Created: 5/20/1964

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AfiprcMd for Re-ease



it rftw. A'.






ii political ittuaticw

Tie Roe* of tha XUiiary The OpposOJon

conomic TRCfDS


ajtkuii uri and Land BafnenT rv. the noMranc ourxocnt

v. rORCOM policy

Jtetalloni wtUl8 lutauona wtth tbt Ul Rtgioaal RabUkaaa




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uncertain whether modenuzation La Innrelatively peacefully or whether violence andin store. The Shah's reform effort has already helpedand shape the forcss which must eventual;y. inor another, bring basic channel to Iranian society.strength of the landlord class has been somewhatgratitude of the peasant! has been enlisted and theiraroused,ew and growing managerial class seemsacquiring mcrrased Ho**em. the Shah,by the armed forcesT still dominates Iranian pom mi!seems Likely to do an for some time to come. With thehe has acquired from the retitive success of histhus far. be wilt probably continue to morawith occasionalike the pvesent one in hisprogram, (ferns.Jf7)

is emerging only slowlyecession which1M1 as the result of ineptly ippttrd anti-innatlonarythe consequent loss of business confidence, Tha latterart back by the uncertainties engendered by thaBut thehe country are adequate toa vigorous economic development, and the outlook forgrowing oil revenues la prtwnislng. within the nextpct^tly be U) wrcoo. Lh* c'^rrciireturnairly rapid rata of rrtma. ft, It)

C The rvdirUon In tensions which followed rxraaiiiation of relations with the Soviet Union In September 1M3 has continued, bat reti'.tons are not likely to become ebrniAcaaUy mere Intlmau ever the next few years. Though the Shaheed to sppaar

more independent oi the US, the outlook isr atomidf rable lime to come, .nness dependent man in tne past on US eccnoniic ad.he military and security field continue* to rely on LS

espects baa resembles other backward stale* rakd>utn and confronted by th* many pressures forgtveraied through wrier contact with Um modemnrmnuin;tlity that sooner or liter the enureof tat gorrrnment and theitself or be owrturatdKossedr* wemed oa Lb* vert* olnu rrtUM coUapanL and if*

resurgence at rerotullonsiy forct* Chant* cant, bat It neither radical dot cataclysmic. Theend governmentalnan beta stretched but not wit atuiultr.

etptanaUon amn to rest In tare* part with the cbancurShin and the kind ofe has come to play, not only a* aas an active national leader. Re has ions; been aware el* the(or change and nu at various Umraumber ofreform, though dob* was rlnoroutty pressed. Beto tbs rkr* tfcaltow pace ofby

tau. the rcpiB* om Lhe tone na By tfls

was neset uMl

sot* to claries e. reaction which not only offered Ma vkfctfor atucs butrakjn friends sada uus sttUag. Uwrigging of the 1M1 again returnedparliamentUj composed of tbe andsrujerous Wuationoe Shah fen it ssry tortme llinJsUr Am.nldal* for change. Aaalnrs reform rneasure* provided saens temporary reflet bwt tbey began lo aflenst* tbeUv* ent*attracting say tbe HsUoneJ From

At UMa* anab ertdsnUy must himself lake rseponabtmy for a

Be saw hosed by swebto tab* la* triad oat of tbs epooatUDa* aaU* andios dsn Mibast of potttical sapport. To tha ead heapros-rue, wfush was spprnvedeaaary IMS. Land rvfsna. toward stuck, em steps h


by UH Amini jovtmment. was tne mi In plank in thii program and rapldiy became tbe focus of popular attention.'

Under the management of the dynamic and ambitious Minister of Agriculture. Arsanjani. the land reform program initially morea eery rapidly. But. when Arsanjani seemed to be pressing the land reform too rapidly aad to be using it lo establish an indtpendent politicalthe Shah forced him to resign. Thereafter the pace of landwas slowed considerably The government found It difficult to provide agricultural credits and the trained managers for rural cooper* Uvea both of which were necessary tor the success of the program. Inhe government pvhhciy claimed that the fin? phase of theof the largest lirnlhnir'fnp hid been completed Some preparatory work is now going on for the second phase of the reform program, which is lo involve0 of the ullages nekf by one or more landlord, tut it is not clear whether aeecision to proceed rnth It will be made.

