as SECRET IRAN ins cam-ems 'Background to Current Uhrest Sgcial 1115 Economic Difficulties Political Impasse II Neg - Term mum Eafbrcing Mai-tial Law icalmiag the Opposition Inpaci on Fbreign and Def nse Policy Longer Term Problems Etonomics and Oil Domestic Ian ia s Regional ole Internatibnal Ofientation m- Outlook Through 1955 Pamvi M litary Ghve nment Control- n'g ummu'mwu I ammo 1o omen mass Eran in 1978 has been experiencing political turmoil and civil unrest- no'te serious than at any' other time in Shah Mohair-nod Raza Pahlavi's 37-year reign Ironically the unrest that threatens the Shah has been born largely of his success in protesting social mange-and economic development in Iran's traditionally riented society This change has been so rapid that it has outpaced the ability of the country's social economic andpolitical insti- tutions to adapt It has the confluence of serious problem growing our of oath of these areas father than any singleadverse or unpopular developmnt that precipitated the escalating street demonstrations that led to the declara- tion of martial law in Softember 1978 DesPite martial law popular unrest continual and has in fact aSSL-sed new forms such as widesgroad' labor stoppages and student boycottst Social 1115 e'ml modernization of lranian society in the past 15 years has brought substantial benefits to Iran's population as medical services out has also created serious dislocations that have co'nt ri- Abuted directly to civil unrest The Shah's hhite olution fomally lamcheri in 1963 and later oesignated' the Shah-People Revolution introouc'ed fundamental %ow1ete dxarrges to the Itanian society including land omership rural development and water distribution the court system education I and health services and the role of the clergy and men To the dis'nrptive iwact of these reform has been added the social effects of rapid virtually forced industrialization the accelerated emergence of a mdem middle class and increasingly rapid I urbanization m- Those who now challenge the Shah and seek to reform or replace Iran's political system are drawn from groups that have benefitted from the trans- formation of society notably the growing numbers of educated youth as well as from the disadvantaged-groups that have not especially unskilled and men-played migrants to the urban areas - th categories if only through exposure to the media have partially assimilated modern Secular ideas and values that have left them ill-equipped to live in a harsh iapersonal urban that enviromnent and have prompted them to challenge all authority including the Shah an traditional Islam This last developrent has sewed to reinforce ammo grunt mam-64' the predisposition of theain uential religious leaders the mllahs to oppose mdemitation Economic Difficulties til recently the steady and rapid growth of Iran's ecommy seemed able to assure material progress sufficient to override the ill effects of social problems Now however the Iranian govenment and people are aware that the economic benefits already won are not well distributed that future benefits will not come as oa ly and that the overall quality of life may not'be improving even in the areas hhere the economy has gram mat quickly a 3th Left Because the of virtually all classes have outpaced fatenal gains SECRET SECRET I I - sorcerer the political insect of the 552051011111 situation has becamehm re 1r troublesome than the economic reeling which almost certainly is that the typical Iranian enjoys a higher standard of living now than at any time in the past Camelaints center on inflation corruption and the increasingly uneven distribution of wealth as well as on such concrete needs as housing foo-d tranSpor tion employment and essential public services The ecommic difficulties that contributed to the current unrest resulted primarily from the indts'trialitation drive of the early and an we - mid-19705 Based W1 revenues pgices hating quadrupled in 1973 and 1974- the 1973-73 fiVe year investment prograxg included $70 billion in industrial development projects During the period 19791-75 Iran enjoyed average annual real GNP growth of orer 10 percent but it also suffered tr- 4 jtr nuns hilt related problems shortages of skilled laboa overtaxed storage port and inland distribution facilities serious bureaucratic delayis growing inflation 2- percent in 197 7 and the relative neglect of agriculture and the private sector The boom came to a halt in 197 -- when real NP growth fell to less a then three percent and more modest goals were adopted -- but the political damage especially annan urban workers small businessmen and artisans had already been done Political Impasse iran's political system has proved unable to respond effettively to the surge of demands on it that has grown out of the country- s tryriad social and economic problems Paradoxically the Shah and