Tomorrow is the first round of voting in the Iranian presidential election, marking the end of the contentious Mahmoud Ahmadinejad-era. If none of six candidates gain a 50% majority, a runoff round will be held on 21 June.
There’s a lot of debate about how big a deal the elections really are. All six candidates have been pre-screened by Iran’s Guardian Council, a 12-member body consisting of six jurists and six theologians, who do things like rule out anyone who doesn’t believe in God, for example. Plus, much of the real power in the country — including control of the military — lies with Supreme Leader Ayatollah Ali Khamenei.
However, there is one thing that the new Iranian president will be expected to fix. Iran’s troublesome, oil sanctions-hit economy. To understand this better, Business Insider spoke to Iranian-born economist Mehrdad Emadi, a former EU advisor who works at the London-based firm Betamatrix.
As Emadi explains there’s a big problem — none of the candidates, whether they are reformist’s choice, Hassan Rouhani, or the conservative favourite Saeed Jalili, actually have an economic plan.
Business Insider: How big a role will the economy play in the election?
Mehrdad Emadi: It is not an overstatement to say that the economy has become the core message for every single candidate.
It is not an overstatement to say that the economy has become the core message for every single candidate.
Promises of fixing the economy in less than 100 days to in less than two years the economy will be turned around were the dominate theme in the earlier days. Couple of the candidates who are perceived to have closer ties to the Conservatives and the Revolutionary Guards have dropped the economy as the key message of their campaign after they performed very poorly in both media interviews and their public talks in cities around the country when they were challenged on how they would deal with business interests associated with the Revolutionary Guards.
The singular importance of the economy in the election can be appreciated better if we are reminded that despite a rise of more than 350% in Iran’s foreign revenues from the export of crude oil generating more than $450 billion extra revenue for the government since 2006, the government has accumulated more than $28 billion deficit in the last 20 months. The official unemployment rate is reported to be around 12% which is challenged by many including the Parliament whose members from the influential Economic Research Commission has calculated the figure to be at least 22% rising to 40% for under 20 five year old segment of the population (the figure is 60% per cent for women in the same age group).
It is further noticeable that the national currency has lost more than 65% in the last seventeen months and the country has fallen down in the table of corruption perception index by more than 40 places in 2012 joining the leagues of the 40 most corrupt countries. The combined effects of chronically corrupt governance in the country and the economic sanctions are beginning to show the devastating effects. It is reported that output of the car and components manufacturers which have the second largest share in the national output, has dropped by more than one-third in the last fifteen month. For all intention and purposes, the economy is in a rapid slide with the bottom showing a total collapse in industrial output. Iran also showed record-breaking levels of import in main food staples.
BI: Do any of the candidates have a clear plan for dealing with it?
ME: Although all candidates have talked about unemployment, accelerating inflation and the financial cost of business monopolies, none of the candidates has presented a clear economic blue print of how they intent to turn the vicious cycle of rising monopolies, corruption and the rush to sell raw resources into a virtuous cycle of investment to manufacture, create sustainable jobs and release the markets from the grasp of monopolies created by the Revolutionary Guards. This may not be caused by the lack of awareness or intellectual ability to present solution but rather because of the sensitivity of the issues given the threatening posturing that the Revolutionary Guards and the Radical Conservatives have adopted in recent months about any attempt toward more transparency in the economy.
BI: Mir Hussein Moussavi has been portrayed as a reformist — do you think this is true?
ME: I should provide the caveat that we have not heard regularly from Mr. Moussavi in the last three years because he has been under house arrest and it is conceivable that his positions concerning many issues have changed and he may now be more ready to go further in his reforms. Based on what we heard from him about four years ago, I see Mr. Moussavi as a reformist who wished to improve the living conditions for ordinary Iranians as well as to reduce the level of tension between Iran and the West. This said, he had repeatedly confirmed his belief in the principal values of the 1979 Revolution and the existing constitution of the Islamic Republic of Iran. I think it may be correct to consider him as a moderate reformist three years ago who also had a strong technocrat base in certain segments of the society.
BI: How might the policies of Moussavi and Saeed Jalili differ?
ME: Mr. Moussavi does not see any benefit in continuation of the stalemate with the West including the United States and has expressed the wish to instigate direct talks over the key issues with no pre-conditions on either side. He sees a constructive resolution of the conflict in the long term interest of Iran and the regime. In this position there is a distinct wedge between Mr. Moussavi and the Supreme Leader Mr. Khamnehei who believes negotiations are futile. On the opposite side of the spectrum stand Mr. Jalili who has been most vocal about in intention to adopt or more uncooperative stance in foreign policy. He actually went on record saying during his campaign that he did not subscribe to the policy of conflict resolution with the outside world and indeed he wished to see further hardening in the position of the country. His economic advisor might have captured the mood in his camp when he declared that sanctions have made the Iranian economy stronger and have benefited the country and Iranians should be praying for their continuation.
As for the economy, it seems that Mr. Jalili sees no reason to challenge the growing control of the Revolutionary Guards monopolies in some key sectors of the economy and the harm they have caused to the development of private sector firms and the prosperity of the country. During the last presidential campaign Mr. Moussavi repeatedly raised his concerns on this issue.
BI: Can Mahmoud Ahmadinejad or his supporters play a role in the election’s outcome?
ME: Given the financial reach of the government and total lack of monitoring over his budgetary control, the potential is there and there have been indications of some support for Mr. Jalili including close associations of certain members of Mr. Ahmadinejad’s cabinet with Mr. Jalili’s campaign. However, the exhibited anguish of the extremists and the softening of the tone of Mr. Khamnehei in recent days about the election suggest that the political leadership are all too aware about the potential eruption of protests given how fresh seems to be the memory of the reported election fraud from the last Presidential Elections four years ago.
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