In the name of Allah

the most
Compassionate and Merciful
The Center for the PubLicaPion of the U.S.
Espionage Den's Documents
P.O. BOX: Wl5 3489 -
Tehran' lslgmic Republic of Iran
Tel: 824005
 IN THE NAME OF ALLAH.
THE MOST COMPASSIONATE AND MERCIFUL

TABLE OF CONTENTS
1 - IRAN: RENEWAL OF CIVIL DISTURBANCES ..................... 1
SUMMARY ........................................ 4
BACKGROUND ........................................'. 4
RESURGENCE OF DISSIDENCE ........................... 6
POLITICAL LIBERALIZATION A FACTOR .................. 8
OUTLOCK ............................................ 9
2 - INTERNAL SITUATION ..................................... 10
3- ORGANIZATION OF PRO-SHAH COUNTER-MEASURES .............. 1 2
4- SUMMARY OF AMBASSADOR'S MEETING WITH SELECT GROUP OF
AMERICAN BUSINESS COMMUNITY REPRESENTATIVES ............ 1 5
PERSPECTIVE ON CURRENT EVENTS ..................... 1 6
POLITICAL REALITIES ............................... 1 7
WHERE WE ARE ...................................... 1 7
U.S. COMMUNITY SAFETY AND WELFARE ................. 1 8
MISCELLANEOUS ..................................... 1 9
5 . INSTRUCTIONS FROM AYATOLLAH KHOMEINI TO STAGE ANTI-GOVERNMENT
DEMONSTRATIONS DURING MOHARRAM ........................ 2 1
6- FRENCH ECONOMIC INTERESTS IN IRAN ...................... 25
FRENCH POPULATION ................................. 25
EFFECTS ON FRENCH BUSINESS IN IRAN ................ 25
RAILROADS ......................................... 25
NUCLEAR ............................................ 25
 AYATOLLAH KtlOMEINI ............................... 26
BIO(;RAPHIC ....................................... 26
7- I S R A E L AND 1)lVlil.OI'MlNTS I N IRAN ....................... 2 7

8- CLOUDY FOR IRAN ....................................... 3 2

SUMMARY .......................................... 32

ISFAHAN P E R S P E C T I V E ON THE BAKHTIAR GOVERNMENT ... 3 2

PROBLEMS FACING THE GOVERNMENT .................. 3 3
SCENARIO FOR ( L I M I T E D ) S U C C E S S .................... 34
I M P L I C A T I O N S FOR THE U . S . AND AMERICANS .......... 35
9- A S S I S T A N T SECRETARY SAUNDERS' STATEMENT ................ 3 8
THE PRESENT S I T U A T I O N I N IRAN AND I T S I M P L I C A T I O N S .. 3 8
INTRODUCTION ..................................... 3 8
PROBLEM I N IRAN TODAY ............................ 4 2
AMERICAN I N T E R E S T S AND ROLE ...................... 4 3
HOW THE PRESENT S I T U A T I O N CAME ABOUT ................ 4 6
THE "WHITE REVOLUTION" ........................... 4 6

CONFIDENCE AND GROWTH: 1 9 6 3 - 7 6 ................... 4 8

PROBLEMS AND PRESSURES: 1 9 7 6 - 7 8 .................. 4 9

TODAY ........................................ 5 2
WHY AN EXPLOSION? ................................ 5 4
THE I S S U E S AHEAD ................................. 55

REGIONAL I M P L I C A T I O N S ............................... 55
FOUR P O I N T S NEED TO BE STATED ....................... 5 7
U . S . P O L I C Y ......................................... 60
WHAT L I E S AHEAD? .................................... 6 3
1 0 - FRENCH FOREIGN M I N I S T E R FRANCOIS-PONCET'S V I S I T TO

COPENHAGEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 5
1 1 - ECONOMIC D I S C U S S I O N S O F THE SUPPORTERS O F AYATOLLAH

KHOMEINI ..............................................6 7
12- WHAT WENT WRONG I N IRAN? .............................. 7 0
13- SPEECI-: IVATERIAL CLEARANCE: REQUBST FOR ................ 74

PROLOGUE ........................................7 5

THE BEGINNING ..................................... 7 5

THE DOWN TURN ..................................... 7 9

END O F A DYNASTY .................................. 8 0

KEYS TO DOWNFALL O F PAHLAVI DYNASTY ............... 8 1

KEY UNANSWERED QUESTIONS .......................... 8 2

14- CALL BY I R A N I A N CHARGE ................................ 8 3

15- CHARGE'S CALL ON AGRICULTURE M I N I S T E R DR . MOHAMMAD IZADI 8 6

16- A LETTER TO CYRUS VANCE FROM EBRAHIM YAZDI ............ 9 0

17- SCHEDULED ANTI-AMERICAN DEMONSTRATIONS ................ 9 5

18- IRANIAN ECONOMIC TRENDS ............................... 9 7

SUMMARY ........................................... 9 7

CURRENT ECONOMIC S I T U A T I O N AND TRENDS MARC0 ECONOMIC

SITUATION ......................................... 9 7
F I S C A L DEVELOPMENT ............................... 1 0 0

MONETARY AND P R I C E DEVELOPMENT ................... 1 0 1

TRADE DEVELOPMENTS ............................... 1 0 2

I N F L A T I O N I S S U E .................................. 1 0 2

LABOR CONDITIONS ................................. 1 0 3

THE ENVIRONMENT .................................. 1 0 4
 IMPLICATIONS FOR THE UNITED STATES ................ 104
19- IRAN'S FOREIGN ASSISTANCE. INVESTMENT. REVENUES AND DEBT
SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
20- AMIR ENTEZAM STATEMENT ................................ 109
21- REPORTING SUBJECTS .................................... 110
22- IRANIAN CONSTITUTION .................................. 112
23- U.S..IRAN COMMERCIAL RELATIONS ........................ 115
24- PGOI TRIES TO CONTROL THE REVOLUTIONARY MOVEMENT ...... 118
25- IRAN: MARCHERS SUPPORT KHOMEINI ....................... 120
26- YAZDI IN NEW YORK: WHERE NOW? ......................... 122
27- ECONOMIC RECOVERY-WHERE NOW? .......................... 128
28- POST-REVOLUTIONARY INDUSTRY IN TABR1Z:MERCEDES BEN2 ... 134

Documents No . 21. 23 . are retyped becuase of pale origins .

 IRAN:

16 AUGUST 1978

,8,C ',a,,,.>
Lnl.,,r,"l;.~.P i.,. .1 _,,I &,.Old, 48.
halmnl :w. I) In.rm.mon
ulu,im.ou alr*ur. D10*cta, mnrrl i
I~~rc-lligt*~lc.c. IRAN

Appr~isrtl RENEWAL OF C I V I L DISTURBANCES (u)

PREPARED BY
Mq. Don Adurnick. LISA .
 RECENT UNRESl' INCLUDED ANTI-AMEk?li'I\N ACTIVIT'I

27 l111y Shira, All w i ~ ~ ( i o w s Iran , A ~ ~ I . ~ IStv<

I , ; ivl
I I yI (11lS) I I I I I ~ I I I I ~
brok~:nby tlcmo~~atrdlor~

6 August Shiraz Crowd uttempts to et11t.r li\ 1.c1n11bound~ n dIbn-A

vfintlowfi

U AII~US~ Shiraz C:rowcl, m~~rcllirx

frolo Moqltc: towards 1AS l~uiltli~tl:,
ix dispersed by policc

Early Augunt idahan Several America118 rewrt that tbry Ilavc I~ccntl11ealcnc11

(:ONFII)k.N'I'IAI. NOFOUN
 IRAN: RENEWAL OF C:IVIL D1SllJRRAM:ES (U)

-
Summary

f'C,/NOFOHN) Since 21 July, Iran hfls c?x[>eriertcedf l wave of dissid~111

activity sirnilar t o that which plagued the country for the first five morltlls
of the year. Religious e k m e n t s opposed to the Saali have sparked a seri~?s
of confrontations with the government that have resrllted in 12 t o 20 killed,
scores injured, and several hundred arrested. Other ~pponentso f the Sh<!h
include those of a more liherul bent, students, and 1 jssihiy terrorist grouos
operating on the fringes. Whilt! these groups mu), . I have a tiefinite pl4:n
regarding Iran's future, t h y are united in their oppostl ,rl to the Shalr.
(C,/NOFORN) The recent rcund of disturbances seems l o indicate art ifl-
creasing anti-US tone. In their cornpetition to out do one another, tile
variou.s dissident groups may escalate the level of anti-American rhetori.:,
ant1 the latent xenophobia in the Iranian character may =rface. This could
lead to some trouble for the large American community in Iran,
particularly for those who might get caught up in events in the more co:~-
servalive cities.
(C,'NOFORN) The recent deaths may set off 11 ew cycle of religio~ls
demonstrutions such as those experienced earlier h i s year. Thc? Islarrric
monxh of Ramadan, now in progress, and the special mourning days in late
August increase the chance for further demonstrations. The governrneilt
will probably be able to handle the situation, but the Shah is still faced wit ti
a dilemma: How to continue liberalizing Iranian soc'ety and maintain order
ot the same Lime without cracking down too harshly bn the dissidents.

Background
(CI'NOFOKN) The resurgc:nc:e c f civil disturbances $n Iran during the paa;t
few weeks is similar in many ways t o that e:cperiqnced from 2anuary to
May. It has its roots in traditional oppositior~ to the Shah by religious
corlservatlves who oppose his secularization ant1 mdderrrjzation o f Ir;~ni.~n
society. The targets o f demor.strators are the same bar,ks; movie t~obse,,
t
behicles, and ordinary business establishments. 0 .e,- opporlents IenJing
their support, i f not actual participatio.~, include t ose of a rnore liher rl
outlook, s~c:has students, followers o f the now defunct National Frorrt, arid
p0ssib.y terrorist groups. Whilt the disturbar~cesare similar t o previolis
dernc~nstrat~ons, they have taken on some new t,w~sts.
(C/NOF-URN) The recent troubles began on 21 July, L rel~giousholrday t)f
some- s~gn~fic-ance to the O i i ~ t eMusl~msof Iran. 11,t t a d of holding thv
usual celebrations, followers of Ayatollah Khorr.eir, c.llled for p o l l t i c d
meetings. Comrnernoratrve services for Ayatolld3 h f i , a respected
rel~gluurleader i n the holv city of Mashad, were f lowed by a v~olent
confrontat~onbetween governmerlt securlty forces d der~lonstrators the
next day. Other cltles also reported some inc~dents,u JIG h apparently were
perpetrated by religious extr emlsts.

(CINOFORN) During the following week, rnoul-r~ingi:erelnonies for K;ri~

and for those killed the previous week led to further disturbances. The
rumor that K a f i was killed hy government security o f f ~ c i a l sfurl:her incited
his following. lsfahan suffered the most violence, consisting largely of
breaking windows. Casualties, as reported in the guvernment-contrallrd
press, indicared that some 300 were arrested, up t o sir persons killed, and
26 in'ured i n the two weeks of violence. Events culminated i n the b ~ r r ~ b i n
of id l l S Consulate i n 1sfah.m. While there were no injuries and only niinor
damage was done, i t was i.he first clearly anti-4meric.an act in sevc!rai
monr hs.

(C/h'OFORN! The period from 5 to 10 August vras sonlewhat calmer ;ll-

though viole:r,ce occurred in the theological center of Q a n ~and the c ~ t i e sof
Shiraz and Isfahan. Alrnost any occasion has been explaited by the religious
extremists, t o include contiiiuing commemoration of Kafi, Iran'!; C:cns.~itu-
tion Day, and the start of tne Muslim month of ~Xarnadan. The arrest of a
pronrirrent religious leader in Isiahan by SAVAK, the Iranian Vatitrnal
Intelligence and Security Organization, also contributed to antigovern~r~erb
demonstrations.

(C/NOFORN) 01111 Augus~,tk#elranian Governrnent decldred rnarridi law

in the nation"s second largest city, Isfahan. Police attempts t o break up ,i
religious derr.onstration led to rioting, and military forces were called ill t o
restore: order. A curfew is i n effect, and the gathering of three or Irrore
persons is prohibited. The martial law is t o remain i n effect for one month
and reportedly will be extended t o other cities as necessary. Unconfirrr~ed
press rrportr. indicate i t may already have been imposed i n three snlall
cities near Isfahan. The swift imposition of martial law i n thtr intlustriai
and toiirist center indicates the seriousness of th,: situation and the
governrrlent's intention to confrorit e):tremists with t r ~ eforce ~.equrredt o
restore order. Casualties i n 1:ilatlan and other cities . nce I I August have
.
raised tile tm~1-a;killecl anc: injured, but relidble figures e not yet avail3h.e.

16 Aug 78 I)IP Ir,tel ,lgence Appraisai Page 2

 fSOFJFIDENf1A.L.

EXILED RELlGlOClS LEADER STILL IMFLdFNTIAL IN IRAN

AYATOLLAH R U H O L W H KHOMElNl
ACE: 76

Has attacked Shah and his refoim m e a r e &

Opposed ,~rea?nceof American8 in Iran.
Exiled t o Imq i~ 1964.

LAL NOFORM
I'o11tic:al Liberalization J k'ai.tor

(C/NOFOKN) As t h e anti-Sh.311 demonstration:, ci clsturbanc.es we) e

wlr~dingdown in May and t h e g o v e r ~ ~ m e nannounc-t t .. rdtk:lo\dn o n d:c.-
8.

sldence, most religious l e a d e r s seerned t o favor a c , nirtl: of I h e s i t u ; ~ t i o ~ ~ .

There were signs t h a t a dialogue was taklng pla'zt! ht. dtserl tht: Shall and t h e
r e l i g ~ o u brc~rnmunity. At t h e siirnr time, t h e fr,ir~~. : I ~ . . i d ~ rreempha:i~~c,rl
his policy of political I ~ n e r a l i z a t i o n , and prep. ~ . . . . o ~ l sfor ntv.1 year's
p a r l i a m e n t i ~ r yelecl.ions dominated t h e news. Tllc .)r;mpolltical ict.iioi-
p h e r e prompted much d e b a t e dncl g e r ~ e r a l l ys e t t l e d tt.. v o l ~ t l l es i t u d t ~ o n .

(C/NOFOKN) T h e r e l a t i \ , e c a l m evidently did r o . \it 1:oo veil with the

monarch's m o r e e x t r e m e opponents. The anti-Shah ,Ilowers of the ex11ec1
Khomeini a p p e a r e d t o havc: been behind much of t h e \ ~ o l e n c e o, r a t l e a s t I:O
have e x p l o ~ t e d t h e genuine cornmemorations of t h e religious rnajoritv.
Reportedly, t h e outlawed TUDEH o r Communist P a r t y of lran i s racitly
supporting religious groups. loyal t o Khomeini. Old t i m e nationalists of a
l e f t i s t persuasion also lend their support to t h e anrigovernment activity.
While t h e s e groups rnay not'have t h e s a m e plan f o r Iran's future! -- if indeed
t h e y have a plan -- t h e y a r e united in their opposition t o t h e Shah ant1 t h e
present form of g o v e r n m e r t .

(C/NOFORI\I) T h e r e c e n t o u t b r e a k s suggest t h a t a n increasing anti-US tone

is clevelop~rlgin t h e govern.nent's opposition. Those eat-orla1 frontist: lonp-
opposed t o t h e Shah have claimed t h a t he i s a puppe; of t h e US a n d w ~ l d3 l
wh.it Washington bids. They point t o his liberali::,ition policy and t h e
improvement of human rights in lran as exampl*:s t h a t t h e Shah i s fol~uwir;:
CIS ir~structions. Lately, t h e r e have been signs t h a t t h e Shah's opposition
believes th;t t h e U S i s not pressuring him enough o n irnproving tht: poli ticiLl
situation in Iran.

(CINOFORN) The anti-American t h e m e i s reportedly a l s o being exploited

by religious elements, parlicularly in Isfahan. Korneini has lcng preached
against t h e American presence in Iran, claiming t h e US is t h e principal
supporter of t h e Shah and exploits Iran's wealth, while Americans in t h e
country enjoy special privi:eges. Iranians typicslly b l a m e their trouble:, 0.3
outsiders, a n d Americans a r e a convenient t a r g e t . In o r d e r t o {:ail
primacy over rival dissidt:nts, s o m e religious 1e.iders rnay l a k e a m o r ?
e x t r e m e s t a n d o n opposition t o t h e government. This could b e r e f l e c t e d is?
increasing anti-US s t a t e m e n t s , a n d t h e l a t e n t xenophobia in t h e Irania,)
populace: rn3y surface. This could pose trouble f o r t h e l a r g e American
con~nlitnity of about 37,000 t o 40,000.

(C/NOFORN) The anti-American t o n e has not thus a; s u r f a c e d p u b i ~ a y ,

a n d ~t may b e limited t o t h e m o r e e x t r e m e oppo, tlon. However, t h e
number of anti-American C c t j in t h e past f e w weelts . unusual. considerln::

16 Aug 7'8 I3IA ~ n r e i l i g e n c eApprai:ial Page 3

CC.N FIDENTIAL.

I
i
there were very few signs of anti-US feeling in tl: Ilv~?rncr.ths of clril
disturbances earlier this year. Moreover, t h e 1.1rgc ~ornberc~f Americarks
within the country, particirlarly i r ~the rrlore conscar? I I ve c~ties of lsfahan
.I

and Shiraz, could lead t o some being caught up In thcs events. Most placczs
that Americans visit in Isfahan, such as r e s t ; ~ ~ r i l n ; .and
> shops, a r e in a
relatively small area. The concentration of Arnerlcans 1s therefore high,
increasing l h e possibility of incidents.

outlook
(CINOFORN) The old dilemma ?or t h e Shah remains -- how t o continue t h e
liberalization of Iranian society and maintdin orc .r al- the same tirile
without too harsh a crackdown on dissidents. His cyposttion is presswins
him t o be even more liberal, and a t the same t1ri.e security forces a r e
probably getting impatient with t h e restraints placed on them. The ma-
jority of the populace is no doubt up.set with t h e constant disruption cf
normal living, and they may make demands for law and order. For t h e near
term, t h e Shah is likely t o continue with his sarne tactics, and rnay make
another a t t e m p t t o hold a dialogue with the religious 01,position. Nonethc-
less, firm action by security forces will b e used if i t is necessary t o clue11
the new round of violence. The martial law in lsfahan is an e x a r ~ ~ pof l e th-
Shah's determination t o maintain law and order.

(CINOFORlrl) The possibility o-: further disturbances is high. In the past

those killed in demonstrat..ons have been commemorated in cer.emonies 4 3
days later, which have led t o further violence. Thus, a new cycle crf
religious disturbances may have been s e t off on 22 July. Meanwhile, the
Islamic month of Ramadan -- a time of fasting and prayer -- is now i.1
progress, which may increase tensions. The v r i o d of 24 t o 26 Au$;ust,
when Iranian Shiites mourn the death of Ali, their most vtmerated spiritual
leader, will be a potentially dangerous time. The opening of school next
month will probably add the student population t o t h e unrest.

(CINOFORN) The months ahead a r e t o likely be turbulent ones for Iran.

