Iran opposition: 'Dark future' awaits the economy

The Associated Press, Iran's opposition leaders said Wednesday that a "dark future" awaits the economy because the government didn't listen to economists when it slashed energy and food subsidies in a country already struggling under biting U.N. sanctions.

Former presidential candidates Mir Hossein Mousavi and Mahdi Karroubi support the government's effort to rein in subsidies but said in a rare statement posted on their websites that it is being implemented badly.

The opposition leaders, who believe President Mahmoud Ahmadinejad stole the June 2009 election through massive vote fraud, said the way the government is slashing subsidies only brings more hardship to the country.

Fuel prices have at least quadrupled and bread prices have more than doubled in the past week since the government started dramatically reducing subsidies.

"Enforcing this plan, while Iran is facing tough international sanctions and its economy is in recession with an unemployment rate of over 30 percent and wild inflation, is a burden on medium and low-income families," Mousavi and Karroubi said in a statement posted on kaleme.com.

"Daily closure of factories and their inability to pay salaries on the one hand and exit of capital because of lack of investment security ... on the other herald a dark future for the country's economy. This gets worse when the government has no ears for the views of experts," they added.

President Mahmoud Ahmadinejad has called the subsidy cut plan the "biggest surgery" in Iran's economy in half a century and vowed to fully cut all subsidies by the end of his term in 2013.
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The government says it is paying some $100 billion in subsidies annually, although experts believe the amount is about $30 billion. Economists say the plan to slash subsidies could stoke inflation already estimated to be more than 20 percent.

Experts say a gradual reduction of subsidies, not a sudden cut, is the best approach to tackling Iran's economic woes.

"Our people have become used to subsidies over decades. The country's economy and people's way of life have taken shape based on that. By using a shock solution of slashing subsidies, the middle class will cease to exist," prominent economist Mohsen Ranani said recently. "The structure of the economy has to be reformed through a long-term plan, not shocks."

Iran is already under four sets of tough U.N. sanctions over its refusal to halt uranium enrichment, a technology that can be used to produce nuclear fuel or atomic weapons.

The U.S. and its allies accuse Iran of using its civilian nuclear program as a cover to build weapons. Tehran has denied the charges, saying its nuclear program is geared toward generating electricity and producing nuclear medical radioisotopes to treat patients.

Mousavi and Karroubi vowed to remain defiant, saying they already live in a "big prison" and it won't be different if they will be put into an actual "small prison."

The two leaders are under close surveillance by security forces.

"Until today, we have remained steadfast in the path we've chosen. Also, we won't give up this way, which seeks nothing but regain the rights of the people in the future," they said.