IAJ LIBRARY Mttdotcryiew
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NATIONAL INTELLIGENCE ESTIMATE
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Iran
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THE PROBLEM
To estimate the main trends in Iranian foreign polici and domestic ah* us over the next two to three yean.
CONCLUSIONS
A. Iian isote active and ^dependent foreign policyemit of the Shan't increased confidence in Zran't economichis declining fear of the USSR, and his increasing aniiery about Nasier and other Arab natiCptialists Iran's new tnteroatjotuu' stance will provide opportunities for the USSR to expand its presence in the renin try and will cause difficulties for the VS. However, the Shah is well aware that his domestic position and Iran's Kcurity depends heavily on US aupport Thus he is uriJutely to move deliberately to ah er the alliance or reduce US activities in Iran. .)
mestic considerations are unlilely to alter Iran's foreign rsolicy to any great extent over the next two to three years. The Shah will probably remain firmly in control, though the bullc of the educated middle class probably will rernain estranged from the regime.)
C. Iran's rate of economic growth may be adversely afiected by the Shah's ambitious military- expansion program. Oilich are Iran's main source of foreign exchange, are not rising as fast as in the past, the reform program is unldely to have much effect on the pace of ecorsorriic developtnent. If, as is liierv, the Shah pvesto his military program, the ecxmomic growth rate would probabN slow somewhat, accompanied by periods of inflation and recession)
mm FOR BFAIaV:
DISCUSSION i. THE SETTING
J. Sine* th* departure oiinoue. Ihe Shah has concentrated virtually all political power in hi-hand- He ho iniulled is Pnmeeries ol Ijilhlul. lacking an* independent pohlHal haw presented no threat to hi> control Al thr tame time Sreform program (the "White Roouncn ealculatrd to talr tit* wind out of the oppositions sails. Tho waa fciUowed by ruecesjful etloris to buy oS or intimidate the opposition, which wasonsiderable disarraypotentially powerful figures within th* governmentre effectively neutralized.eiult,trong undeieuiient of intellectualersist i. ehr opposition hat been deprived of any effrctjv* meani of expression. At the same time, the country has recovered from the receulon of thr, and oil revenues bavr continued to climb These development*given the Shah increasing self-confidence and hate rocou/aerd him to be more assertiva as foreign isjji
II. IRAN'S INTERNATIONAL POSITION
i the same period, the chanting world scene hat powerful') alerted Iran In recent years the Soviet L'mon has undertaken to woo its southern neigh bees fselauoos between Iran and the L'SSB. which vacillated between bad and worse during most of the poit-uar era. have steadily improved sincet that ttnve, Moscow accepted the Shah's pledge not to permit the establishment of foreign missile bases cn hh soil and inched its polof open cbploenaOc and propaganda measures to overthrov. his regime. Further, the banians mierpreied the CS-l'SSfv relationship whech emerged after theshIc ensts aseneralold Wars fears of Soviet intentions have waned in Iran, regional concerns have come to the fore. The Shah has long believed that Arab nationalists haveon ban'sn. province, with its large Arab population Mote-over, he is convinced that Nasser is plotting tc merthrow the Persian monarchy At the same rtme. he feels thai support from the West has not been ai forth-corning as he would like it ro be- He believes that has CENTO partnersnan have received inadequatf Western backing in local quarrels over Cyprus and Kuhmir. andonted thai the Briton may eventuallyfrom thef. and thai Nasser may move in All these factors havr pe loaded him that radical Arab nationalismreater immediate threat to Iran than ts (he Soviet Uasoo,
Thus the Shahore active and independent foreign pobcy as both and feasible In ho mood of growing, self assurance, he is now conn-dent of his ability to deal with the I'SSB without falling under its control.
Morrovet. Iu> >of tU.nliU ruins oil rmipt> ho:hi*ith in. ISli mil Urn sur^lemrTsTjl milirjn pur-chase lund fvimiKili.irmril. die Sruh r> threateningo on!-side IS source* of luppK for jdJidoiu! military eijoipment.
lUloiiori with the USSR
S Th*ear's hope lo mow th* Shih toward greater independeiru from ihe Wen Tho have long prrued forreduction in the IS riesemi in Irana viewHi eventual elsrrurtatiun ll it unlikely, however that the Sc will use pressure tactics to achieve this goal, lnttrad they art liLf-ly over Ihe next several yeart lo promote an image of the Soviet.Cnioneaceful country interfiled in good relatiom withneighbors, in the belwi trot the L'S presencegradually be eroded if the Iranian* buoovr corivirKed c there is no Soviet threat to their country.
