Iran’s President Puts New Focus on the Economy

Iran’s new president, Hassan Rouhani, vowed Saturday to work with the outside world to lift the “oppressive sanctions” crippling the Iranian economy, as he received the official backing of Ayatollah Ali Khamenei at a ceremony marking the start of his presidential term.

In an acknowledgment of the growing toll that international economic restrictions connected to Iran’s nuclear program are having on the population, both Mr. Rouhani and Ayatollah Khamenei made the economy a major theme of their remarks.

“People called for change and improvement in their living standards, they want to live better,” Mr. Rouhani said.

But he and the ayatollah offered somewhat different solutions. Whereas Mr. Rouhani said that interactions with the world, meaning talks with Europe and potentially the United States, were a way out of the crisis, Ayatollah Khamenei, who as supreme leader has final word on all important issues, expressed pessimism that such overtures would yield fruit. “Some of our enemies do not speak with our language of wisdom,” he said, urging self-sufficiency.

As Mr. Rouhani takes his public oath of office on Sunday, Iran’s growing economic crisis sits atop his agenda. Sanctions have slashed oil exports and limited Iran’s ability to transfer money from abroad. The shortage has been aggravated by the profligate spending that is a legacy of the departing government of Mahmoud Ahmadinejad.

During most of Mr. Ahmadinejad’s two four-year terms, Iran enjoyed an oil windfall, with a flow of dollars and euros that fueled huge imports on goods ranging from ice cream to Porsches.

But now Mr. Rouhani’s aides describe Iran’s economic situation as the worst in decades. Many blame what they call Mr. Ahmadinejad’s erratic economic policies, punctuated by slashed subsidies and unbridled inflation.

The signs of woe abound.

Lacking money, Iran’s national soccer team scrapped a training trip to Portugal. Teachers in Tehran nervously awaited their wages, which were inexplicably delayed by more than a week. Officials warned recently that food and medicine imports have stalled for three weeks because of a lack of foreign currency.

While Mr. Rouhani has asked for a hundred days to review the state of the economy and devise solutions, there are some voices who now say that the only way to solve the economic ills is to come up with a political settlement of Iran’s nuclear dispute. Those voices were barely heard during Mr. Ahmadinejad’s tenure.

“Rouhani’s economic success depends on the determination of Iran’s other leaders to find a solution for the nuclear support,” an economics professor, Mohsen Renani of the University of Isfahan, told the Web site Neco News.

In another sign of dissatisfaction over the consequences of Iran’s nuclear stance, an influential political professor publicly expressed doubt recently over the benefits of the nuclear program. “Why are we producing radioisotopes when we can import them much cheaper?” the professor, Sadegh Zibakalam of Tehran University, told the reformist weekly Aseman. “Why should we maintain a nuclear program when we have no economic justification?”

While those voices may have grown louder, they by no means represent the official position of Iran’s ruling establishment, which maintains that self-sufficiency in nuclear energy is nonnegotiable.

“Whatever happens, our nuclear stances will not change nor waver,” Mohammad Taghi Rahbar, a former member of Parliament and an influential Friday Prayer leader in Isfahan, said in an interview. “Our supreme leader, the nation and all officials from all factions believe this is our inalienable right, so we will not retreat at all.”

But ignoring the increasing economic pressures, while promising a better future — a strategy favored by Iran’s leaders over the past years — is proving increasingly complicated. Almost everybody in Iran is feeling the pain.

“It starts with little things, like some weeks ago there was no butter to be found,” said Somaye, 31, a teacher who asked that she not be fully identified so as not to attract the attention of the authorities. “It makes you think, What’s going on?”

Like those of other teachers in Tehran, the capital and economic pulse of the country, her wages came in unusually late this month, after officials had promised every day they would pay. It took 10 days for her salary to be transferred. “I got in trouble with debts I had to pay,” she said.

Last week, the Portuguese coach of Iran’s soccer team, Carlos Queiroz, who helped Iran qualify for the 2014 World Cup, told local news media that an important training trip to Lisbon had been canceled because officials said there was no money to pay for it. Importers are complaining that the Central Bank is not providing them with foreign currency needed to buy products abroad. “We really need all sorts of medicine, from contraception pills to products for hemophilia patients,” said one influential importer who asked not to be identified because of his government contacts. “But we can’t bring them in as the Central Bank is not providing us with dollars.”

Less oil money is coming in because of the sanctions. Iran’s largest customer, China, has not been paying for oil purchases with cash, instead bartering with goods and equipment at unfavorable prices, the news agency Tasmin reported last Sunday, quoting Amir Jafarpour, the manager of the Oil Ministry’s transportation and fuel headquarters.

“Instead of getting our money we have been forced to buy 315 Chinese-made subway coaches at higher prices,” he said, complaining that the Chinese were also pocketing the interest at Iranian oil bank accounts in China.

The sanctions situation could become far more onerous under legislation passed Wednesday by the United States House of Representatives, which would basically coerce Iran’s remaining oil customers to find other suppliers. The legislation, which the Senate will consider next month, amounts to a threatened embargo on Iran’s oil, its most important export.

Mr. Ahmadinejad defended his policies in a meeting with Ayatollah Khamenei last week, saying that Iranians had never been happier and that his government had successfully changed the way ballooning state subsidies were distributed by increasing prices of staples and giving direct cash handouts of $13 each to 60 million people each month.

But as members of Mr. Rouhani’s team prepare to take over, they say they are shocked with what they are finding as they go through the books. “The economic situation is much worse from what we expected,” Akbar Torkan, a member of Mr. Rouhani’s inner circle, told Aseman.

Others are more outspoken. “Iran is an economical wreck,” Yahya Ale Eshaq, a former trade minister and close ally of Mr. Rouhani, told Tejarat-e Farda, a business magazine, last week.

Warning that imported raw materials had dwindled, grinding local production to a halt, Mr. Ale Eshaq, who is also the head of the Tehran Chamber of Commerce, said that one of Mr. Rouhani’s main challenges would be just to provide basic goods. “We will face shortages,” he said.

Mr. Rouhani has criticized Mr. Ahmadinejad’s economic policies, saying that almost no jobs had been created during his two terms and that millions of Iranians could face unemployment in coming years.

He also told lawmakers that inflation was rising at an annualized rate of 42 percent — far higher than the 32 percent rate reported by the government-controlled Central Bank. Private economists say Iran’s inflation rate could be even higher.

“The outgoing government for a long time enjoyed record oil revenues,” said Morteza Bank, a former minister who now advises Mr. Rouhani. He said that Iran was currently exporting one million barrels of oil a day. That is less than half the 2.5 million barrels a day exported before the sanctions were imposed.

“We have to make the effort to reconstruct this economical wreck,” he told the semiofficial Iranian Labour News Agency on Saturday.

Those close to Mr. Rouhani say he will do what he can to turn the economy around. He is now asking Parliament to alter the coming budget to prevent a deficit, which means his cabinet will take unpopular measures like cutting the cash payments and increasing gasoline prices.

“Unless we take measures, we will not be able to pay the cash subsidies from December onward,” Gholam Reza Tajgardoun, a former vice president, warned in the reformist newspaper Shargh Daily.

Members of Mr. Rouhani’s inner circle have hewed to the official line that the sanctions and economic woes will not force any nuclear concessions. “First of all we are looking for seriousness from the other side,” said an associate of Mr. Rouhani’s. “Unless we see tangible, serious, active reach-out, we will not be persuaded to spin around empty gestures,” the associate said, asking to remain anonymous upon Mr. Rouhani’s request.