtaba Khamenei’s elevation, citing senior Iranian sources. That report supports scrutiny of military influence; it does not establish that ideology has disappeared or that a coherent reformist coalition has taken control. The hypothesis explored here is narrower: a greater dependence on security institutions may alter how survival, resources and diplomatic compromise are weighed (Reuters, 10 March 2026).

A leadership succession may redistribute authority among the Office of the Leader, the Revolutionary Guards, the Supreme National Security Council, the government and negotiators. Yet greater military influence need not mean greater willingness to compromise. Security institutions can support tactical bargaining while retaining hardline domestic policies, and different parts of the same apparatus may have conflicting interests. The relevant question is therefore not whether particular personalities appear pragmatic, but which institutions control implementation and who can block change.

This shift does not necessarily mean that the Islamic Republic is becoming softer. Sometimes when ideological systems fall into the hands of pragmatic security forces, domestic repression does not decrease; rather, it becomes more rationalised and selective. The difference is that the central goal is no longer the pure implementation of ideology, but the preservation of power, the control of losses and the management of resources. For this reason, loyalist ideological forces that demand blood revenge, the continuation of war or ideological retaliation may be pushed to the margins, not because the system has become democratic, but because the cost of slogans for the survival of the ruling coalition has risen.

The resulting tension can be described as a conflict between ideological mobilisation and pragmatic survival. This is an analytical distinction, not a complete map of factions. Hardliners may oppose concessions, but institutions that profit from confrontation may also accept a bargain if it protects their economic position. Equally, citizens may welcome relief while rejecting continued repression. An agreement can therefore rearrange political conflicts without removing them.

The Political Economy of the Islamic Republic: From Revolutionary State to Military Oligarchy and Foundations

To understand the real capacity for change, one must look at the political economy of the Islamic Republic. Many analyses treat the Islamic Republic simply as a religious state, but in practice it is a complex network of the formal state, the IRGC, foundations, quasi-private companies, rent-seeking contractors, security institutions and the oil bureaucracy. This combination has meant that even when the formal government speaks of privatisation, free markets or attracting investment, the real resources of the economy remain in the hands of networks that avoid transparency and competition.

Kayhan Valadbaygi’s analysis of Iran’s military-bonyad complex examines the economic entanglement of revolutionary foundations, military institutions and parastatal enterprises. It offers a useful account of why formal privatisation need not produce open competition. Here that research is used as an interpretation of institutional power, not as a quantified claim that every Iranian business is controlled by a single bloc. The practical issue is whether market access, procurement and ownership can become transparent and contestable (Valadbaygi, 2025).

In such a structure, the economy has moved beyond being "state-owned" in the classical sense and has moved toward a "rentier oligarchy." The state still controls resources, licences and rules, but wealth is distributed through affiliated companies, opaque contracts, import rents, energy exports, construction projects and privileged access to currency and credit. This is the point at which war and warmongering become a source of power for part of the structure. Sanctions, the external enemy and the securitisation of the economy reduce free competition and allow powerful institutions to present themselves as indispensable.

In my assessment, this model carries severe social and institutional costs. Inflation, uncertainty, constrained opportunity and deteriorating trust cannot be answered by headline growth alone. Even an increase in oil revenue would not establish that productivity, household security or public accountability had improved. A peace dividend must be judged through people’s lives: reliable services, opportunities to work, purchasing power and freedom from arbitrary interference. That is a criterion for evaluation, not a promise that a diplomatic bargain will deliver it.

Therefore, if Iran's market opens, that opening is not merely an economic opportunity; it is a structural test. Foreign investors need legal stability, enforceable contracts, a transparent banking system, the possibility of capital exit, reduced sanctions risk, and confidence that security institutions will not interfere. If the Islamic Republic merely reduces sanctions but preserves the structure of foundations, the IRGC and rent, foreign investment may remain limited, short-term and political. A truly open economy is not compatible with a closed oligarchy.

