Iran’s more historically reliable opinion polls indicate President Hassan Rouhani is likely to win his bid for re-election on Friday. Yet his conservative challengers have put up a stronger fight than many expected, attacking his government’s economic record and accusing him of failing to improve living standards for the poor.
According to Bloomberg, if there is to be an upset -- Rouhani would be the first
president in the 38-year history of the Islamic Republic not to win when
seeking a second term -- the following charts illustrate some potential
causes.
Voter Motivation
Rouhani’s
supporters are worried about voters staying home on election day. The
president is a pragmatic regime stalwart, and a victory will hinge on
persuading enough Iranian liberals, known as reformists, to back him.
That’s something the late Akbar Hashemi Rafsanjani, another pragmatic
regime veteran, failed to manage in 2005, when low turnout handed the
election to populist conservative Mahmoud Ahmadinejad. Reformists came
out for Rouhani in 2013, as did many rural voters looking for economic
improvement. But will they again?
Rising Costs
Rouhani has campaigned on his economic record, and especially
his government’s achievement in bringing down inflation from above 30
percent in the later Ahmadinejad years to about 9 percent now. But that
means the cost of living is still going up, and while real wages have
risen for most Iranians, it’s not been enough to compensate.
Food Pressure
Stretched
consumer finances mean the average Iranian household is now eating less
meat, dairy products and other basic foodstuffs than they were in 2005.
That’s a problem for the government, which based its support for the
nuclear deal with world powers in 2015 on the lifting of sanctions and
an expected boost to living standards.
Crude Price Slump
The
nuclear deal, which took effect early last year, has allowed Iran to
double its oil exports -- with volume returning to its pre-sanctions
level. Unfortunately for Iran, global oil prices have collapsed since
Ahmadinejad was able to tap into as much as $92 billion of crude export
revenue to fill government coffers and fund subsidies. Current revenue
is lower than it was during the deepest production cuts of the sanctions
era, giving Rouhani less cash to redistribute or invest.
Out of Work
Rouhani
has also stabilized economic growth at about 4 percent -- a far cry
from the 6.6 percent contraction the year before he took office. That
hasn’t yet translated into more jobs -- unemployment has actually been
rising in recent years -- in large part because the key non-oil economy
hasn’t kept pace.
Non-Oil Flop
Iran’s
non-oil economy, the main engine for large-scale job creation,
contracted in 2015 and barely grew last year. That’s partly because,
even as the inflation rate fell to single digits, competition among
banks to attract deposits have kept real interest rates high. In
February, the International Monetary Fund recommended "urgent action” to
recapitalize and restructure lenders.
King Dollar
Whatever Iran may think of the country it dubs the Great
Satan, it certainly likes the U.S. currency. For Iranians, the rial’s
exchange rate to the greenback has always been an important indicator of
how the economy -- and they themselves -- are doing. Under Ahmadinejad,
the rial crashed to almost 40,000 per dollar from under 10,000 in
unofficial trading, dramatically reducing purchasing power. While
Rouhani has brought the official and street rates more into alignment,
and stabilized the official rate, the rial hasn’t recovered its lost
value.