the government are now suffer ihg the consequences both of his long-time authoritarian rule which has allowed little opportunity for meaningful popular participation and of his recent caps Mmlitical li-beralitation which g aemitted the expresswn of has -- seriou t - - t rzt 'Ulucs UlMd to unr 5' The hbemluaum program underway -100- for the past two years has in fact allowed considerable freedom for the press has permitted fomation of political parties outside the official Rastakhiz Party and has promised free elections in 1979 in addition the program has been accompanied by a significant reduction in the use of police state methods by and other agencies to monitor and control political activity As a result of' this lifting of constraints political expression by a wide variety of groups loyal and disloyal has washroom-3 beyond the ability of the official institutions to cope Neither the people nor the Stamper-ed to accept the duties and responsibilities of a democratic political system I The Rastalixiz Party has virtually collapsed in this turrc'il and the Majlis parliament -- although much more active as a forum far de oate of the country's problems than at any time since the 19505 and therefore of sometme as a safety valve has failed to provide effeccive solutions to or leadership out of the political uncertainty The burden therefore has fallen wholly on the Shah weak-government- of Prime l-linisterwlafarmS narif Enamb to balance the need for publicoreer with the need for a political s'ett enent Senior military leaders have been pressing the former the civilian oeposition has been demanding the latter The civilian opposition mmting the challenge contains mo rain elements the leftist successors to the National Front of' the 19505 raw-cooperating to a limited extent under the cane Iranian Freedom Seekers Liberation illuminant and the religious commity The nationalists draw strength from the grape class int'ell igents ia and oppose authoritarian government generally whereas the religious opposition is supported by the lower and loser-riddle classes and opposes primarily the tau- 1 sacnsr reformist policies of the Shahth at threaten the status of religion in the coimtr'y In addition the organin opposition includes the terrorist gmupse- the People's Stxilgglers which draws its membership from the religious opposition and the People's Sacrifice Guerrillas which is leftist oriented and directed and recmits among tmivers-ity Students and the Tudeh Communist Party The religious leaders especially such figures as exiled Ayatollah Rnhollah leomini or Ayatollah Shariat adari from the holy city of Qom' have great influence with and can 'quickly mobilize the msses but in the past they have demonstrated only a limited ability to organize themselves and their followers - The leftist parties and terrorist groups are better organized but command a smaller fellas-ting - Leaders ofthe several opposition groups perceive the need to work together but their widely differing tactics and goals discussed below have made effective cooperation inmossible t II-s NEAR rem OUTMZOK The period up to mid-197911 likely to prove critical in determining the ability of the Shah to preserve the powers of the Pahlavi dynasty and Iran's existing political system in even a weakened form mctioning they have in the past The Shah in this time rate will need to demonstrate his detemination and ability to protect civil order for although martial law could be extended beyond its scheduled emiration in March 1979 to do-so would further weaken his position by implicitly achowledging failure to reestablish stability and confidence Additionally the Shah has promised that the ouadrennial elections- to- the Majlis due by early smarter-'19 will be held and will be free Making good on this pledge will require unparalleled Concessions on the part of both the mnarch and his principal opponents If the Shah succeeds in meeting these challenges he will have won himself a w'I l respite if he fails his progressively Lmdermined SECRET Enforcing iartial Law The Shah and the government face major difficulties in attempting to maintain civil order in the coming tenths even mder martial law Although relative stability has been maintained since September in Tehran and the eleven other cities where martial law has been instituted civil disturbances IL I - i waned- 9 f'Ar'r and terrorist mendents have sprewhbW labor stoppages have shut down a great my public and some private sector enter- prises and student boycotts have delayed the opening of cost universities Ironically the guvemment s success in restoring order in these circuttstances will turn in large part on the continued willingness of its rare moderate opponents to counsal restraint to their more radical covreiigionists and political associates Goverrunent representatives have been consulting with selected religious