Iran Lawmakers Press Ahmadinejad on Economy

By BENOÎT FAUCON   Iranian lawmakers on Sunday attacked President Mahmoud Ahmadinejad

over the decline of the country’s currency—questioning a subsidy overhaul the president has championed and demanding he account for his handling of the economy—as the crisis threatens to morph into a broader political showdown.   Even before the currency’s slide, Mr. Ahmadinejad, once the protégé of Supreme Leader Ali Khamenei, had come under increased fire from conservative rivals in Parliament over his failure to resolve a standoff with the West over Iran’s nuclear program and the country’s economic problems. On Sunday, 179 members of Parliament out of 240 present voted for an urgent review of the subsidy plan because of the rial’s recent plunge, the Iran Labour News Agency reported.   At a United Nations speech in September, Mr. Ahmadinejad had blamed others in government for the steady deterioration of the rial. But it is now the president’s turn to feel Parliament’s heat, with the prospect of a public grilling.   In contrast with two years ago, there is no talk for now of Mr. Ahmadinejad being impeached.   On Sunday, Parliament speaker Ali Larijani, stopped a debate on impeaching Sports and Youth Minister Mohammad Abbasi, saying some lawmakers withdrew “because of the economic situation,” indicating that fixing the economy was more important than political moves.   But the renewed attack on his policies is set to further undermine his influence over the country’s policies, to the advantage of Ayatollah Khamenei and his allies.   The International Monetary Fund has lauded the so-called targeted-subsidy plan, a centerpiece of the president’s policies that was expected to save about $100 billion a year when first proposed, as one of the few meaningful attempts in the region to cut back on massive government subsidies for goods including food and fuel. The program aims to balance gradual cuts in subsidies for basic goods and services with welfare payments to the poor.   The first phase helped push up prices for consumers as it lowered government costs, and lawmakers have blamed the program for at least some of the country’s high inflation rate. A majority of lawmakers in Iran’s Parliament voted in favor of an urgent debate over whether to proceed with the second phase of the subsidy overhaul.   “Because of the inflation and the instability of the currency market…we have no choice but to stop the implementation of the second phase of the target subsidies,” Gholamreza Mesbahi-Moghaddam, who chairs the Parliament’s budget and planning committee and wrote the bill, was quoted as saying on parliamentary website Icana.   The U.S. and Europe are now working on new coordinated measures intended to accelerate the rial’s recent drop and drain Iran’s foreign-exchange reserves, Obama administration officials said.   The rial has shed about 25% of its value against the dollar this month amid mounting sanctions aimed at halting Iran’s nuclear program. The sudden decline in the rial last week, the latest leg in a yearlong decline, prompted Tehran’s first major riots in two years and a crackdown on informal money changers. The situation appeared to have stabilized Saturday as Tehran’s bazaar—a key indicator of Iran’s business climate—reopened after closing for the second half of last week.   But in an indication the turmoil may not be over, many money changers refused to trade Sunday, either out of fear of arrest or because of a refusal to comply with a government order imposing a fixed dollar rate.   Mr. Ahmadinejad has blamed the decline on speculators and on sanctions, which have cut crude-oil exports, a major source of foreign-currency revenue for the government, by more than half in the past six months, as Europe boycotted Iranian oil and other countries cut back under U.S. and European pressure. Iran is also struggling to get paid by its remaining Asian customers because of sanctions on its banks. But his opponents say economic mismanagement is more to blame than sanctions, as they jockey for power ahead of next year’s presidential election.   Mr. Ahmadinejad’s allies lost to candidates close to the Supreme Leader in Parliament in March, while key government officials—such as Oil Minister Rostam Ghasemi—have pledged allegiance to Ayatollah Khamenei only.   By contrast, little criticism has been leveled against Ayatollah Khamenei, who has said only that Iran will emerge stronger than ever from the economic crisis.   Write to Benoît Faucon at This email address is being protected from spambots. You need JavaScript enabled to view it.