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A young supporter of Ahmadinejad attends a pre-election gathering in Tehran June 8, 2009. |
In a few days, about 46 million Iranian voters will be on their way to the polls to choose the 10th president of the Islamic republic of Iran. Out of hundreds of presidential hopefuls, only four have acquired the approval of the Council of Guardians: Mahmood Ahmadinejad, Mehdi Karoubi, Mirhossein Mousavil, and Mohsen Rezaei.
All candidates seem to agree on certain "fundamentals": devotion to the Islamic system, allegiance to the Supreme Leader, Iran’s right to peaceful nuclear technology, and a diplomatic approach to foreign policy.
This leaves the situation ripe for candidates raising economic issues, and presenting their plans for handling Iran’s troubled economy. However, it is important to note that the origins of the Islamic Republic's economic problems are deeper than the performance of the current government.
The Iranian economy faces four types of problems: 1) the development problem, whose features are common to all developing countries; 2) the international financial crisis, which will likely affect the Iranian economy negatively; and 3) the economic sanctions, which are the result of constant pressure from the world’s major economic powers.
Formulating the strategies that can help Iran out of its economic meltdown appears to be the main challenge ahead of Iran’s presidential hopefuls in its upcoming elections.
Iran’s Economic Problems
| Mousavi predicts serious consequences for the high unemployment rate among the youth. |
Today, Iran’s economic growth stands at 6.5 percent with oil and at 7.1 percent without oil compared to -1.6 percent and -1.2 percent during the war years, 5.9 percent and 6.1 percent during the re-construction period, and 4.5 percent and 5 percent over the so-called Reformist period.
The unemployment rate stands at about 9.5 percent, and the foreign exchange reserve is more than 83 billion dollars. There is substantial progress in the production of steel, cement, petrochemicals, and nuclear technology as well as the exportation of non-oil products. The population growth is under control and social welfare indicators are somewhat improving.
On the other hand, the prices are still high, the unemployment rate is still high as well, particularly among college graduates and manual laborers.
There are also other problems such as corruption, which is a heavy burden on the economy. There are incidents of property and credit acquisition through fraudulent procedures.
And if the current financial crisis continues, it might worsen the Iranian economic situation. For example, the OPEC oil price already experienced a drop from a high of about $140 to almost one- third per barrel in less than a year.
Also, one of the main economic challenges ahead of the Islamic Republic is the sanctions that has been in effect since the 1979 Revolution. The economic sanctions have deprived Iran of having direct access to capital, sophisticated technology and intermediate inputs produced in the West.
Notably, the recently imposed sanctions, which target Iran’s financial institutions, have undermined the country's plans for attracting foreign investment.
Candidates’ Stances on Economy
| Karoubi promises to create a more humane economy. |
The candidates’ views differ on how to handle Iran’s economic problems. While the incumbent president Mahmmod Ahmadinejad strenuously defends his government’s performance over the past four years, the other three candidates are critical of the policies he pursued to address the pressing economic problems, such as sustainable growth, price stability, unemployment, budget deficit, and public sector transparency and accountability.
Mousavi, in particular, predicts serious consequences for high unemployment rate among the youth. So far he has succeeded at convincing a substantial portion of the educated youth to rally behind him. As a former prime minister, he managed to handle the Iranian economy during the Iraq-Iran war quite effectively. He has the support of economists who oppose Ahmadinejad’s economic approach.
The other two candidates, Mehdi Karoubi and Mohsen Rezaei, are also critics of the current government’s economic performance. Drawing on his experience as an economist, Rezaei promises to take a more rational path to solve the Islamic Republic’s economic problems.
Karoubi, on the other hand, promises to create a more humane economy that takes into consideration home-based female workers, and extends the social security network. Notably, Karroubi is supported by the former mayor of Tehran, Gholam Hossein Karbaschi.
While it may be convincing to argue that economic progress indices, such as the living standard, employment, entrepreneurship, business environment, social security provision stand at a much lower level than that of many successful economies in the West, it is unconvincing to attribute all these problems to the poor performance of the current government.
Even though Mahmood Ahmadinejad is not an economist by profession, a big number of people believe that he has been trying to apply the Islamic economic model, at the heart of which lies social justice. Achieving social justice was his promise during the electoral campaign, a promise that won him the majority of votes in 2005.
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