leaders and civilian politicians attempting with some success to play on their interest in avoiding anarchy and in ensuring cone trolled change-and continued basic stability This tsetic will not end the disturbances or satisfy the critics but it may buy time and prevent further solidification of the oppositim while the goverru'nent seeks to J JJpIeInent reforms She 1 more serious disorders recur of force held by the Iranian armed and security forces M grovidythem the capa- bility to prevent the disturbances from growing out of controi either in the 'imediate future or in 1979 if an extension of martial law becomes necessary 'Although normally not veil trained for riot control these forces have been provided special transit-t1 and limited additional training and will be abie to protect the reg' I j m as t ey remain loyal and determined to do so 1111 military at present is supporting the regime and is prepared to defend it with 5 -io3 SECRET force but it is clear there are degrees of loyalty and copper among its personnel Senior officers have the most at stake in the regime are the most conservative politically and tend to be the most loyal to the Shah It was they who convinced the Shah to declare martial law however and they would be the most tenpted in exttem to translate their frustrations with centinued' unrest afl zthe troubles of the civilian government into demands for a military government or3 a military coop Me ham less A information concerning the attitudes of junior officers and enlisted men dh anon-m1 Athe latter particular are drawn largely from the same disadvantaged groups as are the demonstrators There is therefore less certainty if I - cow-'7 moi-e - 40v - at these elements of the Military would long obey orders to fire on demonstrator-s to protect the Shah and a govemaent appointed by him 5 the several military units available to enforce martial law the laperi'a l Guards new deployed in Tehran the Special Forces Brigade and the rbome troops are' considered most reliable by the Iranian government Gaming the Opposition 111a Security situation will finally be quieted if at- all only following signifiCant concessions by the Shah and the goven'tment over and above what they hate already offered lines concessions will be necessary in all areas social econbmic and political Even sweeping concessions will not'ensure continoed calm however for were is an almost mi VersaI tendency amng Iranians and certainly among the political and religious opposition to -7 SECRET -1oa- SECFET interpret any concessions as signs of wea rness that should be exploited a rather thanas positive elements 0 solid-calm The Shah and the govarment therefore will need to couple well timed and well defined con- cessions with the judicious exercise of sufficient authority and force to mtimidat'e those who equating lenience with weakness would further challenge the regime The demands being pressed by the several opposition groups vary widelyf r'r in terms ofksuhStance the-Spirit in which they are code and the likelihood of their acceptance by the regime The Shin clergy who are leading the most effective opposition also differ among themselves lhe most in uential leader the exiled Ayatollah Khomeini has for years called tor We Shah and the cstablishnentof a theocmq' thus there is virtually no chance that the Shah or' any secular govermrent can grad-er a settlement with him More moderate religions figures in Iran including the well known Ayatollah Sharia ui iri den-and an a reduced role for the Shah and the effective laments-station of existing but heretofore ignored constitutional prov'sions for the 1 view of le islation by a comitt ee of Lou wed-J Luna theologians npass on its slamic tenets Although there is no chance that such a body would be allowed a veto pet-vet there probably is some room for a caviar-ended solution Regardless of their personal rivalries and differences over ultimate goal-s Shia religious leaders are united - K9 in their demand that the Shah halt his social programs hhich they beliere hare had a degenerating secularizing effect on traditional Islamic society - politicians notably those affiliated with the National Front but also those leading the small independent parties being fenced in r105- sm anticipation of the 1979 elections for the moSt part are demading a sharp reduction in the role of the' Shah and the establishment of a Lei- u a n'me Mic senth It fire 444 constitutions mon'archyA Generally leftist oriented these politicians are pressing for greater civil rights an end to corruption and privilege A I a and a more independent foreign policy including gleaming of Iran's ties to the US This group- is supported by a significant portion of the nlodern middle class - but does not have the widespread fanatical following of the nullahs This amalgam of civilian oppositionists is not opposed in principle