Why Iran’s Ahmadinejad is pushing to cut popular government subsidies

…The Islamic Republic spends between $90 billion to $100 billion per year on subsidies. Of that, $35 billion to $45 billion goes to fuel subsidies, which include gasoline, heating oil, kerosene, liquefied petroleum gas or LPG, and fuel oil, according to interviews with government officials.

Parliamentarians already approved a subsidy cut of $20 billion in January. Under the deal, a new government entity will be given the $20 billion to disperse as they see fit – outside the purview of the national budget, and thus with little to no parliamentary oversight.

But Ahmadinejad has been battling MPs for more comprehensive legislation to cut subsidies by double that amount. The aim is to ensure that his administration will have enough cash on hand to raise payments to his predominantly low-income constituency in the case that utility and fuel prices rise more than government projections, according to domestic analysts.

Ahmadinejad’s move could hurt economy

For now, Ahmadinejad appears to be in a strong position, with the tacit backing of supreme leader Ayatollah Ali Khamenei, who has final say on all state affairs. The Iranian president won a small victory in early April after Ayatollah Khamenei made a public statement supporting a compromise between the parliament and Ahmadinejad.

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