IRAN: A YEAR AFTER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81B00401R000600050016-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 19, 2016
• Document Release Date: October 17, 2005
• Sequence Number: 16
• Publication Date: February 23, 1980
• Content Type: MAGAZINE

-Approved For Release 2005/11/23 : CIA-RDP81 B00401 R000600050016-7
Just over a year ago Iran underwent one of the most astounding revolutions of modern
times. A distinguished Iranian gives his view of the people and the institutions that
govern the now more or less ungovernable people of post-revolutionary Iran. He
suggests that those who bank their hope, or their fear, on the belief that the volatile
mystery of mullahs' rule must soon be overtaken by some more familiar system may be
mistaken. It could, he believes, go on for quite a time;...
Post-revolution Iran is a place where not led to severe shortages in the shops of
deeds . and their expected consequences food or other essential items. Huge num-
country has not had an effective army, to be unemployed. But there is strangely contribute to the division and faction.
do not flow in natural progression. The bers (one million? two million?) are said the style and content of his leadership
gendarmerie or, police force since the little labour unrest. A heady air of parti- . The ayatollah is a man with a vision. He
revolution last year; sometimes it seems cipatory mass politics prevails. Yet civil \ intends to, recreate what he believes to
to lack even a proper government. But rights are routinely and mindlessly have been the ideal Islamic state, based
there has been no general breakdown of violated. on the Koran and modelled on the first
order. Schools and universities remain The Kurds and other ethnic minorities, Islamic community under the Prophet
open; shops do a thriving business; gov- who are demanding local autonomy, and Mohammed in the seventh century. He
ernment offices operate normally-well, the government, which is reluctant to holds that the leadership of the commun-
nearly normally. And, a depressing de- grant it to them, seem to hover forever on ity-political, military, religious, judici-
velopment, the new security service pos- the verge of either a comprehensive al-falls by right to the clerical class, as
sesses the files of, and a more than agreement or a fearful confrontation. heirs to the mantle of the Prophet.
passing resemblance to, the Shah's great- The whole country appears at one and The ayatollah is deadly serious about
ly loathed security system, Savak.
THE ECONOMIST FEBRUARY 23,19W
tionalisation of private Wj
Mt&ipWRelbo3da28Nfh4/23k AGWRW EM4AMR0>E11 aElBO 9 s7. The ayatollah
which then, just as abruptly, subside. ' Normality and disorder exist side by And it lays 'the foundation for the recon-
Dire predictions notwithstanding, the na- side. Even in post-revolution Iran there struction of the Iranian state in keening
. ? The surface calm is periodically shat-
tered by abrupt eruptions of violence
year- after
he same time to be unusually calm and all this.. The new constitution embodies
et on the verge of a breakdown which, his views. It vests supreme power in-
aculously, never quite materialises. ' himself and in a body of religious leaders.
powerful, and potentially disruptive, as-
pirations. It has spawned a plethora of
political parties, interest groups and ideo-
It has lit a blaze of revolutionary ferment
that cannot easily be extinguished. What
happens next depends, not least, on the
attitude and acts-and now increasingly
the health-of the. man, Ayatollah Kho-
meini, who played the decisive role in.
shaping the course of Iran's revolution.
The mantle of the .
prophet
Ayatollah Khomeini remains the tower-
ing figure of post-revolution Iran. His
intolerance for the views of those who do
not share his particular Shiite Islamic
vision has cut into the near-universal
support he enjoyed immediately after the
revolution. But his prestige remains im-
mense. Among the mass of the people,- .
he inspires a fierce loyalty. Hundreds of
thousands-millions if necessary-would
still come out into the streets to answer
his call and do his bidding.. :
He serves as a source of final authority,
and thus of unity, both to a country that is
today torn by faction and strife and to an
inner circle of men who are themselves
locked in the struggle for power. The
widespread Iranian fear that anarchy will
ensue if Ayatollah Khomeini is removed
from the scene by illness or death is an
indication of the degree to which the
country has once again become depen-
dent on one man.
But there are Iranians who argue that
 Approved For Release 2005/11/23 CIA-RDP81 800401 R000600059016-7
Old mullahs, new rulers
But many of his liberal supporters did not
take these aims seriously. They imagined
that, having brought about a revolution
under Khomeini's banner, they would be
able to install a parliamentary demo-
cracy, a people's democracy, a bourgeois
paradise or whatever it was that they
sought. Today they are disappointed men
.who form part of the new Iranian
opposition.