to the Shah's program of modernizing Iran s society and economy and stands to gain the most from any expansion of political liberalimtion The Shah and government therefore have a better chance of arranging an accomodation with this group than with any other element of the opposition There is no likelihood that the Current regime can find any comon ground with the country's two terrorist groups or with the Tudeh Party All want to depose the Shah the Come-lists and the People's Sacrifice merrillas would install a secular Marxist government the People's Strugglers apparent-1y favor the dueoc racy called for by the radically conServat ive Shia leaders _ The Iranian security services orer the years have sharply limited the effectiveness of these radical growps with the result that they have 'not been able to mount a concerted attack on the regime even though they are in- contact with one another and share some overlapoing umbership These groups maintain clandestine organizations however that may enable them in the future to capitalize more effectively on civil disorder especially through the use of terrorism SHEET 106- SECRET The Shah has already made a nut-her 'f concessions in his effort to end civil unrest and elicit the tolerance of coder-ate religious and political leaders In the area of society and religion he has appointed a prime minister Sharif-Emmi who enjoys good relations with gh ia leaders dismissed some a In 1- m rub 3 MM government officials who were merbers of the Bahai set- 15t abolished the cabinet post for wmen's affairs elevated responsibility for the' religious endowment fund to cabinet level closet garblin g casinos reverted from the ee y so-called Pahlavz calendar to the calendar and opened private nego- tiations with the religious leaders To met economic demds the govern-rent 11 To Ra settle l' numerous strikes 1n public sector enterpriseMner-ous terms 4 increased wages housing aliasmnces persions and the like -- and tan indicated its intention to cut back spending on defense and nuclear program in favor of projects directly affecting the masses of the people including housing agriculture transporation and sanitation In the political field Ha the regime 7 '3 the Shah's liberalization - Ff nised -e lcoe cf 0 program will the activities of the royal fandly launched a vigorous mti-comrption program and affirmed the freedom of the press the right to assembly and the i nd pendence of the universities lhe Shahdts also allowed marginally greater latitude to an if oer-gerarg the sun gove nt than was en eyed by its recent predece g e an 4 We use 41w z ty jlfo'mihffr m r None of Iran s- basic problems will be solved in the few no that rennin before the 1979 elections are due yet it is during this period that the Shah -13- SECRET most badly needs to rotect a measure of public order and political confidante Jig-c 394' We wt 4 once of doing this and of inducing he participation in the oil'gctions by tho mdera'to opposition but only if the or ugg a i l In government contir es-to-inple eWsions Those would Jl I concrote evidence of the govemuent's intention to iron-ova the economic lot of the cannon man to grotect or enhance the prerogatives of the mllahs and the role of Islam to lift martial law as scheduled all to allow tmfottcrod political actiVity in the pie-election period and p094 A reykm t an ad nunth - 0 7 7 Inp'act SQ Persia and Defense Policy r4 dept 5 min H73 - The unrest in Iran as had no Significant impact on the coming 5 fueled if nM- norf hq it pr L i own Aha relations nigh its neighbors AIranian officials have occasionally alleged that the USSR has actively backed dissident groups in Iran bu we have no independent evidence to coriirm this and the Iranian security service's have privately that the disturbances have been homgrom The Soviets or a the Shah an Opponent ho uses Iran's political financialmilitary might to fmotrate Some regional goals - he Eco-1 Winc ned to becometh ved in the events in Item les such involvement jeopardize fire currently good bilateral tr economic relationship and acteptable political ties between Tehran and Moscow futon woufd Soviet interes or a short term setback if the Shah were overthrow and succeodod by a reactionary military or religious but in such a developmn er' in a period of instability that in time mold facilitate the expansion of Soviet influence -11- SECRET -108 - SECRET in Iran and in the Persian Gulf region Concerned with Iran s domestic problems the Shah is likely in the near term to take great care to avoid any changes or difficulties in his relations with the Soviets This preoCCJpation with internal developments will also prompt Tran to seek contau d correct relations with its mprimry regional rivall' - Iraq on 0 ghanist'an The reconciliation reached yith Iraq in 1975 has endzred well and the Iraqis are in any case not likely to seek