There is no threat t o t h e stability of the Shah'r rule, but continuirig tests
between the government and t h e opposition a r e in sight. (CDS 84)

16 Aug 78 DIA Intelligence Appraisal

CON FIDENTIAL.
 SECRET

MEMORANDUM OF CONVERSATION
PARTICIPANTS: Cdr. Alain DE BEAUPUY, Assistant Military
Attache, French Embassy
Ambassador Panayotis ECONOMOU, Greek Embassy
George B. LAMBRAKIS, American Embassy, Tehran
DATE & PLACE: September 15, 1978, Lambrakist Residence ''(+<-.
SUBJECT: Internal Situation
DISTRUBUTION: AMB, DCM, POL, POLM, ECON, OR, ICA,DAO, B I O
NEA/IRN,IRN/RNA, INR/OIL/B

De Beaupuy has the distinction of being the only member of the

Diplomatic Corps who predicted the severity of the religious
challenge to the government and the Shah which we have just
witnessed. Cassandra-life, he has been talking to all and
sundry about the wrath building up in religious circles and
the historic precedents of Islam acting as a sounding board
for people's complaints. Historically, the mullahs have
many more allies than they did in 1963.
De Beaupuy said we should not allow the temporary moderation
of Shariatmadari's views blind us to the trend. Shariatmadari
is not in control of the extremists and has to yield to them.
Being a "holy man" he is not a politician and acts differently
than a politician. In response to my invitation for a
prediction, De Beaupuy said, if the Shah does not undertake
extensive activity in the next two weeks, he would predict
the Shah's departure by the end of October.
The scenario sketched out would be a million moslems marching
out of the bazaar in South Tehran as a tide neither the army
or police would dare to stop. He then could see Gen. OVEISI,
accompanied by Majles Speaker RIAZI and perhaps even the
American Ambassador ( 1 1 , marching in to invite the Shah to
take a plane and leave the country.
The only way to avoid this, in De Beaupuy's opinion, is for
the Shah to take a more direct role vis-a-vis his people.
He cannot hide his responsibility for governing over the past
two decades by bringing subordinates to trial. People will
no longer believe his promises except those given directly
as public commitments perhaps over television. People would

SECRET
 SECRET

want him to get rid of his family and the whole Ministry of
court. The opposition ifs clearly not going to settle for
anything less than a constitutional monarchy reigning but
leaving the governing to politicians.
The Greek Ambassador identified himself with De Beaupuy's
views. He said Americans should realize that the Shah stands
alone at present. No one will stand with him. Both De Beaupuy
and the Ambassador admitted the Shah had been a very good
influence for Iran and should be saved if possible. "If
you Americans have any influence left with him, try to get
him to take the necessary action before it's too late."
I n elaborating on his views, De Beaupuy said he had personally
followed the mobs in Tehran and had others following. Septem-
ber 4 had seen 100-200,000 people turn out because moderate
religious leaders joineo the extremists. September 7 and 8
were demonstrations carried out only by the extremists.
The highest number reached September 7 was 50,000. This can
be seen as the high-water mark of extremist capabilities.
Thus the crucial issue for the Shah is to prevent the moderates
joining the extremists in the near future.
Incidentally, De Beaupuy works for French Intelligence.

47
POL: GBLambrakis :hg
9/18/70
 I- .-

E.0 11652: ACTION : :;.L:CSTATE :.?;SiIDC PRIORITY -1

b
TAGS:
SUBJECT:
CONFInENTIAL TEHW.1: 107 7 4
CADIS ;?* ?.,,, ,, L -u
i2a.
E.O. 1 1 6 5 2 : GUS
TAGS : PINE, J i.
I SUBJ: ORWLNI%ATION OF PRO-SHPJi COUNTEL-?.!EASURES

1. ACCORDING TO A SOURCE WSTll GOOD ACCESS (ACCU1VS.Y UNSl'T\S-

AMB
Po1 TANTIATED) THE S ~ I A W ,Ins TWO C O M M I ~ E E Sor FIVE PJ:MBERS
cnu
I EACH WORKING ON BUIT,"ING SUPPORT FOR 1,IM I N THE COUNTRY.

