The outside world may be focused on Iran’s intensifying confrontation with the West over its nuclear program. But at home, Iranians are more concerned with an ambitious and risky new effort to overhaul the country’s troubled economy. If it goes awry, the plan to phase out Iran’s system of state subsidies, which has existed for decades, could profoundly destabilize the government of Mahmoud Ahmadinejad, who has aggressively championed change. But it could also help wean Iran from its dependence on foreign gasoline and insulate the economy from new sanctions—which are a strong possibility if Iran continues to defy Western pressure over its nuclear program. …
There is widespread agreement that selling everyday goods at far below market prices … makes little economic sense. … But the measure also has clear political motives. The changes would hit hardest at the urban middle class, which has tended to favor Mr. Ahmadinejad’s opponents. And the president clearly hopes to carry out an important policy change that two predecessors, Mohammad Khatami and Ali Akbar Hashemi Rafsanjani—now leaders of the opposition—tried and failed to achieve.
The risks are serious, however, and lately even some conservatives have hinted that Mr. Ahmadinejad may not be up to the task. Access the full article>>
