NIE 34-61-PROSPECTS FOR IRAN (PAGES 3083-3086)

Created: 2/28/1961

OCR scan of the original document, errors are possible

NATIONAL INTELLIGENCE ESTIMATE

PROSPECTS FOR IRAN

PcJitical lituatioa Brut outlook

Economic problcmi and

il ADVCON1

CENTRAL INTELLIGENCE AGENCY

SUBJECT: PROSPECTS FOR IRAN

THE PROBLEM

To analyze major developments ond trends In Iran and to estimate their consequences_in tho political, economic, and foreign policy fields.

CONCIUSIONS

1. Authority in Iran Is concentrated almost exclusivelythe hands of the Shah, whose rule rests primarily or. the loyalty of the military and security forces. Despite the attention which has been lavished on the armed forces, their capabilities remain low. The growing political unrest of the urban middle class is being manifeoted more openly than in previous years against the Shah's blatant rigging of elections

for the Majlis (lower house of parliament). Although the Tudeh (Iranian Coeraunist Party) renalna neutralized) non-Cooenuiilat civilian politicians chow little promise ofleadership.

a political upheaval could take place Inany tine, on the whole, we believe the odds area development In the next year or so. However,and social change In one form or anothor is The nature of Iranian pollttca and thethe Shah make lt unlikely that thla change will be Poselbllitlea for sudden change lieoveShah by some of his senior military com,-nanders or anbetween younger military officers and nationalistpresent, neither eventuality would appear likely to result

In improved stability in Iran, (paras. )

economic prospects for the next year or twobright: inflation will probably continue; balance ofdeficits will keep foreign exchange reserves lowforeign borrowing. Nevertheless the newholds some promise for putting Iran's finances Inand for developing responsible and cenpetent economic

Management. Tho major determining factor of Iran's long-term econoalc oucccss probably will belingness of the Shah to support those who are seeking to modernize the country's economic Institutions and practices. In view of thepolitical choices Involved, and the Shah's past r. rfor-mances, we believe the Shah Is unlikely to take any vigorous action to pi*omote economic refonrs. )

1. Assuming that the Shah remains in power and continues to enjoy US support, we foresee little change in Iran'sposition In the next, year or so. ontinuing problem for the US will probably be how to give the Shah sufficientto preserve his present pro-Western policy withoutexcessive demands for aid. (Paras. )

5. For .the short run, we think the odds arereak in the stalemate in Iran's relations with the USSR which has persisted for the past two years. Over the longer term, lt is possible that Iran and the USSH may achieve some kind of modus vlvendl, which might eventually be broadened to Include Soviet economlo and perhaps even military aid for Iran. The chances of such an accomodation would be much greater should the Shah become convinced that the US was withdrawing orreducing Its support for hiin. )

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