1 ONE CONCERNS ITSBLI' WITH BUILDING PPO-SIIL" DI:NC~L:~TPA~'IOXS.

I I T I S HEADED BY, TflC SHAH'S GOOD FRIEtII, 4 N D S;:RVANT GENERAL

A R S L A N / ~ FMARYTAL
~~~~& LAW RDMIPISTP.I\TOR GENERAL OVI:ISI,

PRO:4INLNT RUS1IiCSSPV.iP.I AHANCIIIhN, AND bi;NL!RAL I:IIC!:l CIVANI .

2. THE OTHER COEltIITTCF: CONCEIINS ITSEi,? WITH PRESS AND

MlF
I
PROPAGANDA. I T CONSISTS OF ASL(tWIF1, EDITOR OF

"ATESH, " OLD M.P. (I'nCIP.1 1953 ' D ~ Y S ) 'GkIANATADfinI , 0l.D

O".,,CD .rs
1 P.M. (FRO14 1953 DAYS) IUTI::,

OF COURT (UNDER ALAl4) I 4 ~ h G ~ , &

IT IS PLANNING A HEW,
' mWI&R

w.
bE3'5EH OP E:I:iISTRY

BUSLNESSM! il BUY llR SABER.

-- -
CLL..."CII
--4 ------

; . ' &FT~E~"T..~?,L' O C ~ I O Pnr C O W

.-- ----.-- -- - *CJ,,7urly F I .1III
1611

.: +g..*%""""*
....I
4.n.w I!.
.,d"l. .
I .L

!
I
 1
1 SHOHI'LI. I T IS A I S O BUYING S T O R I E S I N OTHER PODLICATI<,F:.S,

SUCH P.:; ONE l'iiAT HAS J U S T APPEARED I N "KBONDI.NI%AN"

DEING l:t!I?R.~CEG I:Y A L I T T L E G I R L (DURING l 9 4 O 1 S ! ) .

3. IrLl NAGBI :.1ISARI. FORMER AMBASSADOR T O ITALY AND

BM#IC7:iTI<l( C H I R P OP CABINET T O P R I N C E S S S H M S 1.9 THE

MONLi' WAN.
EFFORTS
4. 'I'HESE =KOn:SL ARE SEPARATE FRON SAVAK-LED "AGENT

PROVOClrTEUR" Ac'PIONS WHICH, ACCORDING T O ANOTHER SOURCE,

HAVE BEEN BEHIND S C E N T DESTRUCTION AND CLASIIES I N KERMAN,

RAVAH, KERMhNSIIAII, HAMEDAN, GORGAUI RBZAIYUH, W L ,

PANEH, MARAGBEH, SANANDAS, ETC. A8 T H I S SOURCE TOLD

P O L I T I C A L COUNSI:LOR, PARVIS S A B E T I HIMSELF (WHEN HE WAS

S T I L L O F F I C I A L O P s ~ v A K ) CALLED TO BRAG O F THE F I R S T TWO

INCIDENTS AND 1'0 SAY HE WAS ON H I S WAY TO KURDESTAN;

SBOR1'I.Y THEREAFTER PRO-SHAH DEEaDNSTRATIONS AND ATTACKS

DEGAN TIIERE.
5. COWWNT: WE HAVE ALREADY C O W N T E D ON COUNTER-MEASURES

I N CONl'EXT O F ZAHEDI EFFORTS (TEHRAN 10699) . I T I S QUITE

L1KEI.Y THAT FOILWTION O F THE 'TWO COMMIWEES WAS I N S P I R E D BY

ZAIILDI. S I N C E WB CANNOT B E L I F M S l U H 18 UNAWARE O F SAVAK

A C T I V I T Y ON H I S BEHALF, WE D I S M I S S POSSIBXLITY

TlIAT ZAIIEDI CALL- TO SMH At& $RAIl'S REPLY I N PRESENCE

O F U.S. AND B R I T I S H MBASSADORS WAS STAGE MANAGED TO IMPRESS

TH1.M V?lW SHAII'S INNOCENCE AS PRO-SHAH INCIDENTS
L
( N U W E R OF IRANIAN OBSERVERS WITH GOOD SOURCES CLOSE 10 j
llIM SER T H I S A S DLINDIZESS ON SHAH'S PART T F THE P U B L I C ' L

IMAGE OP IlIM AT PI<BSIINT TIME AND B I S CONCOMJTTGJT FAJI,t,iG

TO APPRCCiATE TRL: (;P\AVITY OF H I S OWN, AND MOEIARCIIY'S,

PREDTCAI:!:tJT. Z A I ; E U l 1 S REI'ORTED OPTIMISM I S PROBAULY

NO I1EI.P TN THAT REGARD.

CONFIDENTIAL
.-
~i;;*i~~.Il.m
 B"Ld. w . 5
UNITED STATES GOVERNMENT

memorandum
1 .u.,Lcr S u m m a r y o f Amba s & d o r l s M e e t i n g w i t h S e l e c t G r o u p o f Amerl'dn
B u s ~ n e s sc O m m ~ t yR e p r e s e n t a t i v e s

ro E/C - Mr. J o h n L. M i

I J o h n , I t h o u g h t it w o u l d be u s e f u l t o d o c u m e n t the torte azbd

s u b s t a n c e o f A m b a s s a d o r Sullivan's r e m a r k s t o t h e busirbexs
c o m m u n i t y o b 1 5 N o v e m b e r , f o r t h e E m b a s s y and for t h e desk.
T h i s M e m o r q h d u m of C o n v r e a t i o n i s a t t a c h e d f o r your ;led~dilra.

I 7
,,
, . .c
.

SC1ATT:VCbdlerrdd
I

Buy U.S Savings Bonds Regularly on the Payroll Savings Plan o,r,,,,,,,,
(IIN 7-70)
,
O U R Y ~ U I V I I I I OI*.
~
UIMU
 -
LIMITED O Y I X C l A L USE

D A T E 6 1'I.ACE: ~ o v i m b e r .1 5 , 1 9 7 8 ; C a r a v a n s a r a l

PARTICIPANTS: Amb. W i l l i a m H. S u l l i v a n
P r i n c i p a l U.S. E m b a s s y S t a f f M e m b e r s
U.S. B u s i n e s s C o m m u n i t y Representat~v,.'.
i A y p r o x l m a t e l y 1501

SUBJECT: S u m m a r y o f Amb. S u l l i v a n ' s R e m a r k s t o H a l o r

U.S. B u s l n e s s R e p r e s e n t a t r v e s i n I r a n

-
T h e A m b a s s a d o r b e g a n h i s s t a t e m e n t t o t h e businus, c o m m u n i t y by
explaining t h a t t w o r e a s o n s b r o u g h t u s t o g e t h e r f o r t h r s b r l e f l n q :
f l I s t , it's t i m e f o r a n a s s e s s m e n t o f t h e s i t u a t r o n a n d s e c o n d l y .
it's t r m e f o r c a n d i d i n t e r c h a n g e o n t h e situation f o r t h e
A m e r i c a n c o m m u n i t y h e r e in Iran. H e had b e e n r e l u c t a n t t l l now
to b r i n g t h e c o m m u n i t y t o g e t h e r f o r t h i s m e e t i n g b e c a u s e thlr8qs
h a v e not b e e n s t r u c t u r e d t o t h e p o i n t w h e r e w e c o u l d e x a m i n e
d+rectlons and alternatives intelligently. N b w it s e e m s t h l n q s
h a v e stabilized somewhat. T h e g:oup assemblqd w a s rather a
seleci group, representlng t h e overwhelming Qulk o f employed
A m e r i c a n s in Iran. T h e m e e t i n g w a s o f f t h e f e c o r d a n d not for
t h e press. in o r d e r t h a t t h e Ambassador's r e p a r k s c o u l d b e m a d e
c a n d i d l y a n d w i t h o u t attribution b y t h e m e d l p .

P e r s p e c t i v e o n C u r r e n t Events:

The Ambassador first reviewed the series of siqnlflcknt polltical

e v e n t s d u r ~ n gt h e l a s t t e n m o n t h s i n I r a n , s t a r t i n g w l t h t h e
perceived c h a n g e s in F e b r u a r y , w h e n t h e r e g l m e determined w l t h
l n t e l l u c t u a l c o n v l c t l o n o f h ~ Ms a j e s t y , t h a t t h e I ~ a n l a n s o c l r t y
i s t a o complex for o n e man t o continue to make a l l malor d e c ~ \ l u ~ l - .
T h e S h a h d e c l d e d t h a t a .haring o f t h e decision-making p r o c r . . . .
m u s t be d e v e l o p e d and p a s s e d o n t o h i s s o n , w h o w o u l d need a type
O f d y n a s t y d i f f e r e n t f r o m t h a t o f t h e l a s t 3 7 years. The Shah
a c c e p t e d t h a t it w a s a d i f f % c u l t p o l i t i c a l c h a n g e t o b r ~ n gabout
and that the rellef o f long-standing pressures upon the soclety
would tend t o upset the surface stability o f the country, and
might even be explosive. I r a n had n o t e x p e r i e n c e d t h l s k l n d o f
rellef of pressure before, because a pervasive police involvement 1 1
t h e s o c i e t y had e x i s t e d t h r o u g h o u t t h e Shah's r e i g n . T h e A m b a s s a d o l
traced the events from Tabriz where the young from t h e villages w h o
had b e e n d i s p l a c e d i n t h e citles, saw opulent behavlor
d i f f e r e n t from t r a d i t i o n a l v i l l a g e b e h a v i o r t a k i n g hold.

D R A F T E D BY; V e r n o n E. A d l e r

D A T E :- November 201 1978

 LIMITED OFFICIAL. USE Page 2.

l'he attack, which was allowed by authorities, was repeated in m d n y

a lties and spread to the universities. Khomeini revived his
dctive role from Iraq, feeding on this new atmosphere o f open
nxpression. Opposition galvanized and polarized in Khomeini
followers.

1,olitical Realities:

11y the end o f Ramazan, the moderates began to realize that they
,.auld not continue in a truly independent moderate role. Along
through the summer when the politicians began to see that they
c.ould not amass a following of the type Khomeini had, they began
t o shift toward Khomeini; this, despite the fact that the
shah espoused an Islamic Republic, a constitutional government.
with a committee of five mullahs t o verify that proposed legis-
lation w a s consistent with the Islamic code, etc. The Septem-
ber 7 peaceful march was followed by the September 8 imposition
of martial law and the Jaleh Square occurrence, with troops and
damonstrators. In September the government's position w a s to
vlacate moderates and break them off from Khomeini. Therefore.
lhere were freedoms given -- t.v. debates, raises in salary and
benefits t o government employees, and other conciliatory measures
within the constitution that would lend support t o the moderate
~ ~ o s i t i o n . Toward the end of October, politicians pilgrimmed to
I,dris for discussions with Khomeini. We remained implacable and
,,tolid.

Ihe Shah realized that the Emami cabinet w a s not stemming the
t ~ d eof anti-Shah sympathizers. By mid-October the Shah decided
he had two options: either a coalition or a military government.
tie never did get any positive response w i t h regard to coalition.
o n Nov. 4th. Sanjabi after going to Paris, said he supported
Khomeini entirely; thin w a s unacceptable t o the Shah since
Khomeini's position starts a n d ends with t h e removal o f the
'7hah and t h e Pahlavi dynasty, with a return t o an *Islamic
Republic" as yet undefined. On November 4th. there was a
university confrontation and people were killed. On November 5 .
lroops were conspicuously absent and did not interfere in the
r ~ o t o u sdemonstrations to any significant extent, although they
~'rotected a few places. Then, o f course, Emami resigned,
recommending the military option, and that evening Gen. Azhari
was installed.

Where
- we are:

N O W we are at 4 point where there i s a test o f wills and o f

.trength. No one knows how atrong the opposition is. The
rnllitary has proceeded with subtlety and sophistication,
toncentrating o n not just law a n d order, but the closely
~ o u p l e d link of "back-to-work", starting with'oil production.
Prime M i n i s t e r A e h r r i a n n o u n c e d that people would be fired and
loved from company housing, plus arrests. Oil production has

$,IW I T L D OPPICIAL US8

 LIMITED OFFICIAL USE

baen boosted a bit, although it's up and down. The strike is

andad in the Abadan refinery. (Normal production at this time
is 6.2 million barrels daily.) Production t h i s week i s about
3 o r 3 + million per day. Increasingly, people are resuming
work but the strike is not broken yet. The Iran A i r strike
is over. There are sporadic strikes in the ministries (for
example, Customs in the Finance Ministry i s still o n strike).
S o we see a trend moving back to work, with production
increasing. The general strike called by Khomeini for last
Sunday worked effectively i n Shiraz, Isfahan and t h e bazaars
in Tabriz, but not in Tqhran.

The regime has put off testing t h e school situation until the
18th for the lower grades a s a starter. We'll s e e if the
teachers return and then the students in the lower grades, before
testing the waters f o r high schools and (possibly) universities.

Khomeini's position is that the country w i l l b e brought to its

knees by general strike and that he reserves t h e right to tell
his people to raise arms. We believe an armed rebellion might
not be successful and that the ability o f the people t o bear
arms i s really limited. We d o n o t believe that Yhomeini can
call for a "Jihad' or holy war, because that can only be issued
against an infidel and the government is clearly taking the
position o f retaining its Islamic code of behavior. S o the
test may not be decided sharply a s w e might decide in Americd
through elections. Rather, t h e tides may move in one direction
then another. If there i s a state o f normal civilian behavior,
the fence sitters o r "silent majority" can surface and support
the Shah, otherwise, if there i s a sullen return t o work with
slowdowns and foot-dragging by the populace, the tide could
shift against the Shah in a major way. The government wishes
to diminish the influence of Khomeini and move toward a
democratic role within a constitutional monarchy over the long-
term. Rolling back of strikes at t h i s time could, o f course,
reverse itself and swing in t h e other direction. T h e government
would not move toward a democratic solution t h e n , but we feel
the government has the levers o f power in its hands n o w and
that's t o the good.

-U.S. ~omm"nft~
Safety and Welfare:

The Ambassador then discussed t h e security o f the U.S. community

and contingency measures which w i l l p e taken, t h e details o f
which would be discussed by Mr. Naas with small g r o u p s o f
company representatives, 4 o r 5 companies at a t i m e , during
the coming weeks. T h e Ambassador conceded that contingencies
will vary, depending upon t h e degrees of emdrgency; however,
he scoped out some o f the following factors: We will be
dependent upon the Iranian military for o u r o w n physical security.
 L I M I T E D O F F I C I A L USE
Page 4

T h e y in turn rely o n o u r military for t h e integrity o f their

defenses. U. S. d e f e n s e contractors a r e essential f o r
r e t e n t i o n of t h e Iranians' military integrity.

E c h e l o n s w i l l b e used for. contingency planning because in any

approaching emergency t h e smaller t h e numbers involved in
preparatory action t h e simpler t h e t a s k o f execution. S o
t h e r e will b e a continuing "fine-tooth g a u g i n g * o f decisions
as emergency situations may evolve.

Miscellaneous:

T h e disruptions'of approximately a b i l l i o n dollars ill lost

revenue and t h e slow-downs and a t r i k e s w h i c h have caused most
o f t h e country's commerce t o b e c o m e i n o p e r a t i v e have been
extremely costly and t h e budgetary load b e i n g borne by t h e G O 1
i s incredibly great. Government p a y m e n t s a r e slowing
down; t h e r e will b e a n a t u r a l attrition o f t h e U.S. community.
T h e 40-odd thousand A m e r i c a n s w i l l s h r i n k in t h e coming m o n t h s .
T h e Ambassador's final p o i n t w a s t h a t h e w a s proud o f t h e way
t h e American community h a s responded t o t h e pressures and t h e
r u m o r s t o date.

Q u e s t i o n s w e r e then t a k e n from t h e audience o f business people.

S o m e o d d s and ends follow:

A. P r i m e Minister A z h a r i h a s p u t f o r t h t h e legislation t o set u p

a s p e c i a l court. I t should b e enacted soon for prosecution and
conviction of prominent p e o p l e o n a rapid basis. Azhari is
s e n s i t i v e to t h i s potentially becoming a w i t c h hunt and intends
t o d o something e f f e c t i v e rapidly and t h e n cut it o f f , bringing
it t o a n end before a n unhealthy momentum i s gained.

B. Iran's reserves a r e s t i l l $ 1 1 billion, b u t they have suspended

borrowing internationally and w i l l h a v e t o g o back t o it, because
of t h e i r internal liquidity problem w h i c h is major at t h i s time.

C. We'll arrange a distribution of r a d i o s s o that in t h e event

w e lose telephone communication upon w h i c h w e rely, w e call establish
a s e t o f links w i t h t h e U.S. community. ( T h e Ambassador stressed
U.S. communications vulnerability b e c a u s e of our total reliance
o n t h e Iranian telephone system.)

D. Don't expect English newspapers f o r a w h i l e and don't rely

o n n e w s broadcasts for accurate information.

E. W e don't a n t i c i p a t e s u d d e n deterioration, but rather in

t h e e v e n t o f an emergency, we'll probably s e e some phasing from
t h e t e n s i o n s developed, s u c h as sabotage, isolated terrorist
actions, etc. T h e Ambassador stressed w e don't foresee or
predict it, but it is a possibility.

L I M I T E D O F F I C I A L USE
 L I H I T B D O F P I C I A L USE

P. T h e r e will b e assembly p o i n t s for t h e A m e r i c a n community.

T h i s i s a sensitive subject, s o t h e i n f o r m a t i o n w i l l b e closely
held. We w i l l use e c h e l o n s f o r dissemination o f i n f o r m a t i o n ,
including t h e subject o f departures. T h e A m b a s s a d o r stressed
Iran should not s e e "abandoningn by t h e A m e r i c a n community o f
Iran, but "there is nothing w r o n g * with s e n d i n g p e o p l e h o m e for
C h r i s t m a s o r filling t h e r e m a i n i n g vacant s e a t s o n regular Pan
Am f l i g h t s which have been recently resumed.

G. O n stability o f t h e rial, t h e Ambassador said it w a s over-

