Iran is in the midst of an intense election campaign with six presidential candidates pledging how they would address the country’s economic issues through their respective policies. While incumbent Hassan Rouhani and First Vice President Eshaq Jahangiri are focused on justifying a continuation of their government’s economic policies, the other four candidates are presenting economic remedies that need to be scrutinized — especially through the lens of whether they would actually be feasible and also whether they present real solutions to the country’s complex economic issues. This article will initially critique some of the campaign pledges of Rouhani’s main challengers — conservative cleric Ebrahim Raisi and Tehran Mayor Mohammad Bagher Ghalibaf — and then offer some expert remedies that need to be the focus of the next government if the real goal is to address the core socio-economic issue, namely unemployment.

Evidently, any pledge of economic reforms — especially when dealing with ideas that will create a burden on the government budget — will have to be scrutinized based on the question of which financial resources will finance the plans in question. Hence, the first question is what the economic plan is rather than individual promises and pledges. A quick review of the pledges so far shows that none of Rouhani’s challengers (Raisi, Ghalibaf, former Minister of Culture and Islamic Guidance Mostafa Mirsalim, and Reformist Mostafa Hashemi-Taba) have a real economic plan but rather economic promises that in some cases are based on a populist discourse such as the increase in the present monthly cash handouts of 455,000 rials ($14). However, let us focus on some of the pledges and identify their shortcomings.

Raisi, the custodian of the holy shrine of the eighth Shiite Imam, has pledged that he would increase the cash handouts to the three lowest income deciles of society threefold. Given Iran’s population of 80 million, Raisi is suggesting to pay 24 million Iranians an additional monthly handout of $28. This would constitute an annual burden of more than $8 billion on the government budget, without a clear reference to where this money would come from. If Raisi would have said that he will discontinue payments to the top six deciles and increase the cash handouts of the lower income classes, it would have made fiscal sense. But such an approach would also badly hit the middle class. He may argue that within the remits of the subsidy reform plan the government could increase fuel prices in order to finance his plan. However, this would lead to a massive fuel price hike, generating an inflationary impact. Furthermore, providing additional cash handouts to lower income classes is both inflationary and would also shift the lower income strata as socio-economic facts are fluid — especially if the government tries to favor some social groups over others. Consequently, such a plan would not only be unfeasible but would actually disillusion segments of society.

Ghalibaf has made two significant campaign pledges that need to be understood within the realities of the Iranian economy. On the one hand, Ghalibaf has stated that he will increase Iranian gross domestic product (GDP) 2.5-fold. If he is planning to achieve that in a four-year term, then Iran would have to experience 26% annual economic growth four years in a row or, in other words, an economic miracle. Experts agree that the trajectory of economic growth in Iran will be an average annual growth of 5-7% over the next few years, assuming the continuation of the Rouhani policies. Thus, Ghalibaf’s pledge is nothing but an empty promise. Furthermore, the Tehran mayor has pledged to create 5 million jobs in his first term in office. Based on economic analyses, the creation of one sustainable job requires an approximate investment of $50,000, which means that the creation of 5 million jobs would require an investment of $250 billion over the next four years. In a country where annual government infrastructure investment amounts to about $30 billion and annual foreign investment to about $10 billion, an economic revolution would be needed to achieve investment of $250 billion in four years. Based on available statistics, the Iranian economy has produced 2 million jobs in the past four years — well below what the economy needs to contain unemployment. There is no doubt that more jobs could be created, but that would require additional reforms — which will be discussed below.