8 While the Shah remain* wary of the t'SSR. he apparently view*ources of eionorriic assistance and haiomluoVd agree menuvanous Communist countries- Tbe Shah don not appear particularly worried by the prospectubstantia) Soviet presence in ban, he feeb coo Edhat bis security forces can cope with attempts at sub-venSon and thai the L'S can bt re bed uponelp counter any direct or indirect Soviet threat Officials of tbe rnieroal security ceganixationescribe Soviet eflorti to develop the Iranian ecortomy as motivated by the Sovietthat induttrial development will lay the groundworkatertakeover of the country The Shah doe* not accept thus tfvrau and remains convinced that he can keep the situation under control
* Aid from the Communist countriesariety of economic projects. Moscow' agreed3 toam and construct grainorthern Iran and Iran iserins; uimg Sower assistance tn rrplormg forhe
attractive on eccownic grounds, assuming adequate reserves
raw rnatrriab are found. It ka designed to meet Iran's domestic rtrel require, mentis saving on tbe order of tOOO rmJlioc peroreign eachangr and absorbing some of Iran's surplus labor. The conitructioo of the pipe line to deliver natural gas. which is now being burned oB to the USSR in pairnmr tor the miD. factory, and nampmsorsey element in the total package However, the Soviets will not provide the pipe itself nor help finance Its purchase from Westernnd therefore Iran will be forced lo expend con-vrrtible foreign richaiee for :hii pvsrpose Fisrtherrnore Iran will be required io prowde ancillary facilities. iuch as railroads .ghways, and power lines, which
"la rentalaat alsosJLan oralRumanial<'at -aduaaevCtr. hatfc.
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eou'dillkon dolU.> and cunv.Nilii. currencies
8 Wnilr Twill fcwJM evorwrie reUlioriv Me birhontinur '0 eapand. iKe joreiv will protubK male onh little prngtru in thr political awl tnUi-.iT> field. Ahhoufl. the ttSR wflfain greaterill be difficult to translate this into political influence. The Shah msv become mot-amenable to longitindtng Soviet reuueifi for increased contuU representation IMIII Mil tf thu vonceinon is associated withconomic aid oflrrs De.pite mi deurr tor adehuonal military shipment the Shahbe most reluctant to ar-ept even token ainouots of Soviet equipmentol trictKm aiTJ remain. panicOajK as long al Communut clandestine rad* attacks on th. Shah
Recjionol Relolioni
he Shah's leai ol the t'AB la based on an exaggerated opinion of Nasser's eepabuities for fornentmg revolution, parueularh among :he Arabs of KbuiiMat. Deipue the tomei the I'AB baa fuJeeed in the Veenen ard the ebbing of Newt: chances for achatving aome form of rnennirigful Arab unity, the Shah apparentlylves bnJe diminution In th* threat bom thu quartet He ee-mains eaceedingly suapkious of Nassers moves. liKerpretlng them as merelv tactical maneuvers to hill his enemies Into compUcency. In this frame of mind, the Shah continues h) believe thatorking through the Iraqi govern-merit as well as radical Arab movements lo the Persian CuH to overturn his regime
h* wealumlng of arrv Iraqi government fnendh to Cake, therefore,igh priorrtY tn Iranian foreign pcJvo Ai the priDCtpal meam for Kcomp'.tfh-,ne this obrective. the Shah Is supporting the Kurdish rebels In northern Iraq with arms and safe haven However, he has limited this support somewhat because be does not wish to see ao independent Kurdish state emerge on the borders of hii own Kurdish areas SowtheJess. this Iranian policy antagonise* Iraq, with which the Iranians alsoongstanding dispute over the boundary to the Shart al-Arah waterway. We behave (hat belle ampec^ernent of leUtsom is bkeh and that it barnsloser taes with Nasser were to corn* to power in Baghdad. Iran would probably intensify its intermittent efJorts to overthrow th* Iraqi goveranent
U. The Shah is alao attempting to fc-ter clover relations with cwnervaiive Arab leaden. He has given some support to King Faisal to the briers eforti to force Nasser out of the Yemen and has shown scene interest aafforts to create an Islamic mcnement of Arab and non-Arab Mj.hm countries, let the Shah is warv of becoming beavlh cornrrutted to thu eflcei Hr apparently realizes that it has little chance of success and that too close an identiBcation would undercut the reformat image he seeks to project. Therefore the Shah is bkeh to limit hb efforts to improving bilateral ties with Arab monarchi and cooservabves. Hew ever. Faisal and Huiialn have objected to Iran's close
trUlIC with !ir. Iran might !iv"i r.-pn' abuart it* irla-
ttonihip *vilh liraet. hot there it Utile likelihoodould break oft it.ucrative trade
Stub's mterrvi In CENTOwaned ttnu he realited ilui.ould not Uelo deal withjo&iil ntobterm. Vtia vehicle fee wow wcriorrtic aiir-tarKe. and (he Iranians wtk) profeubl*tWapedett of Soviet iniiitiwis to maintain thisink tu thea oounteroeight. particulajh at il i. relativelyhein the Regionil Cooperation for Df-CD, -Mangem.nland Pakistan wdl probably iftnam small.
