REFORM IN IRAN: PROGRESS AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004700050004-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 19, 2016
• Sequence Number: 4
• Content Type: REPORT

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SPECIAL REPORT
CENTRAL INTELLIGENCE AGENCY
OFFICE 6 F CURRENT I N T E L L I G E N C E
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For over two years the Shah has been trying
to effect fundamental economic and political re-
forms in Iran, with the primary aim of building
a broad popular base for his regime. The most
dramatic changes are occurring in the traditional
system of land tenure, as villages are taken from
individual owners and distributed among the peas-
ants. The program, as expected, is alienating the
Shah's supporters among the wealthy classes, whose
influence in the country's administration has not
lessened significantly. Moreover, the Shah has
not yet achieved his desired mass political sup-
port; peasants still lack effective instruments to
register their approval of his program, and the
urban population is skeptical of his motives.
Disruptions brought on by the reforms meanwhile
threaten an economic crisis and a possible rever-
sal of what he terms his "White Revolution."
Beginning of Reform Program
Three years ago the Shah
became convinced that he could
not indefinitely maintain his
regime on the traditional feudal
system. Apart from the minority
of Iranians living in the few
large cities, most of his people
were impoverished peasants work-
ing :fields owned by absentee
landlords.
The Shah dismissed the
landlord-dominated parliament,
instituted rule by decree, and
launched his broad program of
reforms, with primary emphasis
on land redistribution. A well-
managed referendum in January
1963 provided the legal trap-
pings of overwhelming popular
approval.
The country now is in the
second of two phases of a land
reform program that eventually
is to affect all of Iran's
50,000 villages. Some 75 per-
cent of Iran's 23.2 million
people live in these villages.
Reform initially was put
on a crash basis, driven forward
by the dynamic minister of agri-
culture, Hassan Arsanjani. Within
two years nearly 10,000 villages
which formed part of the largest
holdings were redistributed to
more than 340,000 peasants.
This phase fell some 25 percent
short of its goal, partly because
the Shah dismissed Arsanjani in
March 1963 when the drive seemed
to be getting out of hand and
Arsanjani's popularity threatened
to exceed the Shah's. Arsan-
,jani's successor, a professional
military man, proceeded in a
more cautious manner.
A second phase, begun last
October, is aimed at smaller
holdings. Scheduled to be
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PERCENTAGE GROWTH IN IRANIAN LAND REFORM INDICATORS
1 JANUARY 1963 - 30 SEPTEMBER 1964
JAN
63
215 COOPERATIVES
11,000 MEMBERS
30 MILLION RIALS
JUN
63
SEP
63
COOPERATIVES
MEMBERSHIP OE COOPERATIVES
CAPITAL INVESTED IN COOPERATIVES
MAR
64
SEP
64
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completed in two years, it is
to affect some 25,000 additional
villages. It is potentially
more disruptive than the ini-
tial phase, as it involves lands
generally held by resident own-
ers, who have dealt closely
with the peasants' needs. These
owners depend directly--often
exclusively--on their lands for
their somewhat preferred eco-
nomic status, and they are de-
termined to retain as much as
possible. The government is
trying to protect the legal
rights of both landlords and
peasants. Resistance to the
government's plans and possible
discontent with the slow pace
of reform is tacitly acknowl-
edged by official pronounce-
ments, almost all of which
stress that lawlessness will
not be tolerated.
The government is assum-
ing the landlords' former role
in distributing seed, extend-
ing credit, providing agricul-
tural tools, and maintaining
irrigation systems. Tehran
also has organized some 4,000
rural cooperatives to aid the
new owners, but these farmers
must work out their own infor-
mal arrangements for work and
crop distribution.
The government is also
trying to combat illiteracy
and the lack of skilled per-
sonnel by sending urban young
men with at least a high school
education into the villages
for one-year periods in lieu
of military service. An es-
timated 10,000 members of this
so-called Literacy Corps have
already been assigned. Early
next year a Health Corps is
scheduled to take to the field,
and late in the year an Exten-
sion and Development Corps de-
signed to encourage better farm-
ing practices is to follow.
In addition to land re-
form, forests have been nation-
alized--a move that has affected
few people and has had little
political significance. Profit-
sharing has been decreed for
workers in industry but only
token compliance on the part
of employers has been required.
If a revolution is meas-
ured by the extent it disrupts
Areas of Land Reform Activity - I September 1964
Areas of land reform activity Swamp
Cultivated area Salt waste
Forest area Intermittent lake
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established patterns, the Shah's
reforms are successful. At
this interim stage of its exe-
cution, however, the problems
threaten to smother the achieve-
ments.
