Mullahs At Odds Over Inflation, Wall Street Journal, June 2

TEHRAN, Iran -- The world is waiting to see whether Iran's new president will push the country toward moderation. But Iranians have a different demand for Mohammad Khatami: Push down prices. Voters repeatedly cited inflation as a top concern in interviews before and after Iran's elections last month …

Outside the Cooperative Organization for Consumers of Cities and Provinces, a crowd of 30 waits to buy two kilograms (4.4 pounds) of sugar for the government price of 56 cents, about half the market price. "It's stupid and outrageous for us to stand all these hours for sugar," says a Tehran housewife. Another woman says food prices in private stores shot up with the Iranian new year, in March. …

The U.S. trade embargo has made some products pricier and harder to find. And government itself has raised prices on gasoline to encourage conservation.

Mr. Khatami, a former minister of culture and Islamic guidance, hasn't defined plans for fighting inflation. His campaign aides say those plans aren't set. That's probably because Mr. Khatami had competing economic views within his campaign. His original supporters came from Iran's left wing, which has fought for price controls and subsidies. But much of the campaign's muscle came from technocrats allied with President Hashemi Rafsanjani. They support a move toward a free-market economy.

Mr. Khatami's victory has weakened Iran's bazaaris, the merchants and traders who supported Ali Akbar Nateq Nouri for president, partly in hopes of winning freedom from import and export restrictions. The Parliament yesterday re-elected Mr. Nateq Nouri as speaker.

Iran's bazaar community, where business deals still are pursued on a whim and a handshake, helped bring down the shah in 1979 with a crippling strike and has given financial support to Iran's Muslim mullahs. But they have an adversary in Mr. Khatami …

Loyalty To Khomeini Key To Regime's Survival, Agence France Presse, June 3

… The Islamic Republic intends to commemorate the 8^th anniversary of Khomeini's death with official ceremonies which must be more elaborate than those in past years…

But the official demonstration of fidelity in which thousands take part each year is a means of concealing the lack of jobs and increasing need for change among the young…

The Iranian conservatives and fundamentalists who control the ruling system, but nevertheless suffered a major defeat in the elections, will stop at nothing to prevent any sort of opening up. The ultra-conservative daily Arzesh'ha wrote: "Everyone must realize that the revolution and regime will continue toward that destination begun 18 years ago."

The newspaper added: "There is absolutely no doubt that the reason the Islamic regime has been able to keep on its feet, is its loyalty to Khomeini's values."

Khamenei: 'We Cannot Limit the Islamic Revolution to Iran's Borders,' Agence France Presse, June 4

… Ali Khamenei told the crowd gathered at Khomeini's tomb south of Tehran: "All of the nation's officials must continue on the eternal path chosen by Imam Khomeini… Thanks to Imam Khomeini, Iran will never fall into corruption and perversion. This is now known to Western society, especially America… Iran will never bend under pressure." …

The regime's number-one man objected to the Israel-Arab peace process, saying: "Those who for years defended the aspirations of the Palestinian people are today scurrying to establish trade and political ties with the Zionist regime."

Denying charges that Iran "exports revolution," Khamenei said: "We cannot limit the Islamic Revolution to Iran's borders."

Austrian President Says Nothing To Hide In Kurd Murder Case, Reuter, June 4

VIENNA - Austrian President Thomas Klestil, responding for the first time to allegations he pulled strings to allow suspected Iranian assassins to flee, insisted on Wednesday he had nothing to hide…

Klestil was a senior official in the foreign ministry in 1989 when an Iranian Kurdish leader and two other activists were slain in a Vienna flat by suspected Iranian hitmen.

Opposition parties have called for a parliamentary inquiry into the matter and on May 22 began a 20-day boycott of parliamentary business to protest at the government's use of its parliamentary majority to block their request

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