priced and if it floated free, t h e ratio w o u l d b e higher. (The
P e r s i a n p r e s s w a n t s 6 0 to 1 instead of 7 0 t o 1 b e c a u s e o f lost
r e v e n u e d u e t o reduced dollar values tied t o o i l purchases.)

H. Within t h o armed forces w e s e e n o absence o f loyalty;

however, t h e s e n i o r o f f i c e r s a r e concerned about t h e i r con-
s c r i p t s s i n c e t h e s e come f r o m t h e s a m e g r o u p a s d o t h e masses
o f demonstrators.

I. Mr. Naas w i l l begin o n November 1 6 to c a l l r e p r e s e n t a t i v e s

o f 4 or 5 c o m p a n i e s in and ask t h a t they bring s t a t i s t i c s with
them, such a s n u m b e r s of employees, addresses, t e l e p h o n e
numbers, deyerdents, vehicle information, etc. He s t a t e d that
a n I n f o r m a t i o n C e n t e r w i l l b e o p e n 7 d a y s a week t o t a k e calls.
qufstions, etc. from 0 7 3 0 until 2000.

!& :nbt

cc: AMB/DCM
POL
0R
USICA

L I M I T E D O F P I C I A L USE
RCPORT CLASS
COUNTRY: IRAN
S E C R E T WNINTEL - NOFORN - NOCONTRACT - &
SURJECT: I N S T R U C T I O N S FROM AYATOLLAH KHOMEINI T O STAGE. ANT
GOVERNMENT DeMONSTRATIONS DURING MOHARRAM
(001: L A T E NOVEMBER 1 9 7 8 )
SOURCE : A CONFIDANT O F A S S H I O R , L O * G T I M E MEMSER O F AN IKPORTANT
O R G A V I l P T I O N I N T H E PODERATE I R A N I A N D I S S I D E N T MOVEXFNT s'HO
--
--
.W "A C- rrlNTTh'llFn -I- O- -S -F P F R S O N A L CONTACTS W I T H T H E L E A D E R S ) { I P
C
O F T H I S ORGANIZATIOY. H I S P A S T R E P O R T I Y G HAS BEEN

I. AYATPLLAH RUHOLLAH K H O M E I N I H P S I S S U T D IIYSTRUCTIONS,

F I R S T R F C E I V E D TN TFHRAN ON 25 OR 2 6 NOVEMBER 1 9 7 8 , FOR H I S S U P P O R T F R S
A F D "BROTHFRS-IN-ISLAM- T O STAGE DIRECT V I O L ~ N T CONFRONTATIONS V I ~ H
I R P I I I A N GOVERNIENT A U T H O R I T I E S D U R I N Q T H E HOkY MONTH O F MOHARRAM
( 1 - 3 0 DFCEllBER 1 9 7 8 ) . KHOMEINI HAS I N S T R U C T E D HQ S U P P a S T E R S T O
D I S R E G A R D THE K I L I T A R Y GOVERNKENT'S R E S T R I C T I O N S ON M E E T I N G S , DEmON-
S T R P T I O N S AND MpRCHES CURING MOHARRAM. I T IS KHOflEINI'S INTENTION
T O H A V E ANTI-SHAH DFWONSTRATORS BROUGHT I N T O VIOLENT COYFLICT W I T H
M I L I T P R Y AND SFCLIRITY F O R C S S DURING MOHARRAM, A S KHOMEINI B F L I E V E S
T H I S \,!ILL LEAD T O T H E REMOVAL O F T H E SHAH AND T H E C O L L A P S E O F T H E

9. t s n l l R C r COMXLYT : I N D t S C U S S I N G K H O M E I N I ' S I N S T R U C T I O N S FOR

V I O L E N ~ ' A Y I ~ % H A H DFNONSTRATIONS ~ U R I N G i'!OHARRAM NATIONAL FRONT
L E A D E R S BELIEVE THAT IT IS K H O M E I N I * ~ BELIEF T H A ~THE I R A N I A N
M I L I T A R Y I N 1 T I F . L L Y W I L L (IBEY O R D E R S T O S H O O T DFMOIYSTRATORS, P U T ,
P S D F ~ O N S T R A T I O N S CCNTINUE AND T H E DEATH T O L L ROUNTS, T H E RANK AND
F I L E O F T H E M I L I T P R Y W I L L REVOLT, AND T H U S B R I N G ABOUT T H E S H A H ' S

3. C I R C I I L R Q S BROAOCASTING K H O M F I Y I ' S CALL FOR V I O L E N C E DURING

KOHPRRAM ARE R E I N G O I S T R I E U T E D I N TEHRAN AND P R O V I N C I A L I R A N I P N
C-lFS. DEMONSTRATORS ARE B E I N G ASKED T O WEAR W H I T E CLOTHING T O
DFMOPSTRATS T H C I R W I L L I N G N E S S T O ACCEPT OEATH AT T H E H A N n S O F T H E
- -- .
Mll ~ T -
. A.R.Y . N F F T I N R S ARE REPORTEDLY E E I N G H Q n AT MOSf3UF.S
&!ID OTHER PLPCES T O O R G P N I Z E D A T E S AND PLACES FOR L 9 R G E -
~ C P L E~EIONSTRAT IONS.
 4. (SOUffCE COlkELVT:, IJO OI4E I N IRAN CAN A T T H I S T I M E P R E D I C T
WITH CEHTAIkTY k~tlLTllEfi S I G N I F I C A I ~ T NUMBERS O F I R A N I A N S W I L L RALLY TO
KIlOI.IE1NI'S CALL A ~ D . D E F Y T H E E i l L l T A R Y A T RISK' OF DEATH.. I T SEENS
I . I K E L Y , iibVEVJiR, T H A T MASS DEPIOIJSTRATIONS A G A I N S T T H E SHAH W I L L TAKG'
P L A C E D U X ffi NGHhrf RAM. A N T I -SHAIt S E N S I M E N T AMONG S T U D E N T S ,
L ) A Z A A R I I S AND OTIiEtl "EXCITABLE" E L E l l E N T S IS A T A HIGH P L T C H , AND
T I i E S E ELEllENTS \ J I L L PROBABLY FOLLOW KHOMEINI 'S I N S T R U C T 1 0 NS/) 8

5 ( F I E L D .COl;iMENT: THE FOLLOW1 tiQ I S 'A SUMMARY T R A # S L A T I O N OF.

KHWEIHI'S PROCLAliiATIUN T O THE P E O P L E O F I h A N ON T H E CuirlING PluNTH
O F AOHf,Filit.i~l" VilICH I S THE k E S S A G E REFEllRED TO ABOVE(

-
TI!.. tIULY IlOrrTlt Or. iIUHFdrlAN I5 bEllbQ A N T I C I P A T E 0 U I i H
t i l 3 i O l S M . J i 8 h V l ; t Y . AIJD S A C J ~ I F I C E THE NOBTH b L O O D N C I L L T t , I U # P H OVER'
THE. SVORD, THE I;LIVTH O F THE STRENGTH OF ~ I G H T , THE MONTH THE
U P P H E S S O A S V1I.L Li J U D G E D AND T H E S A Z A N I C GOVERNMENT A 6 0 L I S H L D / THIS
EdONTH V I L L bE FAI+OUS THROUGHOUT H I S T O R Y . T H E MONTH THAT TIdL PUWEC-
F U L WILL U L br.OKEt4 b Y THE WORD O F BIGHT; T H E MONTH THAT TAE IMAN O F
1 t l E Ii1OSLLitS V I L L SHOW US T H E P A T H O F STRENGTH A G A I N S T THL b P P H L S S U R S .
T l l E I.IUkTH T h E FIiLCDOi'l F I G H T E R S AkD P A T R I O T S W I L L CLENCH T H E I R F I S T S
AirD WIN A G n I l r S T TALKS AlvD MACHINEGUNS. T H E IMAN OF' THE FIOSLil*IS HAS
TAUGHT US T o UVErtTtrliUw TYRANTS. YOU SHOULD ub1T.i: A H I S E AND
S A C R I r I C 3 Y u U n bLUUD WilEN ISLAIrI I S I N DAEtGEH.
T l i t G U V ~ ~ I ~ I ~ H~ ALSN bTE E N P U T I N THE HANDS O F ANTI-I'rOSLEM
( I r r I C I P . L S TO E 6 1 : t F I T THE S A T A N I C RULER AEtD H I S P A h A S I T l C HENCHMEN
A k D I THUS, RUILLD THE COUNTHY. .THE P L O P L E DEMAND THAT ALL T H E I R
F O R C E S L E EXc'iiTED T O D E P O S E T H E SHAH.
THE I l I L I T A R Y GOVEiiNljENf I S I L L E G I T I M A T E AND UNHOLY. AND
YOU SHOULD OPPOSE IT A N D REFUSE TO' PAY TAXES TO THIS CRUEL ~ E G I N E ;
YOU SHOULD H E L P THE R E B E L S AND ENCOURAGE T H E N I O C WORKERS TO S T R I K E .
D O T H E h l O C kfOi!Ktl(S KNOW THAT WEAPONS BOUGHT W I T H O I L MONEY ARE B E I N Q
KIJOW T t I t . 1 THI. PltAtl S E h D S A C O N S I D E ~ ~ A B LAEI ~ I O L ~ NOT F O I L TO I S R A E L TO
a E USED A G A I N S T HOSLEMS? CAN THE GOVEHMIBNT FORCE THE O I L VORKERS
T O CONTINUE T H I S TtLZASON?
 INFORllEO P E O P L E KNOW. THAT A L I S T I S B E I N G PRU'AREO UI;
G O?ERI\'PIENT O F F I C I A L S ALL OVER THE COUNTRY WItO AIiE G U I L T Y O F CltI~1i.S.
GOVERNbiEEtT O F i I C I f i L S KNOW THAT I F THEY UPHOLD THE SHAH .AGAIilST I!:l.hl~l
T H E Y W I L L B E P U N I S H E D I N THE NEAR I X N R E .
D U R I ~ GTHE MONTH OF MOHARRAM W H E N THE S @ I ~ D IS I N T H E : I A ~ D S
O F T H E SOLDIErtS O F ISLAM, TliE H I G H CLERGY W I L L LEAD T l l E S l i I I f c S PihU
T l l I S T R E E OF O P P N L S S I O N AND TREASOlv (THE GOVEHNNLN'I) V I L L Uk: C U I
DOYN S O WE W I L L NOHLOHGER B E S U b J E C T T O I T S SATAIdIC d U L E A1.D
I T HICKERY.
THERE K I L L E E A GREAT I S L A i d l C VICTORY O F FREEDOM AND J U S -
T I C E . O V E R CRUELTY ACD TREASON, AND AN I S L A M I C GOVEJtlMENT V I L L b E
PXOCLAIMEO. AkO T O R R E N T S O F BLOOD W I L L B E S P I L L E D ON ASHURA '10
IlARK T H E DAY O F VENOEANCESAGAINST CRUELTY AND U P P R E S S I O N .
PREACHERS W I L L REVEAL T H E HOLY D U T I E S AND THE C R I M E S O F
THE R E G l h E TO EXALT THE NAME O F A L I . PROCLAMATIONS WULL b E I S S U E D
T O REACH THE V I L L A G E R S TO E X P O S E M E C R I M E S O F THE SHAH. THEY
SHOULD BE TOLD THAT T(1E I S L A M I C GOVEREtMENT IS FOR THEM AND A G A I N S T
T d E C A P I T A L I S T S AIgD LANDOWNDRS. ON T H E A D V I C E OF THE AMERICANS,
T H E SHAH HAS KUINED AGRICULTURE. H E HAS WEAKENED THE COUNTHY T O
b C N E F I T THE C A P I T A L I S T S . THE NEW GOVEkNl4ENT WILL P q O T L C T YOUR
rtIGHTS.
Y O U ~ GP ~ P L EOF R E L I G I O ~ CIRCLES, SCHOOLS, U N I V E R S I T I L S ,
KEWSPAPER WRITERS, FARMERS, WORKE~S,
LVERYBODY -- BAZAAR MEN, AND T R I B E S , ETC.
J O I N I N T H E STRUGGLE FOR THE AIMS O F ISLAM. THAT IS,
--
UVERTHKOW M E O P P H E S S I V E P A H L A V I DYNASTY AND THE S H A H ' S REGIME AND
F Z T UP AN I S L A M I C R E P U B L I C BASED ON T H E P R O G R E S S I V Y P R I N C I P L t S O F
I SLAM.
IrIOUANIhrG S E S S I O N S SHOULD B E F R E E AND k O T HAVE TO HAVE
P E R l l l S S l O N F J O N T H E f i U N I C l P A L 1 T Y O R S E C U R I T Y ORGANIZATIONS. YOU
S H W L D HOLD THEM WITHOUT G E T T I N G P E R M I S S I O N .
THESE AAE C h I T I C A L DAYS FOR I k A k Ai$D YOU Ti(E P E O P L E I.1I.L
L E RE&JriEhEELEO I b I i I S T O k Y FOR ClHAT YOU DO. I T IS hCCESSAitY F O L YCU
T O H E L P OVERTHROW T H E GOVERhflEbT. YOU rlAVE TO P k U T L C T TilL h h l l b h
A G A l h S T THE E L E E I I E S O F ISLAM. THE T R A I T O A S WANT TO P L U T E C T 'I:IC
SllAH BUT T M Y ARE MISTAKEN. THE SHAH HAS TO GO AND THESE' P A R A S I T E S
CANNOT SAVE HIM.

IIC

AYATOLLAH RUHOLLAH KHOMEINI

6. ACQr IRA)(, T ~ H R A N(29 NOVEMBER 1978). F I E L D REPORT NO.
NIT-10,194.
7. FIELD )ISSEN: EMBASSY AT TEHRAN (AMBASSADOR, DCM, P.ND
POI l T I C A L COUNSELOR, DEFENSE ATTACHE, AND RSO ONLY). SENT T O P A R I S ,
H W DELHI, KABUL, ISLAMABAD, KARACHI, MUSCAT, ATHENS, ABU DHABI,
I~JWAIT, JIDDA, AMMAN, TEL AVIV, CAIRO, MANAMA, A N K A R A , ISTANBUL
(AMBASSADOR, DCM, AND P Q L I T I C A L COUNSELOR ONLY). SENT T O EXCLUSIVE
FOR 5-2, USCINCEUR ; EXQUSIVE FOR C I NCUSAREUR ; EXCLUSIVE FOR
CINCUSAFE; EXCLUSIVE FOR CINCpSNAVEUR; EXCLUSIVE FOR COMIDEASTFOR;
EXCLUSIVE FOR COMSIXTH FLT; L~XCLUSIVE FOR CINCSAC) CINCPAC (EXCLUSIVE
FOR CINCPAC, COEIIPAC, A&D POLRD; uwSHAPE (FOR GENERAL HAIG).

--
REPORT CLASS S E C R E T WARNING NOTICE --
S E N S I T I V E INTELLIGENCE
-
SOURCES AND METHODS INVOLVED
NOT RELEASABLE T O CONTRACTORS OR CONTRACTOR/CONSVLTANTS
TION AND EXTRACTION O F INFORMATION CONTROLLED BY ORIGINATOR.
--
NOT R E L E A S A B ~ E:O F O R E I G N NATIONALS
DISSEMINA-

Q A S S I F I E D BY RECORDED REPORTING O F F I C E R XQDS-2.

S E C R E T
 1.IMTTED OFFICIAL USE

MI:MOKANl)IIM Of: CONVERSATION

I'AR'I'ICI PAN'I'S: S e r g e D e g a l l a i x , F i r s t S e c r e t a r y , French E r ~ ~ b a s s y
Clyde D. Taylor. F i r s t S e c r e t a r y , America11 li~l~l>:~s:;!.
A I ' f A : I)cccaber 3, 1978, M i r a h e l l e R e s t a u r a n t
SIJXJEC'I': F r e n c h Economic I n t e r e s t s ill Iran
IIIS'I'KIHIJ'I'ION: AMU/I)CM, I'OI., OR, .JI.If/RI:, NLiA/IRN, Com~~lercc/(:AI:NI:
'1're;ts111~y/oAsIn/l~l~~v
I:!.ench Population
Mr. 1 l c g s l l ; t i x c s t i m a t e d t h e F r e n c h p o p u l a t i o n i n 1r:in : ~ t4 , 5 0 0 .
Ile s a i d t h a t t h e F r e n c h Government s c h o o l , t h e I.ycce, h a d a 1 r r : l d y
d e c i d e d , a n d t h i s i s b y December 3, t o c l o s e down f o r t h e two
r c s c a i n i n g weeks b e f o r e C h r i s t m a s v a c a t i o n . T h u s , h e a n t i c i p a t c d
.I l a r g e e x o d u s f o r t h e l o n g C h r i s t m a s v a c a t i o n . Ile s a i d t h a t
hef'ore t h i s c l o s i n g t h e L y c e e h a d d r o p p e t l i n e n r o l l m e n t f r o n ~3 5 0
t o a1,out 375.
l i i f e c t s on C g c h B u s i n e s s i n I r a n
Mr. D c g a l l q i x knew o f o n l y o n e F r e n c h f i r m t h a t had c l o s e d i t s
0 1 - f i c e d u e t o t h e p r o b l e m s h e r e a n d t h i s was a c o n g l o m e r a t e s a l c s
o f f i c e and n o t a l a r g e o n e a t t h a t . Ile d i d s a y t h a t h e had h c o r d
o f a n i n c r e a s e i n s l o w p a y m e n t s d u e F r e n c h f i r m s . He s a i d t h a t
t h e r e i s somc c o n c e r n b y COFACE, F r a n c e ' s e x p o r t b a n k , c o n c e r n i n g
t h e i r I : i r g e e x p o s u r e w i t h Rank Omran, a n e x p o s u r e which e x c e e d s
$100 m i l l i o n c q u i v a l c n t . Ile s a i d t h i s e x p o s u r e r e l a t c s t o a
number o f j o i n t v e n t u r e s t h a t h a v e b e e n u n d e r t a i e n w i t h f i r m s
~ n v o l v i n gt h e i ' a h l a v i F o u n d a t i o n o r Bank Omran. C o n c c r l ~ i ~ it gh e
'Tehran Mlil'RO, h e c h a r a c t e r i z e d t h e p r o j e c t a s a t i v c b u t 11crhaps
heing suh,lcct t o s t r e t c h o u t .
1Ka.i I ro_i!_J
' l h c F r e n c h llavc n o t r e c e i v e d a c o n t r a c t y e t f o r t h c i r p o r t i o n (11.
t h e r a i 1 r o ; r d c l c c t r i f i c a t i o n b u t t h e y d o h a v e a g e n e r a l plill111ill.c
;rl~d t e c h ~ ~ i c ; ~ sl s i s t a n c ec o n t r a c t w i t h t h e I r a n i a ~S~t a t e Rai 1w;lys
and t h i s c o n t r a c t i s c o n t i n u i n g .

Ile s a i d t h ; ~ t t h e s t r i k e a t t h e n u c l e a r s i t e s l a s t e d f o r a l i t t l c
o v e r two w e e k s . He s a i d t h e r e was a d i s p u t e o v e r w h e t h e r o r n o t
t h e w o r k c r s wo111d b e p a i d d u r i n g t h e s t r i k e p e r i o d . The m i l i t a r y
s a i d t h a t t h e y s h o u l d b e p a i d a n d y e t t h e AEOI s a i d n o ; a compro-
~ n i s cwas agrc.c.d a n d t h e e m p l o y e e s w e r e p a i d a t h a l r r a t e .
 LIMITED OFFICIAL USE

A y a t o l l a h Khomeini
D e g a l l a i x s a i d t h a t t h e r e s h o u l d n o t b e s p e c u l a t i o n o v c r what
l ~ a p p e n s t o Khomeini when h i s t h r e e months' v i s a r u n s o u t i n
F r a n c e . He s a i d t h a t h e c a n s t a y up t o a y e a r and t h a t h i s
Government views Khomeini a s j u s t a n o t h e r o n e o f 2 5 , 0 0 0 1rani:inh
i n t h e c o u n t r y . He s a i d t h a t t h e r e was "no problem c o n c e r n i n g
h i s s t a y i n g up t o a y e a r . "

'Ir. D e g a l l a i x , who h a n d l e s v a r i o u s p o l i t i c a l i s s u e s b u t macro-

economic r e p o r t i n g a s w e l l ( a s d i s t i n c t from t h e commercial o f f i c r
i n a n o t h e r l o c a t i o n which d e a l s s t r i c t l y w i t h t r a d e m a t t e r s ) h a s
b e e n i n T e h r a n f o r a b o u t two and a h a l f y e a r s . He i s l e a v i n g
t h e end o f December; h i s w i f e h a s a l r e a d y l e f t . He w i l l assume
i n P a r i s one o f t h e Deputy p o s i t i o n s i n c h a r g e o f c o m n ~ o i l i t i c s
t o f o r m e r F r e n c h 1:mbassy M i n i s t e r d e Sedouy.
/

- -
LIMITED OFFICIAL USE
'II , I
* r -
ESEi'*ZERA224 C O N F I D E N T I A L
ra L/

ACTION:
I & .: c I U ? ~ A : < / ~ ~ ; , I F A ~ S
EI.IMAN
T 2458>.; POL3
F(rC'I*FF/AML..';GRSSY 6 3 1 9UT 93P6
RUFPOL/AYEZHAFSY B O N N 1252 INFO:
R';SdD'l/AIITKPhJSY OA?IASC!!S 1279 AM8
PI'EJJM/hMCCVSL'L JTFiZSkLEY 3208. DCM
4;I:il%L/bME!461 S .i1 J I D 3 1 1597 ECONZ
x ? ; !I,'?/AMP'IBASST T : l i 417 1210 AD8
R'I PCC /A3iNEASSY LORDOX 4978 PII
Rl;FilPS/AKEMShSEY PA3IS 7923 0R
RlIQ:iZK/'JSNISSION S I N A I 1423 ICA
pC?M22/A%E;4BASSY TEFRA:i IYMEDIATE 1621 ISF
RUEilDT/USMIESION USUN +E'J Yoit< 8328 SHtR
BT TABR
C 0 N F I D E N T I A L SECTIO!I 0 1 OP CRUZY R 1

F.('. 12065: GDS 1/4/@5 (FEIFZR, TBEODORE P.) OR-P

TlbF: PEPR, PGOV, I S , I i l , XF
SuYJrcT: ISLAEL AND DLVELOPEENTS IN'IRLV
1. SUYI~ARY: ISYA5LIS PAVE KATCEED VITP. AWmL rASCIE:A-
7 1 0 V I R A N ' S PRCCRESS1O.r TO TEE LOYPR DSPTHS. TEE
rHUMSLINC 0 7 TEE SEAr'S REG1042 I S EXPECTED T O STilENGT3EN
N A ~ C E V TI s L A n I c P A V R T I C I S MI N TIE MIDDLE EAST, SIGNIFI-
C A N T L Y AFFECT ISRAEL'S OIL SUPPLY, ENDANOXS IRAN'S
P @ , Z i a JEYS, AND FUaTiiZR TBRSATEN REGIONAL STABIbITT
T U d T I S A rEY UNDERP1N"ILC TO TEE MIDDLZ TAST PGACE
'IiCCErS OVER TSE YFASS AEEAD. FEJ DOUBT T AT 'WE SEX?
CuV~:P.#YBNT IN TSERAN *ILL CUT TFI IsILA~U-2RhNiAN LINE.

TINA! ANALVS I F 9EPIVD ON WAS3INGTOY. ZUBTaER, ISBAELIS

) F A ? THAT Ti!& IRirCSTBIALIZED STATES AN?-FSPECIALLY
T'IZ U .S., i I L L BECONE 3VEN MORE BLPHN~~~~. ON SAUDI
AhbBIA AND TLUS LESS YILLINC T3 EXEIIT.'~Y~@SUR%ON TEE
' t 1 I u I S TO STPPORT PEE S U P DAVID 4GOOj4&NB'4 HODBRATP
