Ahmadinejad faces election challenge from moderate

By Parisa Hafezi

TEHRAN (Reuters) - Iranians vote on Friday in a presidential election which pits hardline President Mahmoud Ahmadinejad against a former prime minister who sharply criticizes his economic record and seeks detente with the West.

Four candidates are standing in the poll but Ahmadinejad's strongest challenger appears to be the moderate Mirhossein Mousavi, whose supporters have paraded through Tehran in their thousands to demonstrate their backing.

The election result could help set the tone for Iran's relations with the West, which is concerned about Tehran's nuclear ambitions. A victory for Mousavi could increase the prospects for Western investment in the Islamic Republic, analysts say.

But for Iranians it is a chance to pass judgment on Ahmadinejad's four years in office, particularly his management of Iran's oil exporting economy, which is suffering from high inflation and unemployment.

Although Ahmadinejad says his government has revived economic growth and curbed price rises, the economy was the primary campaign issue. Official inflation is around 15 percent.

Social issues, such as strict dress codes for women and Iran's ties with the outside world also featured in the campaign but the outcome of the vote will not shift Iran's foreign policy, which is determined by supreme Leader Ayatollah Ali Khamenei.

U.S. TIES

The United States has had no ties with Iran since shortly after the 1979 Islamic revolution and remains the "Great Satan" in the leadership's demonology. President Barack Obama has offered a new relationship if Tehran "unclenches its fist."