Khomeini's harsh attacks against these
groups stem from his view that their
pursuit of a secular state, of whatever
colour, represents a threat to his Islamic
vision. He has thus turned against the
former guerrilla groups whose members
spent years in the Shah's prisons, against
other activists in the revolutionary strug-
gle,- against civil rights groups and even
against the bazaar merchants whose
funds helped fuel the revolution.
He denounced his own former prime
minister, Mr Bazargan, for not being
sufficiently revolutionary and, although
he had once described obedience to the
provisional government as a religious
obligation, he in the end acquiesced in
the destruction of Mr Bazargan's cabinet.
He feels that Iranians have been present-
ed.with a unique opportunity to recreate
the Islamic state. So greatly do opponents
of this idea arouse his wrath that he once
expressed regret that the hangman's scaf-
fold had not been erected in the great city
squares after the revolution to eliminate
once and for all the enemies of the
Islamic republic.
thrown his weight behind the advocates
of continuing revolution in. the conflict
between those who seek a return to
normality (with a normally functioning
government, ministries, judiciary nd
army) and those who favour contin4ed
administration by the revolutionary
ganisations (the revolutionary coun
the revolutionary local committees,
with improving the lot of the poor..,-He
sees himself as the scourge of privileges:
and the defender of the dispossessed. He
sees the world, in a sense, in terms of ai'
fundamental conflict between the two;,-
and although Iranians may disagree
about the best means of achieving a
better distribution of wealth, a conflict of
economic interests between different lay.
ers of Iranian society does underlie some
The rhetoric of conflict also maintains
the high pitch of public excitement; it:
thus serves the same: purpose as, at least
to begin with, was served by the hostages,,
at the American embassy in Teheran.,
finely tuned to the public temper, Ayatol-
lah Khomeini may at times be reflectin
rather than directing, public. opinion::;
And his hardline attitude has been en-
couraged by advisers who seek to consoli-:
Ayatollah Khomeini's unchallenge
position means that rival groups within
the inner circle compete for his support to
advance their ends and to discredit their
make matters worse there is a.tendency
to pursue these rivalries by mounting:'?
huge demonstrations. Marches and :'.
counter-marches -the campaign against.
Mr Bazargan when he was ousted in
November was a typical example-reflect
the; factionalism of the inner circle. Given.'
the depth of individual ambitions, pas- -
revolutionary guard and the revolution-
ary courts).
True, he has at times seemed to be
appalled by the chaos created in industry
by workers seeking to run their own
factories, . by the slow disintegration of
the army and by the turmoil created when
populist forces are given a free rein. But
his criticism of the excesses. of the revolu-
tionary courts, committees and guards
has been mild and infrequent. He. has
always defended these groups against the
criticism of others and rarely condemns
sions and interests involved, these con-
frontations have led to surprisingly little =
violence. But the manner of pursuing,
both personal rivalries and political dif-
ferences reinforces a general air of tur-.:
moil and it postpones the day when
serious problems are seriously confront-
ed. At the same time, it has been polaris-.
ing Iranian politics. The hardliners on the
right and, the left have been gaining
ground at the expense of those intent on a
"revolutionary" acts, even though they The collapse of the
encourage the same kind of industrial,
administrative and judicial disruption centre
that he denounces if the perpetrators are,
say, Marxist. - One casualty of the post-revolution pow-
Ayatollah Khomeini feeds the revolu- er struggle in Iran has been the collection
tionary temper. He has revived and made of parties and groups that speak for the
current a forceful Old Testament-Kor- broad centre of Iranian politics: for the
anic vocabulary, rich with resonance for , professional, managerial and middle
Persians, pitting the forces of God versus classes, and for their intellectual cousins
the forces of Satan, the faithful versus the farther to the left. Since the revolution,
idolaters, the owners of luxurious villas in -the men of the centre and the left have
northern Teheran versus the owners of been subjected to continued harassment.
hovels in southern Teheran. He has used Many ' of their newspapers have. been
this vocabulary to flay the rich, the liber- proscribed, their political organisations
als and the westernisers. All this exacer- ..forced into shadowy existence, their lead-
the governmental institutions of the for- bates class conflict. ers~systematically detiouiiced.
mer regime. He 1 3pgnw*dtEiotfReleasdi2A0&1M1Z3thQlP RETRIMBOD 01 R( 6 fl 5 O' a7tst-the: liberals 'and
 - Approved For Release 2005/11/23 : CIA-RDP81 800401 R000600050016-7
member of the assembly of experts and
an associate of Ayatollah Shariat-Madari
went into hiding to avoid a similar fate.