to take advantage of Iran's current difficulties Although the 'Iraqi regime is ideologically opposed to the Shah its apprehension about Soviet actisitics areA in - and its concern o e about the attitudes and behavior of the 313115 of the Iraqi population that is Shia incline Baghdad to prefer a continued role for the Shah to the Tobi-o uncertainties of political chaosnor the energence of a reactionary religious or military government Possessing virtually no capability to influence events in Iran andbusy consolidating its own power the leftist Mregine of In 5% La pith - President Tarakihis also not likely in the near term to initiate problems I with Iran 1-5193 I Iran s military capabilities have been affected at least maximally by the deoan ds of enforcing and administering martial law l'lre Inqueria'l Guard the Special Forces and some airborne troops are deployed in Tehran and virtually all units around the country have been drawn on for troops and equipn'ent to supplen ent local police forces This or Load a - diversion ys ical almost certainly has had a detmrental effect on readiness levels and niorale and say have had a limited impact on combat capabilities as well These problems are not in the near term SECRET however to reduce sigiificantly Iran's overal'l'rdlitary superiority over Iraq or in the Persian Gulf nor ere they likely to stimlete any review of Iranian security policy in these areas A decision in the interests of economy to postpone indefinitely or cancel the future purchase of soohisti- cated military equipment especially the projected large numbers of F-l4 and P-lo aircraft and sizable quantities of ground force not inpact on overall military capabilities until at least the early 19805 but by the midwiQBOs would begin to reduce Iran's capabilities relative to both Iraq and the USSR Iran fact will cut back or delay purchases of military and peas-My industrial equipment from the US as a result of economic diffiwl es grading out of theiiur eacimrest but thisis likely to be a limited retrenchment that will nothinpact on the broader relationship a genomic difficulties presunably will incline Iran again to push for rodent er higher oil prices butprice policy is not likely to become tied in more dirECt way to near term political derelopments Despite their suspicions that the us is involved in all of Iran's domestic affair-ahlranians consider a continuedclose relationship with the US and knericm backing for the Shah to be essential in a period o political me ertainity - If the Shah follows through his current plan to 'pumxe inplane'n'tation of his liberalization program serious difficulties over amen-rights and other bilateral political issues are likely to be a'Voided WGER Iran faces several basic problems that W111 place importaht constraints on the country's longer term options in domestic and foreign SECRET -110- SECRET policy whatever the fate of the- Shah-rand the present govem ent Tne rat-far direction Iran goes in tthill be determined in large part by perennial realities deriving from four principal problem areas economic youth and declining oil production domestic tensions between modernization and tradit ionalismp and between liberalization and auchoritarianiSm Iran's role in the Persian Gulf region and beyond -- international orientation and dependence on the US Economics and Oil Iran's basic economic problem is that the country's crude oil productive capacity is now approaching its peak and will begin to decline probably- in the earljr 19805 At the Same time large and probably growin'g sms wi 11 be required to finance continued diversification of the economy and to support even reduced military and nuclear program Beyond this substantial - Mir-expenditures are Inna- y certain to arise as the govemtent Iran's crude oil protiuctive capability is 6 8 million barrels per day A to meet growing popular demands for etonomic gains in 1978 Sustainable capacity my rise to 7 million old by 1980 but-will deeline thereafter aL-rost certainly falling to 6 million b d -4 and perhaps substantially less by 1985 The rate of decline will depend on the success of a massive and costly gas injection progran that is intended to maintain reser- voir pressures and facilitate crude output in the major oilfileds lie consider that the entire volume of Iran's 43 billion barrel proved reservesprobably will be exploitable over time with the widespread enplaeenent of desalting 414- 1 units at the oilfields and as a_ result of an extensive well and equipment mintenance program An additional 17 billion barrels of probable reserves might be recovered using natural gas injection although this would be at very high costs I With oil output falling any Iranian government will come under growing pressure-tho increase oil prices to finance on- going programs and to cover increased inports If there were no oil price increase