Rouhani came to power in 2013 promising to mend economy and ease social tensions
Iran's President Hassan Rouhani said on Sunday that government bodies must provide "space for criticism" as he sought to head off days of unrest, but also warned protesters that violence was unacceptable.
Hundreds of protesters marched through Tehran and other cities in a fourth day of demonstrations as authorities cut access to social media.
Rouhani finally broke his silence on the protests that mark the biggest test for the government since mass protests in 2009.
They began as demonstrations against economic conditions in second city Mashhad on Thursday, but quickly turned against the Islamic regime as a whole with thousands marching in towns across Iran amid chants of "Death to the dictator".
Protests in Iran have targeted the Supreme Leader with a directness that some say hasn’t been seen since the 1979 revolution https://t.co/fRiQJLJwkr
— The Wall Street Journal (@WSJ) December 31, 2017
"The people are absolutely free in expressing their criticisms and even protests," Rouhani said at a cabinet meeting, according to the state broadcaster.
"But criticism is different to violence and destroying public property."
He sought a conciliatory tone, saying that government bodies "should provide space for legal criticism and protest" and calling for greater transparency and a more balanced media.
Rouhani came to power in 2013 promising to mend the economy and ease social tensions, but anger over high living costs and a 12-percent unemployment rate have left many feeling that progress is too slow.
Unemployment is particularly high among young people, who are generally considered less deferential to authority.
"Rouhani has run an austerity budget since 2013 with the idea that it's a tough but necessary pill to swallow to manage inflation and currency problems and try to improve Iran's attractiveness for investment," said Esfandyar Batmanghelidj, founder of the Europe-Iran Forum.
No trickle down
Iran’s economy has indeed grown, and the IMF has forecast real GDP growth reaching 4.2 percent in 2017-2018. But that boost has largely been because of renewed oil exports, and growth unrelated to the oil sector has lagged significantly, the Washington Post said.
“This is a very sensitive moment for Rouhani,” Vatanka told the Washington Post. “Here’s a guy who basically came into the presidency as someone who was going to be the champion of the reform cause in Iran.
“But these protests show that he’s not a champion of the people,” Vatanka said. “And Iranians feel like they’ve been played.”
US President Donald Trump said the "big protests" showed people "were getting wise as to how their money and wealth is being stolen and squandered on terrorism".
"Looks like they will not take it any longer," he wrote on Twitter, warning that Washington is "watching very closely for human rights violations!"
— Haaretz.com (@haaretzcom) December 31, 2017
Rouhani dismissed Trump's comments, saying: "This man who today in America wants to sympathise with our people has forgotten that a few months ago he called the nation of Iran terrorist."
"This person whose whole being is against the nation of Iran has no right to feel pity for the people of Iran."
Conservative news agency Fars said Tehran shops had closed on Sunday "for fear of damage to their shops by rioters".
After initial silence, state media has shown footage of unrest, focusing on young men violently targeting banks and vehicles, an attack on a town hall in Tehran, and images of a man burning the Iranian flag.
"Those who damage public property, disrupt order and break the law must be responsible for their behaviour and pay the price," Interior Minister Abdolrahman Rahmani Fazli said on state television.
"The spreading of violence, fear and terror will definitely be confronted," he added.
There have been reminders of the continued support for the government among conservative sections of society, with pro-governement students holding another day of demonstrations at the University of Tehran.
They had outnumbered protesters at the university on Saturday.