By mid-November, the Bazargan go-
vernmment itself had been swept away by
the militant tide.
In January, the leader of the Islamic-
Marxist Mujaheddin organisation, Mr
Rajavi, was induced, by conditions laid
down by Ayatollah Khomeini, to with-
draw from the presidential election. In
February, the information minister, Mr
Nasser Minachi, was briefly detained
when the students claimed that'embassy
documents pointed to links between him
and the CIA; he was released on the
orders of the revolutionary council.
The case of Ayatollah Shariat-Madari
illustrates the present weakness of the..
IRAN INTERNATIONAL
The tactics employed by the Islamic
militants in almost all these confronta-
tions have followed a set pattern. First,
the Islamic or revolutionary creflentials
of a person or group are called into
question; then "documents" are pro-
duced linking the target of the attack with
the former regime, American "imperial-
ism" or Zionism; this is followed by a
mass ppblicity campaign, employing the
considerable resources of radio and tele-
vision, designed to blacken reputations
by innuendo and spurious accusation.
Where necessary, militants have been on
hand for physical intimidation or to take
over premises; and at times the huge
street demonstration-the battering ram
of the radical right--has been deployed
to overwhelm by sheer force of numbers.
The centre parties and their supporters
have been unable to evolve a counter-
strategy to these atacks. By virtue of the
support they enjoy among the profession-
al and administrative elite, they exert a
weight out of proportion to their num-
bers. But they remain in a minority: a
distinct disadvantage when the street
crowd has become a lever in the political
process.
The merchants of the bazaar, once
staunch supporters of the revolution and
now made anxious by its economic radi-
calism, could provide powerful support.
But they are made uneasy by the leftist
economic views of the intellectuals and
academics who tend to be the most vocal
in the centre parties. The ranks of the old
technocratic and managerial elite have
been diminished by purges and by a post-
revolution exodus to Europe and the
United States. Their self-confidence has
been eroded by the attacks of the Islamic
militants on their western education and
orientation-and on the fact that, materi-
ally, they did not do badly under the old
regime. -
the left was. launched practically on the
morning after the revolution. Ayatollah
they played no role in making the revolu-
lion. By definition, they could thus claim.
no share in running, or determining the.
N7 shape of, the post-revolution govern-
1 ment. Their call for a wider range of
choice when the first referendum was
held a year or so ago to decide on Iran's
system of government and their demand
for a more representative body when the
assembly of experts convened last sum-
mer to review the draft constitution were
brusquely overruled.
In May, 1979, Islamic militants seized
control of the- country's largest news-
paper, Kayhan, secured the backing of
Ayatollah Khomeini for their "revolu-
'tionary" act and managed eventually to
purge ,the newsroom staff of liberals and
..left wingers. In August, the offices of the
.outspoken liberal-left Ayandegan were
occupied by militants and the newspaper
itself closed down.
Soon afterwards, the headquarters of
forced to go underground. A march in
-' of the press, organised by the left-wing
National Democratic Front, was physical-
""Daftari, a leading civil rights lawyer, had
to go into hiding. Subsequently, several
x other liberal and left-wing newspapers
URV
"publication
.-In'September, another prominent civil
rights lawyer, Hassan Nazih, then manag-
ing director of the National Iranian Oil
'"Company, was hounded out of office.
'Tbe -ostensible reason was his alleged
U 4,
mismanagement of the company. His real
crime was that he had publicly questioned
the -viability of-a governmental system
=based solely.on Islamic precepts and the
wisdom of policies that were driving edu-
~cated skilled Iranians out of the country.
Like Mr Matin-Daftari, Mr Nazih went
into hiding rather than face the uncertain
- Wmercy of the revolutionary courts.
x other broadside -against liberal Iranians
s -: by maligning their attachment to western
-values and their "gradualist" approach to
-.',.`'reform: The documents were merely re-
Ports-of-conversations between embassy
i Officials .and various Iranians. But they
re-used to accuse several men of being
The students who occupied the Ameri-
used embassy documents to launch an-
;agents of American "imperialism".
4then 'ambassador -to the Scandinavian
y,
p
Sazargad- ed Mr Mo addam- which eeis closely associated has an- onOther lenenn a have done less
political moderates. Ayatollah Shariat-
Madari has an important regional power
base in Azerbaijan, where several million
Turkish-speaking Iranians regard him as
their spiritual leader. His criticism of the
excesses of the revolutionary courts and
committees and the arbitrary confiscation
of private property appeals to the middle
class. But when his followers took to the
streets in December to protest against the
new constitution and to confront Kho-
meini's adherents, Shariat-Madari-
moderate man that he is-sought to rein
them in. A collision was thus avoided.
