Ahmadinejad cuts Iranian subsidies, quadrupling the price of gas
President Ahmadinejad has made it a priority to cut subsidies on daily essentials such as gas, water, and flour that have cost Iran as much as $100 billion a year since 1979.
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“This is a very hard country to govern, because there is so much distrust of government,” says Salehi-Isfahani. “With this level of distrust, to figure out a way to give and take at the same time is a good thing. [But] I’m not at all confident that they have thought a lot of things through.”Skip to next paragraph
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One Iranian website claimed that 37,000 clerics had been deployed across Iran by the Islamic Propaganda Organization to help make the case for the changes, according to the Enduring America website, which monitors Iranian media.
Economist Fariborz Rais Dana was arrested in Tehran soon after an interview with the BBC Persian service, in which he said: “The government knows the cash that it gives to people will evaporate under inflationary pressure. Thus, after a while the cash will have no effect. The government will get rid of the huge expense [of the subsidies] and will spend the money on buying weapons or other things, and people will be on their own.”
President tackles culture of waste
Cut-price essential services have been a fact of life in Iran since the revolution. On his first day back in Tehran from exile in February 1979, Ayatollah Ruhollah Khomeini, the father of the revolution, stated that the Islamic Republic would “provide you water and electricity and bus rides free of charge,” and even “build a home for you.”
But the heavy subsidies have encouraged a widespread culture of waste in Iran. Economists say too many cars in Tehran, for example – and the attendant severe air pollution and traffic – are partly a function of gas that until now has been far cheaper than bottled water.
The price of gas, for example, has risen from 10 cents a liter to 40 cents. The price of electricity is set to triple, the cost of water to quadruple, and the price of flour to rise 12-fold.
Sometimes Iranians keep their cooking gas burners on constantly, even if there is no kettle or pot on the stove; reports suggest one of the highest volumes in the region of bread thrown away – part of a subsidy that costs the government $4 billion each year, according to Ahmadinejad.
“We have [planned to increase] the price of water, electricity, and natural gas gradually so everyone has an incentive to be more economical,” Ahmadinejad said on state TV.
'Ahmadinejad is a national hero'
Iranians are uncertain that such monumental economic changes will improve an economy already facing high levels of inflation and four sets of United Nations Security Council sanctions over Iran’s uranium enrichment program.
Television news reports showed some taxi drivers angry with the price hikes that will hit their business hard. But at least some are pleased.
“Ahmadinejad is a national hero,” said a 56-year-old taxi passenger quoted on the Tehran Bureau website. “He is the man who will lay the foundations for a new Iran. Everything he says is word for word our grievances. Why should the people in north Tehran live so well while all of us are being crushed by the hardships of life?”