Economy, Relations with West Are Key to Iran's 2009 Elections

TEHRAN, Dec 12 -- The main issue in Iran's June 2009 presidential election is certain to be the country's economic woes, but both candidates will be linking the economy to the issue of relations between Iran and the West, according to Iranian politicians and political analysts.

Based on the bitter internal Iranian politics of the past three years, both President Mahmoud Ahmadinejad and whoever is chosen as his opponent are expected to try to pin responsibility for Western financial sanctions on each other. The challenger -- expected to emerge from the more moderate camp -- will charge that Ahmadinejad has exposed Iran to economic turmoil by mismanaging Iranian relations with Europe, while Ahmadinejad will accuse his foe of conspiring with the West to step up economic sanctions against Iran.

These likely campaign themes reflect the deep rift within the Islamic regime between those who believe that normal economic and political relations with the West are a vital to Iran's future and those who disdain such relations as a violation of the Islamic Revolution's values.

Ahmadinejad seems certain to run again, even though he has lost some support among ultra-conservatives who feel he will be blamed for falling oil prices and more economic hardships in the coming months, according to Amir Mohebbian, a conservative political strategist and managing editor of Arya News Service.

The moderate conservatives, led by former President Akbar Hashemi Rafsanjani, and reformists, led by former President Mohammad Khatami, are trying to agree on a "national unity candidate" to run against Ahmadinejad. Rafsanjani is now supporting Khatami as the candidate, according to IPS interviews with a senior Rafsanjani adviser, Mohammad Atrianfar, and Khatami's former vice president, Mohammad Ali Abtahi. But it is not clear yet whether Khatami will emerge as the opposition candidate.

Ahmadinejad's moderate and reformist opponents, as well as some conservative critics, believe Ahmadinejad will be politically vulnerable because of the parlous state of the economy and his own mismanagement of it. Mohebbian, who has supported Ahmadinejad in the past but is now looking for a different conservative standard-bearer in the election, said the president had "increased the expectations of people" based on "a good oil price".

Now that oil prices have plunged below 50 dollars a barrel and are expected to stay there for months, Mohebbian said, "The gap between expectations and reality creates insurgency."

The Iranian economy, which already had serious long-term structural problems, has taken a nosedive since the fall in oil prices and is going to worsen in the coming months, according to economist and political analyst Saeed Laylaz.

He told IPS that the housing construction industry, which has absorbed hundreds of thousands of workers, is about to grind to a halt as a result of the financial shortfall. That in turn could increase unemployment to as high as one million more than existed at the end of the Khatami period, according to Laylaz. Inflation is likely to worsen over the next months as well, causing increased popular dissatisfaction, he said.

Rafsanjani adviser Atrianfar said he believes Ahmadinejad will be vulnerable on the economy because he has systematically lied about the actual levels of exports, jobs and inflation.

Former Vice President Abtahi said the issue of international sanctions and the tensions underlying them will be central in the election, and expressed confidence that "people will support a candidate who can reduce such tensions". Reformist and moderate conservative critics of Ahmadinejad have repeatedly attacked him for what they describe as diplomatic blunders that have led to tougher economic sanctions against Iran by the West.