But Ayatollah Shariat-Madari has since
retreated into dignified silence, while the
ublic People's part
with
Islamic Re
Left, ahead
In a sense the parties of the extreme left
have fared better than the parties of the
centre. The Tudeh (commmunist) party,
as always faithfully following the Moscow
line, has given its full support to Ayatol-
lah Khomeini and chimed in with the
Islamic militants in denigrating the liber-
als. Despite the hostility towards the
communists initially expressed by Ayatol-
lah Khomeini, the Tudeh party has thus
been free to publish its newspaper and to
maintain party offices in various cities.
Sidewalk hawkers outside Teheran Uni-
versity do a brisk business in the sale of
Tudeh _ publications and other Marxist
literature, much of it printed in Persian in
 INTERNATIONM. ANred For Release 2005/11/23: CIA-RDP81 800401 R000600050016-7
programme is now endorsed and imple-
mented by the Islamic right. Mr Aboihas-
san Bani-Sadr, first as finance minister
and now as president, has reinterpreted
Islam to incorporate socialist doctrine.
Nationalisation, extensive state control
over the economy, a worker's right to the
fruits of his own labour and to the means
of production are features of this new
Islamic economics.
When the Fedayin and the Mujaheddin
organisations announced their similar
programmes a fortnight after the revolu-
tion a year ago, they caused shudders in
Teheran and Qom with their call for
sweeping nationalisation, the takeover of
.multinational companies, the expulsion
of foreign experts, the organisation of a
people's army, local autonomy for ethnic
minorities, land for the peasants and the
administration of factories by workers'
committees. But now much of the, nation-
alisation programme has been imple-
mented. The authorities themselves have
taken up the cry of "land to the peasants"
and, unwillingly, have acquiesced in the
takeover of housing by students and revo-
lutionary committees.
Despite earlier hopes of reconstructing
the army, the revoluti onary guards are
now enshrined in the constitution and are
being developed as a counter to the
regular army. The parties of the extreme
left have joined those of the extreme
right in applauding "revolutionary jus-
tice", the "revolutionary" confiscation of
property and similar acts.
On some issues the two extremes still
fight one another. On local autonomy for
ethnic minorities, the radical right and
the radical left are still at daggers drawn.
But on other issues the extremes have
come full circle. That the rhetoric of
Islamic militancy incites factory workers
against their capitalist masters is a case in
point. The combination of popular pres-
sure, revolutionary ferment, reinterpret-
ed Islamic doctrine and sheer expediency
explains the leftward drift of the Iranian
revolution and the. weakening of the
moderate centre of Iranian politics.
cially to the "modern" industrial sector. of
the economy.
Industries that thrived under the
Shah's regime are considered to have ,
"client relationship" to. the multination.
als and in any event of doubtful value,
because they concentrated on foreign
owned assembly plants. Foreign eco:'
nomic links, especially those, with big:
American and European firms, are eyed
with suspicion; so is bigness in general,
whether in large-scale agriculture or in
There is much emphasis on endin
"dependence" by going for basic indus-
tries and seeking self-sufficiency in agril'.
culture. There is also a genuine, if popu
list, commitment to the cause of the poor
and to extensive redistribution of wealth::"
All this seems to add up to extensive-.-
vision of an "economy of divine . har
justly distributed. Restructuring. the .,
economy to achieve it will clearly require
necessitate, in Mr Bani-Sadr's view, state:
a lot of tinkering by the state, and will
smaller industrial units have been nat- eign trade. - .. . .
ionalised. Mr Bani-Sadr says that he will A powerful pressure from below fora',*
owned, undeveloped urban properties force the trend towards state interven- -
of more than 1,000 square metres have tion. Ayatollah Khosrowshahi, who has
been taken over by the government. headed the revolutionary government's .
Many major companies, particularly con- housing foundation, causes panic among....-,
large government contracts, are being aloud why one family occupies a many
financial managers. ' . less; or when he demands power to take:
These trends are likely to continue. over all empty houses and apartment!