The Bin Salman Model and the Possibility of Incomplete Bin Salmanisation in Iran

In today's political context, the comparison between Iran and Mohammed bin Salman's Saudi Arabia is attractive. Through Vision 2030, Saudi Arabia has sought to distance its economy from crude oil, attract foreign capital, develop tourism and entertainment, increase the role of women in the labour market, define large infrastructure projects and change its international image. In its 2025 assessment of Saudi Arabia, the International Monetary Fund highlighted growth in non-oil activities, declining unemployment and the continuation of structural reforms within the framework of Vision 2030 (International Monetary Fund, 2025).

But transferring this model to Iran is not simple. Saudi Arabia is a centralised monarchy with enormous financial resources, a powerful investment fund, a relatively coherent decision making apparatus and a stable security relationship with the West. Iran, however, is governed by a network of centres of power: the IRGC, foundations, religious institutions, the formal government, parliament, the Supreme National Security Council and a bureaucracy shaped by sanctions. If in Saudi Arabia bin Salman was able to advance economic reforms through concentrated power, in Iran Mojtaba Khamenei or any other new leader, even if pragmatically minded, must confront the wide interests of networks that have benefited from a closed economy.

For this reason, the more accurate phrase may be "incomplete Bin Salmanisation." This means that the Islamic Republic can imitate some signs of the Saudi model: reducing foreign tension, inviting investors, developing infrastructure projects, allowing relative social opening and constructing a new image of the country. But if this project is implemented without reform of property rights, without financial transparency, without judicial independence, without ending the economic role of military institutions, and without changing proxy policy, the result will not be a competitive economy but security capitalism.

Here the difference between a "culture of expansion" and "authoritarian pragmatism" becomes clear. A real culture of expansion takes shape when society breathes alongside the state: people can travel, trade, universities, media and art can grow, domestic and foreign investors can trust their contracts, and citizens can leave permanent fear behind. Authoritarian pragmatism, however, can build only the appearance of expansion: towers, projects, markets, tourists and foreign contracts, while politics remains closed and the economy remains rentier.

The Persian Gulf, the United Arab Emirates and the Question of Foreign Investment

At the regional level, any understanding between Tehran and Washington would also affect the Persian Gulf states. Maritime insecurity and war can raise costs for trade, insurance, energy and investment across the region. Conversely, a credible and sustained reduction in tension could create opportunities for economic cooperation. This is an inference about shared incentives, not a claim that Gulf governments have agreed to finance Iran or adopted a common view of its political future.

The United Arab Emirates has also stressed in an official statement that the Iranian community residing in the UAE is a respected and valued part of the country's diverse social fabric. This statement is symbolically important because it shows that Abu Dhabi, in the postwar environment, does not wish to portray resident Iranians as a collective threat (UAE Ministry of Foreign Affairs, reported by WAM, 2026). However, one must distinguish between a political message and a definite change in visa or residency policy. If visa and banking regulations truly become easier, the UAE could become one of the main gateways for Iran's return to the regional economy. But this still requires observation of actual implementation.

Large reconstruction figures should be handled with particular care. A proposed investment package, a political commitment to seek financing, an approved fund and money actually disbursed are four different things. Without clear terms, contributors, governance and implementation evidence, no headline figure should be presented as cash available to the Iranian public. The broader political logic can still be examined: capital may become an incentive for changed behaviour. Whether that capital reaches productive activity or entrenches existing privilege depends on institutional design.

This logic is not new in the history of regional relations. One plausible incentive for Gulf states is to prefer a strong but predictable Iran than a weak but disruptive Iran. If Iran returns to markets, energy, transport, transit, petrochemicals, mining, tourism and technology, it can become an economic partner. But if the same capital is used to strengthen security and proxy networks, regional trust will collapse again. Therefore, Arab investment in Iran will be sustainable only if accompanied by a genuine reduction of security risk.

