Iran cuts subsidies, prepares for unrest

TEHRAN, Iran - Security forces flooded Iran's capital to try to discourage public unrest as fuel prices surged 400 percent Sunday after the government cut subsidies to ease pressure on an economy struggling under international sanctions.

The so-called economic surgery had been repeatedly delayed over worries of a repeat of the 2007 gas riots and amid political infighting in the standoff with the West over the Islamic Republic's nuclear program.

But the timing of the first painful steps - just after a first round of nuclear talks with international powers and a second planned for early next year - suggests that one of the world's leading crude-oil producers is feeling the sting of tightened sanctions and might open more room for compromises with world powers, including the United States, in exchange for easing the economic squeeze.

While Iran is a major producer of crude oil, it has to import gasoline because it lacks adequate refining capacity. Even so, state subsidies so far had given Iranians some of the world's lowest prices at the pump.

President Mahmoud Ahmadinejad "has labeled those sanctions a joke, but the Iranian people are not laughing," said Ehsan Ahrari, an analyst based in Alexandria, Va.

The overnight price rises - fourfold in some cases - follow upheaval within Ahmadinejad's government. Last week, he abruptly replaced longtime Foreign Minister Manouchehr Mottaki while Mottaki was in Africa.

The move sent the message that Iran's leadership had tired of Mottaki's challenges to Ahmadinejad and sought a unified government at a critical time. In his first public comment, Mottaki on Sunday called his sudden firing "un-Islamic, undiplomatic and offensive," according to the semiofficial Mehr news agency.

In Tehran, riot police took up posts around major intersections as the subsidy cuts took effect. There were loud complaints by consumers, but no signs of violence like that in 2007, when the government first imposed limits on purchases of subsidized gasoline.

Under the new system, each personal car will be entitled to 60 liters (16 gallons) of subsidized fuel a month costing 40 cents a liter ($1.50 a gallon) - up from the just 10 cents a liter. Further purchases of gas would run 70 cents a liter ($2.69 a gallon), up from 40 cents.

"I don't know what to do," said one frustrated cabdriver, who did not want to be identified for fear of retribution by authorities.

Despite the grumbling, there were no reports of clashes in Tehran or other major cities such as Tabriz, Kermanshah, Bandar Abbas, Kerman, and Ahvaz.