Khamenei supports Khatami's ambitious economic reform plan

TEHRAN, Aug 3 (AFP) - Iran's supreme leader Ayatollah Ali Khamenei on Monday gave his full backing to sweeping reforms announced by moderate President Mohammad Khatami to tackle the country's ailing economy.

In a letter to the president, Khamenei said the policies are "entirely correct and I approve them."

The Iranian leader also called on other institutions of the regime to help the government in its efforts to rescue the economy.

"It is everyone's duty to help the government in this respect. I wish you success in efforts to reform the economy and remove certain problems," he said.

In a televised address to the nation on the eve of Monday's anniversary of his inauguration, Khatami pledged to aim for a fundamental revamp of Iran's economy as he unveiled policies to attract foreign investment, introduce bureaucratic reform and fight unemployment and inflation.

Khatami warned that the Iranian economy was "chronically ill ... and it will continue to be so unless there's fundamental restructuring."

He spoke of plans to fight red tape, limit the government's role in the economy, strengthen the private sector and take a string of other measures to encourage investment and increase productivity.

But many experts voiced doubt that Khatami would have enough room for maneuver -- both economically and politically -- for a rapid implementation of his program.

"With limited and declining revenues, it will be difficult (for the government) to predict their yield," said a carpet merchant and exporter.

The country's economic crisis has been exacerbated by a sharp drop in oil prices on world markets. This year, Iran is expected to face a revenue shortfall of six billion dollars, or around a third of the budget.

Iran's central bank deputy governor, Mohammad-Jafar Mojarad, said Monday that his country could only count on nine billion dollars in foreign receipts as opposed to 16 billion dollars last year.

Khatami has promised to try to boost non-oil exports to ease reliance on crude revenues, which make up nearly 85 percent of the country's hard currency earnings.

Other experts expressed concern that the president's announcement of his economic pl8V(already coming late, may have been too general and vague.

"This was a general outline of some economic policies. It may sound good in theory, but it is definitely difficult to put it into practice in our present situation," said the director of a small import-export company.

The country faces a foreign debt of around 13 billion dollars and each year it has to pay a big chunk of it along with interest.

Khatami also faces difficulties in introducing the necessary political reform to ensure the success of his economic policies.

He said he hoped to attract foreign investment, notably capital owned by Iranian expatriates.

But to change the presently discouraging investment laws, the president will have to secure the support of his conservative opponents in parliament.

His success will also depend much on the future state of relations with the United States and its Western allies, and whether or not Washington eases sanctions against Iran.

Khatami has already succeeded in improving relations to some degree with the European Union and encouraged the US government to take steps to mend ties.

But he continues to face opposition at home from traditional forces seeking to ensure Khatami does not change the basic values of the 1979 Islamic revolution.

Realising his limitations, the president pleaded with the nation to bear with him and not expect a speedy economic recovery.

"My government is bearing lots of pressure for your sake. Our greatest asset is our people's patience. Let's hope the future will be better," he said.

Related links

* Iran News
* Complete list of Iranian online media
* Cover stories
* Who's who

---

---