until exanple Iran's current account would be in deficit in that year In the more likely that oil prices rise at about the same rate as Iran's import prices and oil production diminishes gradually to 5 5 million We by 1985 Iran's current account will go into substantial deficit in 1982' figure 1 If real oil prices were to rise about five per- cent a year over the next several years on the other hand Iran might be able to maintain a current account surplus through 1985 - Iran's $13 billion in of cial reserves and $5 billion in official non resenre assets will enable it to borrow on favorable terms for development projects and borrowing is expected to increase substantially The country has no other reach r solution to its growing goreign payments problem in the period through the mid-19805 however Natural gas production from reserves of 500-600 trillion cubic feet second in size only to those of the USSR will rise subStantially in the next few years but will not replace all as a major foreign exchange earner An active program to attract foreign invest ment'has recently enjoyedlimited success but it gill falter unless political stability is Quickly restored 15 - 112- SECRET fry a As a result of these dif culties for the next sereral years is likely to grow at a modest rate of only four to seven percent annually and little progress is likely to be ease in restructuring the economy Despite the current emphasis on the need to diversify for exmple this sector will constitute only a larger proportion of in 1985 than it did in 1977 figure 2 Serious domsti'c constraints _will persist asa result of the generally inadequate infrastructure the shortage of skilled labor and technical personnel the lack of productivity in the private seetor and agriculture and the in ation that will be further stinulat'ed by the economic concessions now Being granted to quiet popular unrest - 1 gen In the next few years Iranlan policy makers shift resources away from the recently favored military and nuclear programs to such ftmdan-ental needs as transportationand agriculture Qhok Unless significant changes in priorities are made for exanple the proportion of Iran's food requirements produced domestics-11y is likely to fall from the current 75 portent to as lowas 60 percent necessitatinga ranifold increase in payments for food imports and price subsidies On the political side reorientation Will be essential to forestall further unrest as papular expecta- tions are de ated by reduced economic grouth In the coating periodof leveling or declining _oil production therefore this will entail reduc- tion in the 28 per tnt of annual budget expenditures that now goes todefense Such 'a reduction would leave Iran still able to finance warns purchases but not on the soale of the 1970's -15- $5093 -113- Domestic Tensions The disorientation of Iran's society and political system that has created formidable near-tom problems for the Shah will not soon abate Tension will persist for my years o- under any government with or without the Shah - between the forces of modernization and those of tradition and between the forces of liberalization and those of authoritarianism The two conflicts are entwined but distinCt the Shah continues to agonize for exarple over whether his strong commitment to mdernizing ran can best be pursued through - authoritarian or liberal dolicies There is in Iranian history to predispose both the ruler and the ruled to exercise and to expect authoritarian behavior Thete exists no tradition of the orderly transfer of authority Mame has been no real experience with democratic 01116 and there is little feeling of Iranian nationalism even though the first Persian wire was foundedmore than 2500 years ago The modern idea of a nation-state arrived late in Iran as an inportation from Europe and did little to inspire Iranian holiticiam to transcend the cannon virtues of independence and self aggrandizenent in the interests of the general welfare This reluctance was also reinforced historically by the great physical and cultural diversity of the and by the long succession of alien rulers There is in Iran on the Omar hand an established tradition of a strong ruler at the head of an authoritarian and of general obeisante to any authority that manifests its will with force The of the current Shah for example superficially suggests that political stability in Iran is best assured by authoritarian gavel-Intent and that periods -17- -114- SECRET of the greatest political unrest arise than the ruler for whatever reason shares authority as during the bbsadeq crisis of 1951-51 or attempts to introduce additional freedoms as with the liberalization program of mid-19705 In fact although the political behavior of Iranians will change only slowly the popular appetite for participation in goverment has been sufficiently whetted by such factors as