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Monday, October 12, 2009




And here we go...

This post is an update to Flashdance. You will probably have to read the original post to understand what this one is about.

Iran's parliament gives green light to Ahmadinejad's fuel subsidies reform...

TEHRAN, Iran – Iran's parliament on Monday moved ahead with a bill to sharply slash energy and food subsidies, approving one article of a draft law that has the potential of stoking major unrest in a country struggling under international sanctions.

State radio said the article approved by lawmakers would gradually cut energy subsidies over five years, bringing the heavily discounted fuel prices more in line with international prices.

Officials say the cuts are needed to recoup some of the roughly $90 billion spent yearly by OPEC's second largest exporter on subsidies, and to target the funds more directly at helping poorer segments of the population as well as funding infrastructure projects.

Subsidies currently eat up about 30 percent of the government budget at a time when already high spending and the collapse of oil prices last year squeezed the country's economy.

"The plan would prevent an important part of excessive consumption (in Iranian society), as well as injustice in the redistribution of subsidies," state-run Press TV quoted President Mahmoud Ahmadinejad as saying in a live interview on Iranian television Sunday night.

Source: Associated Press

Among its possible consequences, the approved bill has direct bearing on the issue of punitive sanctions against Iran. It's unlikely that the US and its allies can take action to disrupt Iran's oil exports due to the adverse effect this would have on the global energy market and through this on their respective economies. Imposing some kind of embargo on gasoline imports into Iran sounds like a more plausible course of action to take. Under Ahmadinejad the Persians were investing like mad into their refining capacity and switching cars to natural gas. This effort should start paying off in the next few years, dramatically reducing the impact of possible sanctions against Iran. In fact, Iran may yet emerge as one of the leading, if not the leading, gasoline exporters of the world. The incoming reform may dramatically speed up this process if it succeeds to reign in domestic gasoline consumption. In short, while the President of presidents is brooding over his options in Iran, he may soon find that one about sanctions suddenly unavailable.


PS

This means nothing in terms of Israel's options. If it comes to trading ballistic missiles with Iran, the correct way for Israel to proceed in order to avoid creating a global energy crisis and becoming enemy of all mankind, is to target refineries and not oil fields and terminals.

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