September 2010, when Mahmoud Ahmadinejad announced the first steps of a subsidy targeting plan through the state TV, he never have guessed that in less than 2 years, he would be inundated with censure.
Critics accuse him of not carrying out the reforms in the right way. They claim that he was oblivious to the laws passed by the Majlis and instead has put his own ideas into action. His actions resulted in high inflation, weakening of domestic producers and destabilizing the market.
Subsidy targeting is part of a five step, “Subsidy Reform Plan” in Iran. According to the 2010 act of the Majlis, the government could gain revenue of billions of Rials by canceling subsidies for energy carriers and essential goods. According to the Majlis’ laws the government should have given 50% of the revenue to the people. 30% should have been given to the producers and the rest would have been for the government expenses. Most of the critics are targeting this issue. Critics are mostly supporters of the program, but they say the government gave the producers’ share to the people to raise the given cash subsidy.
Products have subsequently become more expensive, because of the increased cost of transportation. Those who couldn’t afford it laid off workers and canceled productions.
The Government has been blamed for being the main reason for inflation, unemployment and impairing the domestic producers. Accordingly the next phase of the subsidies which was supposed to come into action this year is still pending.
This has caused a debate among the upcoming Presidential candidates on how they are going to improve living conditions and finish the job of implementing subsidies:
Mohsen Rezaee, the Secretary of the Expediency Discernment Council and a candidate commented on this matter: I’m totally in favor of subsidy reforms. He even promised to raise the given cash subsidy 2.5 times.
Ali Akbar Velayati, a candidate from the so called “Advancement” or “2+1” coalition thinks differently: Every administration is obliged to continue the subsidies but only those with low income should receive the cash subsidy. We can exclude the well off from receiving it and put it into long term investments and fund the country’s economy.
Mohammad Bagher Qalibaf, Tehran’s mayor and a Principalist candidate believes that the Reform Act is not implemented correctly. But it is a vital necessity that should be continued.
Ghoal Ali Hadad-Adel thinks like his other Principalist friends. He believes that not allocating the subsidy to domestic production has caused serious problems. He also said that the given subsidy cash should be raised considerably.
Kamran Bagheri Lankarani and Alireza Zakani are among the anti-west figures. Lankarani said, he would continue subsidies, keeping a close eye on low income people and limiting the impact it has on the inflation.
Zakani suggested a 7-step program to implement the subsidies. He said we should know the target social group because now the cash subsidy is distributed among the rich and poor evenly which is not equitable.
Reformists criticize the government on subsidy reforms. Muhammad Reza Aref, (VP in Khatami administration), Hasan Rowhani (head of the Center for Strategic Research), Mustafa Kavakebian (MP) and Masoud Pezeshkian (minister in Hashemi administration) are the best known Reformist candidates. But considering Akbar Hashemi Rafsanjani’s candidacy they are likely to step aside in favor of him.
Hashemi hardly criticizes the Ahmadinejad administration on subsidy reforms and said subsidies should have strengthened producers and improved the country’s economy and agriculture. Instead it has caused inflation and devalued the national currency by giving money to the people.
Hashemi’s critics say he believes in the Capitalist model as he did in his 8 year presidency.
Esfandiar Rahim Mashaee thinks very differently on the issue. This controversial figure is considered a candidate supported by the government.
He said I feel it’s my duty to continue Ahmadinejad’s policies.
He believes the implemented first step of subsidies had no negative consequences and the government was successful in controlling the inflation.
The conclusion
As we see different views among political parties and different individuals, implementing subsidies and the amount and distribution of cash subsidies will change unless Ahmadinejad’s protégé is elected.
Most of the government critics say it’s very likely that the producers and the low income people will receive a better portion of the cash subsidies.
The anti-Iran sanctions could have a direct impact on implementing the subsidies. Yet this may change according to the final winner’s view towards the West.
We should wait and see that which candidate, with what political and economic proposals will win.