Future-Oriented Pahlavism and Past-Oriented Pahlavism

At this point, the relationship between recent developments and Pahlavism must be clarified. Pahlavism can be understood in two ways. One type is past-oriented Pahlavism, which emphasises imagery, memory, historical grandeur, the flag, unquestioned monarchy and nostalgia for the Pahlavi era. This tendency is important to emotion and identity for part of society, but if it remains only in the past, it may become frustrated or confused in the face of any economic opening carried out by the Islamic Republic, because it expects the only route to Iran's modernisation to be the immediate fall of the system and the full return of the monarchical form.

The second type is future-oriented Pahlavism. This Pahlavism pays more attention to the substance of modernisation than to the form of government as an ultimate end: a national state, an open economy, normal relations with the United States and Europe, non hostile relations with Israel and Arab countries, attraction of global capital, secularism, citizenship rights, infrastructure reconstruction and use of all of Iran's capacities within global capitalism. Reza Pahlavi's speeches and official documents also emphasise a free Iran as a force for regional stability, an end to support for terrorist groups, an end to a military nuclear programme, transparent governance, an open economy, trade and investment (Reza Pahlavi, 2026; Reza Pahlavi, 2025).

From this perspective, if the Islamic Republic is forced to implement part of this agenda, future-oriented Pahlavism has not necessarily failed. On the contrary, one can interpret the change as pressure toward goals also advocated by future-oriented Pahlavism, without assuming that the government has adopted that philosophy. If a government that for years drew its legitimacy from confrontation with the West, Israel, the United States and the global capitalist order now has to speak of investment, an open economy and reducing tension in order to survive, this itself shows that the language of the future has placed pressure on the ideological language.

But this does not mean naive trust in the Islamic Republic. The difference between future-oriented Pahlavism and the Islamic Republic's pragmatism lies in the question of institutions. The Islamic Republic may open the market so that money enters, but future-oriented Pahlavism must insist that a market without a law-governed state, without transparent institutions, without political freedom and without the end of the security economy becomes a new oligarchy. Therefore, the main objection is not to the principle of agreement and investment, but to the possibility that the agreement will save the ruling oligarchy rather than liberate Iran.

In other words, future-oriented Pahlavism should welcome any opening that improves the lives of the Iranian people, while also showing that incomplete opening is not enough. If visas, trade, capital and travel become freer, that is a victory for Iranian society. But if the same opening remains under the shadow of the IRGC, foundations, censorship, judicial corruption and political monopoly, Iran has not passed beyond the ideology of contraction. It has merely dressed it in new clothing.

Future Scenarios

Given the existing ambiguities, Iran's future can be seen through three main scenarios. These scenarios are not certain, but they are useful for understanding possible paths.

Scenario One: Controlled Expansion and a Bargain for Survival

In this scenario, the Islamic Republic preserves the agreement, limits enrichment, recovers part of its assets and oil sales, normalises relations with the Persian Gulf to some extent and opens the space for movement and trade a little. But real power remains in the hands of the security and economic coalition. People experience relative improvement, but the political system remains closed. This scenario is plausible in the short-term because it has the lowest cost for the ruling coalition.

Scenario Two: Failure of the Agreement and Return to Contraction

In this scenario, disagreement over the final text, inspections, missiles, proxies or sanctions causes the agreement process to fail. Ideological loyalist forces rise again, the ruling system returns to the foreign enemy to control discontent and the economy becomes more closed once more. Given the deep mistrust between the parties, the power of networks that benefit from sanctions and regional pressures, this scenario remains conceivable.

Scenario Three: Deep Opening and the Beginning of Structural Transition

In this scenario, the foreign agreement becomes connected to domestic reform. The economic role of the IRGC and the foundations is limited, the banking system becomes more transparent, property rights are strengthened, relations with the region and the West are normalised and civil society breathes. This is the best scenario for Iran, but politically it is also the most difficult because it threatens the core interests of the ruling coalition. Its realisation requires social pressure, international guarantees, transparent monitoring and the formation of a modernising bloc inside and outside the government.