:OILTION TO TAE A R A B - X S F ~ Z L ICOY~&$UXSI IWR16NS.
 .." -..-.-
s,>,CP f 3 I'd? ?'?.ELTI YInE 'AYPP. TZERS I S i X T A T
Ph::I31Y PSRE A30UT T5E: EFFECT A SBSICAL I W , I 4C'JLD FAY3
OIk TLZ !AIDSLY FASr Iii SZKLSAL AND IS'AAZL Iid ?A~?ICL!L~?..I -
b U T !:3 ?.TCOGNIlI3:! T i A ? S 2 I P C L I C I E S '*/ILL I<! VX SOSE
TBE ARIA. END SUMYAbY
2.
.
C O h $ I L E A 3 L S IYFLiTFNC' OK Y E FATE 0 1 MO2EXP.TION IN
., .
L I I Y TLE 3TST 0 1 US, I S X ~ C L I S ' EaVZ WATCtE9 YITH
i
r
An'FUL IASCINATICb,I IRA'J 'S PBG:RFSSIOE! 1 0 T 3 6 LO it33 I
DZPTCS. TFXY B Z L I E V 2 TEE FZISNDLY AKD STAUKCFLY P a 3 -
Y6ST 95GIME OF "BE S X E P A S CXCMBLED BEYOND REPAIR A:13
AWAIT K I T E P O R E B O C I f 4 ~ I T S SUCCPSSOR. FgV DOU3T TEAT
T E F FJE:<T GOVTTtiL:.lfiENT. liHO-iVBn ITS-'LEACER, IN T533AN Y I L L
T2RMIhP.TB YOST, I F NOT ALL, ASPXCTS OF THP CAiiFP3LLY
CONSTRUCTED AND CLCSF I S 2 A I L I - I R A V I b N RELATIONSHIP.
i
1
ONLY A COUP BY T!F H I L I T A 3 Y , IN TEZ VIEY O P SOMZ ISRAZL
ANALYSTS, JCULD L$'A3tf I S 3 A 3 L TO SALVAGE AT LEAST SOX:
I T S L1W':S S I T E I?A:l. L 3 3 : E 3 AT ' J I T Z I N THZ RR3:IONAI,
PRAMEWCR?, T J E SUCCESS 0 1 "BE ISLAMIC OPPONEYTS 03' TBX
SPAR I S ZXPXCTED T3.E TO ST2FYG'TBEN NASCENT FOECSS
OF I S L A Y I C FANATICIS?l IN TEE MIDDLE EAST Y 3 I C H WILL
COIGTRISUTX TO REGIONAL I N S T I S I L I T Y AkD OPEN THE YAY TO
INCREASED SOVIET PFt4ETRATIOY OF TEE AREA. DEVPLOP-
MENTS IN IRAY ARE TBDS PESCXIVkC BY I S R A E L I S AS HAVIkG
DISTURBINS IWPLICATIONS, 7 0 T ONLY FOR THE I S S A S L I -
IRANIAN QILATEBAL R 3 L A T I O Y S t I P , BUT ALSO FOR TRP RE-
GIONAL S T A ? I L I T Y TEAT I S A LZY UNDERPItlNING TO TEE
MIDDLE ZAST PEACE PkOCESS OY3% TEE YEARS AZLAD.
3. A CLOSE RELLTIONSHIP Y I T E IRAN EAS IMPORTANT SUB-
S T A N T I V I AS YELL AS S Y n P o L I c IMPORTANCE FOR ISRASL.
UNTIL ELCENTLY IEAN #AS T93 SOURC6 OF T J O - T H I F 3 S OF
ISRAEL'S O I L SVPPLY. SU?STANTIAL H I L I T A a Y AND I N T S L L I
GENCE CCOPEEATION 2AS DEVELO?ED BETYEEN THE TYO STATES
OVER T P 6 YEARS. I S R A E L I F I ~ P I SFiAVZ BZEL [NVOLVED IEi
CONSTRUCTICN AND DEVELOPMIKT PROJSCTS I N !RAN ;d31CH,
TOGEIEER WITH E X P 0 3 T S , EA?P EARNED 3n6 MT .LInN ll[1T.T.AF.S
ANNULLLY. SYMBOLICALLY, ISP.~XLISI^ ~ A V ZVI N E D T i i E I R
CLOSE 7tPLATIONSkIF WITE XUSLIM IRAK AS A ;IGN TBAT
T9E J F d I S d STATZ lRS hOT A P A R I d S TO ALL . N THE MIDDLE
EAST. PLTEOZGEIIRAN D I D NO? ESTABLISH D I 'LOIYATIC
RELATICbfS L I T E I S ~ I S L , f i I A I S O N OFFICES S E [BED AS
DIPLOKATIC ?'ISSIO'.S I N ALL 3UT N A M I 3 I N DDITIOPI.
I S R A X L :]AS C ~ L T E EC B E SSCUBZ E X I S T E ~ C E - E N J O Y E 6~ 1 -
I R A N ' S &@,a23 J E X S , THE LARG3ST J E Y I S g COMMUNITY
S T I L L L I V I N G IN A MUSLIM STATE#
4 TEUS, I T I S d I T H GROYING TBEPIDATION'THAT I S S L E L I S
 V A S E THREE C 0 N F I D E N T 1 A L 285

s[:,P CLEP.? ZI3NS G""TCll\G: 7' S S 1 q . i 1 "J5?IR EILdTZilAL

E L L A T I O ~ S F I P *iITr: IFih,~I. T 5 . P NCTS FRI;IE MIEII5T2.D-
CESIGNACZ EA;HTIAR'S S T A T X Z K T THAT ISSAEL FROEA3LY
BT ,
U9278
 I A L

RUOHRA/AXEi4aASSY JI DDA 0898

RUQPIKW/AXEI'~~ASSYKUWAIT 121 1
RUDTC/Ai'lEIE;BASSY LONDON 4873
RUFNPS/A~'Z~~AS P AS RYI S 7824
RUQMZN/USMISSION S I N A I 1424
R U Q I ~ W d / A F i i 4 8 A S S Y TEHRAN I M l t D I ATE 1622
R U E H D T N S I I I S S I O N USUN NEW YORK 6329
BT
C 0 N F I D E N T I A L S E C T I O N 02 O F 02 T E L A V I V 00270

W I L L NOT B E R E C E I V I N G PERSIAEI CRUDE I N T H E FUTURE.

W H I L E T H I S NOT-UNEXPECTED D E V E L O P I E N T C R E A T E S A
D ~ ~ F ~ C UPROBLEMLT FOR I S X A E L , T H E G O 1 IS ROT A N X I O U S
50 I N V O K E T H E U.S. 1975 S I N A I I1 COflMITi4ENT T O S U P P L Y
I S R A E L W I T H U.S. O I L U N T I L OTHER A L T E R N A T I V E S HAVE
BEEN l O R E FULLY EXPLORED. NOT ONLY D O E S T H E P R O S P E C T
OF Y E T FURTHER DEPENDENCY ON WASHINGTON PRODUCE MUCH
H S I T A N C Y HERE, B U T B U Y I N G U.S. O I L WOULD B E E X T R E l E L Y
E X P E N S I V E AND IS THEREFORE T O B E A V O I D E D I F P O S S I B L E .
5. F E E D I N G T H E GLOOi4 H E R E PRODUCED B Y T H E S E W O R R I E S IS
THE ENORMOUS S T R A T S G I C SETBACK FOR THE WEST WHICH A
R A D I C A L I R A N WOULD S I G N I F Y . NOT ONLY WOULD A MAJOR
O I L E X P O R T E R HAVE LURCHED OUT O F T H E WESTERN C A W , . B U T
THE U.S. P O S I T I O N I N THE NORTHERN T I E R WOULD HAVE
UNRAVELED FURTHER, W l T H S O V I E T I N F L U E N C E L I K E L Y T O
INCREASE. NRTHZR#ORE, S I N C E THE W S L I M OPPOSITION
T O T H E SHAH I S NOT E X P E C T E D T O B E ABLE T O E S T A B L I S H
A S T A B L E S U C C E S S O R REGIfiiE, THE I S R A E L I S T H I N K THAT
IRAN I S I N FOR AN EXTENDED P E R I O D O F TURMOIL. T H E
NEXT GOVERNt4ENT MAY NOT B E A R A D I C A L ONE. B U T N E I T H E R

R E V ~ U T I O N A R Y FORCES AT WORK I N IRAN, THEY BELIEVE THE

U.S. COULD HAVE MOVED MORE ENERGETICALLY AND EFFECTIVELY
0 A S S S T ONE O F T H E I R MOST ONOSTAND YO AND C O N S I S T E N T
&.LIES# AND T H 3 S E ISRAELI&KPPTXC&F Im VALUE O F
AMERICAN COMMITMENTS P O I N T 3ISPARASiUal.Y 10 I R A N A S
AN I L L U S T R A T I O N THAT I S R A E L CANNOT I N f#E F I N A L .
A N A L Y S I S DE?zND ON Y A S M I B T O N .
-
 , LOirG AS IRANIAN 4I.L PRODllCTIOM
-:.3[iZ ~ R O A D ~ YSD
;i DRASTICALLY REDUCED ISRAELIS F E A P THAT THE INDUS- C O W F I D E N T I
i . . I A L I Z Z 3 STATES !)ILL QECO~CIEVEN MORE DEPENDENT ON PAGE FIVE 285
Z ' L 3 I ARABIA. AS SEEN FRON HERE, THE U.S. WILL BE
ZJZl4 LESS WILLING TO EXERT PXESSURE ON THE SAUDIS TO
.5PPORT THE CAW DAVID ACCORDS AND A NODERATE SOLUTIOM
TO THE AZA3-ISRAELI CONFLICT. FURTHERNORE, WITH THE
Z L D I S EVER MORE I N THE DRIVER'S SEAT, SADAT TOO UIU
idVZ EVEN LESS UANEUVERIND ROOM I N THE PEACE NEOOTIA-
T I J N S THAN AT PRESENT.
 FROM: I MlERICAN CONSULATE ISFAHAN DATE: Januszy 6, 1971
L ,i 11652 CIIS 2-1-79 (MCGAFFEY. D.C.) OR-M
TAGS: I'IIJS, PGOV, IR
-.L rrJECT. FORECAST: CLOUDY FOR IRAN

Si~mary: A cfvilian government will take over Iran

facing problems sufficient to defeat the luckiest and
most experienced politicians and there appear to be
:)either. r\lmost the most hopeful prospect for chis
povernment is a shaky, embattled care-taker status
lending to elections in early sunnner. More likely is
its failure precipitating a renewed crisis. In either
c :lent, the future looks dangerous ft~r individual
Americans. End Sumnary.
.---
i5iahan Perspective on the Bakhtiar Government
4 > t h e r u m o u r ~ ofd a B a ~ d O i i ~ IEsough ,
the opinioir of Isfahanis about his chance for success.
The responses were basically a weak po;itive. blost
r .pondents stated that if Bekhtiar \ i n % able to ohtain
i i , , endorselwnt of Khomeini and (mop!- impcrtant) the
departure of the Shah, and if he found competent and
unexcepriondble cabinet members, they had noth~ngagai
hlm, and he would have a chance. No one I spoke to wn
excited about him, but no one was displeased. They
stated that he was probably more accoptnble to the
n~litar:;than any of I-heother opposltlon names ~llention
I n the past and was probably acceptable to the l4ationsl
Ftont as well. Tbc Inore sophihticated pointed out that
Llie combination of competence and no p.articipnt~onin
,--- public life in the last twenty years or so (necessary

-
to be unexceptionable) was most unlikely and chat
.ti. .XO D
,.l llh l*Ul

I CONFIDENTIAL
-- . . -- - --
CL.*.I.IC.,IO*

-k-'
< 1
-=
r
'+
.<.I
4y
o n ~ r r o n odr z w o * r uo
(11-6-79 \I sovr=nrr ~
1p.O. :DCMcGaffc~
N CLI..IFILIIION
O ACP.O*~O

L CI
l. e ,- w
- lu,
,111
 ---
CONFIDENTIAL 2.

b~hl~tiar
wot~ldhave to choose between competence and support.
:;Laice Iran faces now all the problems which toppled previous
fiovcrnments,exacerbated by the last six months of strikes
a ~ ~disturbances,
d it is most unlikely he will find a Cabinet
aljlc to funccion effectively and he is likely to become the
I l r s t post-Shah scapegoat. It is possible that last mintte
a:lacuvering will push forward someone else in place of
n . ~ l : l i iar.
t However, any civilian forming government at this
tl;r,e will have the same constraints and problen~sas Bakhtiar,
r o !,he following serves whatever the name of the new Premier.

,tricky balanci.ng
1'1 oh lens
Facln~the Government
-
,, ,,. new Eovernzient will first have to perform a subtle and
act. It must prove acceptable to the Shah,
ur- will not be appointed, but too much approval by the
SII.:!Iwill i:~ake it unacceptable to the dissidents. It must
Llc approved by the Parliament, which most nearly represents
tl~c populace, but as the Parliament itself contains many
~:~c*~~~bcr.s
unacceptable to the dissidents (and as a body is
c.~r;lsidered a Shah puppet), it must distance itself from
1111. Parliament. It must gain.the acceptance of the striking
we^.-!ters, so that they will return to work, but: Irmt distance
~:..:;llf from the wage promises made by the laet government if
IL hopes to deal with inflation.

.f.rJ first problem the government will face will be a..rsce

I,f.*vecnthe departure of the Shah, a necessity for
) -t. .; ~ability,and the organization of resistance by competitor
~1 '(,:;itiongroups. The Shah is likely to delay departure
I : I I ; i l he is sure of the stability of the new government, but
t , : ~ ~ e shis s timing is very good, his delay will fix the image
(.I ? h + Bakhtiar government in the public mind as just another
!;l,dhGovernment, thereby rendering it unacceptable.
f,l:t.: accepted, the government will have to handle the
~ ~ i ~ i ~factor.
,;e In Isfahan, lists have appeared with over
I ; i iisiaes scheduled £0, death and larger numberb for "punish-
:IJ::Ir." (unspecified) or imprisonment. These lists, locally
11:oduced by the opposition, supposedly list SAVAK personnel,
. : ; litary personnel who ordered or caused the deeth of
Jissidents and private or government figures who are
,,orlsideredcorrupt or profiteers. The names on the list
t 8 s r y with the presenter, and it is known that many names
.firs put on the list to settle old, personal scores.
:Jar.~usedly, such lis,tsexist in every city and town in Iran.
I n Isfahan, some of those on the death list have already been
..,;assinated. The new government will have to take steps to
:. .~:i.:;fythis lust for vengeance, but to also afford the
.: ,: :::.-ance of justice. Floreover, there are such large
il~;i!iersof military and security authorities on the list,
t:,a: :he military would not stand for anything more than
!.ul:en 'sacrifices. If the mobs are not satisfied with govern-
o . z r i ~action, however, they are likely to take action themselves,
A
m-
 CONFIDENTIAL

and SAVAK and the military to difend themselves--with blood

fighting a real possibility.
In a broader sense, the govetnment will also have to find a
way to restore order, faced with bands of youna toughs--use
to and c:;joying t h e violence of mobs--continuing their
activities. Again a delicate balance is necessary, because
anything approaching martial law or an autocratic order wil
cause Lhe general populace to rise again.
The larger problem will be the economy. The goveqnment mus
get the workers back to work and at the same ttmqmust ask
them and the entire country to accept sacrific 8,-shortages
and probably high prices. The workers werk prhi'sed wage
increases the country cannot afford, and the ca ts of
returnin% the economy to an even keel will be a$tronomical.
When che workers refused to return to work for wage
increases of 50-125%, will they now return to work for
their old wages? The capitalists and entrepeneurs, and
those v!io control the capital which fled Iran in the last
six months, will watch closely the actions of the governmen:
If they see policies designed to appease the workers at the
cost of inflation and depression, they will refuse to expenl
any risk capital. Unemployement is certainly high now and
will increase unless the businessmen are willing to partici]
in the economy. The business community is in a critical
cash flow situ?tion. Those factories which continued
oper.~~i:.,:hove largely used up all bank credit they possesst
drawing down on stocks (particularly fuel) and currently
possess large stocks of unsold goods but no money. Bazaar:
mostly closed for up to two months are also cash poor, and
customers paying profiteering prices while getting uncertai~
wagcs are also cash poor. From somewhere, there must be a
major inEusion of cash or credit to prime the pumps, and f o ~
a !cl-%,;c!riod of time as business is normally conducted on :
Jay ;L ,.,<!L.ce
basis. Unless the flight capital can be prrsuac
to return to make this infusion, new money will automaticall
creste major inflation, fueling a new economic-political cri
Scenario for (Limited' Success
r s e e i i s unlikely thatttlisntried government can survive,
faced with the above problems. One scenario for limited
success, however, follows: drawn from reflections on commenl
of Na~fonalFront activists in Isfohan. This presumes the
Shah x ~ l lleave as the Khomeini/National Front opposition tc
Bakbtiar nears a peak, causin the protest movement to colli
i.i he surge of joy at this etement of success. All workerr
will rciurn to their jobs as part of thar joy, without
i--c.'".t5. discussions about wages. Khomeini will lose any
inf~~ie~ice, as he will continue demanding protest when most
peoplc .re tired of it. The government will schedule
in,c,c di 3~ 'ly several major show trials, and somehow "endorse'
rho ~ a .>us . ~ reverge lists, without acting on them, focusin
yru;l<' attention on the major tirals and vowing an "unenj:
-CONFIDENTIAL
.--
 -CGNFIDEWTIAL
--. 4.

ursuit" of all malefactors. Mcanwhtle, ttic in~portant

gave their Iranian Property confiscated whcr, the gcl\.t?:.nnlent:
learns of their flight. As it will not be fair to punish
underlings when the big fish escape, only a few symbolic
arrests will be made. Any workers who attempt strikes or
protest about che lack of raises will be attacked as
proL'iteers, following the model of the Shah, and jaw-boner1
back to.work.
The cabinet will be in a state of constant shuffle, gradually
bringing in reixesentatives of the various National Front
and other opposition party factions, and playing them bff
agai.nr;t the other, with Ministers abruptly dismissed as
incapable of dealing with various problems, thus shifting
the blaale and buying time. A great deal of attention
will he paid to upcoming elections, with numerous committees
appointed, including opposition figures and probably a few
minor delays, just to keep people anxious. The government
will icself take a major part in the campaign, declaring
tlie country's prob1ems.a~ serious and demanding that
cznditlates address the problems, not personalities. The
cl)posi.tion will have one eye on the elections, so will be
u11abla to maltc a united front against Bakhtiar. The economy
will illuddle through, with the government making many announce-
n,ents about the need for sacrifice, 80 that Iran will belong
co Irsnians . Finally and perhaps most imp0rtar.t. the Govern:
nleill: will focus attention on a new enemy, probably foreigners,
z ~ i d;or:t li!:ely Americans. They will be accused of
trtial.l;orouslyabandonri~gnecessary projects as a last gesture
of support for the Shah, and simultaneously of attempting to .
rake advanrage of the country's precarious economy of profit--
damned if they stay or if they leave. Among the symbolic
punisllments will be of foreigners working without work and
residence permits, or otherwise in violation of any Tranian
rcpulations--probablynothing more than expulsion but given
e h t p1.a~.
~ 'there is little room for maneuver in tt1i.s
sccnzrio, but if all :he elements fall into plece, the
Bakhciar Government could maintain itself until elections,
and perhaps even after, depending on the level of
cpposition discord.
