The sudden death of Iran’s President Ebrahim Raisi in a helicopter crash on May 19 has cast a shadow of uncertainty over the country's political future, especially concerning the succession of the Supreme Leader. However, Iran's entrenched balance of power suggests that there will be no immediate seismic economic or foreign policy shifts anytime soon.

Iran's sanctions-battered economy is set to continue struggling, and tensions with Israel and the West are likely to persist. Yet, the international response to Raisi’s death underscores a significant thawing in relations with the Persian Gulf states, including previously long-time competitors like Saudi Arabia. Iranian state media confirmed today that President Raisi, Foreign Minister Amir-Abdollahian, and six others perished when their helicopter crashed near the Azerbaijan border. In response, Supreme Leader Ayatollah Ali Khamenei has declared five days of mourning and the closure of the country's economy.

Raisi, elected in 2021 as a hardline candidate, had pledged to crack down on corruption, revive the JCPOA nuclear deal, and improve regional relations. While the JCPOA nearly saw a revival in 2022 under Amir-Abdollahian's watch before mass protests erupted, Raisi's tenure did see the resumption of diplomatic ties with Saudi Arabia, entrances to to the Shanghai Cooperation Organisation (SCO), launch of regional projects like the joint dam with Azerbaijan and membership to the exclusive BRICS+ club.

In the wake of the crash, Ali Bagheri Kani has been promoted to Foreign Minister, stepping up from his previous role as deputy. First Vice President Mohammad Mokhber will serve as interim president until an election is held within the next 50 days. The Guardian Council, a body of clerics and lawyers, will determine the candidates. The 2021 election faced criticism for barring hardliners and reformists, clearing the path for Raisi's victory.

The larger question looming over Iran is who will succeed Ayatollah Khamenei as Supreme Leader. Raisi was seen as a close ally and potential successor. His death shifts the focus to other possible candidates, including the Supreme Leader’s son, Mojtaba Khamenei, former President Hassan Rouhani, and Hassan Khomeini, the founder of the Islamic Republic's grandchild.

Despite these internal shifts, the Supreme Leader, Guardian Council, National Assembly, and the Iranian Revolutionary Guard Corps (IRGC) wield substantial influence, diluting the president's power. Consequently, Raisi’s passing is unlikely to precipitate immediate changes in policy. Economic challenges will persist, with Iran's economy showing modest growth primarily due to increased oil production. Nevertheless, ongoing sanctions severely restrict hard currency inflows, causing the rial to plummet and fuelling persistent double-digit inflation.

The potential for tighter sanctions remains, particularly if Donald Trump were to regain the US presidency and revive his hardline stance against Iran. Additionally, with significant economic resources controlled by the IRGC, regional tensions, particularly with Israel, will continue to see the military prioritised over business interests. Geopolitically, Iran’s stance is expected to remain steadfast. Hopes for reviving nuclear deal negotiations have stalled, and while direct conflict with Israel has recently de-escalated, Iran’s support for its proxies like the Houthis continues unabated. This implies ongoing regional instability, affecting non-Gulf economies such as Egypt.

Conversely, a new president might seek to sustain the momentum in improving relations with Gulf states, which have extended condolences after Raisi’s death. Saudi Arabia and the UAE, referring to Iran as a “sisterly regime,” highlight the positive shift in regional dynamics. Improved relations between Iran and the Gulf reduce the risk of broader conflict disrupting oil supplies from the region. In sum, while Raisi’s untimely death raises questions about Iran’s immediate political trajectory, there remains little chance that while Khamenei remains at the top of the power structure, any significant change in direction is on the horizon.