with the US
cSar.gn o' ihe part feu stars have altered the climate ofIn addiiion. nsinmousausedthend Iran Wiih respect io military aid, the Shah hasdutatisfied with US unwillingness to provide tht amount andaims he wants This dissatisfaction has been fur".her fueled by suchthe prolonged 'rtigatton in US courts instigatedormer Iranianbar attached the assets of the Shahs brother andKtpectt the US could havet had really tried He hasb- US efforti to induce Iran to seek Western offers for the steelwhich the Soviets base agreeduild, while at the same timefraihcomirg with US aid
Ir isell i'i
dial hi- domestic position andurit. are. In large measure,pon US support Inore independent foreign policy bne. the
ver threw years greater strains are likely to appear in US-Iranian relation* as Iran attempts to assert its moVpendrnce and the Shah increases hit demands on the US. He will insist on receiving military equiprnetst. particularly antiaircraft weapon and naval craft, beyond that provided under the currrnt mihtar. aid aperrnent and. in genrral he is likely to erpect more for his to-oper-rxxi with ihe US There will probe oh. be aa.mcruous debate over ihe amount and tvpe of mibtary equipment lo be provided in the future. The US earned considerable unfavorable publicity throughout Iran Intatus of Fortesrsntrg substantial privileges Jo US militarywas hastily rarrirned through the Iranian Parliament The Shah appe.rs to be growing more sensitive about the visibility of the US presence in Iran, which has attracted criticism at borne and hostile propaganda from abroad He would be nvxt reluctant tohis vistbilirv
sluh i* thus likely to ro.ru- uilkn di-rnitt luninds m1 liy the need lo keep liit.nl ihe bask vs-lr.mi.jnivirtl.uhrkit ambitious inendift" plan, createeiprircmenlv lor lim-ira*rrimit danger* lo lhi> relationship are more iueh to ami- tiom an iranian mivcaliulation ofdionsprtlfii lranun moveromehberiii* iianwrt attempt lo alter the relationship.
in. domestic trends
he chances are slim that domesticl) alter iran's foreign policy to any great extentthe next few yean. the pojiucaf opposition ranges from traditionalists generally opposed io am reform through middle class reformists who resent their own exclusion from credit for the shahs reforms lo the communist tudeh party on the extreme left. these disparate andopposition elements have been efiectheh repressed by the shahs securitv forces. the middle class reformists, in particular, have lost some support by their factious opposition to the shah's reform program in association withopposition to it. it is highly improbable that these opposition elements, singly or in combination, will be able to come to power within the foreseeable future.
it. the while revolution, together with the spread of education andis laving the ground/work for far-reaching changes in iranian society. but the pace of change is still quite slow. while some land has passed from the hands of the large landlords who were an important prop to the monarchy, this group has lost little of its former status and appears to be adapting to its new crcumstances without great economic dislocation. the religious conserva-tr.es. who have been more affected, have been prevented by the government's vigorous suppression of dissidence horn coalescing behind one man. and the religious opposition has little vigor. the army and security forces, on which the shah's regime urcunatcly depends, are well taken care of and have not sufleied from the reforms. while our knowledge of political attitudes of the military officers is limited, we believe that the ov erv>-helming majority of the military establishment is, and wid remain, loyal to the shah.
the shah's main domestic political problem is to broaden the narrow base of support for the regime. the reform program has elicited some sympathy from the growing technically trained managerial and administrative class on which the shah pins his hopes for the rsltiinate modernization of the country. nonetheless, the bulk of the educated middle class is estranged from the regime it will remain so until the shah is willing to give it some measure of political influence. this he is as yet clearly- unwilling to do. and vie do not foresee any-early change in (his attitude. in time the disaffection of middle class elements might pose serious problems for the regime, particularly if theysupporters within the nilhtary.
