Iranians will face economic hardship when the government slashes food and fuel subsidies, a senior cleric said on Friday, contradicting Iranian President Mahmoud Ahmadinejad’s line that his policy would be painless.
The subsidy reform that Ahmadinejad has called “the biggest economic plan in the past 50 years” aims to phase out the US$100 billion the state pays every year to keep down the price of essential goods. It is due to be launched in the coming weeks.
Political analysts say the expected surge in household bills and prices for gasoline and food could reignite unrest, which flared after Ahmadinejad’s disputed re-election last year.
DIRECT PAYMENTS
Poorer Iranians will receive direct payments to help them cope with price rises, and Ahmadinejad has said the policy will reduce rather than increase poverty, asserting that “people’s lives will improve from the very beginning.”
But the cleric leading Friday prayers in Tehran — a staunch ally of the president — said the public should prepare to tighten their belts.
“We will have a semi-abstemious period ahead of us,” Ayatollah Ahmad Jannati told worshipers. “The government should be careful to minimize the tensions and negative effects on poor people.”
On an evening TV show, Ahmadinejad reiterated his optimism.
“There are no negative consequences with this plan, and all is positive when two things happen,” he said.
As long as people receive the hardship payments and there is a spirit of cooperation, all will be fine, he said, adding: “If an atmosphere of mistrust is created in this regard, then there will be problems.”
The subsidy phase-out — already delayed for six months due to disagreements between Ahmadinejad and parliament — was due to start in the second half of the Iranian year, which begins on Sept. 23. However, the government has been vague on exactly when and where the cuts will be made.
A senior official said this week that gasoline subsidies would remain in place for at least another month, a delay that some analysts said could mean the government was getting cold feet.
TIMING
Ahmadinejad said the exact timing of the subsidy cuts had not been announced to avoid hoarding and chaotic scenes at gas stations.
“If we announce beforehand when the plan is going to start, it might create problems for people,” he said during his interview on the Shabakeh Khabar (News Network) channel.
Authorities are stockpiling supplies of some items — including food products and detergent — in case of shortages, he said.
“The government has taken everything into consideration so when the plan starts, people will not be faced with problems,” he said.
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