The reform program has not yet broughtasic chaagt In Iranian society or reduced the Shan's domination of politicalsh may bare sei inrocess of change which could have fax-reucrufj consequences. Already the strength of tbe landlord class has been somewhat imralrecLJne gratitude of the peasants luu been enlisted ana their expectations aroused,ew and gtowtig managerial class seems to be. acquiring increasedevertheless, the Shan's mime conUaues to depend essentially on the army and security forces wtjch have received important favors in return for their leralty. Much of the urban ruddle class remains disaffected. The -Thousandhough deprived of much of their land, are sua wealthy, aad many remain entrenched in the Shah's entcurste. rtralty. the peasantry Is not organised and has demonstrated attar

G On* aspect of social change to Iran wruch holds ruacanee for tae future has been the nee et the technically trained managerial and adaUntftrattt* cases erne new have reached the upper lerris of the bureaucracy In nibetaniUl numbers. This new breed of

romca-educated intellectual mat bream* prominent In ibe tat*tn the Pima OrgaiUxAUon wruch. beirg independent of the traditionalproridrd quick advancement. They are now gradually beuif, dUtnbuled throughout the bureaucracy. While many are at enthusiaitte about the Sfwhx style of eoeerameat, they are syarpathrtic with much of lus reform program and are helping to Implement a.


vs.ilie the Shahs authoritarian rule, he has generally felt the nerdar-de of representative gorrrnment In September 1SM3.

after two yean of rating without parliament, he again bcfet electUk* their predrcvsaors, these elecuons were rigged: the contending poutlesJ parties were again cliques attached to certain personalities sad not fpreseatativ uf broader population groups. But this time the dec* Uons were used by the Shah stgniAcantly to Inc.Ttae the nuamber ofrrfBdiimany associated with the land reformhe hUjla and to greatly reduce the representatives of the landlord etass.

In constituting his most recent cabin-t. tnat of Hasan AHahin turned to the msaarenal and adrruoistraUv* clasa Although Mansardwieiuiurut sltslrs ii limited, be hasrepvtatson forapable sdminttxrator. Inhe became head of threnter.roupovcnunent technicians, buslnesnpen. andhich learned the nucleus of the Xrw Iran Party, founded at the shah'st*J. Though this party now hasfe deputies la thet at aa sxUncUU creattoaopular bast,

Tha Idas af aw uTisirj

lthough the reform program la theory threatens the Beaker ocBrvn -noested "Merest in the afsf a> gas. thus far tbey do not teen toflrred or to be perUculariy concerned mmm of ta* auddk-and Junior officers probably share the outlook of theat theorutaoUy scrwnfeg the sfBeer corpa eseat tmhsi the aejatary seas set appiar to br groeraag. W* thatrw homing me ferity of the Ofncer steps at* kryal ta


W. Th.onUnuo to relyray orgaoaauon isATAK) not onlytgath* oor^mucr. bat to orgthSa* Jhas sou howerer. beta abb, to forestall^

of open sefuuw* of UNgIM, hart not IsMas^trrtlaa*




scmolo extend to the Kurdish errae In* benefits of economic development ind to intestate them in greater degree law national Ufe. The Irrjuan Kurds ire unlikely to create senous pnmiems for the government unless Irani Kurdsarge measure of autonomy or unless the USSRetersuaed attempt toeparatist movement. Neither ofe--pmenu now seems hk*U. Whiie tribal disorders -nay occur la other parts of Iran, such curutiru are easy to contain and aotalc. and it would be extnttnele difPcun forrrse tribal groupings to coordinate acucn against the regime Though there ts almcsl certainsome Egyptian or Iraqi uslngut gggeagj the KhuzmaA Araba taey are uoaravrd. sunk la porvrty and apathy, ana therefor* coast it itt* no threat at preasat.


