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Source: http://www2.macleans.ca/2010/02/13/bracing-for-a-backlash/
Facing Insolvency, Ahmadinejad Will Cut Popular State Subsidies
(Macleans) Katie Engelhart - With his government facing insolvency, Ahmadinejad has proposed a radical overhaul of the system of massive state subsidies that have kept life tolerable for Iran's citizens. Today, price supports are firmly entrenched and cover a broad range of goods, including gasoline, electricity, sugar, and water. BEDigest, published by a France-based energy consulting group, estimates that subsidies cost the government $100 billion a year, or about 30% of GDP. The subsidy system has also created a perfect breeding ground for "smuggling opportunities," says Peter Wells, founder of a UK-based oil consulting firm. Gasoline bought cheaply in Iran is smuggled into Pakistan by the Iranian Revolutionary Guard Corps. By some estimates, up to 17% of gas purchased in Iran is smuggled out of the country.