Iran's President Concedes Economy Hurting Over Oil

Ahmadinejad promoted the cash injections as a way to stimulate job creation. However, unemployment has increased to around 10 percent.

Iran's President Mahmoud Ahmadinejad, gestures as he delivers a speech during the International...

Iran's President Mahmoud Ahmadinejad, gestures as he delivers a speech during the International Conference on Financing for Development in Doha, Qatar, Saturday, Nov. 29, 2008. Ahmadinejad publicly acknowledged for the first time that tumbling oil prices are gouging his country's fragile economy and will force painful spending cuts, state media reported Wednesday, Dec. 2, 2008. (AP Photo/Hassan Ammar)

(AP)

Possible rivals in June's presidential election — particularly former nuclear negotiator and moderate conservative cleric Hasan Rowhani — have seized on Ahmadinejad's vulnerability, noting that Iranians are poorer and the economy is suffering.

They and other critics accuse Ahmadinejad of squandering the opportunity presented by soaring oil prices over the past three years and failing to use the higher income to insulate Iran for tougher times.

The president has also drawn criticism for his hard line on the standoff with the U.S. and other major international powers over the country's nuclear program, which has contributed to Iran's isolation.

Political analyst Mostafa Mirzaian said Ahmadinejad's handling of the economy was hurting him especially with middle class voters who are "already complaining whenever they have the chance."

Related

WATCH: Talking With Iran

WATCH: Show of Strength

Diving oil prices and their impact pose the biggest threat to the president's already eroding support.

Oil prices have plunged from $147 a barrel in July to under $48 on Wednesday, near a three-year low. The sharp decline has added to the pain of Iran's rising inflation and unemployment. Iran, the second largest OPEC producer, is deeply dependent on oil exports. About 80 percent of its foreign revenue comes from those sales.

Iran has been one of the most vocal proponents of steep cuts in OPEC production in an attempt to prop crude prices back up to between $80 and $100 per barrel. A 1.5 million barrel a day cut by the cartel in October, however, has so far failed to reverse the slide in prices.

"Because of the world recession, oil prices will be declining for some time," Ahmadinejad said, according to IRNA's report based on a transcript of an interview the president gave to state television late Tuesday.

But he insisted his administration can control the damage and will continue direct payments to the poor — a populist pledge that helped the former Tehran mayor win the presidency in 2005.