Calls for referendum. Ahmadinejad
Photo: AP

Iran president asks parliament to review subsidy cuts

Ahmadinejad suggests holding referendum on government proposals to slash energy, food subsidies by $40 billion. Analysts say cuts could provoke more unrest

Iranian President Mahmoud Ahmadinejad has called on lawmakers to reconsider their rejection of government proposals to slash energy and food subsidies by $40 billion, state radio reported on Monday.


Last month, parliament passed a state budget for the new Iranian year, which started on March 21, that did not contain the radical cuts in subsidies sought by Ahmadinejad, with many MPs fearing it would drive up prices in the oil producer.


Ahmadinejad, whose disputed re-election sparked widespread opposition protests last year, has suggested holding a referendum on his proposals that would save $40 billion. Parliament approved only half that amount.


On Monday, state radio quoted Vice President Mohammad-Reza Mirtajeddini as saying Ahmadinejad sent a letter to parliament calling for a "review of the subsidy law".


In the letter, "the problems surrounding the implementation of the subsidy law have been pointed out and the parliament has been asked to help in the resolution of this problem," ISNA news agency quoted Mirtajeddini as saying.


Lawmakers had said the cuts could fuel inflation, as the disappearance of subsidies would prompt an immediate repricing of many basic goods higher to market rates. Inflation currently runs at about 10 percent year-on-year.


Analysts say they could also provoke unrest in a country already plagued by tension after street protests by opponents of Ahmadinejad over the past year.


Parliament speaker Ali Larijani sent a reply letter to Ahmadinejad on Monday, saying the legislature was ready to examine the government's opinions again in its desire to cooperate in the implementation of the subsidy reform, ISNA reported.


He asked the government to come up with projections on how cuts of $20 billion and $40 billion respectively would affect the inflation rate.


The speaker also reacted negatively to Ahmadinejad's call for a referendum on the issue, ISNA reported.


Analysts say Ahmadinejad hopes the subsidy cuts will make Iran less vulnerable to sanctions on its gasoline imports and it would allow the president to channel some of the cash saved directly to constituents who support him.


The government says those in need would be compensated with direct cash payments.


Iran is the world's fifth-largest crude exporter. But while oil prices have surged, the economy has slowed as a result of the economic downturn, political isolation and sanctions over its nuclear energy program.


פרסום ראשון: 04.06.10, 08:15
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