Gholamreza Mesbahi Moghaddam, chair of the special committee of the mullahs’ Majlis on reviewing the Economic Transformation Plan, said: In view of the fall in oil prices, the Economic Transformation Plan will be implemented without paying cash subsidies. In this regard, an increase in the price of some energy carriers has been ordered.
Mahmoud Ahmadinejad, the mullahs’ President, had claimed that he intends to narrow the gap between rich and poor and reduce inflation through the so-called “Economic Transformation Plan.” According to this plan, the Iranian society has been divided into 10 income levels, and those in the lowest seven income brackets would directly receive a maximum of $70 per month. This meant that subsidies for commodities and services would be eliminated and in their place people would be paid in cash according to the above-mentioned income levels.
Incidentally, the empty promise of paying people in cash was not taken too seriously even within the mullahs’ regime. Ahmadinejad finally announced that he will implement his unpopular plan and will eliminate subsidies, but that he will not send any cash.
Ahmadinejad’s calculations were based on a $150 per barrel of oil, but the price of oil has since dropped to under $35 per barrel. In an interview with the state-run Mehr News Agency, Mesbahi Moghaddam said in this regard: “Due to the decline in the price of oil and oil revenues, what the government had planned in terms of paying cash will not be implemented.”
Germany’s Deutsche Welle Radio said in analysis that Ahmadinejad is not only unable to pay people with cash subsidies, but that he would also have to compensate his foreign reserve deficits with an increase in energy prices. Deutsche Welle added that this can lead to an increase in inflation and consequently more pressure on the people, which could heighten protests.
The International Monetary Fund had said that the Iranian regime would face unsustainable budget deficits with the drop in oil prices.
The New York Times reported that “The drop in oil prices will make the Iranian regime re-examine its calculations.”
Various factions within the regime, which have locked horns with regards to the robbery of Iran’s national income, were also opposed to this plan. The mullahs’ Majlis Speaker, former Revolutionary Guard Ali Larijani, had said: This plan is a shot in the dark.
The chairman of the mullahs’ Expediency Council, Ali Akbar Hashemi Rafsanjani, had also said at a meeting with members of the Assembly of Experts that the government’s Economic Transformation Plan would have negative consequences.
Mohsen Rezai, who is the Secretary of the mullahs’ Expediency Council and the former commander of the Islamic Revolutionary Guard Corps (IRGC), had said: The Economic Transformation Plan was a topic before the crisis happened, and was calculated on the basis of oil prices being above $100 per barrel.
Mohammad-Reza Bahonar, the Majlis Deputy Speaker, threatened to block the plan, and added: If the government were to decide to implement the Economic Transformation Plan without the prior knowledge of Majlis, we will intervene to stop the government.
Morteza Tamaddon, the parliamentary deputy of the Ahmadinejad cabinet’s Minister of Industry, had also stressed: “Ahmadinejad was repeatedly told that the Economic Transformation Plan would be dangerous and can cause the fall of the government, especially during its last year in office.”
State-run media have, moreover, reported on Ahmadinejad’s clash with his Minister of Economy regarding the plan, saying: This conflict has been one of the obstacles to bringing this plan to Majlis.
However, the main reason for opposition to the plan was the regime officials’ fear of eliminating subsidies, a hike in commodity prices, and consequently anti-regime protests and uprisings by the Iranian people. Of course, since Ahmadinejad has no choice but to act in accordance with the mantra of ‘no breaks and no reverse gear’ in his economic policy as well as the regime’s nuclear weapons program, and since he is forced to accept all the consequences, in a November interview with the state-run television he had stated: “I will stand by this plan even if it leads to the fall of the government.”