Tehran's concern lest the peas-
ants become overenthusiastic
in anticipating a new era. Some
officials also fear that the city
youth manning the Literacy Corps
will not only teach the peasants
to read but also plant radical
ideas in the villages.
Human factors constitute
the major impediment. Some
landlords saw the revolution
coming several years ago; they
started removing their assets
from the villages and allowing
irrigation systems to fall into
disrepair. There is concern
that other landlords in antic-
ipation of the redistribution
of their lands will stop fur-
nishing seed and other necessi-
ties to the peasants.
Peasants, for their part,
are not easily adjusting to
their new responsibilities.
They remain a largely inert
mass accustomed to carrying out
orders and with little or no
individual initiative. Commun-
ication to impress them with
their new position is difficult
because of their limited out-
look and general illiteracy.
The program is more likely to
arouse their expectations of
great benefits than to equip
them with the means of realizing
them. In the current transi-
tion period, any failure by
the landlords to exercise their
accustomed function is likely
to be aggravated by peasants'
refusal to play their part in
the traditional pattern.
The slowing down of the land
redistribution partly reflects
Special problems are faced
in border areas inhabited by
Arabs and Kurds. Priority has
been accorded projects for so-
cial, as well as economic, de-
velopment to complement land re-
form along the western border.
The government has faced an in-
creasing security problem in the
northwest and southwest in the
form of disturbances over food
shortages and rising banditry.
Economic Repercussions
With traditional agricul-
tural procedures disrupted in a
country already lacking adequate
transportation and marketing
facilities, the flow of food to
the cities is easily upset by
any natural difficulties, such
as this year's drought. Prices
are rising as a result. When
Tehran carries out its plans
for mechanizing farming, more
rural workers will migrate to
the cities and aggravate urban
discontent. Even now, available
land could be cultivated by an
estimated 25 percent fewer people.
Dispersal of funds to the
cooperatives is proving burden-
some, complicated, and expensive
because of the myriad of guaran-
tors necessary to secure a loan.
According to some land reform
officials, local village officers
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and the peasants themselves
often squander government funds
for consumer goods and religious
pilgrimages. In order to meet
the required modest payments for
the :land they are acquiring, the
new peasant owners are in some
cases forced to turn to former
landlords or moneylenders for
credit at exorbitant interest
rates and may soon find their
land taken from them under fore-
closure. In the troubled Kurd-
ish regions in the northwest,
Tehran has already banned any
foreclosures for failure to
meet payments under the first
land reform stage.
The uncertainties accom-
panying land reform have de-
pressed private investment and
business activity. The prime
minister has exhorted the busi-
ness community to maintain its
previous rate of investments
and has implied that otherwise
the government will become even
more directly involved in busi-
ness. Tehran now is considering
a new tighter commercial code,
the establishment of a govern-
ment-regulated stock exchange,
and a law to control banking ac-
tivities more closely than in
the past.
The government's perform-
ance has not raised confidence.
Recently within a six-month
period, the government first
abolished the official monopoly
on sugar imports so as to allow
private enterprise to enter this
lucrative field, and then re-
versed this action when it was
unable to dispose of reserves
previously acquired at high
prices. Tehran recently raised
consumer taxes on petroleum and
other products--including kero-
sene, a vital commodity in Iran--
thus adding to inflationary
pressures in the cities.
Political Impact
As the reform program got
under way, the Shah gradually at-
tempted to construct the elements
of political support by recon-
vening parliament and promoting
a party that would mobilize pop-
ular backing for his policies.
Parliamentary elections
were held in September 1963
under universal adult franchise
that gave women the vote for
the first time. The hand-picked
legislators come largely from
the upper and upper-middle class
professionals, administrators,
and businessmen. All pledged
at least nominal support of the
"White Revolution." In March,
Hasan Ali Mansur, a wealthy and
ambitious scion of the upper
class, took office as prime
minister. He has carried forward
the reforms within the parlia-
mentary framework at a deliberate
pace.
The Shah's chosen political
instrument at present is the
New Iran Party, nominally headed
by Mansur. This grew out of a
group of well-to-do businessmen,
professors, and administrators
formed in early 1963 to study
Iran's social and economic prob-
lems with the eventual aim of
entering the political forum.
Some 40 of the group were elected
to parliament that year; the
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party was formally organized
and named in late 1963, and
with an expanded membership it
became the majority party in
parliament. It now controls
140 out of 189 occupied seats.
The New Iran Party appears
to be trying to remain an elite
organization. It is simultane-
ously trying to expand its base
by recruiting "associate mem-
bers" among trade unions, guilds,
and agricultural cooperatives.
Many of these "members" learn
of their status only after they
have been enrolled.
