Candidates Air Grim Views of Iran's Economy

WSJ—The economy and foreign policy emerged as the top issues in Iran's June 14 presidential election with the eight candidates dedicating their first live televised debate on Friday to economic woes.

The four-hour discussion exposed in a highly publicized way just how much Iran's economy has deteriorated under international sanctions on the country and mismanagement by the current government.

Candidates shared grim facts with viewers: Most factories have been closed or are operating at 50% capacity; privatization has been sidelined in favor of giving security branches a bigger stake in the economy; 3,000 cargo ships are stranded because of sanctions; the government has borrowed from the central bank to compensate for its budget deficit; three million people are unemployed, including 800,000 college graduates.

To many Iranians, none of these revelations were news. They see the impact of the faltering economy in their daily lives, but it was startling to hear candidates—who made it on the ballot only after vetting by the regime—so bluntly express the country's dire state.

"Tonight's debate showed us that they can't hide or sugarcoat reality anymore," said a 46-year-old government employee who watched the debate in Tehran. "People think about the economy day and night and won't vote for a candidate who appears out of touch or lying," he said.

In the debate's opening, question-and-answer session, candidates said they would improve the economy by weaning it off oil-based revenues, expand domestic production by promoting privatization, curbing inflation, building trust between the public and the government and shrinking government size and spending.

They also touched on the impact of sanctions and foreign policy on the economy. A more in-depth discussion of foreign policy is scheduled for a debate next week.

The candidates slammed the current government of President Mahmoud Ahmadinejad and the economic system at large, at times sounding similar to opposition leaders and expatriate critics of the Islamic Republic.

"Our economy has no leadership. Why don't we do something serious about it? The fallout from bad decision-making in our country has been worse than what any enemy could do to us," said Mohsen Rezaei, the former commander-in-chief of the Revolutionary Guard Corps.

Mr. Rezaei said Iran needed to find a "logical solution for sanctions" if it wanted to curb the skyrocketing inflation currently estimated by independent economists at 40%.

Ali Akbar Velayati, a former foreign minister who is currently foreign-policy adviser to Supreme Leader Ayatollah Ali Khamenei, said Iran needs to work on improving relations with the world.

"If we don't make peace with the world and expand our relations, especially with our neighbors, we will miss many opportunities….They have sanctioned our oil today and are buying less oil. We are having problems with our dollar transactions," said Mr. Velayati.

The second part of the debate looked more like a game show. The moderator said he would read yes-no and multiple-choice questions, causing uproar among the candidates. Some said it was an unprofessional way to conduct a debate meant for serious, in-depth discussions. Others simply refused to answer.

The moderator then abandoned this line of questioning and instead showed random pictures, asking candidates to say the first thing that came to mind. Pictures included a patient laying in a hospital, a floating cargo ship and an empty mine.

One picture depicted a traditional Iranian bazaar filled with people.

"People have no money in their pockets," Mr. Rezaei said.

"It shows the patience of our people, trying to stay afloat despite all the suffering," said Tehran Mayor Mohammad Bagher Qalibaf.

"It shows our youthful nation," said nuclear negotiator Saeed Jalili.

Mr. Jalili, the candidate depicted in state media as closest to Mr. Khamenei and his inner circle of advisers, joined the others on Friday in criticizing the economic policies of the government, but said Iran would prevail despite the sanctions if it maintained a defensive attitude.

After the debate, Iran's English-language Press TV criticized the candidates because their candid assessments would "cause hopelessness about the future among voters."

The opinions put forth by candidates served as a rare window into the disagreements taking shape within the Islamic Republic's power circle.

Iran's overarching policies, such as possible concessions on the country's nuclear program, relations with the U.S. and involvement in Syria, are decided above the presidential level. Mr. Khamenei has the last word in all state matters.

"Where does the law allow me, if elected, to make decisions for foreign policy?" said Mr. Qalibaf, the Tehran mayor, this past week in a television interview.

The president, however, has leeway to bring on an experienced team of technocrat that can make some small changes and lobby Mr. Khamenei to make bigger policy shifts.

"There is room to maneuver for politicians even inside the confinements of the Islamic Republic," said Fereydoun Khavand, an expert on Iran's economy based in France.

Four years have passed since Iran's last presidential elections prompted massive antigovernment protests and allegations of vote fraud in the re-election of Mr. Ahmadinejad.

The regime and Mr. Khamenei have tightened their grip on power by placing the two main opposition leaders, former presidential candidates, under house arrest and disqualifying two prominent figures who were considered wild cards with popular voter base for the coming elections.

The debate moderator said a poll showed over 50% of voters remained undecided. None of the current candidates have a major popular support base and most of them are largely unknown outside the capital. However, all have close family or professional ties to Mr. Khamenei.