Can Rafsanjani Save Iran’s Economy?
Whoever wins the Iranian presidential election will face a daunting economic challenge.
On May 11, when news emerged that former president Akbar Hashemi Rafsanjani might register for the upcoming presidential elections, the free currency market froze for a few hours. Some currency exchange bureaus even announced that hard currency rates would not be announced until it was known whether Rafsanjani had registered as a candidate.
While the last-minute nomination came as a surprise to many, it could be expected that the news would lead to a positive response from the key economic and business players in the country. Immediately after his registration, the price of gold coins (a main indicator of market trends) and foreign currencies started dropping. In fact, the Iranian rial appreciated by about 4% compared to the US dollar within one day.
More interesting than the market reaction was the emergence of news that segments of the powerful Motalefeh Party (the representative of the old merchant community in the Bazaar) would support Rafsanjani in the race. This is a very significant development as the Motalefeh had traditionally always supported the conservative candidates in Iranian elections. However, it also indicates that even the Bazaaris expect Rafsanjani to play a more positive role in managing the economy as opposed to other leading candidates.
There are diverse reasons for the overall positive reaction of market players to Rafsanjani’s candidacy. Emotionally, Rafsanjani is still known as the politician who put an end to the Iran-Iraq war in 1988. He was the one who persuaded then-Supreme Leader Ayatollah Khomeini to drink the “chalice of poison” and accept the cease-fire with Iraq. That day was one of the most significant turning points in modern Iranian history and some believe that a similar event will be needed to generate a new positive momentum. This historical fact bears symbolic significance, particularly when we realize that many Iranians compare the current conditions to the economic misery that had dominated Iran in the 1980s. Rafsanjani is seen as the political figure who can restore some normalcy in the Iranian economy.
