Senior Iran cleric says president spreads poverty

By Parisa Hafezi

TEHRAN (Reuters) - An influential Iranian cleric has criticised President Mahmoud Ahmadinejad in unusually blunt terms by saying his government was pursuing policies that were leading to "public impoverishment", newspapers said on Monday.

Former president Akbar Hashemi Rafsanjani, a political rival of Ahmadinejad, called on the government to rein in populist spending policies largely blamed for fuelling inflation that is now running at more than 20 percent.

Ahmadinejad swept to power in 2005 vowing to spread Iran's oil wealth. Benefiting from soaring world oil prices, he has won applause by announcing big handouts at provincial rallies but ordinary Iranians now gripe about the price rises that followed.

Rafsanjani, head of a powerful arbitration body, has tended to criticise the government in indirect terms in the past but his latest criticism of Ahmadinejad's management used uncharacteristically straightforward language.

"Building Iran's economy cannot be possible by spreading public impoverishment," Rafsanjani was quoted on Monday as saying by the pro-reform Etemad-e Melli newspaper.

Rafsanjani, president in the 1990s, was beaten in the 2005 presidential election by Ahmadinejad. Rafsanjani is not expected to run again but his comments show that rival political camps are starting to stake out positions for the 2009 race.

His remarks reflect widespread public disillusionment with inflation and unemployment in the country, where over 15 million Iranians live in poverty according to official figures.

Despite mounting criticism, Supreme Leader Ayatollah Ali Khamenei has several times given vocal support to Ahmadinejad, backing that will be vital in the 2009 race, analysts say.