Sunday, Nov 22, 2009
TEHRAN (AFP)--Two top rivals of Iranian President Mahmoud Ahmadinejad strongly criticized Sunday his plan to scrap subsidies on energy and on many food items.
In mid-October Iran's parliament approved the broad outlines of a law proposed by Ahmadinejad which envisages phasing out government subsidies on those products over a five-year period.
The total cost of the widespread subsidies is estimated to reach to 30% of gross domestic product and economists fear their abolition could stoke inflation.
Ahmadinejad's main rival and opposition leader Mir Hossein Mousavi said he is "worried" as there will be no parliamentary supervision for the plan. He said that by proposing the law the government is trying hard to be in control of revenues that rising energy prices will generate.
"This issue will lead to chaos and corruption in society," Mousavi said in a message posted on several Web sites. "I am cynical about this bill. Parliament should resist and establish its supervision over spending so that we will not see these funds being used for populist measures or for injecting cash into special sectors."
Mohsen Rezai, secretary of powerful political arbitration body the Expediency Council, also criticized the proposed legislation.
"As a result of the new law, the effect of the global economy on the domestic economy will be more than before," he said in a letter to parliament speaker Ali Larijani.
Rezai, a former head of the elite Revolutionary Guards and a defeated candidate in June's presidential election, suggested the formation of an independent council of financial experts to study the impact of the bill on the lives of Iranians.
A number of Iranian economists have accused Ahmadinejad of fueling inflation since his first four-year term began in 2005 by offering easy loans. They now fear the scrapping of subsidies will have a similar effect on the economy.
The government says the subsidies help only some sections of the society and lower income classes will be compensated after their scrapping.
The Guardians Council, the body which holds veto power over parliamentary legislation, has yet to approve the law, which proposes among other measures to raise energy prices to global levels.
The bill's supporters claim it could help Iran offset some negative effects of possible sanctions on gasoline imports. World powers, angry over Tehran's continued defiance over its nuclear program, have threatened to levy new sanctions on Iran which could target the country's petrol imports.
Iran, the Organization of Petroleum Exporting Countries' second largest oil exporter, depends heavily on fuel imports as it lacks sufficient refining capacity. The Iranian economy has depended heavily on subsidies since the early years after the Islamic revolution of 1979.
(END) Dow Jones Newswires
22-11-09 1417GMT