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New Year priorities: Tehran focused on turmoil at home, not nuclear program

While many US and European leaders are focused on curbing Iran's nuclear program in 2011, in Tehran the emphasis is more on domestic challenges such as economic reform.

Iranians fill their vehicles in a gas station in central Tehran, Iran, Dec. 19, after Iran announced a plan to slash energy and food subsidies. With internal political and economic problems, Iran will be unlikely to focus on their nuclear program in the new year.

Vahid Salemi/AP

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In Washington and European capitals, top New Year priorities on Iran may be Tehran’s nuclear program, and the next round of talks in Istanbul in late January.

But for Iran’s leadership, 2011 promises to be a year of significant domestic challenges, as President Mahmoud Ahmadinejad presides over a precipitous series of subsidy cuts, imposed on an inefficient economy already under strain from a host of sanctions.

Undergirding the turmoil in the Islamic Republic are questions of legitimacy that remain unresolved since the contested June 2009 presidential elections, which brought millions of Iranians into the streets in sometimes deadly protests of fraud.

Economic reform

The most important challenge in Tehran in 2011 will be economic reform.

After decades of expensive subsidies that drained the treasury of anywhere between $30 billion to $100 billion per year, Tehran’s cold-turkey withdrawal of subsidies on gasoline, fuel, and bread – which last week quadrupled the price of gas overnight and made diesel prices skyrocket much higher – is an “extremely drastic” measure, says Farideh Farhi, an Iran specialist at the University of Hawaii.

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