.1ii:alicntions
. .,-, . .- for the U.S. and Americans
ii tl~eTZhtiargovernment falls, the 1ikeli.est result will
be n new autl~oritarianregime, either by military coup or
by En uprising of the radical right (elevating Khomeini) or
che radical left (unlikely to be friendly to the U.S.). A
military coup, while likely to be both successful and friendly
to t h c U.S., is unlikely to last long, as the populace have
l e a r n d how co fight the military--civil disobedience and
econom!c pressure rattler than direct violence--and there is
no cvi~lcncc-the military--has learned a proper response. I f

CONFIDENTIAL
 -
CONFIDENTIAL

it did sric~eed,it would be only if it adopted radical right

or left p l uiiagc. A Khomcini government would be, at I east
initially, hostile to the U.S. and foreigner- and would be
likely 'i1.0 to di.ssolve shortly of its own i7:ompetence if
nothing t>J\e. A radical left government, like that in
Af';;hdnibl,'n, is likely to be correct in its relations Lo the
U.S., but lcan l~cavilyon the USSR for support and would
become quickly entangled in internal disputes with the
re,ligio~,s ;ight, again like Afghanistan. Any of these
results will lead to the disinte ration of the economic
s; rengt h o f Iran, the increased fikelihood of further groups
or.d stru;:yles, and the loss of a U.S. ally.
On the otl~erhand, a Bakhtiar success is likely, at least
in the short run, to be seriously dangerous for Americans
living in Iran, or at least in Isfahan. The anti-foreign/
n11:i-Am(-ricnn feeling continues here, accompanied by
\violence of increasing intensity. If a government in Tehran
110th restricts revenge On SAVAK and security figures and
,laopts an anti-American attitude, there will almost
, levitably be an jncraase in violent incidents against
.i;sricans,and at present of higher levels of ;iolence,
c resul~;will bc serious injury and death. It appears
:I~at w h a ~is in the better interests of the U.S. will work
ins in st ir~dividualAmericans and probably will require a
l~ln]or reduction in the American presence here, for several
wths .it Lcatrt.

9 MC FFEY

-COIW
--- IDENTIAL
ACTION
J 3 ( 1 4 1 A~DIISA(I~I'
OISTH
C J C S I ( B 2 ) C J C b ( 0 1 1 DJSCE3) I J C I ( 0 2 ) J l ( 8 2 1 J S l J R C
JOINMCC O I C REVW(011 S L C O E f i B 7 1 S S C D E f l A d D l P A ( 0 1 ) D I A I OlA(lU)

-- NMIC

-
--
CMC CC YASMZNGTON DC
C8AF k A S H I N G l O N OC
CNO NASHINGTON DC
CSA WASHIkGTON DC
STATC OPCEN WASHINGTON DC
FILL
(065)

0 t7YOS7Z JAN 7 9
rn SECdTATL nrenoc IMMEDIATE
10 R u e n A n / A n L n e A s s v rnnrn x m n t i o x r r r 7 a 7 a
r u o ~ ~ c / r n c n ~ rB~IRUT s s ~ x n n c o ~ i ~e ar o 2 -
AUBHEOfAMEMBASSY C A I R O I M M E D I A T E 4 9 7 6
RuCnDn/AnBnBrssY OAMASCUI xMnLOIAT€ P 7 o a
UUinJM/AMCONSUL JERUSALEM I M M E D I A T E O I 6 S
RUOMRA/AMEMUASSY J I O D A I M M E D I A T E 7 1 0 8
AU&kTV/AMEHBASSY T E L A V I V I M M L D I A T C P I 8 7
~UQMHR/AMEMUASSY TEHRAN XMMEOJAT€ 9 6 7 1
YUOMA~/AMEMBASSV MANAMA 3 0 U 4
RUOUBl/AMlMBASSY RABAT 0 8 7 9
WU4MNl/AMCMBAS8Y B A N I 1 3 7 0
UUOMlI/AMEMBASSY T R I P O L I 7 1 7 6
~UOIKR/AMCfiBAYSY TUNIS 8 5 1 6
AUOMZN/UEMl8SlON S I N A I 7 8 8 8
a u v ~ i n i ~ n c o ~~ e u ~I H
2101 R ~ N
R U f H G V / U S M I I S I O N ECNLVA 1 8 8 6
auonnw/rncnerssr K n r R r o u n 0171
A U O T C l A M ~ M B A Y 8 V LOhOON 6 3 0 1
~ U E H M O / A M E H ~ A S Snoacon
Y 5840
RUCHNA/USM18SION USNATO 2 1 1 5
t4UfNPS/AMeMBASSY P A R I S 5 6 5 2
WUfHUO/AMEMBASSY RUM€ 4 7 2 7

PAGE 1 C O N f I O € N T X A L
PAGE 2 C O N ~ I O E N T I A L
R U L H U T I U l M l S S I O N USUN NLN Y O R l 6 l S I
RUOMBIIAMLMBASSY ABU O H A B I a 4 3 1
R U L H C R I U S I N T BAGHOAO 9 1 B 9
R u u n o o I A n E n a r a s v oonA 8031
RUUMUIIAMEnBASSY NUMAIT 5 3 5 0
RUCHOLIAMCMBASSY BONN 2 2 9 9
R U E K J C S I I k C O L F IIAIHOC -2730
RULKJCII JCS r h r n o c nsvs
RUEAIIAI CIA IAIHOC 9912
RUEAONWI NSC MAIHDC l74D
RUfHlA/USlCA
R U I N A A A I U S C I N C E U R V A I H I N G C N GL
z P n / A n c n u A s s v ALGIERI POUCH
BT
C O N C I O L N T I A L

LInITto orrIcxrL ure IECTION 11 or mu B T A T E 11ta2841mi

C I N C k U N FOR POLIO, T L L A V I V FOR PAOI O E L I V C R BY U A.M.

C.O.tI2UbB NIA

TAG11 SOPN

IUUJLCTI ASSISTANT I E C R i T A R V I A U N O L R I I I T A T g M E N T

FOLLOWING I S THE TEXT O f A I T A T L M E N T I H X C H A 4 8 I I T A N T

l L C R L T A R Y SAUNOCWr I1 O E L I V L R I N O TO AN OPLN l E I I I O N OF THE
HOUSk I N T E R N A T I O N A L R L L A T I O N I COMMITTLE ON
l 0 l e U A.M., IABHINGTON TlML. P L L A I C NOT€ T
C M ~ A R G O E O FOR P U B L I C U
LI UNTIL THC TXME TOMORROW OF ITS
OELIVC~Y s c r o n E THE c o n M r r t r r .

--
BEGIN TliXT

T k L PWCYENT I I T U A T I O N I N I R A N AND I T 1 X M P L I C A T I U N I

T H l B HEAUING PROVIOL( AN OPCORTUNITV ?OR UB TO R C V I L N

TOGCTHER THE PREBLNT IXTUATION IN IRAN ANO ronc or r t r
IMPLICATIONS FOR THC PUTURE or UNITCO rrrtcr P O L X ~ Y
TOIAROS XRAN ANO tnr MIOOLE crrr,
 R- UEYAKTMENT OF DEFENSE
JOlW CWEFS Of STNf
I E s * O E CtNlER

PAGE 3 C O N F I D E N T I A L

; PROPOSE TO DEAL # l T n THE FOLLOMING QUESTIONS IN TnIa

INTRODUCTORY P R C S L N T A T I O N I

--#HAT HAVE UEEN THE I N T E R E S T S AN0 HOLE OF THE U N I T E D

8TATES I N I R A N ?

.-anrT 18 rnr PRESENT SITUATION ANO now DID IT rwzre?

--#HAT AblL THE REGIONAL AN0 GLOUAL I M P L I C A T I O N S OF

l H E S E DEVELOPMENTS I N I R A N ?

--#HAT L I E S AHEAD?

I N SHORTI I M I L L UE O C V E L O I I N G THE POLLONING P O l N T S l

--THE UNITED S T A T E S ULNAINS FIRMLY c o n M ~ ~ ~ ~ onrs - - ~ a
CVeRY AHERICAN A O H I N I 8 T R A T X O N S I N C E l O R L D MAR 11--TO A
FRtB, STABLE, AN0 INOCCENOENT IRAN. I R A N 1 8 INDCPLNO&NCL
I S C R I T I C A L I N PUOTECTING'THE FRkEDOH OF OTHER N A T I O N 8
I N THE M I D D L E EA8T. F I F T Y PERCENT OF THE PLTROLEUH
CONSUMED UI me ? R ~ E ~ O R L Dr r s r r s tnnoucn T m r rrwrlss
OF nounuz ON IRANIS SOUTHERN FLANK.

--INAN, L I I L OTHkR N A T I O N S THAT HAVE DEVELOPED N A P I O L Y r

HAS LXCBRIENCED FUNOAMLNTAL AN0 ACCELERATING CHANGE OVER
rne FAST T W O OECAOCS-WECONOHIC OEVELOPMCNT, w x o c 8 r n E A o
SOCIAL CHANGE, AND ornrnoa FOR GREATER PUPULAR INVOLVE-
*ENT IN 8 n r C I N G T n E OECISIONS rmxcn AFFECT r n h n l s LIFE
4 ~ FUTURE.
0 NI THE COYNSE OF T n I a C n o c t s 8 OF rrrlo
~ 0 U L Y N 1 Z A T I O N , ECOkOHIC PYOGRCSS HA8 OUT-PACE0 THE
OEVliLOPMENT OF P O L l T I C A L I N 8 T I T U T I O N S . 8OHY I R A N I A N S
#AVE CELT THAT T H E I R T R h D l T l O N A L ROLES AN0 RELIGXOUS
CONVICTIONS HAVE BEEN THRCATENEO BY THESk DEVELOPMENTS
&NO BY THE INTHOOUCTION 01 AN U N F A H I L I A R CULTURE, MANY
4RE N O 1 I N S I S T I N G ON A W I O t R 8HAblING OF P O L I T I C A L POkER
d s * E L L AS r c o N o n I c UENEFITS. T M I ~ I 8 T n t CRUX OF rnt
8T
a2254
ANNOTE8

+*kt 3 C O N F I O L N l I A L @W!Iti.',
 EPARTMENT OF DEFENSE
)(NMl ENIS f S OF S T I F F
UtSFAGl TkNIER

PAGI! 4

NNNN
L7033tlZ
 DEPARTMENT OF DEFENSE
MINTCHIEFS OFSTAFF
ItSSIOE CTlIER

VZCZCMLTZ~L C O N F I D E N T I A L ZYUU
MULT 230eo
SECT U 2 OF 2 S D 2 6
ACTION
J3C141 ASDIISA(101
DISTR

----
C J C S I ( 8 2 ) C J C S ( 8 1 ) U J S [ Y 3 ) S J C S ( 0 2 ) J I t U O ) J S I JRC
J 3 l N M t C SECOEF(U7) SECOEFI A S O I P A ( 0 1 ) 0 1 4 I O I A [ i O ) NMXC
CMC CC UASHINGTON DC
CSAF UASHXNGTON DC
CNO UASHINGTON DC
C I A WASHINGTON UC
FILC
(0521

TRANSIT/@l7RJ21/Y17B338/~00I11TOUB17Lb323
OE RUEtlCAA # 2 2 5 4 0 1 7 8 3 2 1
L N I CCCCt ZZM
0 17UBS7Z J A N 7 Y
rn s E c r T A r r WASMUC
1 0 RULHAH/AMEMUASSY AMMAN XnMEOIATE 7 0 7 4
R u a n u E / A n E n u A s s Y BEIRUT InnEozhTe ~ S O J
RUEtlEG/ANEM!3ASSY CAIRO IMHEOlATL 4 2 1 ~
auanon/rnenerssr o ~ n ~ a c uxnnrorrrr s 8764
IUCMJM/AHCONSUL J L U U S A L L N I M M L O I A T E D l 8 4
WUQMRA/AMEMUASSY J I U O A I H M E D I A T E 7 l i U
W U S M T V / A ~ E M B A S S YTEL AVIV I n n e o I A n orso
RUQMHRlAMfMBASSY TEHRAN I n H E O X A T e # I 7 6
~ ~ U Q M A M / A M L M B A S S YMANAMA a o m 6
RUOKBT/AMEMBASSY RABAT 0 0 8 0
RUQMNSIAMEN0ASSY SANA 1 5 7 1
RUQMTI/AMEMBASSV T R I P O L I 7 1 7 7
RUDKKR/AMLM8ASSY T U N X l 0 6 1 7
RUOMZN/USI4XSSION S I N A X 7 6 l b
RUOMOH/AMCUNSUL UHAHRAN 2108
RUFHGV/USMIS6ION GENEVA 1 6 6 6
dUUMKM/AMSMUASSY KMARTOUM E l 7 2
a u o T c / A n f n u r s s Y LONDON OSOP
U U C M M O / A ~ E ~ B A S S noscon
Y S~SB
RUCHNA/USMXSSION U I k A T O 1 1 1 4
SUFNPIIAMEMBASSY P A R I S 0 5 5 5
w u r n ~ o i ~ n e n e ~ROME s s ~ 4720
RUEHDT/USMXSSION USUN NEN YORI 6 1 3 1
4UUmBI/AMEMBAYSY ABU O H A B I 2 4 5 2

PAGE 1 C O N F I O C N T I A L
~ A b t 2 C O N F I D E N T I A L 2JY;JD
#U&HCR/UbXNT bALHOA0 OJQU
~ u u a o o / r M r m u ~ s s DOHA
r esaa
ttUlJHKW/ArlEHBASSY K U M A I T 5 5 5 1
NUFHOL/AflEHBA1SY UONN 2 3 8 8
ttULKJCS/ . d t C U t F WA8HUC 2757
HUEKJC8/ J C I n A 5 H o c a 5 8 8
N U E A I I A / C I A UAYHOC 2 8 2 3
U U C A U Y W / N Y C WASHDC i r a s
ttUBHIA/USICA
UUSNAAAIUSCIhCtUU VAIHINGEN GE
LEN/AHEMElAS8V A L G I E R S POUCH
BT
C O N f l O t N T I A L

L I M I T E D O F F I C I A L USE SECTION 8 2 O f 8 8 I T A T E 9 1 9 1 5 4 / 0 1

CXNCEUR fon POLAU, TEL AVIV FOR PAO, OELIVLR BY A.m.

PROULEH I N I H A N 1 0 0 1 1 .

--OUR P O L I C Y OVEN THREL DECADE6 H A 8 @€EN TO WOKU WITH

IRAN, AS W I T H OTHEU N A T I O N 8 UNDEKQDING T H E W PROFOUND
CHANGES, TO HELP T H t H F I N D C O N I T R U C T I V E S O L U T I O N 1 TO THC
PROILE~I THEY PACE, E n m c e rnon PERIOOI or c n w x w I T n
NEW S T A U I L I T I , AN0 P R L I E R V L T H E I R N A T I O N A L INDLCLNOENCE.
OUU OTl4ONGLY-MELO VIEW I1 THAT NO O U T I I O E POWER 4HOULO
TRY TO D I C T A T E I U A N l S COURIL, E M C L O I T I N I T A B I L I T Y f D R
I T S OWN ENDS, OW SEEK CONTROL OF ANY K I N 0 I N T H I I AREA.
EACH N A T I O N bHOUL0 HAVE TME fREEOOM TO WORN OUT I T 1
P u t u n E rnec F n o n OUTSIU; INTERFCRCNCC.
--THE C N T I U E A n t A OF WEITERN A S I A 11 CHARACTERIZE0 BY

GROMTH AN0 CHANbk. CHANGE PROUUCEI OPPORTUNITY A 1 WELL

AS I N I T A U I L I T Y AN0 C K I b I I . THE I I I U C I1 HOW TO CHANNEL
CHLNGE ALONG PATHS L E A D I N G TO S T A B I L I T Y AND ITRENQTM.
OUN POSITION IN T n E AREA 18 ITUONG. near OF THC ITAT~I
THERE #HAKE DUU 0 0 J E C T I V E I FOR T H I I KLGIONm-THg I E C U R I T Y
AND N A T I O N A L I N O ~ P E N O E N C E OF EACH I T A T E I N THE AKEA AND
T n e OPPORTUNITY T O c n o o s E THEIR OWN w r y 8 TO BUILD ncrtsn
L I V E 8 FOH T H E I R PEOPLE, B E C A U I E ME #MARE THOBe 0 0 J h C -
T I V C I AND SEkK NU 0 0 H I N A T I U N , k E B E L I E V E U N I T E D I T A T C I
HELP I N A P P H U P R I I T C MAY8 WILL UL 4OUGMT I N TML FUTURE

C O N F I D E N T I A L S@ll#lll
 DEPAKTMENT OF DEFENSE
PIIITCHIEFSOF srrrr
UESSACE CENTER

VAGE 3 C O N F I D E N T I A L
A8 I N T H t PAST AS NATIONS OF T H t AREA WOUU OUT T H E I R
rUTUUEO. WE ARE I N CLUSE TOUCH r I T H GOVERNMEhT8 I N THE
I L G I O N ANU ELSk*HEUE WHOSE I N T E R E S T S AUE ALSO
A r r c c T t o B Y Tnrs SITUATION,

AMERICAN INTERESTS AND ROLE1

rue INTEUESTS or rnr U N I T ~ O S T A T E S IN IRAN HAVE R e a A z w c o

CONSTANT o v e n TnE P A S T GENERATION.

UECAUSC UF I A A N ' S IMPORTANCE TO THE SECURITY O f THE

OULF REGION, FUTURE or THE MIODLE E A S T , AND THE PRODUC-
VION OF O I L , WE HAVE A STRONG I N T E R E I T I N A FREE, Y T A B L t s
4N3 INOEPYNDENT IYAN, k E HAVE P E R S I S T t N T L Y AN0 A C T I V E L Y
CUUSUEO T H I S O L ~ J ~ C T I VSEI N C E WORLD MAR 11.

aOuUING M I T H I N THE L I M I T 8 SET #Y THE GOVERNMENT OF I R A N

I N AREAS O f COMMON I N T E N E ~ T I W t HAVE HELPEU I R A N 8TREkGTH-
I N I T S E L F ECONOMICALLY I N TWO W A V I l (1) ME HAVB P A R T I -
c I r r T e D IN I Y A N ' ~ MODERNIZATION, PIRUT THHOUGH DEVELOP-
MLhT A b S I S T A h C t AND THEN THROUGH THE COOPERATION OF
PRIVATE AMERICAN FIWMS. (11 AMERICAN ANO OTHER MESTERN
COMPANIES HAVE hOUUEU CLOSELY I N TME OEVELUPMENT OF
I w A N ' S O I L PNUUUCTION AN0 M A R U E l l N G s T H f U E & Y H E L P I N G
1 0 PAUVIUE T H t d t V E N U E 8 WHICH HAVE 8 E E N THE M A I N ENGINE
OF I R A N ' S ZCOhUMIC DCVELOPMENT.

AS I S OFTEN THk CASE W I T H GOVEHNMENTl WHtRE AUTHORITY

18 HIGHLY CSIVTNALIZEO AND r H E R t lMCORTANT ECONOMIC AND
I T W A I E G I C l N T E H E S T 8 A n t AT STAKE, OUk A B I L I T Y TO M A I N T A I N
CONTACT WITH ALL ELEMENTS O f THE I O C I E T Y AND P R E 8 8
L F F E C T I V C L Y AN0 C O N S I S T C N T L I FOR CONYTRUCT/VE CHANGE HAS
UCEN L I M I T t O . WHERE WE I A N S O C I A L AND P O L I T I C A L P R E I S U W t b
d U I L O I N G UP w I T n l h THE SOCIETY, HE CALLEU ATTENTION TO
r n c n , uur r n t u r c t OF O E V C L O P M ~ N THAS BEEN SET U Y T H ~
GOVEHNMENT AND CIRCUMSTANCES I N IRAN.

*E n r v t ALSO HESPONOEO T O I R A N ~ Y REQUESTS TO HELP MOUEUN-

dT
rza54
ANNOTLI
CLH 7 P 5

PAGE S

YNNN
17USJbZ
 OEPAKTMENT OF DEFENSE
IIlllCHIEfSOFSTAfF
UEXAGE C E N R I

IPJ OF 2 3 0 2
ACTION
J3(141 ASD#ISA(iBl
SISTR-
C J C b l ( R 2 ) C J C S ( Y 1 ) UJSCYS) S J C S ( B Z 1 J J ( d 2 ) J J l J U C
J J J N H E C O I C R L V u C d l ) S E C b L F ( 0 7 1 SECUEFI A S O l P A ( 8 1 )

-
NMlC
CMC CC WASnINGTON DC
CSAF WASHINGTON OC

OE RUEMCAA - 2 2 5 4 0 1 7 Y 3 2 5
Z N V ccccc t z n
o 17meJ7Z JAN 79
cn S E C S T A T E w r s n o c
1 0 RUEkbM/AMtflUAbSV AMMAN I M M t U I A T k 7 0 7 6
~ U I ~ M # E / A # E # S A Y S YB E I R U T I M M k D l A T C b J Y 4
* u t n c c / n m E n e r s s r CAIRO I n n E o x A T f 4277
dUEHDM/AflbM6ASbY OAHASCUO XMMEDIATE 2 7 6 5
~ U E ~ J M / A M C U N S UJERUSALEM
L x n n r D r r r e aiss
a u u M n A / A n E M s A s s Y JIDDA InnEolATt 7 ~ 1 1
#UCHTV/AMEMBASbV T E L A V I V I M I I E U I A T E O88O
dUUMMR/AMCMBASSY TEnRAN I M M E O I A T E U S 7 7
I3UUMAMfAMEMdASSY MANAMA 3 0 8 6
~ U O K B T / A M C M U L S S Y H A B A T aoer
AUUMNS/AMLnbASSY SANA 1 3 7 2
dUOMT1IAMEMBASSY T H f P O L I 7 l 7 6
dUUNKR/AMkMBASbV T U N I S U 5 1 U
UUdMZN/USMISSION S I N A I 7 8 5 7
PUUMOH/AMCON5UL OHAHRAN 1 2 8 3
4 U F U G V / U I M I S 5 I O h GENLVA t o 6 7
l4UUMKM/AMEMBAYSY KHARTOUM d B 7 5
AUDTC/A#EMBASSI LONDON 6 3 0 3

RUC~ROIAMSMBASSY ROME 4 7 1 0
R U E n o T / U b M I S S I O N USUN NEW VDd* 6132

PAGE 1 C O N P I O E N T I A L
 EPARTMENT OF DEFENSE
l O l l l C W l l F S O F STAFF
l C S A D f CElTIn

it D
lMII/AMEMBASIY ABU DW
IHCR/UIINT OAGHOAO 9 1
IMOO/AMLNBAISY OOHA I
iMKW/AHLNBAI8V &UWAlT
r n o L i r n E n e r r a v BONN O
K
,JC/I s s c o ~ rrrrnoc
IC
K
JI, JCI w l e n o c as*
, A l I A / C I A WAIHOC ? I ?
,ADWYI NSC WAIHOC 115

IT
C O N f l O E N T I A L

L I M I T E D O f f I C I A L U I L I E C T I O N I 3 OF 88 8TATE 81OP84/8S

ClNCgUR FOR POLIO, TCL AVIV FOR PAD, OCLIVCR BY 9 A.H.

I Z L I T S ARHEO CORCEI, WHICH HAVE PLAYED AND WILL CONTINUE

1 0 PLAY AN IMPORTANT ROLE I N I R A N 1 8 DECLNSCb COLLOYING
rrrrxrn wzrnoRAaAL IN i o ? i PROM A rrccrrL ROLE IN THC
P C R I I A I GULF WE HAVE ENCOURAGED COOPERATION 6ETYECN THE
8 T A T C I O f THAT REGION T o ITRENOTMEN I E C U R I T Y THERE. IN
C4HT TO COMPSNIATE FOR B R I T I I H WITHDRAWAL, WC LWCANDCD
OUR SECURITY A I S I I T A N C E R E L A T l O N 8 H ~ P ~TME I R A N I A N ARNE0
PORCEI I N ADDITION TO HcLPXNo NEIGH8ORlNo ONAN O I F t N O
AGAINIT INIURGENCY HAVS HLLCCO PROTECT YE8TCRN ACCCSS
10 OIL IUPPLIERI*

~CONOMIC P R O G R E ~ SAND ITAOILITY. UNTIL RECENTLY IRAN

MA1 CONTRIBUTED NOT ONLY I Y PROOUCING O I L FOR THE WORLO'I
CNLRGY NEED8 BUT A L I O YY G I V I N G I U B I T A N T I A L . A I D TO OTHER
COUNTRIEI, INVESTING IN BOTH rnc o c v a L o r r o rno THE
OCVELOPING WOULD, AND PLAYING A IGNI~ICJNT ROLL THC m
I N INTERNATIONAL DIPLOMACY, IRAN HA8 MADE NUHEROUI
C O I I T I V E C O N T R l B U T l O N I l PEACEKEEPfNG I N VICTNAM AN0 THE
IIIDOLE L A I T , IUPPORTING MOOERATL I O L U T I O N I TO CONfLSCTS
IN A r R x c A AND E L s e r n e R r , ANO WORKING TO RESOLVE IOWE OF

PAGE O 8 C O N F I D E N T I A L