Mansur has a long way to
go to establish a genuine popu-
lar political base for the re-
gime. The New Iran Party has
not succeeded in gaining wide-
spread support in the provinces.
Peasants and townsmen have re-
sponded apathetically to Mansur's
extensive tours in an attempt
to stimulate enthusiasm for his
government and the Shah's "revo-
lution." His latest provincial
visit was marked by a perfunc-
tory response on the part of
welcoming crowds of school chil-
dren, organized workers, and
tribal and village leaders.
The Shah has not allowed
much leeway to the parliament.
Its limited power continues to
lie in an ability to delay and
modify legislation. Discussion
of controversial issues is gen-
erally muzzled. It accepts or-
ders from the Shah when they are
clear and unequivocally passed
down.
With the Shah still person-
ally dominating the government,
political devices meet with
apathy. The skeptical Iranians
have seen the failure of pre-
vious attempts to set up nation-
wide political parties. The
New Iran Party is widely thought
of as a collection of office
holders and office seekers. The
party has notably failed to at-
tract the support of Iran's
small educated middle class, the
group most important to the
country's future development.
Efforts to give the peas-
ants a means of political ex-
pression on the national level
are barely starting. As a first
step, the election of village
councils is now authorized. About
3,000 villages have held elec-
tions.
Overt opposition to the
Mansur government and the Shah's
regime comes primarily from the
loosely organized National Front
and it affiliates--drawn mainly
from aggrieved elements of the
urban middle class and the in-
telligentsia. Former premier
Mohammed Mosadeq, still a symbol
of radical nationalism in Iran,
is the titular leader. The
front's goals are vaguely de-
fined, however, and there is in-
ternal agreement only on opposi-
tion to the Shah's regime. The
Shah's espousal of reforms has
thrown the Front on the defen-
sive, and it can only question
his sincerity in intending to
carry them through and the means
he is using. As the front boy-
cotted the 1963 elections, it
claims no members of parlia-
ment.
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The nationalists' most
powerful agents are students
who through demonstrations can
exert pressure on the govern
ment. Some officials fear that
participation in the Literacy
Corp; and other proposed serv-
ice projects may add to stu-
dent radicalism.
Among some of the National
Front's affiliates there is a
trend toward championing the
violent overthrow of the gov-
ernment? These elements ap-
parently are making common cause
with religious leaders who feel
that the reform program is
undercutting their traditional
power base. In the past these
religious figures have fre-
quently shown an ability to
stir the masses to protest dem-
onstrations and violence. Some
tribal leaders in the south
have also been disturbed by the
land reform plans, which threaten
to cut off their traditional
source of support. Their re-
sentment--in addition to general
poverty--may have caused the
tribal disorders of the past
two years.
The landed elite and the
small landlords have been par-
tially alienated from the re-
gime. While their influence
remains strong, they are dis-
organized at present and proba-
bly have no effective means of
opposing the Shah except to
hamper reforms.
The illegal Communist (Tudeh)
Party, penetrated and harassed
by the security service, is of
little consequence, but would
re-emerge if circumstances be-
came more favorable.
The cloudy economic pros-
pects of the reform program are
further dimmed at the moment by
an especially bad run of weather.
A severe drought this year has
cut the wheat crop; the result-
ant need to import unusually
large guantities of wheat has
forced the government to dip
deeply into the country's for-
eign exchange reserves. Feed
grains are also in short supply,
and the slaughter of livestock
to avoid losses through starva-
tion will cause future meat
shortages and higher prices. The
1965 winter wheat crop has also
suffered because of delays in
distributing seed.
In political terms, the
Shah is far from achieving a
transformation. His power base
is narrow. The regime continues
to rest on the active allegiance
of senior officers in the armed
forces, on traditional Iranian
respect for the monarchy, and on
the passive support of the social
elite. While the Shah awaits
the development and organization
of peasant support, control of
security forces and other instruments
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of authority keep his regime
beyond any immediate threat.
Forces calling for greater
assertion of Iranian "independ-
ence," although feeble, are
ready to exploit opportunities..
Last month, for example, a gov-
ernment bill on the status of
US forces in Iran ran into
strong objections. The nation-
alist opposition successfully
played on neutralist sentiments
by fostering fears among legis-
lators that the bill involved
"capitulations"--limitations
on Iranian sovereignty by a
foreign power.
In the immediate future
the Shah may well face a mount-
ing economic crisis. This
would give his regime a choice
between finding some new devices
to stem inflation, restore
business confidence, and redress
the drain of foreign exchange,
or calling a halt to major as-
pects of his revolution. At
best, Iran appears headed for
slower implementation of his
program if no crisis diverts
it entirely. (CONFIDENTIAL)
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