Tuesday, Oct 21, 2014

Hassan Rouhani suffers first major political defeat, people give thumbs down to economic policy

Iranian President suffered his first major political defeat, with public overwhelmingly brushing aside appeals to forgo direct government aid. (AP) Iranian President suffered his first major political defeat, with public overwhelmingly brushing aside appeals to forgo direct government aid. (AP)
Press Trust of India | Tehran | Posted: April 25, 2014 12:33 pm

Eight months after taking office, Iranian President Hassan Rouhani has suffered his first major political defeat, with the public overwhelmingly brushing aside appeals to forgo direct government aid.

The 455,000-rial (USD 14, 10-euro) monthly handout scheme, initiated in December 2010 by Rouhani’s predecessor Mahmoud Ahmadinejad, is part of broader economic reforms aimed at overhauling the country’s massive subsidy system.

The reform — which phases out parts of remaining subsidies on energy, utility bills and basic food costs — is forecast in this year’s budget to save the cash-starved government USD 18 billion.

Encouraged by economists as a way of regulating Iran’s economy, which is stretched thin with debilitating sanctions and mismanagement, the plan’s second phase is expected to begin this week.

But the Rouhani administration for weeks ran an aggressive media campaign seeking to persuade the most affluent of Iran’s 77-million population, and some of the middle class, to waive the cash payments.

Enlisting celebrities, sportsmen, politicians and even religious figures, it argued that the money should instead be spent on infrastructure, manufacturing, public transport and health care.

But on Wednesday it was announced that 73 million people – 95 percent — had asked to receive the money, amounting to a near USD 1-billion monthly bill.

The low rate of dropouts was mocked in conservative circles, and even moderates and reformists expressed criticism.

Self-declared moderate Rouhani was elected last summer, beating conservative rivals after vowing to fix the economy, seek improved relations with the West and promote greater freedoms.

Much of his election campaign was waged across reformist platforms as well as social media — which thrive despite state efforts to curtail Internet access — where he retains strong support from the upper and middle classes.

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