Conclusion

The June 2026 moment should be understood without simplification. Reports of a framework agreement made a turn toward bargaining conceivable, but they did not demonstrate that the governing coalition had abandoned ideological confrontation. Military and economic pressure may encourage compromise; it may also reinforce coercion and elite control. The argument of this essay is therefore conditional: diplomatic opening can expose tensions within an authoritarian system, but neither its depth nor its outcome is predetermined.

On the other hand, this change still does not amount to a real culture of expansion. A culture of expansion means that the citizen, investor, university, market, media and society can breathe without fear and without monopoly. The Islamic Republic may open the doors of the economy for its own survival, but if the network of foundations, the IRGC, rentier oligarchy and the security system remain in place, the result will only be an "open economy for the rulers," not an "open Iran for the people."

Therefore, the question "Can the Islamic Republic change from within?" has no simple answer. The Islamic Republic can change its tactics, restrain ideological loyalist forces, retreat from some slogans and signal approval to foreign capital. But its structural changeability will be proven only when it gives up its sources of power: the security economy, proxies, monopoly, repression and corruption. Until then, any agreement is more the beginning of a test than the end of a crisis.

Future oriented Pahlavism in such an environment should neither fear improvements in people's lives nor trust the Islamic Republic. Any economic and international opening that benefits the Iranian people can be understood as serving Iran's future. But the task of future-oriented discourse is to show that Iran does not become open through the market alone. Iran becomes truly open when an open economy, law-governed politics, a free society, normal relations with the world and an accountable national state stand alongside one another. In this sense, the central struggle is not only between the Islamic Republic and the opposition, but between two visions of Iran's future: ideological contraction in new clothing, or cultural, economic and political expansion in its full meaning.

Final Note on the Limits of Certainty

This essay retains its original historical reference date of 16 June 2026. Its institutional tests remain relevant beyond that date: distinguish proposals from signed obligations, signed obligations from implementation, and economic relief from political freedom. The editorial note identifies later official developments without retrospectively turning the original scenarios into established facts.

References and source notes

Linked sources were checked for this edition on 13 October 2026. News reports are attributed as reports; analytical sources are not treated as proof of every political inference. The dated official update is separated from the original argument.

• Reuters. Vance says funds won’t be transferred to Iran in exchange for signing deal to halt war. 15 June 2026. Syndicated by Investing.com.
• Reuters. Tehran can immediately sell oil upon signing US-Iran deal, US official says. 16 June 2026. Syndicated by Investing.com.
• International Atomic Energy Agency. Director General’s Introductory Statement to the Board of Governors. 3 March 2025.
• Reuters. Iran’s new leader, still silent, was elevated by the Revolutionary Guards. 10 March 2026.
• Valadbaygi, Kayhan. Beyond the IRGC: The rise of Iran’s military-bonyad complex. Clingendael, 2 October 2025.
• International Monetary Fund. Executive Board Concludes 2025 Article IV Consultation with Saudi Arabia. 4 August 2025.
• Emirates News Agency (WAM). UAE affirms embrace of Iranian community as integral to its diverse social fabric. 2 April 2026.
• Reza Pahlavi. A Free Iran’s Promise to the World. January 2026.
• Reza Pahlavi. Iran Prosperity Project (IPP) Keynote Remarks. 30 April 2025.
• The White House. President Trump Signs Iran Memorandum of Understanding. 18 June 2026.
• US Department of the Treasury. Operation Economic Outcast Neutralizes Iranian Regime’s Remaining Shadow Fleet Network. 8 October 2026.

Theoretical and historical background

• Beblawi, Hazem and Luciani, Giacomo. 1987. "The Rentier State." London: Croom Helm.
• North, Douglass, Wallis, John and Weingast, Barry. 2009. "Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History." Cambridge: Cambridge University Press.