Date: 07 Mar 2000
Time: 07:47:35
Remote Name: 156.29.145.175
By Mehrdad Balali
03/06/2000 Reuters English News Service (C) Reuters Limited 2000.
TEHRAN, March 6 (Reuters) - Iran 's outgoing parliament has endorsed a move by a clergy-based council to block President Mohammad Khatami's ambitious privatisation plan aimed at securing a swift economic recovery.
The conservative-dominated assembly reversed or watered down on Sunday recent rulings which had backed Khatami's reforms to end a state monopoly on banks and major industries for the first time since the 1979 Islamic revolution.
The shift came after the Guardian Council, which vets parliamentary legislation, rejected most privatisations under Khatami's five-year development plan as unconstitutional.
The parliament's retreat before the powerful council threatens to throw Khatami's entire plan, due to start later this month, into limbo.
A new parliament with a strong pro-Khatami faction, elected in a landslide last month, is to convene in May. It was not immediately clear whether the new MPs would be able to reverse their predecessors' moves.
Khatami's reformist government had hoped to jump-start the stagnant economy through market reforms and create 3.8 million jobs in five years for the huge army of unemployed youth.
Earlier, parliament had blocked key market-oriented elements in the plan on the grounds that the poor would suffer.
It had instead imposed provisions deemed contrary to the programme's spirit, prompting serious doubts of quick recovery.
Some government officials and MPs had hoped that parliament would stand its ground against the Guardian Council, thus sending the dispute for arbitration to a top state body more in tune with Khatami's policies.
KEY PRIVATISATIONS BLOCKED
Among the setbacks to the planned privatisations were votes to maintain government control on banks and insurance companies, allowing limited room for private activities in these sectors.
The new moves also undermine government efforts to end the state's monopoly on airlines, the railways and other transport systems as well as telecommunications, water and power.
But MPs held their ground on a few points, including a provision to allow private mining, the setting up of new private banks and the sale of 49 percent of existing state banks.
"The state's dominant role in the economy is the biggest problem faced by developing countries, including ours," MP Ali Qanbari said during the debate, broadcast on state radio.
"Private banking can save us from this predicament. Existing (state) banks are not helping to boost productivity."
Central Bank Governor Mohsen Nourbakhsh, an advocate of liberal reforms, told parliament that he had lobbied with the Guardian Council to clarify a boundary for private activities in major industries without violating the constitution.
He assured deputies that future private banks would not be allowed to violate the state's sovereignty over banking affairs.
Iran privatised all banks after the revolution to stop the outflow of capital and as part of a drive to establish social equity. Major industries have traditionally been state-owned.