External Affairs

In Iran Election, Rouhani’s Real Opponent is the Economy, Not Conservatives

The country’s culturally liberal president is the front-runner in opinion polls but the race is expected to tighten before May 19, polling day.

President Hassan Rouhani (left); a crowded Tehran bazaar; conservative presidential candidate Ebrahim Raisi. Credit: Reuters/Devirupa Mitra/Reuters

Tehran: On the side of the busy chinar-lined Vali-Asr avenue in north Tehran’s Mahmoudiye area, the white marble multi-storeyed building separated from the street by a tall compound wall looked just like exclusive apartment complexes do in any part of the world and especially in West Asia. But the large purple banner draped outside the half-open iron doors with young men and women wearing purple ribbons streaming in and out marked it out as a space that is quite unique in the wider Middle East region: the headquarters of a political campaign in a fiercely contested election that will set the course Iran takes for the next four years.

Donated for the re-election campaign of President Hassan Rouhani by a rich supporter, the building had been turned into the campaign committee for businessmen to build up and maintain support among a critical constituency.

For Rouhani, the economy could be his Achilles heel – and he knows it. While the economy had recovered after the liberal leader’s surprise election win in 2013, the euphoria of the lifting of sanctions in January 2016 following implementation of a compromise deal with the US and other major power over Iran’s nuclear programme – the Joint Comprehensive Plan of Action – had raised expectations, sky-high. Rouhani’s main opponents have taken advantage of this opening in three television debates.

In March, Supreme Leader Ayatollah Khamenei had also implicitly criticised Rouhani, stating that he understood the “pain of the poor and lower class people with my soul, especially because of high prices, unemployment and inequalities”.

Rouhani has been on a flurry to inaugurate projects recently, ranging from the Hamedan-Tehran railway link to announcing new industrial parks in Bandar Abbas, but the sharp jabs from Khamenei and opposing candidates have also led the president to pivot and lash out at the conservative and security establishment in unusually strong terms.

Ebrahim Raisi with Iran’s supreme leader, Ayatollah Khamenei (right)

On behalf of Rouhani’s campaign, 38-year-old Dawood Habibfard has been in charge of speaking to various businessmen and commerce chambers in Tehran to keep track of their grievances and assure them of the Iranian president’s indispensability to get back the economy in good shape.

“This place is for tradespeople,” he told The Wire, sitting in one of the rooms in the second floor of the multi-storey building. Just outside the room, three fashionably dressed women sat in the expansive, but empty living room, discussing political developments around a table piled with Rouhani posters.

“I have been talking to the various communities and businessmen, listening to their problems,” he said, adding immediately, “But they will all vote for Rouhani. He is best for the market”.

When asked about the complaints that he heard, Habibfard said, “Recession is the main economic problem”.

But, he believes that Rouhani and his team have the leadership to tackle the problem. “They [the opposition] have only empty promises. We are the only one to have an economic plan,” he said.

Challenge of populism

Habibfard was referring to Rouhani’s main conservative rival, Ebrahim Raisi, who announced that he will increase cash handouts and create 1.5 million jobs. The other principal candidate, Mohammad Bagher Ghalibaf, who came second against Rouhani in 2013 but has now withdrawn and endorsed Raisi, went to the extent of promising five million jobs and tripling monthly cash transfers. This led Rouhani’s first vice president, Eshaq Jahangiri, to joke last month, “That brother who promised millions of jobs has either never created jobs or does not understand numbers and figures”. Jahangiri is also one of the six presidential candidates, but is widely expected to step down soon in favour of Rouhani.

Sitting adjacent from him, Habibfard’s colleague who looks after the campaign in central Tehran claimed that these populist promises “would actually make the poor poorer”. “If they increase the monthly payments, then it will mean that they will have to increase price of all the basic necessity like gas and electricity. Who will pay the burden?” asked Mehdi Hossainkhani, who runs an export-import company with most of his business in west Asian countries. An ardent Rouhani supporter, Hossainkhani notes that he was paying two of his own employees out of his pocket to take part in the campaign work.

Outside the building, 20-year-old architecture student Mohammad Amin was standing with two friends on the pavement, his hands filled with stacks of campaign literature. “We are going to distribute it around the city. We also stand in at main areas so that we can explain the situation to people who have questions,” he said, wearing a grey t-shirt emblazoned with the words ‘NASA’.

When asked whether he preferred freedom or jobs, Amin answered, “aazadi”.

Among young, urban Iranians, Rouhani’s support base has not waned, but a rising level cynicism is also evident.

Popular concerns about the economy

In another part of city which was covered with political posters of various sizes and colours, 26-year-old Hassan was sitting at the park around the round-shaped performing arts complex, theatre-e-sahar, taking a noon break from his job in a nearby restaurant. Describing himself as a Rouhani supporter, Hassan noted that even his vote, which he planned to cast, may not change the ground situation on the economy.

“Generally, nobody can do anything. They (Rouhani supporters) vote, because they don’t want Raisi to get elected,” he said.

Across the park, a retired government official, who identified himself as Jabbar, was listening intently to Hassan. (Most of the Tehran residents who spoke to The Wire wanted to be identified only with their first names or remain anonymous before discussing their political views).

Jabbar described Rouhani in unflinching terms. “He is a liar. He said that his 100 day plan (in 2013) will change everything. Lies. He has not done anything,” he said.

While he did not want to say where he had worked earlier, Jabbar noted several times while criticising Rouhani that he was an “Arab” from Khuzestan. In the 2013 presidential elections, Khuzestan was one of the four provinces where Rouhani did not get the majority of votes.

