Iran Forces on Alert as Economic 'Surgery' Begins

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Iranian security forces remain on high alert after the government slashed subsidies on food and gas.

On Sunday, the cost of bread doubled and prices for subsidized fuel shot up 400 percent.

Security forces flooded the capital city of Tehran to prevent rioting.

The cuts are part of Iran's new economic plan to reduce costs in response to crippling international sanctions.

The government plans to give about $8 to each citizen for two months to compensate for the increased prices.

President Mahmoud Ahmadinejad told Iranians in a nationally televised speech Saturday that it was finally time to begin trimming the state subsidies that lowered the costs of bread and cooking oil and gave Iran some of the cheapest fuel pump prices in the world.

"Iran's top leadership is puzzled about the tightening sanctions and their long-term implications on Iran's economy. Ahmadinejad has labeled those sanctions a joke, but the Iranian people are not laughing," said Ehsan Ahrari, an analyst based in Alexandria, Va.

Some economists have said the unpopular plan to slash subsidies could stoke Iran's inflation rate estimated to be more than 20 percent.

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