Presidential legacy of Mahmoud Ahmadinejad, who is ineligible to stand for third term, is one of high inflation and unemployment
In 2005 many in Iran’s political class scoffed at reformist candidate Mehdi Karroubi for suggesting he would give every adult 500,000 rials a month (then around $57) from the country’s energy sales if he was elected president.
But in winning 17.2% of votes in the first round – not far behind Akbar Hashemi Rafsanjani on 21% and the eventual winner Mahmoud Ahmadinejad on 19.5% – Karroubi finished comfortably ahead of the man considered the main reformist candidate, Mostafa Moein, on 13.8%, who fought the election on the traditional reformist themes of social and political freedoms. Ahmadinejad won a 61.7% majority in the second round runoff against Rafsanjani.
Karroubi was not the only candidate to use redistributive rhetoric in the 2005 campaign. In defeating Rafsanjani in the runoff, Ahmadinejad said he would “put the oil money on the sofreh” – the square cloth placed on the floor on which poorer Iranians set their meals.
Again in 2009, the economy was the major issue; and although Karroubi polled badly in a disputed election, Mir Hossein Mousavi, another reformist candidate, fought a skilful campaign that blended day-to-day issues with the traditional reformist call for civil and political rights.
Now, the economy is still at the centre of election debate, with a large field of would-be candidates criticising the economic management of Ahmadinejad, who is ineligible under the constitution for a third consecutive term.
At the core of economic policy is the tension between resources going into short-term consumption or into the investment required for long-term growth. Despite having the world’s second-largest reserves of both gas and oil, Iran has been less than successful in using energy revenue to develop other sectors.
The former government of Mohammad Khatami ringfenced windfall oil revenue in 2000 in the Oil Stabilization Fund, in order to assist private sector investment, but political pressures led both parliament and government to raid the fund even before Ahmadinejad replaced Khatami in 2005 and adopted a populist course, including replacing state subsidies of everyday items – like petrol and bread – with cash payouts.
Ahmadinejad has continued this course even in the last year as tightening western sanctions have halved Iran’s oil sales, with the government admitting that in the year ending in March state revenue was at $77bn — well below the budget projection of $117bn. With the private sector squeezed by sanctions and the state short of development resources, the economy is well short of the 8% growth target set by the fifth five-year development plan, which guides government policies from 2010 to 2015. The International Monetary Fund projects the economy will shrink by 1.3% in 2013.
With unemployment at 13% and inflation at 32%, many voters have lost confidence in Ahmadinejad’s approach. Farideh Farhi of the university of Hawaii argues his populist measures may still appeal in rural areas but less so in the cities and towns where around two-thirds of Iranians live.
“Past promises have made people sceptical,” she says. “And they also have demands that relate to better delivery of government services.”
This could lead to candidates offering very similar, almost technocratic agendas. “Yes the election may turn out to be about hiring a competent CEO,” says Farhi, “perhaps with a tinge of hope that he will be better able to reduce the tensions with the US.”
But an Iranian business journalist and businessman said there could be some mileage left for populist policies that play to the poor. “The bottom half and top half disagree on some things and agree on others.
“Those on low and let’s say low-middle incomes would like more government involvement in the economy, with more handouts, and they are against privatisation. Those on higher and high-middle incomes don’t approve of handouts, and would like to see less government involvement, although they would like bank loans and low lending rates.
“Everyone agrees, however, on two things: that there is corruption throughout the economy and that privatisation as practiced so far is a proxy for corruption and transferring ownership to favoured groups.”
Relations with the west are bound to be some kind of election issue, if only because sanctions have now had such an effect on the economy. But again, with candidates keen to stay within the guidelines laid out by Ayatollah Ali Khamenei of maintaining Iran’s “rights” to nuclear technology, this may boil down to competing claims to be skilful in diplomatic manoeuvring rather than advancing competing agendas.
One exception to such consensus could be Rahim Esfandiar Mashaei, Ahmadinejad’s leading aide and chosen successor, but he may not pass vetting by the Guardian Council, the state watchdog that assesses the “suitability” of candidates. If he runs, Mashaei will presumably extend Ahmadinejad’s themes of redistributing wealth and tackling corruption.
A further exception could be Kamran Baghari Lankarani, Ahmadinejad’s former health minister, who is running with the backing of the Jebhe-ye Paydari (the Resistance Front), a grouping that wants to continue the purer ideals of the revolution and is sceptical of any dealings with the US.
“The Paydari Front may make a case for continued pursuit of revolutionary ideals and economic justice, rejecting the so-called western-oriented technocratic solutions to Iran’s problems,” says Farhi. “But the more common slogans for platforms so far such as progress, wisdom, competence suggest that most candidates will be running against Ahmadinejad’s erratic decision-making style and what is now openly identified as empty populist promises.”
By The Guardian
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