Iran’s economic ‘surgery’

Iran’s government has slashed subsidies on food, water, electricity and fuel. They say the subsidies have been an expensive affair costing them around $100bn annually.

Petrol prices will rise from 40 cents per litre to 70 cents. Electricity prices will jump from around $5 per month to $20. It is a dramatic increase, also for the cost of natural gas, from around $30 per month to $150.

The cutbacks have been descirbed as the “biggest surgery” to the nation’s economy in 50 years. They come as the Iranian economy is straining under international sanctions. Earlier this year, the UN, the US and the EU all imposed tough new sanctions on Iran over its nuclear programme.

But is Mahmoud Ahmadinejad, Iran’s president, breaking his electoral promise to help the poor, his main source of support? And are sanctions the only reason behind Iran’s economic woes?

Inside Story, with presenter Sohail Rahman, discusses with Saeed Laylaz, a political and economic analyst, Elahe Mohtasham, an Iranian academic, and Mahjoob Zeiwri, a professor of contemporary history of the Middle East at Qatar University and an Iran expert.

This episode of Inside Story aired from Tuesday, December 21, 2010.