 9EPARTMENT OF DEFENSE
JOINTCIUEFS OFSTAF*
MESAGE C l l l E M

PAGC 3 C O N F I D E N T I A L
I T S LONG-STANDING O I I P U T E S M I T H N€I@HBORS.

AS A CONSEUUCNCE OF OUR OTHER l N l E R E 8 T S I N IRAN, WE HAVE

AN INTEREST A L 8 0 I N I R A N I S I N T E R N A L OEVELOPMENT AN0
STABILITY. I U T I N ANV EFFORT TO PURSUE T H I S INTEREST,
*E n u w IN THE F U T U R ~ , A S WE H A V E IN me P r s r , R s s p r c r
THE U I G H T S OF I R A N I A N S TO D E C I D E HOW THEY SHALL ORDER
T H L I U OHN FUTURE.

I F I45 AUE TO IJNO~NSTANO PULLV THC NATURE OF TWE PREBENT

SITUATION, HE NEE0 TO EXAMINE HDM I T CAME AIDUT.

MOUERNIZATION. IWAN HAS EXPERIENCED S I N C E WURLO WAR 11

NANY OF T n t PRESLURES ANO INTERNAL STRAINS GENERATED B Y
MOOLRNIZATION THAT HAVE PROVE0 D E S T A B I L I Z I N G I N OTHER
COUNTRIE8. DOME OF THESE PROULEMS ARC F A M I L I A R ONES--
RAPID POPULATION c n b r r n , A M A S ~ I V E SHIFT or POPULATION
FROM RURAL TO UWdAk ARCAS, LARGE NUMBERS OP UNEMPLOYED
AND UNOENEMPLOYEO URBAN WORKERS AND ~ T U O S N T S I AN0 A H O 8 l
OF o w e n PNOBLEUS T H A T ARISE WHEN A NATION A S DIVERSE
A S IRAN P u s n e s FUU D e v L L o P n E N T ON A NUHBER OF FRONTS
SIRULTANEUUSLY. OF PARTJCULAR S I G N I P I C A N C b I N I R A N H A 8
ULEN THE INCREAYING A L I E N A T I O N BETWEEN THOSE L E A O I N O AN0

U E N E F I T T I N G FWOU rnri MODERNIZATION AND OTHER^ w o a e

P O S I T I O N I N S O C l t T V AN0 DEEPLY HELO R E L I G I O U S C O N V I C T I O N S
ARE T H U ~ A T E N ~av D IT.

THL " W H I T E R C V O L U T I O N M I 1 9 6 2 - 6 5 . BY THE 1 B l e l 8 ,

l R A N I A N L E A O t R S HA0 UECOUE KEENLY AWARE OF GROWING DISCON-
TENT# A SENSE OF D R I F T I N IUAN, AND UEMANDS FOR FAR.
PCACHING REFORHS H I T t i I N A MORE BROAOLY-BASLO, RESCONSIVEI
NON-AUTMORITAHIAN P O L I T I C A L SVSTEH. I N ORUER TO
CHANNEL THESC P U t S S U R E I I N T O CONSTRUCTJVE NATHLR THAN
REVOLUTIONARY CHANGE, T H t GOVERNHEN1 LAUNCHEO A PROGRAM
OF ~VOLUTIONARV NEPORH AND OEVELOPHENT PRCBSED r R o n r n E
TOP AT A FORCED-DUAFT PACE. T H I S *WHITE REVOLUTION"
UT
#a284
ANNUTES
c L n ?as

PAtE 3 U(dtl8lUl
NNNN
171d337Z
 1)EPAR'TMENT OF INFENSF
IOIII~ cnltrs or s r r r r
YEMlliE CINIER

VZCLCMLT~~Q C O N F I D E N T I A L ZYUW
nULT 23936
SECT 9 4 OF P A D 2 6
ACTION
J3(14) ASOIISA(10)
OISTR /;
C J C o l l U Z ) CJCS(U1) D J 8 ( 0 3 ) b J C S ( R 2 ) J S ( B 1 ) J S l JKC
J3:NMCC 0 1 C REVY(B1) S E C O f f ( 0 7 X S E C O E f I A S D I P A ( 0 1 ) D I A l 01A(1#1
NMlC \
CMC CC UAStlINGTON OC

- c s A r YA~HINLTON oc
CNO UASHINGTON DC
CbA WASHINIDTON OC
FILE
(BPS)

ZNY ccccc zzn

o 1 7 e e a 7 z JAN 7~ lMMEl)lATE
CM SECBTATE n r s n u c
ro n L i i ~ n / i n ~ n i r i s rIMMEOIATC 7070
RUUMBE/AMERBASSY B E I R U T IMMEOIATC 8 3 0 1
NUEHEG/AWLMBASSY CAIUO I M N E O I A T L 4 P 7 0
NUtHOM/AMEMBASSY O A K A I C U I I M M E O I A T E a 7 1 6
NUEHJM/AMCONJUL JERUSALEM I M M E 0 I A T S O L I O
RUOMKAlAUEMBAJSV J I O O A I M U E O I A T E 7 1 1 2
IUCHTV~AMEHBABSY TEL AVIV I n n E o I A T c OOOI
IUQMhR/AMEMBASSY TEHRAN ZMMLDIATC 0 8 7 0
WUUMAH/AMEHBASSYn A N A n r a m 7
IUDKlT/AMEMBASSY RABAT YBB2
NUQMNS/AMEM0ASSY SAhA 1 3 7 3
RUOMTI/AMEM0ASSY T R I P O L I 7 1 7 Q
WUDllK/AMEMBASSY T U N I S B S l O
tlUUMZN/USMlSSlOh S I N A I 7 8 5 8

N u o n s n t r s e n s r s e r K H A R T ~ U H0 0 7 4
RUOTC/AMEMBkSSY LONDON U S 0 4
n u E M n o l r n E M b r s s r Moscow 5 5 3 2
WUFMNAIUSMISSIUN USNATU I l l 6
RUFNPS/AMEMBASbY PARgS 0 5 3 1
WUrHRO/AMLMBASbV ROME 4 7 5 0
W U f H O T i U S M l S S I O N USUN NEW YOMI S I S 3
8
CAGE 1 C O N C I D E N T I A L
 . LPAKTMENT OF DEFENSE
IOIYTCHI~FSOFOIAF~
YlSSAGtCE#lER

PAGE 2 C O N F I D E N T I A L
HUOMBI/AMEMbASSV AUU O H A b I 2 4 5 4
NUkHCR/USINT BbCHDIO 9 3 9 2
J U O M O D / A M ~ M ~ A ~DOHA YI 8034
WUUMIW/AMLMB*SSV UUMAIT 5 3 5 5
d u f H o L / r n E n e r s s Y BONN Pa82
H U E K J C I / S t C U E F UAYHDC 2 7 3 0
HUEUJCS/ JCS wASHDC 2 3 8 8
NUEAA
IJ CIA wAsnoc P B P ~
#UCAOW#/ NSC kASHOC l 7 b l
WUEHIA/USICA
R U S N A A A / U S C I h C t U U V A I H I N G C N GE
ZEN/ARENBASSY ALGI~RS P o u c n
UT
C O N f l O t N T I A L

CINCEUR FOY POLAOU T E L A V I V FOU PAO, D E L I V E R BY 9 A.N.

THB REFOHM PHOGRAMv FUELED DY R I S I N G REVENUES I N THE

lOIBl1, Q U I C K L Y UESULTkD I N FAR-REACHING CMANGCSt S u e -
STANTIALLY I M P Y O V I N G T n E LIVCS o f MANY CITIZENS BUT
DAMAGING THE P O l l T I O N O f OTHERS. LAND R L O I I T R I B U T I O N ,
FOR EXAMPLE, MCAKENEO THE POUCN OF rne BIG L A N D L O R ~ SAND
A L I O IEAWCNLD T i l t CLfRGY, UEHOVING T H E I R INOEPENDENT
JOURCE OF IhCOME AN0 MAWING THEM DEP6NDENT ON P R I V A T k
OONATIUNS. THE A M U I T I O U S 8 C A L E O f DEVELOPMENT PROOUCEO
A NEY E L Z T E OP T n o s E CHARGED n x t n PLANNING AND CARRYING
OUT THE NEW PROGYAMS, OUT PLANS UCRC MADE AND IMPLEMBNTEO
w1TH L I T T L E P U B L I C CONSULTATION. EXPANIXON I N THE
P R I V A T E SECTOR GAVE R I S E TO A NEW CLASS O r ENTREPRENLUUS,
# M I L E THE I N T E R E S T O f UAZAAR MERCHANTS AN0 OTHER T R A O I -
TXONAL ELEMENTS O f 9 0 C l E T Y WERE NEGLECTED. THERE WEUE
INCUEAOE0 O P P O k T U N I T I E S FOR EDUCATION, BUT R E S T R I C T I O N S
STILL L I n I T E D T n e PARTICIPATION o f THE N E I L Y E O U C L T ~ U
IN THE r o L I T r c r L PROCESS, AND MORE WERE TRAINED THAN
COULD BE EMPLOYEO I N P D ~ l T l O N S THEY FOUND REUAROING.

C O N ~ I O E N C E AND GUOMTHl 1963-76. THE ECONOMIC SUCCESSES

OF THE M H l T E U t V U L U T I O N H c A V I L Y O v E R S n A D o r k O THE AflSENCE OF
 DEPARTMENT OF UEFENSl:
~ O I * l C ) * l F s O r 11Mf
UtUAGf C f l l f l

PAGE 3 C O N F I D L N T I A L 2:93b
A PARALLEL ADVANCE I N THC P O L I T I C A L 8Y8TCM. BY 1976, I T
APPEARLO TO NOTI O B S C R V C R ~DF T n r IRANIAN ~ C E N Ernrr
I R A H I 8 APPROACM TO M O O E R N I ~ A T I O NHA0 PROOUCLO 8UB8TANTlAL
PROQRC88. A8 A RE8ULT O? THL REFORM PROGRAM# I R A N MA8
8CINC TRANlFORHED I N T O A HOOLRN ECONOMIC COWER. THE
FUTURL LOOILO BRIGHT. PRO8PCRITV 8LCMLO Al8URLO TMROUGM
MAPIDLY INCREA8ING O f L RLVLNUL8. 8Y $ @ I d THERE WA8
(OLIO ACHILVEHENT, ALTHOUGH LCONOWIC AND POLITCAL
OLVLLOPHLNT CONTINULO TO HOVE ON r c p r R r r E v r c u r A T VERY
OIFFtRTNT 4PCLDI.

PROBLLM8 AND P R E I B U R E I I L078-71. THE NEW PRDICCRITY

0 x 0 NOT ENTIRELY MASK PROBLLH$ PROOUCLO sv THC CONCLN-
TRATIDN OF P D L I T I C A L POWER AT THE APLU OF GOVLRNHLNT AM0
THC A B ~ E N C LOF POLITICAL I N ~ T I T ~ T I O N ~ T n r T COULD DEAL
1111 THE TRAUMA OF MODERNIZATION. MO8T PROMINLNT AMONG
r i t e crurcr or o ~ s s ~ ~ i s r wrie ~ c ~POPULAR
i o ~ ReacNTneNT
0 1 wnrl w r 8 SEEN rr WIOCIPRCAO CORRUPTION, H A R ~ HRCPRLI-
I I O N , 8OME INEPTITUDE I N HIGH P L A t L 8 , 018RLOARO ?OR TME
OELP R E L I O l O U S FEELING8 OF THE POCULATIDN, IMBALANCC
ULTWELN WLVENUEI AND LXCLN8L8, 8MORTCOMING8 I N PLANNING
AN0 CARRYING OUT AMBITIOUS PROJLCT8, R I 8 I N G UNLMPLOYHCMT
IN THL cxsxrs r s r n E CON~TRUCTION soon ULGAN TO ~U~IIOL,
l N 8 U F F l C l E N T JOU UPPORTUNITfE8 TOR CVLR LARGER NUMBCRI
Of GRAOUATING STUDENTS, INEOUITABLE OI8TRIOUTXON OF THE
B E N C r I T 8 OF DEVELOPHENT, 8 A C R l F l C E OF C I V I L I A N PRDQRAH8
FOR n I L x T A R v PRODUCRMCNT, AND A nxcn R A T E 0 1 INFLATION
THAT OUTbTWIPPEO WAGC INCREAaL8 AN0 FRU8TRATEO LXPLCTA-
110N8 FOR A STEADILY R l 8 I N G 8TANDARO OF L I V I N G . TMLlf
GRIEVANCE8 AND TtlE AU8cNCf OF P O L l T f c A L O U T L f T 8 FOR
AFFECTING GDVERNHENT POLICY LEO MOOLRATf 8ECULAR
O P P O 8 I l I O N LCAUEUS TO HAUL COHMON CAUSE WITH 8 l Q N I F l C A N T
E L i n e N T a OF TnE n u 8 L x a c L e n a v .
ON UEBPOkIE TO INCREASING P O L I T I C A L FCRHENT AN0
C R I T I C f 8 t l I N 1 9 7 6 ANO 1077, THE GOVCWNMfNl 8PON8OREO
CAMPAIGNS AGAINST CORRUP~ION IN Trio PUULIC ANO r u r v r r c
BkCTOR8, R ~ O U G A N I Z E DI T S E L F TO CURB WA8Te AN0 PlOMOTE
EFFICIENCY, AND G A V E OFTICIAL POLITXCAL P A R T Y A
61
M2154
4NNOTES
CLH 7 8 5

NNNN
170B#lZ
 DEPARTMENT OF DEFENSE
JOINT CHIEFS Of STIF*
UESSAOE CENTER

CS
:ZCZCML:Z~~C~#~C N F I 9 t N 1 I A L ZVUm
IlULT 22-34
SECT u 5 OF 2 4 ~ 4 0
ACTION
J3(14) ASUIiSA(181
OlSTR
C J C B I ( B P 1 CJCBCYI) OJ8CYJ) BJCS(BZ1 JD(UP1 J J l J I i C
J~INMCC o r c u E v r ( u l ) S E C D E ~ ( E ~ s
I c c o r r l A 8 D I P A ( Y l ) UIA:

-
Olaiid
NMIC

--
I
CMC CC MASHINGTON OC
CSAP MAbHlNbTON OC
CNO MASl4lNGTON DC
CSA H A 8 h I N C T O N OC
rILE
tess)

TRANSIT/Ul7BJ20/0l7B34lfYB0ll5TORIl7B320
JE RUEhCAA 4 2 2 b 4 O 1 7 B S 2 6
ZNV CCCCC Z l H
O 1 7 B 0 3 7 Z J A k 79
PM ~ E C S T A T Ew r s n u c
10 RUEHAM/AMtMlAUSY AMMAN I N M L D I A T E 7 l 7 7
ltUJN0L/AMEMUAbSY B E I R U T I M M E O I A T E b 3 V a
R u e n w A n E n u A s a Y CAIHO x n n e o I A t f 4270
w E n o n / A n k s e r s s r O A M A ~ C U S IMMEDIATE 8707
YULWJM/ARCONbUL JLRUSALEM IWMCOIATL B 1 1 7
WUJMYA/AMEMUAS8V J I O D A I M M L D I A T E 7 1 1 3
NULHTVIAMEMBASSY TSL AVXV XMMEDIATE Y e 0 1
#UUMMR/Al4LMUAS3V TEHRAN I M M k O I A T E 0 6 7 Q
w u M A n t r n E n a A s s y MANAMA S E B ~
~UDKUT/AMERUASJV RABAT QUU3
IUPMNSlAMEM8lSSY BAN& 1 3 7 4
4UOMTI/AMCMBISbY T l 4 l P U L I 7 1 0 Y
?UOKLR/AMEhBASSY T U N f S 0 0 2 i 1
~UUMZNtUSMXSb13N S I N A I 7 8 5 8
NUJMOH/AMCUN~I!L UHAHUAN 2 1 5 5
N U ~ H ~ V / U S M I S ~ I ~GENEVA
IN lU6B
I ~ U U M ~ M J A ~ E M B A ~KHARTOUM
J* UU7b
d U D T C j A M t M u A S E r ,ONDON b 3 0 3
N U E H M O I A M C ~ ~ A S ~ VR O S C O W 5 5 5 s
h U P M N A / U S k i S $ l C h USNATO O i l 7
IUCNPS/AMthbLSSY PAR18 5 5 3 6
I U F H N O / A M ~ ~ ~ ~ NOHC A S ~ Y473:
N U f H D T / U Y M l S b I C N USUN NEW YORK 6 1 3 4

PAb6 1 C O N f I D L N T I A L
 bl~I1AH1'MENTOF DEFENSE
JOIN1 CHII6I I16 Illfl
I t S I A G l LtNIIll

PAGE 2 C O N P I O E N T I A L ,
NUrMUI/AMEMUASSY A ~ OHAUI U 2433
HUEHCR/U8INT BALHOAO 9 5 9 3
U U U ~ O O ~ A ~ E M ~DOHA A ~ S eYu 3 s
~ ~ U U M K W / A M E H B A ~ SKUWAIT
Y 5304
RUFHOLfAMEMBASGY BONN 0 3 Y S
WUCKJCI/ SECDEF WAIHOC a 7 4 0
R U E K J C I I J C I WASMOC DSBO
n u E r x l r / CIA rranoc asas
RULADNNI N I C YASHDC 1 7 8 3
RUEHIA/U8XCA
R U I N A A A I U I C I N C L U R V A I M I N G E N GE
ZLNIAHCMBASSY A L G I E R I POUCH
L)T
C O N f I O L N T I A L

L I H I T C D O F F I C I A L U I E 8 E C T I O N BS Of 0 0 I T A T E OlPPB4/BO

CINCEUR FOR POLAD" T E L A V I V FOR PAO, OCLIVCR BY 0 4.8.

GREAIER ROLE NITHOUT I N f R I N G I N G ON ROYAL AUTHORITY.

HOVE8 TO IMPROVE THE HUMAN R I O N T I I I T U A T I O N WERE DXRCCTLO
AT E L I M I N A T I N G TORTUHE AN0 CXTREMC P U N I I H M L N T I I N THE
P R I I O N I AND AMNE8TYINO P O L I T I C A L CR18ONEIB RATHER THAN
AT C l T A B L l I M I N G NEn P O L I T I C A L I N I T I T U T I O N I ~ THE
GOVERNMENT11 M E A 8 U R E I EVENTUALLY INCLUDCO LNCOURAICHENT
OF " C O N l t R U C T I V E C R I T I C I I M n TO PROMOTE C I T I Z C N
P A R T l C I P A T I O N I N GOVtRNMCNTr A I WLLL A 1 L F f O R T I TO ILOW
OOWN THE R A P I D HATE O f ECONOMIC GROWTH THAT H A 0 C A U I E S
JCVERE OIILOCATIONI IN THE Iocrcrr. rncrc c n ~ ~ o r s ,
HONEVLW, OX0 NOT I A T I I F Y THE OEMANOS OF LAROC N U M I C R I Of
IRANIANS ron A MORE O P ~ NPOLITICAL IYITC~.
BY THC CNO OF 1 9 7 7 , I R A N I A N AND F O f 4 t l G N OBIERVBRS IAW
THLIE aovrs A S me r l n s i REIULTI OF THE o r f x c x A L POLICY
OF LIILRALIZING IRANIAN POLITICAL LIFE T M A T nro rtmrco IN
1 0 7 6 1 T H O l E STEPS, HOWEVER, D I D NOT YET I N C L U D E MOVEMENT
TORARO B A S I C P O L I T I C A L CHANOE.

BY CARLY l 9 7 1 , WIDEIPREAO D I S R U P T I O N S MA0 BEGUN AN0

SYMPATHY WAS SHOWN BY STUDENT O E M O N I T R A T I O N I ABROAD.

UY MID-YEAR I T MAS CLEAR THAT A NEn P O L I T I C A L DYNAMIC
W A S EMERGING. RELIOIOU~ FIGURLI TOOK tnc LCAO
 DEPARTMENT 01; DEFENSF
IOI~TCHIEFSOFSTAFF
MESSAGE CENTLD

PAGE 3 C O N F I O E N T I A L
I N E r P R t S S l N G O r F O S X T I U N T O TUE GOVEHNtlENT. T H t 3tiAti
r'u
L O O K ~ N GTOnAnO F k t t E L t C T I O N S . UY L A T E AUGUYTr HOWEVER,
I T MAS APPAYtNT THAT I h t 6 0 V t R N N t N T H A 0 U N O E R t 8 T I M h T C D
THE DEPTH OF D I S S I T I S F A C T I O N . A NEW GOVEUNMCNT MAS
I N S T A L L ~ D A T T U A ~TIME wnlcn PUOMI~EO r R E E o u n OP
A C T I V I T Y FOR LEGITKMATE P O L I T I C A L PARTIES. A PEW
OIYS L A T ~ R IT H a s FONCEU T O OLCLARE MARTIAL L A M IN
TEIiRAN AND E L E V t h OTHER C I T I t S I N RESPONOE 1 0 M A S S I V k
OEIIONBT~ATION~. UY T H t t N D UP OCTOBERI Y T U I K E S AND
018OROERJ HAD BELOHE n I U r S P R E A D . O I L PRODUCTION HA0
DROPPED O R A M A T I L A L L Y ~ AND i n € GOVERNMENT A P P A R A T U S W A S
CEASING T O FUNCTION. n x T n n r s s I v e RIOTING IN E A R L Y
NOVkMO€Ur TUE CHISIS n A o u t c o n t FULLBLONN AND A
MILXTARV G U V t k N M t N T WAY I N b T A L L E U .

TOOAY. THE S I T U A T I O N I N KHAN AS WE & t E I T AT T H I S

dOMCNT CONSISTS UP THE t O L L O * I N G E L E N E N T S I nIOEbPnEAD
S T R I & E 8 AND UEflUNBTRATIONS HAVg BROUGHT THE I R A N I A N
LCONOMY TO A NEAN HALTI MLNY PEOPLE, AT L L A S T I N TWE
M A I N C f T I t b ~ A n t NOT UCIHnING AN0 ARE SUPPERING SHORTAGES
OF KEY connovrrlts. r n t MANRING SYSTEM n A s NOT ~ E E N
FUNCTIONING AND P t T n 3 ~ E u nPHOOUCTLUN DOE& NOT n t t T
G U M t S T I C NtEUS. A t T l V l b f N E L I G I O U U LEADERS AND MANY
MEMBER5 OF THE ~ U L I T I C A LUPPOS!lION HAVE BEEN P R e 8 S I N G
ron tne s n ~ n . s L $ i n e o r r : t utrrarune F n o n OR C o n n x 6
ABOICATIUN, THE b H A r HAY L E F T I U A N UN VACATION, A
dCPREb€NTAf:Vt NLGENCY L U U N C I L HAS BEEN NAMkO TO PERFOHM
ITY CON~TITU:IONAL FUNLTIONS :N THE r e s r N c c or T n E snrn,
P W I k t M!NlSTEh 8 n K t i T l ~ u .N~t n GOVkRNMeNT r A C i 8 THE TASKS
UP R t Y T O n l h L NORMAL L : F ~ I N T H t COUNTRY AN0 R E C O N C I L I N G
POLITICAL t c t n t ~ r bT r 4 T n r v t OPPOSED EACH OTnEu.

I h 8HOR1, 1 R A H 6 A Y REEN TnUUUGH A DECADE AND A HhLF UP

NAPID GRUWTH AM SUC:AL LHANGL YHILC new POLITICAL
I N Y T I T U 7 I O N Y U4rE NO: L U U L V t V COMHENSUIATELYU THE P t O P L C
fl08T AFCELTLD YY C H A N t t ARL NOll DEMANDING A'GREATEM
NOLE IN JETEnIIrNANG I H I N S S FIJTuHE BUT HAVE NOT YET
FOUND OkDEMLY * b Y S OF f X P R t b b I N G T H E I M V I E W 8 ON I R A N 3 8
dT

NNNN
17ib341Z
ACTION
JS(l41 rso~Isr(iu)
OIYTR
C J C S l ( 0 2 ) C J C u r m l l D J S t 1 3 ) S J C S ( 0 Z ) J 5 C i l 2 ) JSBJUC
J31NMCC O I C n E V r t a l 1 bECDkP(B7) 8 k C D C F l A S O t P A ~ E l l O I A l D l A [ l ~ d :
NMIC
cnc cc oc
--
HASHINGTON
C8AF kAYHINGTDN OC
C N O MASHING?ON DC
C8A UASHINGYON OC
FILE
(USS)

TRANSIT/0170328/Yl7flS42Jd~0I14IOR~l7ldJJ0
O r RUEMCAA 9 2 2 5 4 8 1 7 1 3 2 8
Z N Y ccccc zzn
0 1 7 0 0 3 7 2 JAN 7 9
f n SECSTATE a r s n u c
TO RUEMAMlAMtMlAvSY AMMAN IMMEOIATE 7 8 7 3
~ U U ~ B E / A ~ E M B ~UCIRU~ SSY InsEoIhTii b397
~ U ~ ~ E G ~ A M C N B ACAIUO Y S Y xnnLoIATE 4880
NUEMDM/AMEMBASSV DAMASCUS l M l 4 k D I A T E 2 7 6 3
I?UCWJM/AMCUNYUL J E W U S A L C ~ I M t I t O I A T t @ 3 b 8
a u u n n A / r n e n u A s s r JXDDA I n n t o r r r e 7 1 1 4
I?UCMTV/AMEMBASSI TEL A V I V IMMBDIATE @I#&?
ttUUMtI~/AMtMUASSY TtMUAN I M M t U I A T E @ I 8 0
UUOfiAH/AMEMBAhSV MANAMA 3 0 8 9
I?UDKUT/ANEMBAYSY RABAT D d 3 4
4UUMNS/AMEMBASSv SANA 1 3 7 5
~ U U ~ T I / A M ~ ~ B A Sf S . eYI r o C x t i n 1
MUDKUR/AMEMBASSf T U N I S 0 5 2 1
U U U M ~ ~ / U S M I S ~ S~ ILN~JYI 7 8 6 8
dUOMDH/AIICONStJ, OHAMWAN 2 2 5 6
RUPkGVIUSMISbION LCNEVA 1 8 7 8
N U U M K ~ / A M ~ H B A S S rYn h u t u u n US76
UUOTC/AMUIUASS~ LONDON 6 3 ~ 6
n u e n m o / r n E n e * s s r M08C01t 5554
R U f H N A / U S M l S b I O N USNATU P L l 8
I?U?NPS/AMEMUASSY P A R I S 3 5 4 7
~UCHUO/AMEMnAYSY ROME 4 7 3 2
R U i H O T / U S M I S b I O n USUN NEW YUUK 6 3 3 6

PAGE 1 C O N P I D E N T I A L
 ,EPARTMENT OF DEFENSE
NIYTCHIEFS OF STAFF
MESSAGE CENTER

PAGP 2 C O N F I D E N T I A L 24Y.ild
NUQMSIIAMEMBABSV AUU D H A # I 1 4 3 6
A U E H C R / U I I N T BAGHDAD 0 5 9 4
