Economic woes get back seat in Iran's polls

By Jonathan Lyons

TEHRAN (Reuters): The rough-and-tumble politics of Iran's factional struggle has pushed key economic issues off the agenda of next week's parliamentary polls.

As a result, many of the most crucial questions that will face the 290 deputies during their four-year terms are getting short shrift from the more than 6,500 candidates as they campaign for the Feb. 18 contest.

Analysts say this phenomenon will hurt the conservatives, who have been unable to use the economic hardship of ordinary people against the policies of moderate President Mohammad Khatami and his pro-reform allies.

"Unfortunately, under the current political atmosphere economic issues have been sidelined by the politicians," said Issa Saharkhiz, editor of economic daily Akhbar-e Eqtesad.

"In talking with different political figures, I have told them the one great issue you are not paying enough attention to is economics," he told Reuters in an interview.

On the surface, the case for a vigorous economic debate appears clear-cut. Among the pressing issues facing the next parliament are:

o Foreign trade and the future role, if any, of the private sector in what remains a state monopoly. This would require major changes in existing laws.

o Privatization and, beyond that, the broader question of the state's place in the economy.

o Foreign investment and the role of multi-nationals. Existing laws restrict foreign investment in Iran's most attractive sectors, such as mining and energy. This will also require significant legal reform.

At the same time, annual inflation, at around 20 percent, remains a constant worry, while unemployment is rampant, particularly in less-developed areas.

Figures published on Tuesday showed unemployment ranging from 31 percent in Lorestan province, in the west, to a low of 8.8 percent in Semnan province, to the north.

"We are now in an economic paradox," said economist and commentator Saeed Leylaz. "There is a lot of social tension and we need a minimum six percent growth rate per year to relieve this tension."

"But these same tensions prevent the economic reforms we need."

For almost two years, conservatives have hammered at Khatami's campaign for a civil society, saying Iran is too weak economically to bear the dislocation of radical reform.

At the same time, Khatami's coalition cabinet, roughly split between free-marketeers and advocates of state planning, has proven too divided to implement a comprehensive program.

The result, say critics, is an ill-defined policy that has been rescued only by recent strength in prices for oil, Iran's leading source of hard currency. Conservative candidates have tried to attack the reform movement for its economic record.

"If someone sacrifices economic growth to political and cultural reform, then society will face problems. If development is not multi-faceted, we will go backwards," Mohammad Reza Bahonar, who heads the main conservative coalition, told a news conference.

"We believe that giving slogans costs less than taking action."

However, public opinion surveys indicate Khatami has lost none of his support, still hovering around the 70-percent level he received in the 1997 presidential election.

Now he and his allies hope that same popularity can be translated into parliamentary seats, breaking the conservatives' hold on the legislature.

The Islamic Iran Participation Front, closely affiliated with the president, is confident that economic malaise can only be addressed after substantial political reform is enacted.

And they say the voters agree.

"Economic activities are only possible under conditions of political and judicial clarity, and people are aware of this in both micro- and macro-economic matters," said the Front's economics spokesman, Mohsen Safaei-Farahani.

That proposition will be put to the test late next week, in the first round of parliamentary balloting.

Even some of the skeptics have been forced to move with the times. Saharkiz said his own economic daily is devoting a large share of its pre-election coverage to political issues.