exposure to the media and Western values education and urbanization that no government will have the option oi turning back permanently This con ict between authoritarianism and liberalization is so mdamental that it is almost certain over the next several years to cause continued instability and therefore major problem for either the Shah or an alternative military or civilian regime The related cultural dichotomy that will ensure continued disorder in Iranian society is the tension between redemization ans traditionalism 'lhe Shah has been the chief proponent of rapid noderni zation but the goals of the program are supported also by the bulk of the military leadership and by the secular politicians many of when in other respects are opponents of the Shah lbdernization as pro-noted by the Shah has cursed on land and economic refonns women's rights education and health and rural develops-rent h'ith progress these areas mreover have come other mdamntal changes especially rapici urbanization the alteration of the traditional class structure and the general perhaps irreversible somlarization of society These too I have proved socially and political disruptive The inability of Iranian society to accommodate successfully to these social changes stems in large'part from the long-standing and pervasive in uence -13- 4 15- secasr of religion and religious leaders Iran is distinguished from all other principal Islamic states in that its population adheres ovenhelmingly to the heterodox Shia branch of Islam Although the Sh ia faith eight percent of all Malina serves in part to unify Iran's two large cultural groups Persian and Azarbaijani it also provides the devout with a mindset and a leadership that is fanaticaliy opposed to modernization Shia Islam is not merely a religion rather it is an all encompassing religious economic legal Social and intellectual system that controls all aspects of life and the se ct s leaders mlike their comterparts in 3mm Islam are believed to be conpleting God's revelations on earth The tens of thousands of Shia nullah s although not well organized politically have more direct-and regular contact with the masses of Iranians than do goverment or party officials Because for years the nullahs have seen their economic judicial y adminiStrative social prerogatives by successive governments and the forces of npdemization the 'nu llahs are now using their influence to check this trend Their challenge now is to the Shah but for at least the next several years they will retain Sufficient strength to make similar demands on any military or civilian regime in which they themselves are not heavily represented h'e-do not foresee any likely in which a government controlled by religious leaders would come to power although religiously based politiCal parties may emerge If meaningful elections are held either in 1979 or thereafter politicians will find it useful to appeal for support from the clergy SECRET -1-16- Regional Role Geography and history together have ensured that Iran for the indefinite future will face certain difficult constraints in its relationship with its regional neighbors Strategic economic political and cultural factors all distinguish Iran's interests from the often mm interests of the ts-fem Arabs to the West or the Afghansdto the East Iranian leaders of any political stripe will find their options in regional foreign and defense policy limited by the need to protect the country's territorial integrity and oil routes and by their interest in balancing the anti-Persian outlook and policies of neighboring states Iran's most inmadiate foreign policy concern is to erusure Iranian hegemony in the i ersian Gulf region a goal dictated by apprehensicn about Arab radicalism and the vulnerability of Iran's oil fields and shipping lanes In pursuit of this goal Iran has sought correct bilateral relations with the States it sees as most likely to threaten this hegemny -- the USSR Iraq and Saudi Arabia -- and has tried to interest the Arab Gulf states in a regional collective security arrangement Dcepseated Arab of Persian whitiohs has precluded any such nult-ilateral agreement and almost certainly will continue to do so although the Arabs individually have been willing to normalize relations with Iran Iran and Iraq have observed scrupulously the provisions of the Algiers IACcord of 1975 that ended Iran's involvement in the Kurdish rebellion and delineated the two states comm border and bilateral relations are likely - 20 SECRET -117- to retrain stable for the next few years This stability is a result primarily SECRET of the apprehenSion Iraqi leaders have of Iran's military strength and political in uence and their concern about Soviet activities in the area I Cox read Iran for its part is grateful that I raqhi's neilher meddling in Iran's domestic problems not attenuating actively to subvert