Iran's Economy and Politics: Tensions Rise over Subsidy Cuts

This is unlikely to be a headline story in non-Iranian press --- where is the drama in subsidy cuts? --- but it should be.

The Ahmadinejad Government's high-profile plan to reduce subsidies on food, energy, and other goods, softening the blow for those on lower incomes by handing out Government cheques, was supposed to be implemented in September. Then it was supposed to begin in October. Now it is scheduled for November.

Each week, however, features more rumblings on the economic and political fronts. This is a round-up of what only a day brings....

Parliament's National Security Commission has sent a letter to President Ahmadinejad, demanding that he give the people more information about implementation of the cuts.

Hossein Ebrahimi, the deputy chairman of the Commission, said, “According to the information we have received, foreign enemies and domestic seditionists are planning to try to impede the proper implementation of the subsidy reform plan, so transparency over the subsidy reform plan is necessary.”

Emad Hosseini of Parliament's Energy Committee went even further, saying that several MPs have called for postponement of cuts until consumption patterns are addressed.

MP Omidvar Rezaei --- brother of Mohsen Rezaei, conservative leader and former Presidential candidate --- has declared that people are frightened about the cuts and they should be implemented over five years rather than several months. 

The Government is putting out reassurances. Minister of Welfare Sadegh Mahsouli has promised that financial support for those on lower incomes will be paid by late October. The Government is also insisting that refunds for firms endangered by the cuts will be distributed next week. 

This, however, is no longer just an issue of the subsidy cuts. With growing pressure on the Iranian economy, even a stalwart of the regime like Ayatollah Mesbah Yazdi is jabbing at the government. He has complained that Parliament has repeatedly demanded reports on the 4th Budget Plan (2005-2010) and privatisation in vain and that the Majlis now has to decide on the 5th Plan (2010-2015) on the basis of insufficient data. 

Peyman Nouri, chairman of Iran's stock market, has added to the pressure saying that the government is showing a budget deficit on its privatisation plans. He claimed that, as of last month, only half of revenues from the privatisation had been received.