ran's natjrai resources an capaute of tupporting mnmrtflffifflor.'. Arsbvore than sCecuate lo support the growing population, and UTsgat'on projects en uscrnsaig agnc-Jl-tural producUntr and bnoclng new land under culilratioB. Farored b* good wrather. total agrl ultural production InIncreased some niner thai of ih* previous year. Iran* most Important asset, however. Is lis boonuag- <N1 industry, which It largely msulated from theof Iran's domes lie econccrie The gtririiim-nis rapidry ruing re**euaa from this seurt* are auOctent taoud baservad development program,itowvsg for con-unued mlsmaaagrnent and corruprloa

snc* 1M1 Iran hae been plaguedist lan which has rt> rslled in meuuoara^le ummpk^me-ii. unused preductire capacity, and sa un-'iTcrao* camate for mvastmeotiraber of yuan poor to iMi rumg cal revenues, bug* tsresga loans, aid good bateauath rate of iienranir actrnty Oram Karunai Product ,OXPi war ruaog by nearly aa pee-wat aanuaily. tad by IMI annual

ii perreat of OKP. Th* aumOer of

auempt ta carry out oath aa atnbsttwai md largely afgfsl hagt*u* ItuuUaaaryaloom,han decline baHngieaihttd th* govtrrurvrnt ta replac* Hi expansionary potfc*asof.muum which fngnteired thatad pewred ta be star* efttRthem to aasatta.

at* reataUy. th* ginn -eextngwetr* ta* throughtard Ptaattlarutawrts. Credet hat

kndtrsd>has been aim tudea wttli the Comnion usrkci.

ner. tae expansionary encvl ol ruchcn rua teeatn part to thencxruuiUw rtry ire Shoe's sunujtaneoo* effort to launch ru* onr program.

It- Tbe xd/est ol the atarxur rorrmmeril and the bowmt of the re.'orra Qeofram apoarentiy beeunestore busincu corilrkfoa. AJLhouch administrative oafneultie*t (niennaenL .'men rap.uly increasing public ffivoBucect under tie "ten.modeai roe baa been actuered az recent months. Mnmnolc l'jk* probatrai remain, ard ec do nettronf busu-xs* recr.cry ta the tav medlate future. Iran's underlying economic ru-runh. bowceer. enuheac difficulties and vruhio OM next rev Tearsora raped rate of erowta.


I g


It. One of tae baser rceeona for Iran's faeeeahk booming oil industry, arfuch provided tne goverTirnem "Uhevenue*n amount likely ta Cvaemae by atoercent annually fnr ;h* next aeeerai years, experience "nth na'tonalu^ta; the oUjndustrytne the irarnsn Oovemiaent haa dealt vnth the oil consortlurii ihtuufh neart jiam* reiher than threat* Though Uiea*direuJy voices complaints aaainst the evnaortumSi drntaoo-meni programs, the rapid rue of oil production and revenues inndevelcpeneut of severaldepesti haw largely eueyee these

fact ttuti probably continue laore reeiauc atuiude than the awe extreme memoers of ihe OrranlaaUoa of Pa-iroktum ExptruAg Countnasre mtcreatad sa gaxnmg greater control of level* of ml production aad peaces, ttt Iran ought lea re OFtC oeer that out. If so. It rrauW peooat'y expect the ceanpsnasa to increaar their peoporuonai* oiTufce ol Irasuaa


X The concept cf eomprrtirnem has net yetrm reauteedIran, The Third ftatauy drawn ap by ihe plan Orgsnaraiion. srieaeed eerty t'eeaaas ef kvweJuag through the trad Hiesearably tea-eed pnatnoS Aner the rail ef the Aawu go'enuaoai. heniver. the eaaaw njful pawusaag *aa largely ton Astu-eaanairkg etceneats rnsrUad uJhsenee ta the ajase

an Or-anoailon and detemralising responsibility for orojeet lonrAlanon and implementation Corucqucntly. the Third Planf.ecU iliaraueratic bickering as to how plan raourrts should be allocated.

nder the Uansur government tbe outlook for the Thud Plan has improved seme* hat. Relatively lev pnjects without some intnossc economic merit are cunternplaud. Even tae "make-work- project* bsprufram have utility forecession and urbanTheao pronuses support for land reform and rural development. Thanks to the ruing ou foreign loansdits, the financing oferious problem Even so. the Plan Organisation is passingeriod of transformation and Is unlikely for some time lo have aufn--vest authority and competence to give efl-eUv* ehroctlon to Iran's development Thus,Third Plan, which is wippoaad to Incrraae development expenditures more than tiroall times, nil prooshly fall considerably short of its goals.