the smaller conservative Arab regimes in the Gulf Saudi Arabia's detemination to preserve its sphere of influence on the Arab side of the Q1113 its more conservative policy on oil prices and its apprehension about developments inside Iran' and about the policy toward Saudi Arabia of a possible post-Shah govemment are likely to preclude sigti fi'cantly closer ties with Irah'm The sta t es' shared anxiety about'perceived Soviet and radical Arab threats prObab'ly will lead them to minimize-any contentious bilateral issues however rt'fr' Iran s defense policy in the Persian Gul fhis aimed at creating a preponderant force capable of deterring or nothing costly an attack from any quarter and able to project Iranim power abroad especially in the north- yest Indian Ocean If meat plans for the acquiSition of additional nilitary e juipment are inplemented these objectives are likely to 'be substantially achieved by the mid-19805 as the Iranian armed forces already the largest and host equipped in the Gulf increase their superiority over the otter littoral states Ieran for economic reasons cuts back sharply or delays indefinitely its purchases of sophisticated military equipmnt however especially F-14 and aircraft and major g ro'md force equipIrent the margin of its superiori1 over Iraq will be reduced significantly in the mid-19 805 -21 SECRET 113- SECRET Iran's present military superiority over Iraq rests primarily on the strength of its Air Force which has more aircraft better pilot training a greater airborne EOE capability and ordnanu such as laser-guided bombs and W guided missiles that are mavailable to Iraq lhe Iranian Navy also is far soperior to that of Iraq it could easily close the Gulf to Iraqi shipping and could attenpt small asphibiaus operation The mo states' gromd forces are more nearly balanced however with each side possessing different advantages in tents of equipment and capable of incursion into the other's territory The disposition of ground forces figure 3 and the greater mobility of Iraqi forecs could in feet give Baghdad a Substantial numerical advantage along the border during the sta es of an attack - A program of naval expansion now underway the 19805 irther strengthen Iran s ability to project its forces into the Indian Ocean and onto the Arabian peninsula Despite this accretion of 'military power however _we estimate that Iran will continue to act in agstrained manner consistent Omdu' any steeds e Mane- F with its current policy Iran would be likelyAto intervene withits forces to control security problems among the smaller states on the Arabian Penin- sula only if invited to do so or if tacitly approVed by the conservative Arabs especially Saudi Arabia as was the case when Iranjntervened in the Dhofar War in Oman in the mid-1970s -- and would we to seize and control shipping lanes only in response to a direct threat to Iran s own Sewrity I I I I The distrust that characterizes relations hetueen' Iran and Afghanism is virtually certain to deepen over the neat few years as a result of what Iran considers Afghan President Taraki's steady mean-eat toward a closer I - 22 - SECRET -119- SECRET - as a the b relationship with the USSR Shah robabldee covert support to Afghan clissitien'j I an opportunity to mdermine' the leftist goverrntegt but owing to- Iran Ls domestic problems and apprehension about possible Soviet reactth i'kely to tterfere blatantly or directly On the diplomatic level Tehran will seek continued correct'rela- tions with Kabul in the hepe of checking the growth of Soviet influence in Afghanistan To protect against a long g ig ogtg m m Iran over the next few years will take steps to improve its military posture in the eastern border area Iran's limited forces in the east at present are sufficient to defend against any likely military threat but they have little capability to project power beyond Iran 5 borders Intemational Orientation I Rania leaders of all but the most radical leftist or terrorist groups share an apprehension about Iran's geopolitical position They see Iran as surrounded not only by basically unfriendly or tsireliable area states but also by a superpower Russia that is detern ned over the long tern to wider-mine Iran s regional influence and internal stability ks a result of this percep tion and the extensive ties that Iran museouently has developed with the United States no sharp reorientation of Iranian policy vista-visnsuperpowers is likely in the period through the adds-19805 The vigorous 'anti-Commism of the Shah and of most senior Iranian politiioal and militate r leaders grewout of the Soviet occupation of Iran dutin8_ and after h'orld War II and out of the diffiwlt early years of the Shah's reign when the Soviets were seen as the principal threat to his role and to the -23 5255137 1203- This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu