Iran’s business shocked by Rafsanjani poll disqualification

Iran’s business community has reacted with shock to Tehran’s decision to bar former president Akbar Hashemi-Rafsanjani from running in next month’s presidential poll, seeing it as a blow to the possibility of reform for the beleaguered economy.

Iran’s constitutional watchdog, the Guardian Council, on Tuesday disqualified Mr Rafsanjani and Esfandiar Rahim-Mashaei, an ally of outgoing president Mahmoud Ahmadi-Nejad. The two candidates were considered not loyal enough to the Islamic regime to run for president in the June 14 election.

Iran’s economy has been struggling due to international sanctions that have helped fuel inflation, which has been officially put at 32.2 per cent though many believe it is much higher. The result has been a declining purchasing power for many ordinary Iranians and an increasingly complex business climate.

Mr Rafsanjani is considered to be an advocate of a market economy and detente in foreign policy. He had said he felt it was a duty of the next president to prevent the economy faltering further.

So for many Iranian businessmen his disqualification represented a blow to the country’s immediate economic prospects.

“Since this morning, I hear businessmen making comments like ‘Shall we give up business?’ Or ‘Should we leave the country?’” said Mohammad-Reza Behzadian, a former head of Tehran Chamber of Commerce.

“Before [the disqualification of Mr Rafsanjani] businessmen were thinking of feasibility studies, exports and expansion of business while foreign partners were calling to see how serious Mr Rafsanjani’s candidacy was,” he added.

The ban on the 79-year-old former president caught many politicians, businessmen and ordinary people by surprise because Mr Rafsanjani was a key participant in the 1979 Islamic revolution.

But his candidacy had disrupted the plans of Iran’s supreme leader, Ayatollah Ali Khamenei, who many analysts believe is hoping for a peaceful election with a high turnout that would end in the victory of a loyalist as president.

The opposition Green Movement, which challenged the last presidential election results in 2009 and took to the streets, seemed set to publicly back Mr Rafsanjani, fuelling regime fears that the election could lead to another violent confrontation.

The business community, however, did not share the same concerns.

Instead, the hope among businessmen was that Mr Rafsanjani could bring stability notably in the currency market, where the rial has lost more than 50 per cent of its value in the past year.

The “bazaar is in shock [about the disqualification of Mr Rafsanjani],” said Hadi, a stationery merchant in Tehran’s Grand Bazaar. The result, he said, was that prices would increase again as of next week.

Some western diplomats expressed the hope that Iran’s supreme leader might intervene and requalify Mr Rafsanjani in the coming days. Iranian analysts, however, said that was unlikely and his campaign said he did not plan to appeal against the ruling.

Mr Ahmadi-Nejad, who has been involved in an increasingly public political battle with the supreme leader and his supporters in recent times, took a harder line. He described the disqualification of Mr Mashaei as “unfair” on Wednesday and said he would take his complaint directly to Ayatollah Khamenei – a clear move to blame the top leader for disqualifications.

Domestic media reported that work was continuing on Wednesday at Mr Mashaei’s election headquarters. A decision by Mr Ahmadi-Nejad and his supporters to ignore the Guardian Council ruling risks fanning tensions in Iran’s political hierarchy and could even lead to his dismissal from power ahead of schedule.

The Guardian Council has authorised eight candidates to run for president, including top nuclear negotiator Saeed Jalili. Almost all of them are considered close to Iran’s supreme leader.

“These candidates all have the same colour, which means we should tolerate eight years of another Ahmadi-Nejad type of president under whom the economy slowed down, the private sector weakened, while sanctions and corruption brought business to a standstill,” said Mr Behzadian. “This also means we cannot see good relations with the west or even neighbouring countries in our lifetime.”

Copyright The Financial Times Limited 2013.