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Last Updated: Wednesday, 22 September, 2004, 12:31 GMT 13:31 UK
Iranian MPs back investment veto
President Mohammad Khatami
President Khatami is fuming at the parliament's move
Conservative MPs in Iran have backed a bill which would give them a veto over foreign investment.

The move deepens the split between the parliament's hardliners who hold a majority and President Mohammad Khatami's reformist government.

The bill will "paralyse the work of the government" and cost Iran billions, an angry President Khatami said.

The law was "without precedent in the history of the Islamic republic", he told reporters.

Turkish deals

Under the law - which garnered a narrow 108-104 majority after two days of debate and four rounds of voting - holdings of more than 49% must be approved by MPs.

This law signifies that the voice of a government led by a president representing the people has no value
President Mohammad Khatami
It will be backdated to 20 March 2004.

The primary target, said its backers, was a pair of deals with Turkish consortia.

Its language, which singles out airports and telecoms deals for special attention, bears out that aim.

Tehran's new Imam Khomeini Airport was built at a cost of $15m (8.4m) by Turkish-Austrian group Tepe-Akfen-Vie (TAV), but its staff were thrown out by Revolutionary Guards in May hours after it opened.

TAV, they said, had business with Israel which made its presence a security risk.

Similar charges are levelled at Turkish mobile phone group Turkcell, which has been awarded a $3bn contract to build a second GSM network in Iran.

"The tender process for the second mobile operator was biased in favour of foreign firms," one hardline MP said.


Ever since elections in February - which were boycotted by moderates after most non-conservative candidates were barred from standing - the power struggle between parliament and the president has intensified.

The bill is the latest push by religious hardliners to win control of the economy.

According to President Khatami, it amounts to an attempt to shut out the elected government from international affairs.

"This law signifies that the voice of a government led by a president representing the people has no value, and that the government cannot deal with the international community," he said.

The parliament, or Majlis, is currently reviewing a five-year economic plan presented by President Khatami, who has been in office since 1997.

The plan, the original version of which called for privatisation - particularly of banks - and outside investment, had been thrown out by the Guardian Council, a religious legislative watchdog.

The Council had blocked much of the legislation put forward by the previous parliament, a majority of whose members had backed President Khatami.

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