Aoric Ji.i. and Lona lUton*

far tne land reform orograrn hu had no discernibleagricultural production. Any ditruptiva effect has been mereby good wast her conditions over the past two years, aidproduction mayurther mcrewse this year.small pioportlon of the land hasuaenbutrd "omoat of the gm eminentuch are to plar sntn acnculturai manseemcnt hare barn formed only onfuture of the aeneullurai sector of the eeonjcay will dependmeasure on how successfully these cooperatives fulfill theirparticularly irre mtnacement of Irani complicatedwhich has been the traditional task of the landlords UnnrporuiallrUes ere tn fact *wll performed, and Ifplans to provide financial and technical assistance arcagricultural production Is likely lo Iniriaaa


Shah apparently reels the needeeathmf sped mefforts in order lo consolidate resent gains. The pace ofhas outsunpned the gevernsaent's tdrnkruStraUra capacitiesnewikely ta be transferredee near foture. Yet itthat swareneos of litis feet win arooso sftgninrnntamong the pruanlry. who hare yet to akrpUy any politicalof Ihetr own. fn any event, there is ao ready rerucw foreapreea their feelings, as the Shah haa eftectMy peeetnted the

of any easse leaden eraoe it

II* reform pro=rmra enee^tkauy. auhoujh he teens do* to are it asdesign foe social sxtd rc^.iomic lo wruch heersonal commitment. Kuheowever, has Deen io use rerormjiii^iivc when pressed, andmay dra* back ooce more. Neter-ihrless. the Shall dors appear convinced mat his "Unite Hc*eJuuon" has thus (arotable success, and hi* *eii-confidence has clearly hem enhanced. Kence the chances now seem rood that he will ton-Unuo to more forward, though with some pause; and even nrlnrsu j

H. Even If he penttsta, the aucrass of the Shahs initiaUee for erolu-uonary reform em: depend in the Iwtg run on whether Itvtponse in the country su indent lo be translated Into broadened political support for the rrsime. It Is too soon jet to say thai this will happen, though it reform is pressed and enlarged Ino not unreasonable to bebeve that new and more eooaxructirr political formal ions wu. eventually appear. The test would then be whether UVould be willing; lo *har* power with tbe pclltirs' forcesalled mto betac. On this win depend also his abulty to attract and hold theaJeni so badly needed for the task*clopmeni In any case, it seems clear tbat the Shah's reform efTart has already helped to stimulate and shape tbe forcesson eventually, ia one way or another, brine basic chansea to Iranian

tasic weakness of Iran that the present equilibriumalmost exclusively- on tbehe mcderuhauon that has taken place to dale has been largely adreinioraUvv and economic, and Utile has been done to crratr political uutitutions that wouldse death of the Shah Hence, should assassAsalon ar any other event remote him. the monarciiy as an InsUtiition weald be endangered. Theear-old Shah has not allowed any other fbruree to developer in their own right, and tha bureaucracy aad tha paiUament, though somewhat more respected than tn the past, hare as yet nouture. Hence the militarye drawn Into the politicaltfetsenr government, tfby the senior officers. wouM prooao-r. stastoast demoting to re-era* the Shahs programs,enerally more eonarrvauveowever. If younger officersosahaaeit wjece. themight reflect ins more radical outlook of the nationalist oaeeat-Uon la any erent, conditions wouM be so daturbatf that any snrusm regime would probably find it difficult to roruwOCsrte Bower,rolonged period of Instabilitysably assess.

