Iran's new president describes a bleak economy

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TEHRAN, Iran -- Iran's president-elect, Hasan Rouhani, painted a bleak picture of the country's economy Monday, blaming the departing administration of President Mahmoud Ahmadinejad for high inflation and unemployment, saying it "has left much work to be done."

Mr. Rouhani said Mr. Ahmadinejad's government had presented a far-too-optimistic picture of the economy, which even according to official statistics is stumbling. "We asked current officials about the situation of the country," Mr. Rouhani said, "but their reports and those of our teams were very far from each other."

Speaking in Parliament, Mr. Rouhani said the inflation rate -- officially listed as 32 percent -- is 42 percent, the local news media reported. He said Iran's economy contracted during the past two years, the first time since the Iran-Iraq war in the 1980s.

He said he was especially concerned about unemployment among educated young people. "According to our statistics," Mr. Rouhani said, "we will have 4.5 million unemployed university graduates four years from now."

But Mr. Ahmadinejad picked up some unexpected support from the supreme leader, Ayatollah Ali Khamenei, and other conservatives, who for months have criticized Mr. Ahmadinejad as incompetent and for surrounding himself with corrupt elements.

"The respected president and his colleagues faced enormous tasks and operated rapidly in comparison with all the other governments," Ayatollah Khamenei said during a speech broadcast on Iran's state radio. "We must consider their huge workload, tireless efforts. This Cabinet avoided comfort and grants, whereas most officials in the world and in the country benefit from them."

Mr. Rouhani's close aide, Akbar Torkan, who acts as a liaison with Mr. Ahmadinejad's government, told local news media that the economic state of the country was "much worse than expected."

Several lawmakers also criticized some last-minute decisions by the departing government. In one instance, Mr. Ahmadinejad transferred the largest plot of buildable land in the capital to the Voice and Vision organization, Iran's state broadcaster. That decision was accompanied by a ceremony lauding the president, organized by the state broadcaster.

In another move, the central bank quietly cut in half the official value of the local currency, the rial, so a dollar now buys 24,500 rials, up from 12,260. While economists say the new figure still does not reflect the rial's true value -- that is, more than 30,000 to the dollar -- it will help the government pay off outstanding debts to banks, but at the price of further stoking inflation and raising basic goods' prices.

"They hypothetically made a huge amount of money, which they used to barter off against their debts with banks and other state organizations," Ahmad Tavakkoli, a lawmaker, told the semiofficial Mehr News Agency on Monday. "This is illegal and dangerous."

Mr. Ahmadinejad was barred by the constitution from seeking a third term.

The change in attitude might signal a behind-the-scenes compromise, analysts say, or illustrate the tendency of Iran's governing establishment of hard-line clerics and commanders to close ranks in the end.

Mr. Rouhani has signaled his intention to pursue improved relations with the United States, although it remains unclear whether he has the desire or the authority to soften Iran's position over its disputed nuclear program, an underlying cause of the estrangement. Iran insists that its program is peaceful, while the United States and other Western nations suspect that Iran is seeking the ability to build nuclear weapons. Negotiations stalled before Mr. Rouhani's successful election campaign.

On Monday, 29 former U.S. government officials, diplomats, military officers and national security experts sent a letter to President Barack Obama, urging him to take advantage of Mr. Rouhani's signals. The letter called Mr. Rouhani's ascendancy "a major potential opportunity to reinvigorate diplomatic efforts to resolve the standoff over Iran's nuclear program."

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