The outside world may be focused on Iran’s intensifying confrontation with the West over its nuclear program. But at home, Iranians are more concerned with an ambitious and risky new effort to overhaul the country’s troubled economy.

If it goes awry, the plan to phase out Iran’s system of state subsidies, which has existed for decades, could profoundly destabilize the government of Mahmoud Ahmadinejad, who has aggressively championed change. But it could also help wean Iran from its dependence on foreign gasoline and insulate the economy from new sanctions — which are a strong possibility if Iran continues to defy Western pressure over its nuclear program.

The new plan has been the subject of frenzied debate in shops, blogs and homes across Iran, not to mention the Parliament. Lawmakers across the political spectrum have warned of catastrophic price shocks once subsidies are lifted. Conservatives seem deeply worried about the repercussions, with some saying the plan could lead to a crime wave, or worse. Opposition leaders like Mir Hussein Moussavi have begun hinting that the government’s failure to stem economic pain could become their new rallying cry.

Filed under: * Economics, Politics • Foreign Relations • * International News & Commentary • Middle East • Iran

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