The men around, Ayatollah Khomeini, blocks, to fix rents and even the prices at 'y
Bani-Sadr, came to power with a bagful But the. large majority of less-well-to-'
of economic ideas that seem to lead, do urban dwellers (and also the land
whatever the professed intentions of the hungry peasants) are stimulated by such:'
tension of state control. Mr Bani-Sadr is forcefully to occupy empty apartment
the most influential exponent of the new blocks . (and, for a while, under-used
lic. He provided the major push for the Their counterparts in the factories inter-
n 'Cr`~11 Tr1t'1'V of nationalisation of banks and industries. fere in the management of plants and<
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32- THE ECONOMIST FEBRUARY 23, 1980
The Iranian economy is undergoing a affairs. But inherent in the attitude of Mr lems combine to invite further state inter---
.
economy. volved in business, to run their own liquidity difficulties and her such prob--
radicalism is readily evident in the leave the people, including those in- ages of raw materials and-spare parts,.:
ferment that fires the momentum of the eminent came to power believing it was take them hostage, is causing many in
west have not grasped the nature of said to respect private ownership and . of revolutionary committees to arrest
y
Those who see a communist plot behind The revolution, it is true, was support- left alone. But owner-managers are reluc-
every act of nationalisation, every factory ed and heavily financed by the bazaar tant to commit themselves to new invest-
divine harmony. taken to "reorganise" the Iranian This intensifies business uncertainty..
economy. Man
smaller industrial units have been
der state control. Banks, insurance com- control over the means of, production,:'.
 Backward is the amazon cry
Unless such difficulties are overcome,
more and more ailing industries will fall
in the government's lap.
Until now, the disruptive effects of
these developments have been somewhat
muted by a number of factors. Industries
are drawing on stocks, running down
assets and ignoring their bank debts. The
government has ensured that workers'
wages are paid either by twisting manage=
ments' arms or by providing a hidden
subsidy in the form of loans. Demand has
remained buoyant partly for this reason
and partly because of the large wage
increases given to militant employees in
both the public and private sectors, be-
fore and after the revolution. :
The bazaar has proved an astonishingly
resourceful and resilient organisation,
finding new sources of supplies (chiefly
imports to replace failing domestic pro-
duction), maintaining the domestic distri-
bution network and shifting, because of a
loss of confidence, from a system of trade
heavily dependent on credit to cash-
financed transactions. In fact, the govern-
ment's propensity to leave the bazaar
alone (the bazaaris financed the revolu-
tion and the country's new rulers, dis-
playing a surprising conservatism for rev-
some other projects are being started up would let them. The bazaar
bazaar trade than to industry) has been a again, very little money is being spent on -powerful and strong. ' The instinct for!
boon. More stat interference would cer- development. The hostilit to foreign trade and business 'runs strong in ;Iran,,,
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34 THE ECONOMIST FEBRUARY 23,19
tainly have meant more disruption of the firms, and the disputes over claims, pre
economy. vent pre-revolution projects from being
The unemployment resulting from the.... completed. "Revolutionary" civil ser
economic slowdown has been blunted by vants, appointed to head government:>zd,
a boom in cheap, do-it-yourself housing departments, are afraid to take any deci=; ,
construction. Thousands of families in- sions at all. Mr Bani-Sadr reported in the=:,
habiting the bidonvilles of Teheran have autumn that although current spendingr'
taken advantage of the absence of mu- was mounting, the government had not'-'A
nicipal -authority to knock up dwellings in been able to spend the development
previously restricted areas, on private funds allocated in the budget.;.
land and outside the city limits. These The size of oil revenues (probably';'
new "instant slums" will no doubt cause, nearly $30 billion this year for exports aty
headaches later on. At the moment, they half the level prevailing before the revo-'
ItN+
provide employment and make a' great lution) is both a blessing and a curse.-
many families happy. permits the government to subsidise a
Staggering economic problems 'will basically failing economy-and makes it TM
confront the authorities as soon as they .easier to ignore difficult problems and'
stop a moment and look hard-not least put off the day of reckoning.
at the large exodus of members of the This is more the pity because it would
managerial class. Productivity in local in fact take very little to turn the situation:::-:
industries has fallen sharply and the role around. Oil revenues are already gener-
the private sector has been greatly ous and could be increased to finance a
of
reduced. Government takeovers simply substantial development programme, es-
an extension of inefficiency. The pecially now that billions are no longer
mean
faith of Mr Bani-Sadr in state control being spent on weapons. Despite purges-
notwithstanding,. not a single major state- and emigration, the Plan .Organisation;-; .r
owned industry (petrochemicals, steel, --the central bank and other government-
machine tools, tractors, aluminium) was bodies contain economists, planners and =:`
profitable in the Shah's time. managers of wide experience who are ;; l
Although roads are being built and eager to contribute ;if only., someone....
city is'
 Approved For Release 2005/11/23 : CIA-RDP81 800401 R000600050016-7
and -there could be a vigorous private
sector again (active in commerce, very
cautious in industry) if there were some
guarantee of stability and less govern-
merit interference.
