BEIRUT AND TEHRAN — Bad news hammered Iran's hard-line president Tuesday as a restless parliament rejected major elements of his proposed budget, an ally lost a bid for a key post held by a powerful cleric and a former prime minister announced that he was gunning for his job in upcoming elections.
The setbacks suggest the multiple vulnerabilities of President Mahmoud Ahmadinejad, as well as an emboldening of his rivals, before June elections that could heavily influence the country's relations with the West and its domestic political climate.
Iran's election season has gotten off to an unusually early and contentious start, underscoring the significance of the June 12 vote. Analysts say the election will hinge on bread-and-butter economic issues and may be more hotly contested and unpredictable than any vote in Iranian history, in part because Ahmadinejad's populism has changed Iran's political landscape.
"Ahmadinejad has normalized politics," said a Western diplomat in Tehran, speaking on condition of anonymity. "Before Ahmadinejad, the politicians talked opaquely. Now they have to go on the ground and make their case to the people."
Ahmadinejad has struggled to pass a budget before the Persian New Year celebration March 21, when the nation all but shuts down for two weeks. But he has so lost the confidence of the conservative-dominated parliament that a number of economic items on his agenda have been thwarted.
Over the last two days, lawmakers have passed the major outline of Ahmadinejad's budget but rejected his proposal to cut fuel subsidies and increase cash giveaways that might win him votes but further exacerbate inflation and jack up prices for basic goods.
Dozens of economists have spoken out against the plan, which they fear would hurt Iranians already coping with inflation and unemployment.
"In this condition, giving cash subsidies would add up to galloping inflation; in the current fragile economy that will lead to" political unrest, said Bizhan Bidabad, an economic analyst and former central bank official. "The whole ruling establishment is wise enough not to endanger the system."
Experts predicted that Ahmadinejad would try to counter parliament in coming weeks. "It is not over," said Ahmad Bakhshayeshi, a political scientist in Tehran. "The war between parliament and Ahmadinejad will continue."
An Ahmadinejad ally, Ayatollah Mohammed Yazdi, lost his bid to unseat the powerful Ayatollah Hashemi Rafsanjani as chair of the Council of Experts.
The council is a committee of clerics mandated to oversee and elect the supreme leader, currently Ayatollah Ali Khamenei, 69, a cleric who is Iran's ultimate authority on political and security matters.
Rafsanjani garnered 51 of the 79 votes cast, the official Islamic Republic News Agency reported.
Ahmadinejad's style, which some describe as arrogant and bombastic, has alienated significant segments of the Iranian establishment, including clerics who don't necessarily disagree with his political views. In recent weeks, Ahmadinejad has organized meetings with Tehran Mayor Mohammed Baqer Qalibaf, who may also run against him, members of the conservative Islamic Coalition Party and the clergy in Qom in an effort to mend fences with his conservative rivals.
But Iran watchers say it may be too little too late.
"He's trying to compromise and say, 'I'm willing to change,' " said an analyst for a Western oil company in Tehran. "He understands the problems. But it's too late three months before the vote."
A new challenge to Ahmadinejad emerged from the left Tuesday when former Prime Minister Mir-Hossein Mousavi announced he would run for the presidency on a platform of restoring faith in public policy.
"The country has become poor in terms of efficient workforce and experienced managers," said a statement attributed to Mousavi on the website of Iran's English-language Press TV channel. "Poor human resources are worse than poverty."
Iran eliminated the post of prime minister in 1989.
Along with former President Mohammad Khatami and former parliament speaker Mehdi Karroubi, Mousavi is the third reformist candidate to challenge Ahmadinejad. Khatami has indicated he might drop out if Mousavi, a close friend, entered the contest.
"The popularity of president Ahmadinejad is severely low and the popularity of Mousavi and Khatami is much higher so far," said analyst Bidabad.
"But bear in mind that the election campaign in Iran is neither like Western democracy nor like the East, with modesty and respect toward rivals," he said. "I anticipate a very harsh war of words and verbal clashes."