In Iran election, lackluster economy opens door to a populist push

The presidential election, which has become a referendum on moderate President Hassan Rouhani's first term, has seen his conservative challengers cast themselves as champions of the working class.

Perched just off Revolution Square in central Tehran, Mehdi’s tiny fast-food joint is doing brisk-enough business selling burgers and pizzas – because everyone has to eat.

But as Iranians prepare to vote in presidential elections on May 19, the contest has boiled down to a battle over Iran’s lackluster economy and a referendum on President Hassan Rouhani’s first term, with rivals making extravagant, populist promises to boost the fortunes of middle-class Iranians like fast-food shop-owner Mehdi.

He says he wouldn’t be packing takeaway meals if Iran’s economy had surged the way Mr. Rouhani promised it would after the 2015 nuclear deal and the relaxation of sanctions. And he would still have the transport job that he left last year amid a construction downturn.

Likewise, Mehdi doesn’t trust the promises of Rouhani’s leading challenger, hard-line cleric Ebrahim Raisi, custodian of the biggest religious foundation in Iran. Nor did he trust the promises of conservative Tehran Mayor Mohammad Baqer Qalibaf, who recently stepped down in favor of Mr. Raisi.

All candidates have played the populist card, with conservatives calling for cash payments to the poor and promising 5 million more jobs while doubling or tripling incomes.

The focus on bread and butter, or the lack of enough of it for many Iranians, harkens back to a fundamental tenet of Iran’s 1979 Islamic Revolution, aiming for “social justice.” But today it highlights vast inequalities in Iranian society.

Candidates that have been among Iran’s ruling elite for decades now portray themselves as champions of “social justice” for the working class, which analysts say is not unlike billionaire candidate Donald Trump last year on the US campaign trail, hobnobbing with auto and coal workers and promising to bring back their jobs.

“I have voted five times in the last 20 years, and learned that promises are made to win votes only,” says Mehdi, a tall, well-built Iranian in his late 30s who asked that only his first name be used. At least this college graduate has a job – one in five graduates are jobless, and youth unemployment has risen during Rouhani’s term from 24 percent to 30 percent.

“Pledges are good for nothing,” says Mehdi, echoing a common refrain of political disillusionment. “I just vote on the reality that Rouhani is still a better choice. The government has improved the tarnished image of Iran, and been very successful in foreign policy.”

That view is good news for Rouhani, but hardly a uniform reaction among his supporters, some of whom may need convincing to turn up and cast their ballot for him again. The relatively moderate president has eased Iran’s isolation and called for more outreach to the West, before and since the nuclear deal.

While Rouhani says that landmark achievement may have prevented a war, it is a target for hard-liners who accuse him of “deceiving” Iranians by raising expectations of an instant economic bonanza that could never be met.

Instead, non-nuclear US sanctions and restrictions on Iran’s financial transactions remain, and President Trump has threatened to tear up the deal – and certainly will not lobby for Iran’s quicker reentry to global markets, as the Obama administration once did.

“[Rouhani] oversold the nuclear deal, he did not manage expectations well,” says Nasser Hadian-Jazy, a political scientist at Tehran University. “He was so much concerned about selling it, he didn’t think about the future and delivery and managing of expectations.”

Slow economic progress

Still, the incumbent has a “strong” economic team, whose performance “is not all that bad – but the problem is that is not how the people are feeling now,” says Dr. Hadian-Jazy.

While Rouhani’s supporters embrace his calls for greater social freedoms, they have been disappointed by slow economic progress. In the past decade, Iran has felt successive blows: mismanagement and overspending during oil boom years by former President Mahmoud Ahmadinejad; years of crippling US, EU, and UN sanctions; and finally – just as Iran was permitted to reenter the oil markets with fewer restrictions – a tumble of oil prices that have gutted the budget.

The International Monetary Fund said in February that Iran was managing an “impressive recovery” since the sanctions eased, with 6.6 percent growth in 2016 and an expected 4.5 percent “as the recovery broadens.” Still, the economy has not been able to keep up with large numbers of Iranians entering the workforce each year, so unemployment has risen to 12.7 percent.

Though Rouhani says the nuclear deal boosted state revenues by $20 billion, foreign investment has been far less than expected. And while oil exports have more than doubled, the IMF warned that were the nuclear deal to collapse, Iran “could risk recession.”

The political risk for Rouhani is clear. Though accurate polling is a challenge in Iran, 72 percent of respondents to an April survey of more than 1,000 Iranians by the Toronto-based IranPoll said they believed the nuclear deal had not improved the lives of ordinary people. Of those surveyed from across Iran, 54 percent said they “hardly get by” or found it “very difficult to get by.”

Promises of a better life

Amid the uncertainty, peddling populist hope is an obvious tactic, with conservatives striking Rouhani’s record repeatedly – and playing up their own populist credentials, hoping to garner Iran’s legions of pious poor who for eight years supported the simple-living Mr. Ahmadinejad, Rouhani’s predecessor.

“They are concentrating on the economy because the most important problem of the country is the economy,” says Saeed Laylaz, a reform-minded economist in Tehran. He estimates that Iranians’ purchasing power decreased sharply during Ahmadinejad’s tenure, by perhaps 50 percent to more than 70 percent, as inflation soared to 40 percent and sanctions bit.

“Because of this, everyone is making promises to give a better life,” says Dr. Laylaz. “But I don’t believe that people are believing that … they have absolutely bad experiences and a bad image about these promises.”

Among Rouhani’s challengers adopting a populist tack on the campaign trail, Tehran Mayor Qalibaf attacked hardest, saying Rouhani was president only of a wealthy 4 percent of the elite, and not the 96 percent of the masses. A tree that bore no fruit after four years, he said, could not be expected to ever bear fruit.

In one presidential debate on live TV, Qalibaf showed a list of meager assets that he said he would happily exchange for half of Rouhani’s mansion. But he was accused by his challengers of selling $100 ice creams to rich Iranians at Tehran’s Milad tower – the dish was garnished with gold leaf – and other elitist moves that were chastised at the time by Iran’s supreme leader, Ayatollah Ali Khamenei.

Likewise, Raisi weighed in on enforcing tax collection, which Rouhani countered was rich, coming from a man who manages a sweeping religious foundation – estimated to be worth some $210 billion – that pays no taxes at all.

'Working for your stomachs'

Some Iranian political humor making the rounds refers to a statement a generation ago by the founder of Iran’s revolution, Ayatollah Ruhollah Khomeini, who said the revolution was about ideology and exalting souls, not about filling stomachs.

“But everybody now is saying, ‘We are revolutionary, and we are working for your stomachs’ – it’s changed 180 degrees,” says a veteran Iranian analyst in Tehran who asked not to be named.

“Qalibaf is honest, saying that for four decades of revolution, 4 percent had a nice life, and 96 percent are miserable, hungry, they are poor, they are dying,” says the analyst. “What can you say against the revolution stronger than that, as far as the failure of the revolution?”

Yet carrying the populist torch has not been easy for either side.

“Ahmadinejad was very different … he seemed authentic, he lived that [simple] way, so the people believed him,” says political scientist Hadian-Jazy. “[Qalibaf] has Ray-Ban eyeglasses worth several hundred dollars, rides a Mercedes … and claims he is one of the 96 percent. That’s too far.”

A special correspondent in Tehran contributed to this report.