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Iran's Supreme Leader Ayatollah Ali Khamenei delivers a speech in a meeting with military commanders in Tehran, Iran, February 7, 2017. Leader.ir/Handout via REUTERS


By Bozorgmehr Sharafedin and Babak Dehghanpisheh

DUBAI (Reuters) - Iran's supreme leader, Ayatollah Ali Khamenei, said on Monday the government's economic policies had fallen short and called for a new "resistance economy" to create jobs, piling pressure on the president before May elections.

Hardliners led by Khamenei have repeatedly criticised President Hassan Rouhani, particularly for the terms of a nuclear deal he reached with world powers which lifted economic sanctions and was supposed to boost the economy.

"I feel the pain of the poor and lower class people with my soul, especially because of high prices, unemployment and inequalities," Khamenei said in his New Year's message.

"The government has taken positive steps but they do not meet people’s expectations and mine," he added, setting out a clear battle line before the presidential vote.

The New Year, or Nowruz, is the country's most important national event, which involves large family gatherings, gifts for children and vacations.

Unemployment stood at 12.4 percent in this fiscal year, according to the Statistical Centre of Iran, up 1.4 percent from the previous year. About 3.2 million Iranians are jobless, out of a total population of 80 million.

"I call the new year a year of resistance economy, production and employment," Khamenei said in the pre-recorded video broadcast on state television.

Khamenei has coined the term "resistance economy" to describe measures to make Iran's economy more self-sufficient, in contrast to Rouhani's policy of seeking to open Iran to more international trade and investment.

In his New Year's message, Rouhani touted the economic achievements of his government and called for citizens' rights to be respected, points likely to resonate with his supporters in the approaching election.

"What we achieved in curbing inflation (and boosting) economic growth and jobs in the past year was unprecedented in the past 25 years," Rouhani said in a video message aired on state TV.


Khamenei's latest criticism came as a number of prominent political figures, including Ayatollah Ahmad Jannati, the head of a body that selects Iran's supreme leader, also criticised Rouhani for his economic policies.

But conservatives, who hope to stop Rouhani winning a second four-year term, have yet to identify their presidential candidate.

"Mr. Rouhani can't expect the Supreme Leader to take his side in the elections. The past has shown that the position of the Supreme Leader is more independent," said Saeed Leylaz, a Tehran-based political analyst who worked as an adviser to former president Mohammad Khatami.

"After this new year period Mr. Rouhani can expect to face a lot of pressure and criticism."

Despite lifting of international sanctions, the world's top banks have refrained from doing business with Iran due to fears of being penalised by U.S. sanctions that have remained in place despite the nuclear deal. This has slowed Iran's efforts to rebuild its foreign trade and lure investment.

Although inflation dropped to single digits and real GDP grew by as much as 7.4 percent, the IMF reported in February that "growth in (Iran's) non-oil sector averaged 0.9 percent... reflecting continued difficulties in access to finance".

"Aware of people's economic woes, Ayatollah Khamenei is trying to distance himself from (Rouhani's) government and move to the people's side, minimising responsibility," said Hossein Rassam, former Iran adviser to Britain's Foreign Office.

(Reporting by Bozorgmehr Sharafedin in Dubai and Babak Dehghanpisheh in Beirut; Editing by Julia Glover and Vin Shahrestani)

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