Targeting subsidies in Iran is one of the most important and prominent parts of the economic transformation plan, which aims to change the process of providing subsidies. In this process, gradually removing subsidies for fuel, food, water, electricity, and other items in Iran will change the way they are given. A portion of these removed subsidies (60% in 2011) will be paid in cash to the people, while the rest will be allocated for infrastructure and cultural projects. This plan was implemented in the late 2000s and the majority of it will be carried out in the 2010s. Targeting subsidies is referred to as the largest economic plan in Iran’s history.

The history of subsidy payments goes back to the 1340s decade. These payments continued in the post-revolution period with the allocation of more financial resources. Although during the implementation of the first and second development plans, which were based on structural adjustment policies, reducing government expenses and eliminating subsidies were considered, this was not seriously implemented. In the fourth development plan, targeting subsidies, especially in the field of energy carriers, was emphasized, but it faced opposition from members of parliament to the point where the conservative parliament passed the policy of “price stabilization” in the opposite direction, a policy that the conservative government has declared as one of the objectives of the targeted subsidy plan to correct its negative consequences! In November 2008, the Council of Ministers approved the targeted subsidy bill in line with reforming the country’s economic system, and this law entered its implementation phase after ups and downs in December 2010. A plan that the government claims will make Iran one of the top 10 industrial countries

This writing presents a different perspective from what has been previously discussed about this plan and its consequences. It raises questions that each have dual answers. In other words, it is a vague crossroads that does not make it easy to choose one of them at first glance.

What is the governing pattern of targeted policy? In other words, in which type of welfare or economic policy framework are the characteristics of this policy explicable? This policy has two aspects: one is the elimination of subsidies and price liberalization, and the other is the temporary payment of funds to households as cash subsidies or complementary income. On the one hand, based on existing laws and discussions by policy makers, the period of cash payments will continue for one to a maximum of five years, and on the other hand, economists defending this policy see price liberalization as the most important aspect of this policy and the main factor in making the economic space competitive, expanding the private sector, improving the business environment and economic growth of the country. Based on this and by analyzing the content of existing writings and statements, it can be concluded that price liberalization and creating new financial resources for the government are the dominant aspect of this policy. Therefore, it can be said with some tolerance that this policy leans more towards

2- Another issue that is raised is that economic defenders believe that price liberalization is the first step in making the economic space competitive. Here, two points can be raised. First, if making the economy competitive is so important for the government, then why have many of the government’s privatizations under Article 44 of the Constitution been handed over to semi-governmental rather than private sectors, according to the Parliament’s report? While research has shown that the danger of semi-governmental sectors, due to the expansion of rent-seeking and the lack of transparency in economic information, is much greater for making the economy competitive than the danger of government sectors. The second point is why the government emphasizes price liberalization on one hand, but on the other hand directly or through guilds, tightly controls prices, especially in the area of household consumer goods, and in a way, manipulates the market mechanism? With the level of intervention that the government has in the area of prices, what is the reason for

3- From the beginning of the discussion about the necessity of targeted subsidies, the most prominent issue that has been constantly raised is the issue of Iranian households’ wasteful consumption of water, electricity, and other energy carriers. To the extent that the Prime Minister declared the main slogan of the government as “consumption management” during his recent provincial trip to Semnan province. In this regard, various comparative statistics have been presented with other societies, emphasizing industrialized countries. Although many of these statistics seem unrealistic, serious questions arise about such comparisons. The first is the “consumption culture pattern” in Iran. Many religious laws, the pattern of eco-centric lifestyle, and many cultural components that have been promoted as values by the government over the years, have created a lifestyle that makes its comparison with Western countries undesirable and impossible. Secondly, why does the government hide its role in wasting resources? More than 30% of water loss in distribution networks due to the aging of pipes before reaching the consumer,

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According to Habermas, there is a space in between the economic and political spheres, which is known as civil society or the public sphere, and its most important aspect is “criticism”. Habermas believes that the existence of this critical space not only strengthens communicative action among actors, but also leads to the growth of society and gradually encompasses the government. In this framework, how will the implementation of targeted subsidy policies affect the process of citizenship in Iran? What is the impact of this policy on the relationship between the government and the people? Will this policy, as a neoliberal policy, according to Bourdieu, turn the government into a foreign entity in the minds of the people? Will people’s dependence on the government increase due to cash payments, or will the liberalization of prices lead to the formation of an independent public sphere separate from the government? Although it seems unlikely, the expansion of the public sphere, especially with the weakening of professional and civil institutions in recent years, is

5- Without a doubt, providing social welfare is one of the government’s responsibilities towards society. Within this policy, which seems to allocate a significant portion of social expenses to the market, what new role will the government take on? Is it intended that within this framework, the government gradually withdraws from the realm of welfare and adopts a market-based welfare mechanism? In other words, will new agents enter the field of providing welfare services?

6- According to studies, in the conditions before the implementation of this policy, although the higher income classes receive a larger share of subsidies, the dependency of lower classes on subsidies is significantly higher than that of the upper classes. In other words, in the new conditions, the amounts paid among the lower classes are mentally perceived as significant amounts. In the days following the implementation of this policy, news was published about disputes over the distribution of these amounts among household members, which raises the question whether paying these amounts will weaken social capital among households. Will it lead to a decrease in charitable activities in society? And will the method of payment and distribution of these amounts weaken moral values?

7- Some studies have shown that the formulation of unrealistic and non-realistic programs by officials in the field of social issues is a significant factor in the occurrence of many social problems. The failure to achieve these programs not only leads to social frustration and a decrease in the level of trust in society, but also results in fundamental damages. Now the question arises, why do politicians introduce this plan as the solution to all the economic and developmental deficiencies of the country without any doubt about its potential failure? From the beginning of the introduction of this plan, the government has referred to it as the biggest economic wound in the history of the country. But first of all, to what extent has attention been paid to the patient’s condition? And secondly, with the current performance, to what extent is this surgeon capable of performing such an operation?

There is no doubt that the current method of spending subsidies is not very efficient, but it should be noted that there is no certainty or guarantee regarding the success of alternative methods. The questions raised in this article all have doubts associated with them, which are compounded by the ambiguities and lack of transparency that even the implementers and stakeholders of this policy face. However, it should also be noted that the existence of oil revenue resources always keeps the possibility of reform and reversibility of such policies as an option for the government.

The purpose of targeted subsidy program.

Gholamreza Masbahi Moghadam, the head of the Economic Commission of the Islamic Consultative Assembly, has mentioned the following reasons for the targeted subsidy program: The formation of Iran’s economic structure based on cheap fuel, which has led to low-quality production, inability to compete with others, and lack of effort for optimal fuel consumption in Iran. He gave an example of this by stating that the price of diesel in Iran is 16.5 tomans, while in Turkey it is 1800 tomans. However, the cost of transportation in Turkey is cheaper than in Iran. One factor contributing to Turkey’s success is that they have reformed their transportation fleet, which has taken place after Turkey’s economic reforms, and is considered a successful example of reforming energy carrier prices. One-third of Turkey’s income comes from taxes on electricity, diesel, and gasoline. Cheap fuel and food have led to wastefulness and overconsumption among the people. The World Bank