the shah's clear emergence as the dominant 6gure increases thetrong ijentification of the regime with hit person. there have been several
onh> Idt*. Sum*tlose lo >uiiiu WMI,
lb*f.pu.rtor leaders, prevent*fr imjll and miirird NtthtdsBku'l for thr Ktrnt. lorn-if- snd Cu-iJ Jgainvl Though th* assnvunjtion of Prim*rjroanred ihu danger,hah find, public appearance!precautions
X Sho-ld lie Shah dV. bant political sUbshiyaveh shalrn Hu ion ihe Crownean old and no regency council hat been appolnied None of the politicalncluding the kWraueraey andParliament. have any IriHependenl stature. OuI> the inlhtiry establishment appears to have the toree tothe political vacuum which would attend the div appeara.iee of the Shah At leait wWuth. (beeri would be tn the best positionssume concot They are probebh scenewhai more consent live than the Shah,overnment which they controlled would probablySe present coxie
IV. ECONOMIC 1TKNDS
ran hat nxmfujly emergedecession whxh began1 Gross National Product eipanded about fiveear during the last three Iranian fiscal veersnd both public and private investment have nxreasei Tbe prrfcrrnanr* of the oa!st aasuUtad from dorneiiir ecorormeprovided the main impetus lor economicother sectuii of the ecoraoray have registered only modesi progress Because agricultural producing has failedep pacepopularioH In-create food imparts are risingrobebh rocrloue to do so. Industrial development has been some-hai more successful gaming nscrr*rmmi parocu larh in the past year or so. However, despire frstng cul income Irani lor rip cichange reserves have failed to increase significantly because of mountingol both consumer aod tsvesonent goods
iZ The White JUvohrbon as unlieh to has* asuch tsftct on toe pace ofeIopnvrnl. Th* peogram of proftt snaring for workers and th* sale of government interprisei remainead tetter Tbe Literacy Corpi program, under svhich several ihousand ctrarre* teachrri have been sent to me villages, hasood start However,ar from certain that the programj: te roooaued long enough and b* la-trgratrd ef ectJveS rssovgh with th* rest of the aelucaiiorial ivstem toajor long-term impact Land reform, to be sure, has been proceedingairly rapid rate in recent months and mas be completed by the end6 It is not genmtinp muchofn* however, and as yet hat hadmaU negatne impact on agricultural production. Much of therwkmging to ihe owner of one village ormcreh been rented to th* tenants at Lird long-term rates, and in mam cases th* landlord remains the source of credit In coimr-.g. tears goternnsent sponsored agricultural mpentivn could play
portJlMn int-ie-HiiC preduilwn, tml ihryn.un dstVull to >utl and will require considerable financial resource*.
il ii ihe brighthe Iranian economic ptvture. itor. th*d-Ovg rrvenues from this source that th*aining hi* principalor economic progress and an independentn inieroaliooal affairs. Tit-Iranian government's oil revenues have more than doubled in the past seven vears. and netmounted> millnuim.*ver. the inweave5 ol not quite eight percent duappointed th, Sluh. who espects the IWl percent growth rate ol earlier vears to continue. He isnslde/aW. pressure on the Ccmsnrtium members, which market the bulk of Iran's oil. to step up their offtake subsuntiabV This the companies have refused to do chimingharp boost in oil lifting would violate their components to other members of the Orraniiauon of PetroSrum Exportinghile the oil companies will cerutnlv bear the brunt of the Shah's displeasure, a. will probablv also trouble telaUons with the L'S and. if the companies give in com-pleteh. Iran would be in conflict with other OPEC countries. Having no aherna-tne source of foreign exchange, and remembering the hard lesson of an earlier break with ihe oil companies, the Shah will almost cert-ilnh- avoidefinite show-down with the eompanies. Thus, unless world demand increasei more rapidly than expected, over the next few yean Iran's odot hVeh to rise much0ear, ao amount which will be msuftcitnt to smar.ee the military and economic programs presently desired by the Shah.
he Shah may not yet be aware of the degree to which his foreign exchange resources are falling short of the requsferneoti of his ambitious plans. Thereonspicuous lack of real coordinauon In planning between the various civilianh't any agencies in Iran, and fen government org in as tion! carry out their tasks etScWnttV. these conditions are likely- to penrirt Iran canhoice between militarv and economic eapendituresime by in-me of foreign loam; of late it has not done much benowiog abroad, Eventually, however, the Shah will have to resohe these conflicting ciemands. He Is likely, as In the past, lo choose military over economic development. In such circurhitancei. Iran's economic performance would probably continue along the pattern of recentawdcrate growth rate, but with periods of rnfUtion and recession. Should Irani foreign exchange problem becomehe Shah would probabh turn to th* US and the West lo bail him out. Yet, he would probably strongly resist any efforts to slow hiipenditurri or tohorn hS ecoownle deals with the Communist world.
Original document.
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