TEHRAN (Reuters) -- Iranian President Mahmud Ahmadinejad has accused parliament of violating the constitution after it rejected a key plank of his subsidy reform plan, in a widening economic policy row ahead of a presidential election.
Ahmadinejad, a conservative politician expected to run for a second four-year term in the June election, made the accusation in a letter to parliament speaker Ali Larijani, Iranian media reported.
In the letter, Ahmadinejad said parliament had "violated some articles in the constitutional law in dealing with his proposed budget," the official IRNA news agency said.
The assembly voted on March 9 to throw out of the 2009/10 budget bill a clause that would overhaul Iran's system of hefty subsidies, with lawmakers arguing it would further stoke inflation in the world's fourth-largest oil producer.
It later approved the budget, but without including the government's $19 billion subsidy reform plan, Iran's state Press TV reported on its website. The bill still needs to be approved by a powerful legislative watchdog body, the Guardians Council.
Ahmadinejad believed the assembly had gone too far in making those changes to his budget proposal, media reported, but parliament's deputy speaker Mohammad Bahonar said it had acted within its powers.
Larijani, a conservative rival of the president, also rejected Ahmadinejad's criticism in a letter to him.
"The Guardians Council is exclusively authorized to identify violations of the constitution and the interference of the president is illegal," IRNA quoted Larijani's letter as saying.
Critics say the government's plan to hike energy and utility prices and compensate low-income families with direct cash payments would only add to double-digit inflation at a time of plunging oil prices and growing economic woes.
They accuse Ahmadinejad of squandering the windfall oil revenue Iran earned when crude prices were soaring, leaving it more vulnerable in times of need, such as now.
Ahmadinejad argues his plan would help "implement justice and remove discrimination" and that change was needed more urgently now that crude has fallen by around $100 a barrel from July's peak of $147, hitting Iran's main source of revenue.
His main rival in the June 12 election had been expected to be reformist former President Mohammad Khatami, who oversaw a thaw in relations with the West during his 1997-2005 tenure. But reports have emerged
that Khatami has decided to withdraw his candidacy and would back another moderate in the presidency race, without naming him. Former Prime Minister Mirhossein Musavi is another reformist candidate.
Iran's ties with the West have deteriorated again under Ahmadinejad, partly because of his fiery anti-Western speeches. New U.S. President Barack Obama has offered to extend a hand of peace to the Islamic republic if it "unclenches its fist."
Analysts say the outcome of the election could hinge on whether Ahmadinejad retains the support of Khamenei, Iran's top authority, who has publicly praised the president.