Senior Iran cleric says president spreads poverty

from Reuters UK

By Parisa Hafezi

TEHRAN - An influential Iranian cleric has criticised President Mahmoud Ahmadinejad in unusually blunt terms by saying his government was pursuing policies that were leading to "public impoverishment", newspapers said on Monday.

Former president Akbar Hashemi Rafsanjani, a political rival of Ahmadinejad, called on the government to rein in populist spending policies largely blamed for fuelling inflation that is now running at more than 20 percent.

Ahmadinejad swept to power in 2005 vowing to spread Iran's oil wealth. Benefiting from soaring world oil prices, he has won applause by announcing big handouts at provincial rallies but ordinary Iranians now gripe about the price rises that followed.

Rafsanjani, head of a powerful arbitration body, has tended to criticise the government in indirect terms in the past but his latest criticism of Ahmadinejad's management used uncharacteristically straightforward language.

"Building Iran's economy cannot be possible by spreading public impoverishment," Rafsanjani was quoted on Monday as saying by the pro-reform Etemad-e Melli newspaper.

Rafsanjani, president in the 1990s, was beaten in the 2005 presidential election by Ahmadinejad. Rafsanjani is not expected to run again but his comments show that rival political camps are starting to stake out positions for the 2009 race.

His remarks reflect widespread public disillusionment with inflation and unemployment in the country, where over 15 million Iranians live in poverty according to official figures.

Despite mounting criticism, Supreme Leader Ayatollah Ali Khamenei has several times given vocal support to Ahmadinejad, backing that will be vital in the 2009 race, analysts say.

Ahmadinejad accuses political opponents and the outgoing conservative-dominated parliament of sabotaging plans to get the economy going. He says foreign "enemies" have undermined the economy and has declared war on economic "mafias".

RELYING ON OIL

Rafsanjani, a pragmatic politician who has been siding with reformists seeking political and social change, said the government was doing harm by casting aside competent officials.

"Many experienced people have been replaced by inexperienced employees. They (the government) think whoever takes major steps ... is an aristocrat or a wealthy anti-revolutionary," he said.

Ahmadinejad has shaken up government offices while in power, appointing dozens of former colleagues from the Revolutionary Guards and Tehran City Council to fill posts. He has scrapped some technocratic bodies, like a nationwide budget planning authority, moves critics say have given him greater control.

Critics say Ahmadinejad has often defied conventional economics by, for example, talking about controlling price rises while calling for interest rates to be set well below inflation.

Central Bank Governor Tahmasb Mazaheri, appointed in September, has publicly criticised Ahmadinejad over interest rate policy. The former governor had similar differences with the president.

Rafsanjani, a pillar of the 1979 Islamic revolution, has said Iran needs to liberalise its oil-dominated and sclerotic economy although, when he was president, Rafsanjani was accused of lining the pockets of the rich and ignoring the poor.

"We can stop relying on oil exports ... But this year's (ending on March 20, 2009) budget has become 15 percent more reliant on the oil," Rafsanjani said.

Economists say Iran is increasingly relying on its own financial resources because U.S. and U.N. sanctions are deterring Western investors in particular. Many foreign banks are reining back business with Iran or cutting ties completely.