Source

October 15, 2010

TEHRAN Oct 15 (Reuters) – A senior Iranian cleric warned President Mahmoud Ahmadinejad’s government on Friday that its plan to slash huge state subsidies on essentials like food in the coming weeks risked provoking popular dissatisfaction.

The criticism of Ahmadinejad’s cornerstone economic plan was the latest sign of policy divisions within the hardline conservative elite that rules the Islamic Republic and reflected growing concern about economic hardship ahead.

Some Iranians saw their electricity bills soar tenfold last month, the first sign that the subsidy cuts were taking effect. Queues at filling stations have lengthened as motorists anticipate the price of gasoline to rise sharply.

Leading Friday prayers in Tehran, Ayatollah Ahmad Jannati said people had reason to be concerned about the economy.

“The government must not do anything to dissatisfy the nation. There are grounds (to expect) we will have high prices,” Jannati told worshippers.

Ahmadinejad calls moves to eventually eliminate the $100 billion per year the state pays to keep down prices “the biggest economic plan in the past 50 years”. He says new cash payments to poorer Iranians will soften the blow of higher prices.

Some political analysts say a big surge in prices or a shortage of goods — which could be compounded by economic sanctions against Iran — could reignite unrest that flared after Ahmadinejad’s disputed re-election last year.

“I have been told repeatedly that the price of water and electricity has soared,” said Jannati, who heads the Guardian Council, a powerful legislative watchdog, adding that he had written to the government to express his concerns.

“I suggest that this is not done,” he said without making clear whether he meant the subsidy reduction plan should be suspended — something some members of parliament have called for — or merely modified.

“If it is the right thing to do — and it must be done — then it should be explained so people are convinced.”

The opposition movement which staged huge street protests after Ahmadinejad’s re-election last year has been suppressed by a government accusing it of “sedition”.

But dissenting voices among hardliners, particularly in parliament and the judiciary, have become louder of late.

(Writing by Robin Pomeroy; Editing by Mark Heinrich)