| 20 March, 2017

Iran's Khamenei criticises economy in New Year speech

Iran's supreme leader Ayatollah Ali Khamenei speaks during Friday prayers in Tehran September 14, 2007.

Iran's supreme leader Ayatollah Ali Khamenei speaks during Friday prayers in Tehran September 14, 2007.

REUTERS/Morteza Nikoubazl

DUBAI, March 20 (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 nation's most important holiday. It marks the start of spring and is usually celebrated on March 21, the previous day or the following day in a tradition that has lasted thousands of years.

Rooted in ancient culture, it is also celebrated in Iraq, Afghanistan, Tajikistan and Turkmenistan with large family gatherings, gifts for children, vacations and spring cleaning.

Rouhani, for his part, issued a New Year's message touting the economic achievements of his government and calling 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.

Rouhani also said the "security environment" in cultural and social affairs must be put aside.

The starkly different messages from the supreme leader and the president could polarise voters ahead of the presidential election.

The conservatives, who hope to stop Rouhani winning a second four-year term, have yet to identify their candidate but a number of prominent hardliners have lined up to criticise his handling of the economy.

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

His supporters have used the phase "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.

(Reporting by Bozorgmehr Sharafedin in Dubai and Babak Dehghanpisheh in Beirut; Editing by Andrew Heavens and Julia Glover) ((; Mobile: +961-70 735 367;))