Iran plans to phase out subsidies. Public alarmed.

The subsidising of Iran economy has distorted to a point where it imports its more vital needs like food and energy. Now to get away from that so any sanctions(HA!) that might happen won't hurt as much, Mahmoud Ahmadinejad is going to head the effort to do away with subsidies.

The bad news? Mahmoud Ahmadinejad is going to head the effort to do away with subsidies.

There is widespread agreement that selling everyday goods at far below market prices, which costs the Iranian government an estimated $100 billion a year, makes little economic sense. It encourages overconsumption of gasoline and other products, discourages domestic production and makes Iran more dependent on imports, economists say. The subsidies are also regressive, because the rich pay the same artificially low prices as the poor and consume far more. And they encourage smuggling. Previous governments tried to eliminate subsidies and build a more dynamic, market-oriented economy, but retreated in the face of popular pressure. President Ahmadinejad — who has long cast himself as a champion of the poor and a scourge of Iran’s privileged elite — has pushed hard on the issue, and last month Parliament gave him full authority to begin paring subsidies this year. Mr. Ahmadinejad, not known in the past for favoring strong pro-market medicine for Iran’s ailing economy, has presented the measure as a matter of economic justice. He says half of the money the government saves by eliminating subsidies will go to helping poorer Iranians adjust to higher prices. 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.