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Ahmadinejad Asks Parliament To Review Subsidy Cuts

Iranian President Mahmud Ahmadinejad has suggested holding a referendum on his proposals.
TEHRAN (Reuters) - Iranian President Mahmud Ahmadinejad has called on lawmakers to reconsider their rejection of government proposals to slash subsidies by $40 billion, state radio reported today.

Last month, parliament passed a state budget for the Iranian year, which started on March 21, that did not contain the radical reductions in subsidies sought by Ahmadinejad, with many MPs fearing it would stoke inflation in the oil producer.

Ahmadinejad, whose disputed re-election sparked widespread opposition protests last year, has suggested holding a referendum on his proposals that would save $40 billion. Parliament approved only half that amount.

State radio today quoted Vice President Mohammad-Reza Mirtajeddini as saying Ahmadinejad sent a letter to parliament calling for a "review of the subsidy law."

In the letter, "the problems surrounding the implementation of the subsidy law have been pointed out and the parliament has been asked to help in the resolution of this problem," ISNA news agency quoted Mirtajeddini as saying. He did not elaborate.

Parliament speaker Ali Larijani said the government and parliament would set up a joint committee to consider the subsidy reform, ISNA added.

Lawmakers had said the cuts could stoke inflation. Analysts say they could also provoke unrest in a country already plagued by tension after street protests by opponents of Ahmadinejad over the past year.

Analysts say Ahmadinejad hopes the subsidy cuts will make Iran less vulnerable to sanctions on its gasoline imports and it would allow the president to channel some of the cash saved directly to constituents who support him.

Iran is the world's fifth-largest crude exporter. But while oil prices have surged, the economy has slowed as a result of the economic downturn, political isolation, and sanctions over its nuclear energy program.