But no such turnabout is imminent.
Instead, the populist temper will encour-
age continued abuse of the private sector.
At the same time plenty of economic
theories are still waiting to be tried out
and will not be abandoned until they are
seen to fail-and oil revenues will contin-
ue to encourage experimentation and.
disregard for the mounting problems.
A swallow heralding
the spring?
Last month, before the presidential elec-
tion', with Azerbaijan seething and the
authorities still speaking with a dozen
voices, most observers regarded the pros-
pects for an end to Iran's political turmoil
as bleak. Today, after the election of a
"moderate" as the first president of the
Islamic republic; and with danger of a
different kind threatening from Afghani-
stan, there is a gleam of optimism that the
domestic situation will somehow clear up
and the American hostages somehow be
released. Commonsense would suggest
that, in a country as volatile as Iran, some
factors in the equation have changed with
the election of Mr Bani-Sadr as presi-
dent; many more have not. .
Mr Bani-Sadr rode to victory on a 75%
majority of votes cast. The candidate of
the Islamic Republic party, which until
now has dominated Iranian elections and
referendums, received pitifully few votes.
This gives Mr Bani-Sadr a wide-ranging
mandate: huge rallies mounted against
him by, say, Moslem hardliners would
not be credible.
And whereas Mr Bani-Sadr's economic
theories can drive more traditional
economists to distraction, he has shown
commonsense and courage on a number
of issues. He was the first public figure in
Iran to condemn, without hedging, the
Soviet invasion of Afghanistan. He has
told the students holding the hostages at
the American embassy that their action is
illegal. He has suggested that public rec-
ognition of the deposed Shah's "crimes",
rather than his physical return to Iran, is
the main issue; this had led, with what
of a UN commission of inquiry.
Mr-Bari-Sadr is also likely to be more
tolerant of critics and opponents than the
Islamic hardliners. He himself has in the
past been critical of the lack of objectivity
in radio and television news reporting.
He is no friend of the United States.
But, a strong nationalist, he is likely to
try to strike a better balance in Iran's
foreign relations between the United
States and the Soviet Union. He has said
that he will oppose the Moslem hard-
liners and end the monopoly of power,
that certain religious elements have been
seeking to achieve.
All this is known and has already been
said. But, where economic policy is con-
cerned, Mr Bani-Sadr is no moderate. He
is likely to press on with a "restructuring"
of the Iranian economy which could take
many years to work itself out. He is a
prime advocate of "Islamicisation". So
the attempt to "restructure" Iran's insti-
tutions, as well as its economy, will also
go ahead, although perhaps, with more
restraint.
At the same time, there is little indica-
tion that the deep conflicts now dividing
Iranian society have been resolved.
Forces sympathetic to Mr Bani-Sadr in
the inner circle around Ayatollah Kho-
meini, and in the revolutionary council
which the president now chairs, have
risen to the top. But this may prove to be
just a round, not a final victory. Mr Bani-
Sadr does not yet have the authority or
power to eliminate the rival centres of
power that he, like Mr Bazargan before
him, complains about. And, as happened
with Mr Bazargan, his support on the
streets may fade. A year ago, huge rallies
were marching in support of Mr Bazar-
A V V ~m 1 -V 1 1\GIB.'Q.~i'Y'{~Y/'~4Y"P"Y'W?P'IHYI "F*YR~~~
cise their views more o y. - Banff-Sadr: praying for guidance?
ECONOMIST FEBRUARY 23, 1980
IRAN INTERNATIONAL
gan; in November they were marching to
denounce him. Mr Gotbzadeh, the for-
eign minister, who received less than 1%
of the vote last month, was being de-
fended against his critics by huge crowds
less than a year ago. Mr Bazargan also
discovered that Ayatollah Khomeini's
support can be withdrawn as totally as it
was once extended.
Nor is it at all clear how the new
constitutional arrangements will work out
in practice. On paper, the constitution
vests supreme authority over virtually all
the departments of the state-the judicial
apparatus, the army, large parts of the
executive, even legislation-in the cleri-
cal class. It is a constitution whose imple-
mentation will be fraught with difficul-
ties, precisely because it has been tailored
to ensure the supremacy of one man
and-after him-of one class of people.
