TEHRAN (Reuters) - Iranian voters said Monday that whoever wins June’s presidential election must make fixing Iran’s economy and halting relentless price rises a priority.

Former Iranian President Mohammad Khatami (C) looks on as he attends a ceremony by a group of reformist clerics in Tehran, February 8, 2009. Khatami, who pushed for detente with the West when in office from 1997 to 2005, said on Sunday he would run in Iran's June presidential election. REUTERS/Morteza Nikoubazl

That was their message a day after Mohammad Khatami, who pushed for detente with the West when president, said he would challenge Mahmoud Ahmadinejad, whose four years in office have seen Iran become more isolated over its disputed nuclear work.

“For me it is the resolution of the economic problems that is of prime importance. Whoever can solve these problems should gain power,” said Mohsen Rasouli, a 41-year-old taxi driver.

Western capitals, who say Iran wants atomic bombs despite Tehran’s denials, will watch the vote closely, although the president can only influence rather than decide policy, which is ultimately determined by Supreme Leader Ayatollah Ali Khamenei.

But many voters said they would not be guided by nuclear diplomacy or whether Iran should respond to an overture by U.S. President Barack Obama to try and end 30 years of hostility.

“I will vote for (Khatami) without hesitation. Just look at prices under Khatami. Honestly, they were about one third of what they are now,” said housewife Mehri Nasrollahzadeh, 54.

Prices for food, fuel and other basics have risen sharply under Ahmadinejad, who critics say has spent windfall earnings when oil prices were high without saving enough for now, when they have tumbled.

Ahmadinejad’s backers say he has spread wealth more fairly in the world’s fourth largest oil exporter, as he pledged to do in 2005 when he was the surprise winner. They say inflation, which hit 30 percent last year but is now falling, is a global issue and say Ahmadinejad has plans to deal with it.

“A change in the country’s management will lead to more chaos,” said Reza Moghaddasi, a 36-year-old civil servant.

ISOLATION

But some Iranians also worry about Iran’s isolation. The U.N. Security Council has slapped three rounds of sanctions on the Islamic Republic since 2006 because Iran has failed to allay suspicions that its nuclear plans are military not peaceful.

“Although economy plays an important role in this election it is hard to say it will be the determining factor,” said political analyst Ali Rashidi, adding some voters worried about their pockets, while others wanted broader reforms.

Khatami, a cleric who was president from 1997 to 2005, came to power promising political and social change. He presented a softer image of Iran to the West. But hardliners who held and still hold key levers of power blocked most of his reforms.

Ahmadinejad, the first non-cleric president in more than a quarter of a century, won over many of the poor with a down-to- earth style and regularly berates Western “hegemony.”

Some Iranians say that’s just the approach Iran needs.

“He has the power and courage to bargain and haggle with the West. We can even foresee a normalization of relations with America during his tenure,” said builder Farshad Azari, 41.

Obama has said he will extend a hand of peace if Iran “unclenches its fist.” But the opening has come with a threat of tougher sanctions if Iran does not halt the part of its atomic work that most worries the West: uranium enrichment.

Some analysts say Washington may not make a more detailed offer before the June race.

Iran has dismissed U.S. demands and has set tough conditions for any dialogue, such as telling U.S. troops to quit bases in Iraq, Afghanistan and elsewhere. Some analysts say this is also a bid partly to buy time until after the presidential election.

While other politicians have also thrown their hat into the ring, Ahmadinejad and Khatami have been the focus of attention.

Analysts say the result may depend on whether Ahmadinejad retains the support of the supreme leader, who has publicly praised him and whose words could sway millions of loyalists.

And, in a system where the president is not the most powerful figure, some wonder if Khatami can really deliver change when his previous efforts were so regularly compromised.

“I hope this time around he will have enough power to fulfil his pledges,” said 25-year-old beautician Houriyeh Najafi.