THE CIA'S SECRET IRAN FUND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000302910010-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: July 22, 2010
• Sequence Number: 10
• Publication Date: March 1, 1980
• Content Type: OPEN SOURCE

STAT
Sanitized Copy Approved for Release 2010/07/22 : CIA-RDP90-00552R000302910010-7
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POLITICS TODAY
March/April 1980
SPECIAL REPORT/BY DANIEL DROOZ
N, '10 CIA" [~IJNXIL I
How Carter Undermined the Shah and
Stopped the Money to the Mullahs
For more than a year, the CIA has been suffering in
silence about Iran. First the Agency was criticized in the
U.S. for not predicting the fall of the Shah and the rise of
Khomeini. Next it was slammed for not foreseeing the
vulnerability of the U.S. embassy in Teheran. And then to
cap the insults, the Iranian :students" who took over the
embassy accused the CIA not of failure but of too much
"success" in interfering in Iranian affairs. Frustrated by
the Administraton's unwillingness to rebut the critics,
CIA officials are now angrily beginning to get out their
own side of the story. Reports that the CIA did indeed
warn of thedanger to the embassy have already appeared
in the media. But in the atmosphere of bitterness, agents
are also telling the details of a far more extraordinary CIA
enterprise.
According to these accounts, from 1953 to 1977
millions of CIA dollars were used to subsidize Iran's
Islamic religious affairs in an effort to maintain support
for the Shah among the nation's ayatollahs and mullahs.
The payments were ended in 1977-at the direction of
Jimmy Carter-despite CIA warnings that the cutoff
would undermine the Shah. The religious upheaval that
spread in the months thereafter ended in February, 1978,
when the Iranian monarch was forced out.
Details of the heretofore secret series of events were
provided by six agents, former agents and intelligence
analysts with connections in Teheran, the U.S. State
Department and the White House. According to the
sources, the long history of the CIA payments began back
in August, 1953. Prime Minister Mohammed Mossadeq-
who two years earlierhad masterminded the nationaliza-
tion of the Anglo-Iranian Oil Company-had just ousted
the Shah. In response, the CIA's Kermit Roosevelt (a
grandson of President Teddy Roosevelt) organized
counterdemonstrations that restored the Shah to the
throne. In a recent history of the American intelligence
system, Armies oflgnorance', William R. Corson reports
STAT
that Roosevelt spent $20 million to recruit a mob of 6,000
pro-Shah demonstrators-and to buy the support of the
mullahs. "Without the agreement of the Mosque, no one
can rule Iran," as an intelligence consultant to Congress
recently explained.
For the next decade the Shah and Iran's religious
leaders coexisted more or less peacefully, while the CIA
quietly sent regular payments to help support the mul-
lahs. Then, in 1963, as part of his efforts to impose
massive land reform, the Shah redistributed much of the
land belonging to the Mosque-thus eliminating a prime
source of income for the mullahs; he also ended Iran's
traditional system of double taxation, appropriating the
20 percent of their incomes paid by Iranians to support
their education and all other religious affairs.
The two moves prompted angry demonstrations-led
by Ayatollah Khomeini. The army, however, backed the
Shah, and the rebellion was crushed; Khomeini was
exiled. To make up for some of the income he had
diverted, the Shah substituted a government stipend. 13u t
13 years later, in 1976, the earlier lessons about the power
of the ayatollahs and mullahs were again ignored. The
Shah cut off the stipend he had initiated in 1963.
Throughout this period the CIA's own payments to the
mullahs had continued. The exact total is not known, but
at least one source contends that the sum had reached
$400 million a year. That figure seems high to some CIA
watchers, who note that it would account for 10-20
percent of the Agency's generally estimated budget.
Some Iranian experts also doubt that so large a sum could
have been distributed and remain a secret.
The money the mullahs did receive from the CIA, say
the intelligence sources, was distributed through Ayatol-
lah Kazem Shariatmadari. More moderate than some
Iranian religious leaders, Shariatmadari was considered
the "palace mullah" by the CIA and has long been one of
Iran's most powerfuI ayatollahs. (It was his followers who
recently clashed with some supporters of the Ayatollah
Khomeini.) There are 200,000 mullahs throughout Iran,
organized in a loosely hierarchical fashion ranging from
local mullahs up to the ayatollahs. Money from various
sources-the Shah, citizen contributions and presum-
ably the CIA-was distributed through the religious
infrastructure.
Sanitized Copy Approved for Release 2010/07/22 : CIA-RDP90-00552R000302910010-7