. Ayatollah Khomeini's heart attack in
mid-January was a reminder that even
this over-powering personality is not im-
mune to the ravages of time. A power
struggle of fearful proportions could
break out at his death.' To be sure the
country's genius for compromise has sur-
prised many in the past. The forces
pushing the country towards polarisation,
as Mr Bani-Sadr's election indicates,
have not yet neutralised the strong im-
pulse for sensible solutions. But it is
much too early yet to say that Mr Bani-
Sadr's presidency is the swallow that
heralds the spring.
 Approved For Release 2005/11/23 : CI -RDP81 800401 R000600050016-7
the budget March-26th. The 'chancellor has been
preparing his dience for a harsh- one--even for a
failure to index t thresholds, which he is required to
do by law unless can persuade the house of
commons to agree oth 'se. What the treasury ap-
kinds of indexation--of dire and indirect taxes and
social security benefits. At pre t, income taxes and
social security benefits are fully lin d to prices; but the
duties on tobacco, spirits and pet are not. The.
chancellor might signal the need for rea age cuts4by
.offering something less than full indexa 'no'n all
three. He might then choose to "give away" ?,billion
or so by cutting the employers' nation insu nce
.surcharge, which could be a better w y~of boost
companies' cash flow than messing ab tit with corpora-
tion tax. But that would depend on his ability to
squeeze the public sector borrowjng requirement down
to the f9 billion or so expected this year-which means,
in real terms; a very sharp de, c line.
Sir Geoffrey still appe doggedly determined to
reduce public-sector bo owing, in order to have some
hope of bringing int est rates down. The Economist
But can they?
Do the five distinguished gentlemen who are. about to
be sent by the United Nations to listen to Iranian anger
against the Shah hold a key that will` unlock the
embassy-prison which holds the unfortunate American
hostages? Probably not-even if they get as far as
Teheran (their ability to get beyond Geneva was, at
mid-week, not entirely certain as Iran and the United
States, with the UN unhappily in the middle, tussled
over the commission's terms of reference). In whatever
way that fracas is resolved, the key to the hostages'
release is still clasped in the frail but implacable fist of
Ayatollah Khomeini.
Rebuff, hope, rebuff
Hope burst out last week when Iran's President Bani-
Sadr told Le Monde that the hostages might be freed
"in the next few days". Mr Bani-Sadr speaks with rrlore
authority than any other non-clerical Iranian: he has
solid popular backing, as shown by the unexpectedly
heavy vote for him at last month's presidential election;
he has the ayatollah's support, as shown, most recently,
by Khomeini's decision to delegate to him the com-
mand of the armed forces. Although no "moderate"
(see the special article from Iran starting on page 29),
he is not insisting on the Shah's extradition as the price
for the hostages' release. All this seemed encouraging
enough for Mr Kurt Waldheim, the UN secretary-
general, to rout out five-one hopes-good men and
true (from France, Algeria, Syria, Venezuela and Sri
Lanka) and despatch them on their way to Teheran. If
Iran were in search ;of .a face-:sa-Ong:-mechanism to-
14 Approved For Release 2005/1 P23
has urged him to go eas
into recession. We
'might ease some
.borrowed j
the bdrgaining climate by taking a clear lead in tli
4
~b
lic sector, and moving- towards the kind of pa
regarded as a U-turn. The time to talk is when inflatin
is expected to come down-as it will, for at least.
moment, when last summer's rise in value added
drops out of the year-on-year price index next summe
-
It will not do to wait for another autumn and make di,
actually wants) and the nationalised industries (at leas
Tougher luck for Britain if they a
itself off the hook of hostage-holding (which Mr Banff
=
Sadr, pre-empting criticism, has admitted is neither
humanitarian nor legal) the sending of this commissio
of inquiry would provide one. For several substanti
reasons it is not that simple: - _ -
? The fact that Mr Bani-Sadr is not as depressin
awful about the hostages as some of his fellow
countrymen has muffled the toughness of the cond
ca's admission of wrongful connivance in the Shah'
regime, and a promise not to intervene again, plus
and his fortune to Iran. Mr Carter has already
beat its breast in repentance. It is hard to see how it
_
get its hands on the Shah's fortune, to keep or return
And its influence in Panama will surely be used .t
? Although Mr Bani-Sadr has more authority than any?
