Five issues at stake in Iran's presidential election

Iran is heading for a vital presidential election on Friday, with incumbent reformist leader Hassan Rouhani likely to win a second term if opinion polls hold. But he faces a tough challenge from conservative rival Ebrahim Raisi, who looks poised to force the vote into a second round run-off.

Raisi is expected to pick up votes from Iranians who are disillusioned with the slow pace of economic reform and have grown frustrated with unemployment, which remains high despite the lifting of sanctions as part of a deal Rouhani brokered in exchange for curbing Tehran's nuclear ambitions.

If Raisi replaces Rouhani as president, the nuclear deal could be cancelled. But a Rouhani victory and second term would not necessarily guarantee a more open, cooperative Iran.

1. Nuclear Deal

Donald Trump's assumption of the US presidency in January cast doubt on the 2015 agreement between Iran and the P5+1 group, which includes the five permanent UN Security Council members – the US, Russia, China, the UK and France – plus Germany, as well as the EU.

Trump has consistently called the pact signed by the previous Obama administration a "bad deal." He has already threatened to reverse it. In the event of the deal being cancelled, Rouhani's four years of work to transform Iran into an open market could come to nothing.

As part of his election campaign, Rouhani has vowed to honour the nuclear deal, promising to invest the profits made from the lifting of sanctions to support Iran's "poor and needy."

In contrast to Rouhani, Raisi promotes a more isolationist policy, and prefers to see Iran become more self-sufficient, in line with what the country's Supreme Leader Ayatollah Ali Khamenei calls a "resistance economy."

Raisi accused Rouhani of being "weak" in the P5+1 negotiations, which he says has left Iran out of pocket. "We should not show any weakness in the face of the enemy," he said in a televised debate. A win for Raisi could make extremely difficult Trump's job of convincing the US Congress every 90 days that Iran is complying with the agreement, known as the Joint Comprehensive Plan of Action (JCPOA).

2. Energy Sector

Under Rouhani, the lifting of sanctions has allowed Iran to export its gas to an energy hungry European market, which is currently seeking ways to diversify its supply away from Russia.

Iranian oil production almost immediately returned to pre-sanction levels, despite seeing a decrease since January.

Iran is in need of foreign investment to improve its production capacity, Saxo Bank's Head of Commodity Strategy Ole Hansen says. But a Raisi presidency "would likely be less market-friendly" and could trigger the return of sanctions, he adds.

Victory for Rouhani, on the other hand, could make the Trump administration's "agenda of getting tough" more difficult if Rouhani continues to retain confidence among key partners in Europe and Asia, Suzanne Maloney, a Middle East analyst at the Brookings Institution, argues.

3. Syrian Civil War

Regardless of who wins the election, little change is expected in Iran's foreign policy on the Syrian front. Although the president is the head of the Supreme National Security Council, the Supreme Leader has the final say over foreign policy and the Iranian Revolutionary Guard Corps (IRGC) has a strong voice.

Iran has been a key player in the Syria conflict, sending elite commanders from the Revolutionary Guard's Quds Force to support Bashar al Assad's regime and allied militias, including Iran's Lebanon-based proxy group Hezbollah.

But Rouhani has attempted to rein in Assad to a certain extent, having called for the establishment of a truth-finding committee to investigate the chemical attack on the Syrian opposition-held Khan Shaykhun district of Idlib in April. He has also urged the Assad regime to undertake "reforms."

Rouhani's stance on Syria has differed from that of Khamenei's. According to political analyst Maysam Behravesh of Lund University, Rouhani has "foregone Syria in favour of getting the nuclear dossier."

This is unlikely to change if he is re-elected, Behravesh says. But if Raisi wins, Iran's policy on Syria "will probably be intensified and pursued with greater vigour."

4. Houthis in Yemen

Rouhani has called for holding "Yemeni-Yemeni" political talks to end the civil war between the government and Tehran-backed Houthi rebels.

But the fact that the war started during Rouhani's term in office is an indication of an increasingly aggressive Iranian foreign policy during his presidency.

"Last October, Iranian-backed Houthi rebels in Yemen fired missiles likely supplied by Iran at US Navy vessels," Elliott Abrams, a senior fellow for Middle Eastern studies at the Council on Foreign Relations writes in Politico.

Nonetheless, an Iranian political analyst reportedly close to Rouhani's government told the Financial Times that even though Iran did not have a huge influence in Yemen, it "seems ready for a compromise by cutting its help to the Houthis."

As for Raisi, Global Head of Commodity Strategy at RBC Capital Markets Helima Croft believes he would be more likely to support "provocative" military and regional policies that will include arms shipments to the Houthis.

5. Stand-off with Israel

Israel has been one of the most outspoken critics of the Iran nuclear deal. The Israeli government sees the lifting of sanctions on Iran and the prospect of Iran turning into an economic powerhouse in the region as a threat to its security.

While Iran's international partners in the nuclear deal insist that Tehran is cooperating, Israel claims Iran is fooling the world and that the deal is isolating the Jewish State.

Israeli Prime Minister Benjamin Netanyahu has even warned that Israel would carry out air strikes on Iranian nuclear facilities, with Israel claiming the deal does not prevent Iran from developing nuclear weapons.

Israel has fought wars with Iranian-backed groups including Hezbollah in Lebanon and Hamas in the Gaza Strip. Israeli fighter jets have also targeted Hezbollah and Iranian commanders in Syria with air strikes, particularly around the Israeli-occupied Golan Heights.

Israel would likely welcome the collapse of the nuclear deal, which looks to be a possibility should Raisi become president.

"Ebrahim Raisi, hardline Shi'ite cleric, would be the best PR Israel could have hoped for," Dr. Avi Perry writes in Arutz Sheva. "He would make a much more compelling case for not letting Iran acquire an acceptance status in the eyes of the Western world."

But a deterioration of ties between Iran and Israel's main international sponsor, the US, could see the situation in the Middle East become more volatile, not less.

"Trump's rhetoric towards Iran is so harsh that to have someone else on the other side who is equally harsh, it might provoke an unintentional confrontation," says Reza H Akbari from the Institute for War and Peace Reporting.