“There has been no change… Things have only got worse,” Jabbar said to a question on the impact of the lifting of nuclear sanctions in January 2016.

Iran’s President Hassan Rouhani speaks as he visits Azadshahr mine explosion site in Azadshahr, Golestan Province, Iran May 7, 2017. Picture taken May 7, 2017. President.ir/Handout via REUTERS

According to economist Djavad Salehi-Isfahani, while Rouhani’s policy has failed younger Iranians, they were likely to overlook his shortcomings due to his “relaxed social policy positions” – but older Iranians may not be so lenient.

Shopping at the covered market at Tajrish Square and holding two bunches of lettuce in her hands, Shahnaz, who also gave only one name, shook her head with disappointment. “Yes, the prices of all vegetables have gone up. It is very difficult to manage the budget,” she said. The 60-year-old Tehran resident said she was living on the remittances sent by her daughter in the US.

Despite being unhappy with the economic situation, both the senior citizens said that they would go to the polling booth on May 19. However, a considerable number of Iranians are not likely to vote, surveys – and anecdotal evidence – suggest.

Taking cover from the hot sun in the subway at Vali-Asr square, Pernaz Moradi and her family were sitting together in a line on the projection from the wall. Hailing from Kermanshah, Moradi and her group, who were Kurdish, stood out for being particularly colourful among the Tehran crowd, which generally favours darker hues.

Pernaz, who is a graduate in Persian, said that she didn’t plan to vote. “I didn’t vote even in the last election,” she added. Her two cousins added that they had voted in 2013, but may not do so this time.

“I have been searching for a job for ages. There is more scope and development in Tehran, but in Kermanshah, we are worse-off,” she exclaimed. Asked if she was pessimistic or optimistic about Iran’s future, she was negative.

Iran’s unemployment rate in 2016-17 stood at 12.5%, which is an increase from 10.6% in 2014-15. “Unemployment remains high and private sector job creation is slow. With per capita incomes unchanged from a decade ago and poverty on the rise, pressure to realize rapid gains is high,” the IMF said in a report in February.

Contrary to perception, inflation has come down – it went to single digits in 2016 – but this was mainly due to the Rouhani government’s tight hold on government spending.

Surveys give Rouhani the edge

Like Pernaz, 33-year-old Zara does not plan to vote. In fact, she has never voted in any election. “There is one person who is chosen for 8 years and then he goes away. I don’t think it brings much change,” said Zara, her pink-dyed hair peeking from beneath her headscarf. She was sitting with a setar – a musical instrument – outside the doors of the City Theatre.

“Everybody has one insight of freedom. Freedom is not just playing of instruments. In my personal view, all are the same,” she said.

As per the polling organisation, IPPO, which is publishing opinion polls every day till May 18, around 16% of the electorate have said that they don’t plan to vote, with another 4% still undecided. Iran generally has high voter turnout. However, there has also been an unusual phenomenon noted by the pollster – a sharp rise in the number of respondents who did not want to disclose their choice. “There is the possibility that due to the rising level of political agitation, the respondents are fearful of disclosing their final decision and as such they are not willing to reveal their vote,” it analysed.

Rouhani continues to be the frontrunner, as per opinion polls. He got around 50% in the latest poll released by IPPO for May 15 – three days before voting. He has to win more than half of the votes to be elected in the first round. If no candidate crossed the 50% vote share mark, then the top two contenders will enter a run-off. So far, all Iranian presidents since the revolution have managed to win two successive terms – Ali Khamenei, Hashemi Rafsanjani, Mohammad Khatami and Mahmoud Ahmadinejad.

While Ahmadinejad was disqualified from standing in the presidential elections this time, Zara admitted to a fondness for the populist leader due to his ‘pro-poor’ policies, compared to Rouhani. The former president continues to have substantial support among the poorer sections, whom he won over by introducing the system of cash transfers in lieu of energy subsidies.

Iran’s President Hassan Rouhani speaks as he visits Azadshahr mine explosion site in Azadshahr, Golestan Province, Iran May 7, 2017. President.ir/Handout via REUTERS

Speaking to The Wire, Salehi-Isfahani, who is a professor of economics at Virginia Tech and a visiting scholar at Harvard, said Raisi and Ghalibaf’s populist programs are likely to resonate with the poor, even though they are still just promises.

“I think Rouhani made a mistake of abandoning the competition for the poor’s vote. He has faithfully paid the cash transfers but unwillingly and grudgingly. Cash transfers have been popular with the poor, and he could have easily improved that program, but he took an ideological approach to it – it’s Ahmadinejad’s idea, so must be bad,” he said.

He dismissed Rouhani’s new 100-day economic recovery plan as being an unnecessary concept. “The idea of a 100 day program for a returning administration is silly. He could have implemented the 100 day program anytime,” he added.

Salehi-Isfahani, however, had more confidence that Rouhani could pull off an economic recovery, as he had prepared the ground well.

The IMF’s outlook had predicted GDP growth of 6.6% in 2016-17 due to an increase in oil production, after facing a contraction of 2% in 2015-16. However, the growth rate will then go down to 3.3% in 2017-18, as OPEC tightens targets.

While Iran continues to be in the cross-hairs of the Trump administration, Rouhani’s statement that he was ready to start negotiations with the US on non-nuclear sanctions is likely remain a non-starter.

However, analysts believe that while US sanctions could become even tighter, Iran’s economy could grow despite renewed hostility from Washington. “The Europeans and Chinese seem to be determined to keep the door open with Iran and their fear of US secondary sanctions may fade away with time if Iran continues to play a constructive role in the regional and global plane,” said Salehi-Isfahani.