He has chastised the embassy students but they have
not signalled that they are prepared to obey him. On
the contrary: they listen to the ayatollah alone. . e
? The notion that the commission can whizz through
the investigation in a-week or so is candyfloss. A vast
queue of witnesses-will be waiting to complain about
h
'
t
e Shah
s abuse of human rights; a mountain of bumf"
can be produced to prove that America `backed the3
Shah's
m
govern
ent. The question. is at which point-the=
i
i
comm
ss
on states that it will not 'proceed with its
1 1 I T6d64O O Ot 46sird: -the answer,
THE ECONOMIST FEBRUARY 23, 1900
ueeze when their next cash limits are set. Thai
o late. The place to start is in the belly of th
nthis, as the economy slii
ccept that lower interest rat
the private sector's problems. Bu
order to finance higher wage settlements
,y should be butchered to make a publi
 :,Approved For. Release 2005/11/23
-the earlier the better.
? This_leads.to the biggest obstacle of all. How are the.
commissioners, or the United States, to get the hos-
tages out without responding to the blackmail in a way
that creates additional hazards for other diplomats in
other capitals? The Iranian embassy-hijackers have got
plenty of mileage out of the publicity; it would be
dangerously wrong to cap this with a condemned, let
alone a repentant, America. Giving the Iranians a kill
as -well as a chase could be decisive in encouraging
terrorists-to-be to take up the sport of diplomat-
hunting.
The commissioners, renowned in their own fields- of
law and statesmanship (the French delegate's human
rights credentials include the defence of Iranians on
trial for political offences in the Shah's Irani should if
they get to Iran add a wary foxiness to their other skills.
The desire to find the way to a sensible relationship
between Iran and the west, unshackled by hostage-
holding, is not on the west's side only; in the end it
could be that Russia, by invading Afghanistan and thus
threatening Iran, will involuntarily have done the most
to procure the hostages' release.
Or it could be so if. the west were dealing only with
Mr bemirel deserts the help that.,
the west needs to give him
When you have worried enough about Afghanistan
,
Pakistan, Iran and the Gulf, turn to Turkey: a violence-
wracked and almost bankrupt country of 45m people
r wh
h
ere t
e eastern tip of Natond thtdf
ae wesern en o Islam overlap; whose collapse could make the fall of
Afghanistan sound, by comparison, `'a distant rattle of
stones in the hills.
visiting Ankara as a symbol of western an dety,and
e
w
stern willingness to help. Next month theOrganisa
4inn of ~.........,-.., r?- ------`-- . .~ +r.
-decide whether to pour in the $2.5 billion that might get
Turkey's economy out of hospital and back to"work.
Suleyman Demirel's ri htish overnment,stru rles to
m
e
h
bring political terroris
und
r control and. t
e coun-
Heard it all before? Yes.. A year ago, after the fall of
ert
cl
the Shah- western finance eo
i
-
s
ew
n out
Ankara while Mr Bulent Ecevit's leftish government
For all the reservations about the way he handled
'
Turkey
s economy innhis 1975-77 spell in office, Mr
D
i
'
em
rel
s chances of gtti th iinlid h
engenternatoa ae
reasons. The first is that Mr Demirel became prime .
oviet tanks roiled- A$WrAWrV J9?&t 0 1 23 OG :[hPIM ?1M'AM:gO
Sant-Sadrs smile has a twist to it
reasonable men. But it was not reason that brought
down the Shah and all his- works: it was faith and
implacability. And those are hard qualities to oppose.
3>> . .
about what The Economist 15 months ago called "the
between Afghanistan, the Horn of
ey has now turned, by natural progres--
roblems of the country-at the north-west
that triangle. When Turkey's neighbour,
tightening its links with the Soviet Union, and
w dying of President Tito raises a shadow over-
alkans, the need for astable and economically
x The second reason why Mr Demirel wins more
sympathy than his predecessor is the record of his first
three months in office. Talk about "a new Demirel"
may conjure up memories of the "new Nixon" of 1968,
who turned out much like the old one. But Mr Demirel
s. if -not new, at least genuinely refurbished. He now
ds a government-admittedly a minority one-
coinp d f lik d d
ose o e-mine ri
and d b of
pone by a team o p
no lon
r hamstrung, as he w
by coalit with
n partners wit ve
thus been
le to attempt a
both foreign
`Mr Demirel
s unequivo
to the western ca - G
Gone
the non-aligned world
an
d hi
paying court to the
viet
coming spring meeting o
be held in Ankara for the firs
ght-of-centre pragmatists
ro-western advisers. He is
as between 1975 and 1977,
ry different views. He has
radically new approach to
cally returned his country
a
re Mr Ecevit's wooing of
s "new defence concept",
Union. That is why the
ime since 1960, and why