V. eoejjON eouCT

M. transesternentasis wilt of the Shah. He to ssspasseted at Ufels by the

parwular the mulLary etUClulimcnL Od thr otbrr hand, many ol the inultrctiuli wouldeutral course between East and West: indeed, this would be the foretgr policy which any Xauonal Front gov tnunent would strive to adopt


Jl The meatcpmeeit in Iran's torn en retadoas ba recent years has been lhe normalisation of reUrjoaa with tbe Soeli* Union since September ISfS. Al thatoscow accepted the Shah's pledge not to permit the establishment of mUrn's bases on bat soil sad shelved its policy of open diplomatic and propaganda pressures torus regime. Thus, without dc racting .'rem rut Western dea. th* Shah was able to end the strong Sonet pressure which bad sept umnon high for many years, Soviet acceptance of this gesture may Indicate recognition, at least for the near term, of thefefforts against thertfua*

St Yet rsrsthar the Shah nar the BVemha has sought toch more than reuue* tettsajrut After an Initial Barry of lyrrpathetlclo thr Teheran press, the Iranian Oovtrnusnit Intervened ta reduce the volume and emphasis of pro-Soviet publicity. Tor their part th* Soviets have not come fo*th enth the expected proposals far large-scale economic projects, though thex haveUSyear credit for Iran. Comm'irUst peopagaada beamed by clandcstase radso stations oatssd* Ironincurs the regime.

H The Shah will probably welcome continued improvement tn Soviet reiatiora sod may even pay increasing Up servlee ton any case. It will be dlffscult tot turn to resect th* friendshipowerful ne^hbor tbat claims tochaagtd Us aXUtwde aadolicy of acrcenmooauonrm to appease the neutralist and sanoprrabsc arnumea who beUeve theirvcrtomjnlUcd to the West It counter the Shah's concern that, with signseveloptnc; East West detenu, the US might lea* interest Ot supporting sad defending Iran against rncrrssed Soviettiarthtkat, Irasuaa fears of Sw let design* remain alive and wiii procably serve ta check any samjvant danger ta Iran's Western oriertaUoo tor th* period of thi. nttaiU

M. Iran's natHumhlp wtfb th*ppear* ta bewaoe change. Though th* American ailkute* remains lb* inratmcat et" Irtn'i fonrtga tetssy, the Shah far leaaeria ot aasastiAteed to Appear more inarpeadecu Al



Bloc have redived Iran's oependvricr on U* economic assistance. Accordingly US Influence on economic development is oiereasing.

he same cannot be said of the security field, where inn remains heavily dependent on US assistance. The Shah waa heartenedS-Iranian exercise which brnt-^h* sisabla numbers of flmrnrin troopsIran. He haa permitted operation of sprclaJ US facilities on Iranian soil and we see no sign that he will move to curtail U3 personnel or activities in the foreseeable future The me year US military aid plan has alleviated to some dearer the Shah's diuauaraction wtth US military support Thus weeriod of relative calm la US mllitai uona wtut Iran, probably until near the end of the military aid plau


he CENTO alliance Is important to int.ormal defense link to the West anc because it provides in eidlilorialon the US for aid This does noi mean that Iran is fully musfled with the alliance. It bau been Irritated by the refusal of the CS and the CK to cacuudn alleged threats from non-Communist regional state: aswithin the purview of the alliance and has susp-ctsd the US at Ones of harmg onhlukewarm Interest to this pact. Irani dissaUsauntoc with CEXTO's eeooomic was greatly alleviated by !fca re-rent deeasioo of ihe US to finance the Turkey-Iran rail link.he car-eumsta-ncrr. Iran can be expect to conttnoa to beEXTO. although aot without critic.tea* of specific asrexta of the

The Shahs chiefxern kt his fear thai Nasser Isplotting to owr throw Ma regime, working through Iraq and the Prraan Oulf gwawaJawSBfi Though Haseer has reetnUy made soma ovrrtarvs to improve relations, the Shah remains wary. In fact, he Is likely toore active policy to counter bar activities directed at the Persian Oulf. Relations with AfsftssUsUa bar* lauwovad mark*-'It siace Iran served ae mediator ka thaispute, and prospect* for the future here are good-





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