Ahmadinejad faces tough test ahead in elections

The tumbling oil price has made Iran's presidential campaigning much tougher. For the past year, the incumbent Mahmoud Ahmadinejad has been given a huge bonus by being able to use the extra state revenue from the oil price at historic highs to buy his way out of trouble.

He has even planned a $40 to $80 bonus to be paid to the majority of Iranians early in 2009, just before the elections.

This bonus plan has been castigated as election bribery or highly inflationary, but Ahmadinejad's economic failure has been on a much wider scale. Inflation is very high, goods are not moving around the economy and rationing is being used for some goods, and investment is getting close to an all-time low.

Ahmadinejad's Economic Transformation Plan includes reforms of taxes and subsidies but appears to have been poorly thought through, and has been attacked by many other politicians and economists.

The fall in state revenue means that he will be more exposed than he has been up till now, and his opponents know this. His economic ignorance will be an opening which will allow his opponents to attack his blatantly confrontational foreign policy, and aggressive regional stance.

While his opponents might agree with some of the substance of his policies, they are furious that his grandstanding has brought such trouble to the country. They do not see his continual persistence in challenging Iran's enemies as being helpful.

Straight fight

The next election will be different from previous struggles since it will not be a straight fight between a liberal/moderate and a conservative. Last time, the liberal Khatami was challenged by the conservative Ahmadinejad, who won because Khatami had failed to make much headway against the conservative establishment. This time, the liberals may fail to find a powerful candidate, since Khatami has been very reluctant to agree to put his name forward.

As respected Iranian analyst Farideh Farhi makes clear, the conservative (principalist) camp is split, and is not automatically lining up to support the incumbent Ahmadinejad. Some conservative leaders have challenged Ahmadinejad saying that they will only support him if he backs down from some of his recent positions.

Since they are not getting much joy from Ahmadinejad, the centre-right is looking at different possibilities like Mohammad Taliban, Tehran's mayor; Hassan Rowhani, the former chief nuclear negotiator; Mustafa Purmohammaadi, the former Interior Minister, and maybe Mohsen Rezaie, the former commander of the Islamic Revolutionary Guards.

Such a wide range of names going forward makes clear how the conservatives are divided, and not united in support of Ahmadinejad. As Farhi points out, Khatami might hesitate to go forward as a liberal candidate since he wants to see this split take more formal shape, while his standing might unite the conservatives behind Ahmadinejad. He might prefer to see a centre-right candidate (with tacit liberal support) defeat Ahmadinejad.

Serious opposition

Serious opposition was expected from the very high-profile former nuclear negotiator Ali Larijani, who is now speaker of parliament. He has categorically refused to run for president in 2009, although he is a conservative opponent of Ahmadinejad. He looks set to build opposition from his position in parliament, standing ready to oppose the 2009 bonus scheme, for example.

Larijani has spoken of the need to develop a "new political logic" in Iran which avoids the extremes of Ahmadinejad's era. By attacking the divisiveness of the past few years, Larijani is pitting himself against Ahmadinejad, but at the same time is calling for a major shift in the way politics is run. Maybe he senses a time coming that the existing balance between the Supreme Leader and president, as well as others, might change.

As the Iranian election unfolds, the US election will have come to a conclusion and a new president will be sitting in the White House. Despite the differences in both American candidates' rhetoric, whoever wins might not make a big difference as far as Iran is concerned.

McCain has been outspokenly confrontational, and Obama has said that he would like to talk to the Iranian leadership, but both have been quite explicit that they regard Iran as the major sponsor of terror in the Middle East, and that they will not allow it to acquire nuclear weapons.

A confrontation with the new administration is almost inevitable, and the only real question is how it will be managed. Those who favour yet more military adventures in the Middle East will want McCain to be challenging Ahmadinejad, almost certainly leading to a US attack on Iran.

Those who want a negotiated solution will want Obama to be talking to someone who has successfully challenged Ahmadinejad, trying to find a way forward. Either way, Iran nuclear programme will remain high on the priorities for all concerned.