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Khatami's 5-Year Plan would privatize major industries

Sept 15, TEHERAN, Iran (AFP) -- President Mohammad Khatami, under mounting pressure to tackle Iran's economic woes, outlined an ambitious program Wednesday to privatize several major industries for the first time in more than 60 years.

In his first five-year plan since taking office in 1997, Khatami called for the privatization of Iran's communications, post, railway and tobacco industries in a "total restructuring" of the Islamic republic's economy.

He told Parliament, whose approval is needed, that Iran must address both the "immediate and future needs" of the economy, which has been hampered by a lack of foreign investment, persistent unemployment and rampant inflation.

If Parliament endorses the program, covering the years 2000 through 2004, then about 30 percent of the economy would be private in the next five years, compared with around 10 to 15 percent now.

The plan also foresees an optimistic annual growth rate of 6 percent, compared with just 3.2 rate in the previous two five-year plans.

The President emphasized the need to create jobs for young people; more than half of Iran's 60 million citizens are under 20. Young people along with women provided much of the support for his election victory two years ago.

Khatami's proposals would put an end to state monopolies instituted more than six decades ago by Reza Shah, who founded the Pahlevi dynasty, which was overthrown in the Islamic revolution in 1979.

Foreign companies have been wary of investing here since 1979, when countless companies lost tens of millions of dollars as the new Islamic Government nationalized many private enterprises, from hotels to banks to factories.

Since then Iran has had no law to guarantee the security of investments by foreign companies.

The 1955 measure stipulates that foreign companies can operate here only on a joint basis with Iranian companies and are limited to 49 percent of the holdings.

Khatami acknowledged several weeks ago that insuring the security of outside capital was a "prerequisite" for fixing the economy.

Despite the aggressive privatization proposal, Khatami's plan indicates that Iran will remain heavily dependent on revenue from oil, whose projected price has been lowered to avoid budget deficits created by a possible slump on the worldwide crude oil market.

Oil revenues have been projected at $12.50 a barrel, even though current market prices have been hovering around $20, rebounding to their highest level in nearly 24 months.

Crude oil was projected at about $5 higher in the last plan, and the collapse of prices left Iran with a $6 billion shortfall in the last Iranian year, which ended in mid-March, and about a $5 billion deficit this year.

Oil accounts for about 85 percent of Iran's hard-currency earnings and about half the state budget.


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