RUOMOOIAMLMBAYYY DOHA 8 8 3 6
RUOMKWIAMEMUASIY 6 U W A I l 5 5 5 5
RUCMOL/AMEMUASIY BONN 1 3 8 4
RUCKJCSI SECOEF UAIHOC 2 7 4 1
RULKJCI/ JCI w A s n o c ZJOU
UUCAIIAI C I A rrsnoc z e z ?
RULAOWY/ N I C WASHOC 1 7 5 4
RULHIA/USICA
R U I N A A A I U S C I N C L U R V A I H I N G E N GE
ZEN/AMEMPAIIY A L G I E R S POUCH
'a1
C U N F I O L N T X A L

L I M I T L O O F C I C I A L U I E I E C T X O N 8 8 OF 9 9 I T A T L 9 1 9 1 b 4 I 8 0

CINCEUR FOR POLAD, I L L A V I V FOR PA0, D E L I V E R I Y O A.M.

C U T U ~ E COUI~E ANO IHAPING rngxn o r N ~ESTINY.

WHY AN L X P L O L I O N ? W I T H MIND8IQHT, THE I T O R V APPEARS

O L C L P T I V L L Y CLEAR AN0 B I M P L E r BUT I T I S NOT SO I I M P L C .

I O M L ANALVUTS MOTH I N AN0 OUT O f COVORNMCNT HAVE POINTED

OVLU THE V t A R s t o VARIOUI roxnra o r w r r K n r s a IN THE
I R A N I A N ECONOHIC, I O C I A L # AN0 P O L I T I C A L I Y I T E M I . 61
N I O ~ l O l 6JUST~ AS THE LEAOIRSHIP, I N I R A N BEGAN TO NEACT
TO OROWINS DISCONTENT# A N A L Y I T B I N WAIHINGTON WERE P O I N T -
I N @ OUT THAT I R A N ' S R A P I D tCONOMIC GROWTH H A 0 NOT PRODUCED
P O L I T I C A L P A U T I C I P A T I O N TO MATCH AN0 THAT THE GOVEUNMENT
UOULO P I N O I T N E C E I I A R Y TO OHARC P U L L T I C A L POWER MORE
BROADLY.

S I N C E 1 9 7 8 A NUMDER OF DEVELOPMENTS HAVE RIiXNPORCEo

EACH OTHER TO DEEPEN L X I S T I N G O I B S A T I S P A C T I O N S AN0 TO
ACCLLEUATE THE CUSII IN UNPREOICTAULE WAVI. row o r
THOIE ISIUOS HEHE 8 T I a u L A T L o U Y THE V E R Y SUCCLII or tne
ECONOMIC MODERNIZATION I T I C L F . AN ECONOMIC OOWNTURN k l T H
SHARPLY INCRkABEO UNEMPLOVMCNT AN0 I N F L A T I O N AOOEO TO
OIICONTCNT A8 H E L L A8 TO A POOL UP UNEMPLOYEO WHO NO
LONGER H A D A s T A 6 r I n EXIITING e c o N o n r c ACTIVZTY. WHILE
tnr IRANIAN G o v e n N n E n t WAI TAKING CERTAIN ~ T E CTO~ ALLOU
PAGE 2 C O N F X O C N T I A L E l 1l l l 9 l
f n t t N E X P ~ C ~ S ~OF
O Nc H i T i c x s n ANU T O I n P n o v t 176
VCUFOttnANCF I N ~SSVRIN~ HUMAN UlGHTS, B A S I C G R l t V A N C t S
U~MAINED, IN T ~ I S C O N T ~ X T , n r s s l v E ANTI-GUV~YNNCNT
DEIION~TWAIIONS PNOTLSTING ~ S P ~ C UF T THE
~ s n * n r s PRoGuAn
TOOK PLACE I N E4MLY 1078, TMk U t G l N N I N E OF THE CYCLE OF
A C ~ I O N ANU CUUNTkHACTIQN TnAT n A s CHARACT~IIZCO Tnt
I R A N I A N L C E N t b I N C E THtN.

T ~ E1 1 8 t J t d A M ~ A D THE NAIN ISSUE F o r T n e IWANIAN

NENT I d TO € 4 0 T A E BLDOOSHCD AND REBTORE OUOLR 8 0 A
EDVEIN
NEm NATIONAL C U N C ~ N S U SC A N n t f a n G E D ON no* IRAN 8HOULU
BE GOVEUNEQ AND ~ n r rITS ~ n I U n I T l t 8A T HONE AND AUROAD
r H O U L 0 YE. f H t I M H E O I A T E C H a L c E N t L I S FOR THE REGENCY
COUNCIL ANO T n t N ~ W CIVILIAN GOVERNMENT T O WIN ENOUGH
POPULAR bUPPDkT a 0 THAT T H t V I O L k N C t CAN L k t N O L O AND
NORMAL ECONOHLC A C T I V I T Y CAN a t W t S r U R t D . I N AOOITIOh
TO ENDING r n t s u t r r n r N b H n l L n P ~ O P L E n r v E ~ X P E R I L ~ ~ C L U
I N HECENT MONlMby I ? I S k S S t N T I A L TO CUEATE AN
ENVIYONbItNT FUN N A T I O N A L O k L I Y E R A T I O N S ON A LONG-TCNH
P O L I T I C A L YOLUTION ? O H I R I N ~ bPWOBLLMS.

I N A COUNTNY A5 C U h P L t X AS :kAN Q U i C & S O L U T I O N 8 ARE NOT

r o BE ~ X P E C T ~ L I . IN A COUNIUY d n a c n n r b BUFFERED su MUCM
v I O L ~ N C E , T ~ t f i E * I L L BE NO P A I N L ~ S SANSWERS. DOnEdllC
P:ACt AND PHOB4dLY C O N b I D k R A b L t TIfiE W I L L U L NEEDLO FOR
:US I R A N I A N PEOPLE TO WONK OUT A NEW CONSCNOUd ON T n E l u
POLITICAL FUTUR'. X T i s X R P U ~ T I N T T n A T THIS P R O C E ~BE
~
UeOEkLY. ME OANhUT P H t U I C T nHAT D I R E C T I O N I I A N W I L L
Ch0OSE.+ 8UT I R h N I A N S ALONL n U 5 T M A h t THC U E C I S I O N ,

rnc d U E s ? l u ~rltisr FHLIIu~NTL.V POSED A ~ O U T ~ n I tN P L I C A T I O N ~

f n E c u u u t ~c ~n l s l s IN IRAN :SI 0 0 ME SEE r n E
: N b T A U I L I T Y LN IRAN ALUhC u i f F U t C t N T O E V E L O Y H C ~ T S I N
A F ~ H A N I S T A N . NOMlt4 AND SOUTH YtMEN, THC n O n N OF AFNICA
Ab PAECCS I N A PATTERN OF I N b T A B I L l T Y N h I C H W I L L CkANGE
THE P O L I T ~ C I LO R I E N T A T I O I ' ~ UF W E 8 T U A T t G I C H I O O L E i A S ? ?

tiT
#22L4
ANNOllS
CLH t a s
 DEPARTMENT OF DEFENSF
JWl CmER Of SlUI
M E W E CENlCl

vzczcn~~a48 C O N ~ I D E N T I A L ZYUW
MULT 03Y44
I L C T U 7 OF 9 3 Y Q 6
ACTION
J3(14) ASDlISA(l0)
OIIlTU &7-4#9
C J C S I ( 0 0 ) CJCS(Y1) UJSC83) S J C b t B Z J J S C 0 2 1 J 3 1 J H C

-- J3tNMCC O I C UEVn(m1) I E C D C f ( 0 7 ) I E C D L f t A 8 D I P A ( P l ) D I A I D I * t t u l
NMlC
CMC CC RASHIN!iTON UC
I
-
(0331
C I A F WASWIhGTON DC
CNO WA8MlNGTUN DC
C I A YASHINGTON DC
FILT

T R A N I I T / B ~ ~ B ~ ~ B / u ~ ~ ~ ~ ~ ~ / B ~ B ~ ~ ~ T O ~ O ~ ~ O ~ ~ Q
DL RULHCAA M 9 9 5 4 B I 7 B 3 S B
Z N V ccccc zzn
0 1700372 JAN 7@ IMMEDIATE
f M 8EC8TATE NASMDC
1 0 R u L a ~ n / A M L n B A 8 8 v AMMAN I M M L D I A T C 7 0 7 9
RUUMbE/AMEHBASSV B E l t t U T I M M E D I A T E 8 3 0 1
ttUEMEG/AMEMBASSV C A I R O I M M E D I A T E 4 9 8 1
UuiMDM/AnLMflASsV oAnAscu8 xnneotrTc 9769
dULHJM/AMCON&UL JERUIALBM IMMEDIAT( 9 1 8 9
RUUMRA/AMEtlBASSV J l D O L I M M L D I A T E 7 1 1 8
a u L n T v / r n e n e A s s Y TEL r v l u I M N L D I A T C 0 8 0 s
RUUMMR/AMEMBAIIV TEHRAN I M N E O l A T E 0 8 # 1
I3UOMAH/AMEMBASSV MANAMA U Q 0
RUOKbT/AMCMIAISY RABAT 0 0 1 5
RUOMNS/AMCMBASSY 8ANA 1 3 7 6
RUYMTI/AMCMUASIV T R I P O L I 7 1 8 9
RUDKKR/AMEIIBASSV T U N I S 0 9 2 8
RUOMZNlUIMlIbION B I N A I 7861
i?UUMDW/AMCONSUL OHAHRAN 2 1 8 7
UUfHGV/USMlSbION GENEVA 1 8 7 1
RUPMKM/AMEMBASSY KHARTOUM 0 8 7 7
RUOTC/AMkMBASSV LONDON 6 5 0 7
RUEHMO/AMEMBASSV MOSCOW 9 8 5 5
YU~WNA~USMISSIDN UINATO alto
UUCNPI/LHEMBASSV P A R 1 8 S S 3 8
RUFMkO/AMEMUA8IY *ORE 4 7 3 3
dUEMOT/USMISBION U8UN NEW YDHK 6 1 3 6

PAW 1 C O N f I D C N T I A L
PAGE 2 C O N F I D E N T I A L
H u u n u I / n n c n B A s s y A Y U DHAYI 2437
I4U&HCR/USINT BAGHDAD 9883.
HUUMOO/AMEMBAIYY DOHA e e a t
u u u n n * / r n e n e r s s v K U ~ A I T sass
UUFHOL/AMEHBASSV YONN 1 3 8 8
a u t n J c s / SECOEF w ~ a n o c2742
Y U E I J C I / JCS NASHOC 2 5 0 1
r I U E A I I A / C I A HAlHOC 2028
9UEAOWw/ N5C WASHOC 1755
dUtHIA/USICA
HUSNAAA/U8CINCEUN V A I H I N G E N CL
Z E N / A M E M B A I S I ALGIERS POUCH
8T
C O N F I O t N T I A L

L I H I T E D O f F I C I A L U 8 E SECTION I 7 OF 0 0 I T A T C Y 1 2 2 6 4 / I 7

CINCEUR FOR POLAD, T E L A V I V FOR PAOI O C L I V g R @Y 9 A,#.

fOUU P O I N T 8 NhEO TO B E 8 T A T E O l

f I H S T , WE 8 OF COURSE, RECOONIZL THAT FUNOAMSNTAL C M A N 6 E I

ARE T A ~ I N G PLACE ACROII rnrc AREA or wcatcrn rrar AND
NONTHEASTEUN AFRICA--ECONOMIC MOOKRNIZATZON~ I O C I A L
CHANGE, A R E V I V A L OF R E L I G I O N , RCIUROCNT N A ? I O N A L I I H ,
DEMAND8 FOR OROAUER POPULAR P A I T X C I C A T I O N I N THf
P O L I T I C A L PROELIS. T H S I E CHANEEa ARC SENCRATED #Y FORCE8
d I l H I N EACH COUNTRY. WE M U I T O I I C E R C N T I b T O YETWEEN THER
ANO nesasr THE IMPULSE t o OVSR~IR~LIFY. ccononlc, IOCIAL,
AND POLITICAL OEVLLOPMLNT ARE C o n C L c x PROCLIIC~ wnlcn w r
S T I L L OO NOT FULLY UNDERITAND. OUR P O L I C Y I N THE FUTURE
A S IN THE P A S T am rerns WILL BE T O WORK ~a WE C A N Y I T n
THE COUNTRIES UNDERGOING THEdE CHANGEI TO H E L P THEM F I N O
CONSTRUCTIVE SOLUTIONS AN0 TO EMERGE FROM P E R I O D 1 O r
CHANGE N l T H NEW STABILITY. AS LONG A 8 T H C I C N A T I O N 8
ARE 6 L N U I N E L Y INDLPENOENT AN0 FREE TO P U R I U E T H E I R ONN
POLICILS WlTtiOUT INTIMIDATION, tnra WILL CONTRIIUTE TO
T n k ~ I N D OF NORLO N n I c n I r THE GOAL or rnc U N I T E D
$TATE8.

J k C 0 h 0 1 I N S T A B I L I T Y I N ANY COUNTRY I N A 8 T R A T L G I C AREA

BECOMES A FACTOR I N GLOBAL P O L I T I C O . YL ARE I N CLO8E
T O U C H N l T n OUR FMIENDI ANO ALLIEI IN t n r n z o o L E E A S T

PACE 2 C O N F I D E N T I A L 90111111
 DEPARTMENT OF DEFENSE
M I N T C W l t F S OFSTAFF
I E P A C f CENltll

VAbE 2) C O N F I D E N T I A L
A N J t ~ S t u H t R tANU snrnt r n t r n CONCERN T H A T m e SULUTION
J F THE P R O U L t h b I N I Y I N NOT I N C R E A I L THE DANGER TO T H C I N
OWN I N D t P E N O t N C t . WE M I L L CONTINUE TO WORK WITH A L L
OF THEM TO M I N I M I Z E T n A l DANGER. WE W I L L CONTINUE TO
M 4 K t C L t A n OUR V I t Y THAT WE 8HAR6 WITH THEM THE OUJEC-
TIVES OF A ~ S U Y I ~ G THL s T A e I L I t v , THE stcuaxrr, ANO THE
NATIONAL INOLPENIENCE OF E A C H NATION IN T n r AREA. YE
B E L I E V ~ uun c o n n o r ~ u ~ r o MILL
s r PROVIDE THE BASIS FOR
fUUTHER C L O S t COOPERATION.

TYIUO, OUU P U S I T I O N I N T H I b STRATEGICALLY IMPORTANT AREA

d I L L R t M A I N 5TRUNG OVER T H t LONG RUN A8 LONG A l HOST OF
T H t C O U N T H l t b T H t M t ARE ALLOWED TO PURSUE T H t l R OWN
P A T H S T O U ~ V ~ L O P M ~ANU N T PHOGUESI FREE rnon o u r s g o €
I N T ~ U F ~ Y C N C E . uun n t s p c c r FOR oxvtrsIrv ANO PLUHALISH,

OUR CNCOUUAGtMtNT OF HUMAN f'HEkOOM8 AN0 L I b E R T I E S , THE

A Y P t A L U f w E b T t U N ECONOMIC AN0 T t C H N O L O G l C A L STRENGTH,
ANU oun OELJICATIUN TO DtMOCRATIC P R I N C I P L E 8 A L L CVOKE
4 3TMONG R C S O N A ~ C EAMONG THE PEOPL68 AN0 N A T I O N 8 THROUGW-
OUT THE ARtA, THEY ALbO &NOW THAT WE ARE PREPARED TO
s u w u n l T n E I n U W N ~ F F O R T ST O STRENGTHEN Tntzan u r r E n a I v L
C A P A b I L I T I 6 S WITHOUT SEEKING A S P E C I A L P O I l T X O N F O n
O U k S L L V t b TUAT THkY UO NOT HANT.

FOUItTH, THE LnANGES ME AUK w I T N E I 8 I N G ACUOIa T H I S AREA

OF N t S T E R N AbdA AND N O ~ T H L A S T E R NA F R I C A CONTAIN THE SEERS
OF PUClbWESb AS W t L L AS T H t CAUILCI Of C R I S I I . SOME PARTS
OF T n x h r R t b AN^ AHONG ~ n rrstcrr t cuorxnc ANO R~IOURCE-
n I t a NATIONS OF ~ n r to n L u . s o n E A ~ EAMONG THC nos1
T R A D I T I u N A L AN0 T M t POLJWEYT. THE CHALLENGE HC AND OUR

CHANbt IOWANU CONSTRUCTIVC R t S U L T S --

F U I t N U L FACL I S MOW TO S E I Z E THC OPPORTUNITY TO CHANNEL
NOT S I H P L Y TO
REACT TO I T AS 4N U N U t k C O h k SOURCE OF I N S T A U I L I T Y ANO
CONFLICT, : N SAYING T H I S , Wk UO NUT H I N I M I Z C THE UANGEUb
POU A M t n I C A r r I ~ l t w t s ~ snu1
, UE WANT ALSO TO KEEP OUR
b I b M T S ON u i i A T * I L L dE THE I N T t R E S T I O f THE PEOPLE I N
T H I S AUtA.

dT
u22a4
AYNOIEQ
c L n 725

PACt J

NNNN
17034JZ
 OEPAKTMENT 01: I)EFENSE
JOINTCHlffSOFSlAFF
UESSAGE C E l l E l l

~ ~ L I L H L T Z ~ U S ~ CU /0M N C IU t N T IA L ZYUW
*uLT 2JY45
SECT UB OF 23b26
4C1lOh
JJ(14) AbUllSA(10)
UlPTk
CJCYI(P2) CJCS(al1 OJbtUJ) bJCS(02) JS(U21 J3lJUC
JJINMCC OIC n t V n C U 1 ) StCOEF(B7) S t C O E F I A S D I P A t Y l ) O I A l Dl*t:UI

.. NnIC
CMC CC nASHINGTON UC
C I A F d 4 b h I N b T O N DC

- CkO WASHINGTON LJC

CSA W A S H I N b l U N OC
FlLt
(,a31

l~4~5IT/d1?UJ31/~170~44/d@Y~l~~O~~l7~3~~
JI NUtUCAA 4 2 2 5 4 d l 7 8 3 J l
l N 1 CCLLC L z n
.I l f U U 3 7 L J A N 7Y
~ C C S T A *TA~~ R U C
ra ~ u ~ n ~ ~ / ~ n t nA MnM A~N s I sM vn t U I A l E 7 9 8 8
* t l u n t I t / A M E n b A b S V U E I U U T 1 M M t U I A T R bag9
r ~ ~ t M E G / P n t M B A b SC i A I U O 1 ~ 4 M t U I A l k4 2 8 P
*tiLMUM/AUkMbASbV OAMASCUS 1 M M t O l C T R 2 7 7 R
I~HJM)AMCUNSUL JEUUbALkM l n n t 0 1 A T E D l b m
41luMu4/AMtMBAbsY J I D D A I H M k D I A l E ?lib
dUcdTV/AMtMt4AS$V TEL A V I V I M M L D I A T L U 8 0 4
* ~ l ~ M h M / A n t t l @ A s STEHYAN
Y I M M k D l A T k 0512
* u ~ M b H / A n t f 4 B A S S Y MANAMA 3 U Y l
* ~ l 3 R U T / A n t n u ~ b ~YABAT Y SUB6
4odMNY/AkitnbASbY SANA 1 3 7 7
.JJMTI/AM~MBAJS~ TYIPOLI 7 1 8 ~
.dUMKU/YMtPlHAS51 T U N I S Ub24
~ u u M L ~ / u b n l S ~ I SUI h NAI 78b2
r r d n u n / A M C O N a b ~ O ~ A H U A N 2238
~ u P n L v / u b M l S r I bGENEVA ~ 1872
*udfi6M/AfltMtlASSI KHAYTUUM Y 8 7 8
~ I u T L / A M ~ M U A J S Y,ONDON OJ9B
~ u r n n ~ t ~ n t ~ nF O h Ss ~ aO ~
M5 5 5 b
* G I P M I % A / U ~ M L S S I U ~U ~ N A T UZ ~ P Y
4dPNPS/AntMbALbf PARIS 5539
~U~MR'O/AII~M~A~SV *OMk 4 7 3 4
~ J L H U T / U S H I S S I U N USUN NCW YOUK 6lS7
PAOC 2 C O N F I D E N T I A L
w u m u I / A n i m e A s s v ABU DHAMI 2 4 3 8
dUEHCR/USINT BAGHDAD 9396
nuunoo/AnEnBAssv oonh seae
dUOMKW/AWtMBASSY KUWAIT 5 3 5 7
RUFHOL/AMEMBASSY BONN 2 3 0 1
RUEWJCS/ s t c u E r MASHDC 2 7 4 3
YUEUJCS/ JCS * A s n o c 2 3 0 2
WUB!IIA/ C I A mASHOC 2 0 2 0
N U E A D W WNSC ~ WASnoc 1786
~ULnIAIUIICA
AUSNAAA/USCINCEUK V A I H I N G E N b E
ZEN/AMEMBASSY ALGIERS POUCH
8T
C O N F I D t N T I A L

L I ~ I T E OO F F I C I A L USE SECTION B B OF 0 Y STATE l l 2 2 b l l 0 8

CINCEUR FON POLAD, T E L A V I V FOR PA00 D E L I V E R BY S A.M.

d.8. POLICYI

U . 5 . P U L I C Y 1 O r A n O I R A N HAY BEEN BASLO ON THREE CONSIS-

TENT PRINCIPLES A S EVENTS THERE n A v E EVOLVED O V S R TnE
PAST SEVERAL MONTHS1

i s WE H A V E n e P E A t E o L Y MADE IT CLEAR DECISIONS

AFFECTING THC FUTURE OF I R A N AN0 THE R E L A T I O N S H I P BETWEEN
THE I R A N I A N PLOPLE AND T H E I R GOVERNMENT ARE D E C I S I O N S
~ n z c nnus1 e E n r o E IN IRAN B Y IRANIANI, YE ~ E E KNO ROLE
I N D E C I D I N G THOSE Q U E S T I O N S t AND WE C O N I I O S N ANY
EXTERNAL I N F L U E N C E IMPROPERm

2, t n t U.S. GOVLRNMENT AS wonn~o r r r n x N T n E INSTITU-

T I O N A L FRAMEUOKK OF I R A N UND6R I T 8 C O N S T I T U T I O N WITH
rnr DULY e s r A e L r s n r o r u T n o n x T I E s OF IRAN AS SPECITILO
I N THE I R A N I A N CONSTITUTION. THERE ARE C O N 1 T I T U T I O N A L
P R O V I S I O N S FOR CHANGE, AN0 WE SUPPORT THE D E C I S I O N S OF
TH6 I R A N I A N GOVEKNNENT WHEREVER AND HOWEVER WE CAN
APPROPRIATELY Mk HELPFUL.

J, WE MAVE SUPPLIRTEO I R A N ' S INDEPENDENCE. WE HAVE

TAKEN T n e P O S I T I O N NO OUTSIDE POneR ~ H O U L DEXPLUIT
I N S T A B I L I T Y I N IRAN--OR ANY OTHER COUNTRY--FOR I T 8 OWN

PAGE 2 C O N F I D C N T I A L
 DEPARTMENT OF DEFENSE
~IllTCHltROFSTUF
r r x r s r ernrm

FAGE s C O N P I O C N T I A L
ADVANTAGE. THE OVERRIOING AMERICAN OBJECTIVE FOR I R A N I S

SIMPLY tnrr IT SHOULD nrve ma r R s s o o n T O WORK OUT IT^

OWN FUTURE f U E E PROM SUCH XNTCRfcRENCC.

THESE P R I N C I P L E S HAVE BEEN A P P L I E D CON818TENTLY THROUbHOUT

THE L A S T VCAU O f TURMOIL I N IRAN, AN0 THEY WlLL CONTINUE
TO BE OUR G U I D E L I N E 8 I N THE FUTURE.

d I T H I N THE GENERAL CONTEXT OF THOIE P R I N C I P L E S WE HAVE

P u a r u E o T n m r K E Y OIJECTIVES~

F I R S T , WE HOPE TO SEE THE EN0 OC ~ L O O 0 8 M C 0 , 8 0 THE PEOPLE

OF IRAN C A N UETUNN TO NORMAL LICE. ONLV I N rucn cmcun-
8TANCEB CAN T H E U t BE RATZONAL D 1 8 C U S 8 I O N OF A POLITXCAL
~ O L U T I O N TO I R A h ' S CURRENT PROBLEM^ WHICH WILL RE8TOUE
S T A B I L I T Y THERE. WC W I L L ENCOURAGg A L L P A R T I E 8 TO 8ECK
POLITICAL ENOO B Y PSACSPUL MEANS.
ICCONO, n E W A N T T O MAINTAIN A c L o 8 e ANO PRIENOLY RELATION-
S H I P ~ X T HAN INDCPCNOENT, STABLE, AN0 8ECURC IRAN. WE
dELXEVE THE I N T E R E 8 T S OF I R A N AN0 Q r THE UNITED 8 T A T t 8
ARE CLOSELY INTENTWINLO, AN0 YE 8COU AN ENVIRONMENT O f
M U l U A L R U P E C T AN0 P O S I T I V C COOPeRATION. WS B E L I E V E
r n g s WILL ~ E ~ I V E T n f I N T C R E ~ T S OF IRAN, OF T n k UNITED
S T A T E S AND OF T n e mer WORLD.

THIUO, ME * ~ t uc S T A Y L E AND P R U ~ P E R O UIRAN

~ nnxcn CAN
PLAV I T S R I G H T F U L ROLE I N THE n L G I O N AND THE INTERNATIONAL
COMMUNITY. ME ARE PREPAWCOT O HELP IRAN--ON THC T g C n N I C A L
LEVEL, ON T H t GOVERNMENTAL L E V E L AND ON THE
J I P L O h A T I C L t V E L - - T O RESTORE I T 8 PRODUCTIVXTY AND TO
4 E C A I N THE I N T E N N A T I O N A L CONFIDENCE I T HAS €ARNE0 OVER
T H t PAST DECADE. THE RESUMPTION OF MAJON O I L 6XPORTI
NILL BE IMPOUTANT eotn T O THE E c o N o n v OF IRAN AND TO THC
ECONOHY OP THk WUULO.

d E B E L I E V E T H A I THESE O B J C C T I V L S SERVE NOT ONLY THE

I N I E U E S T S O f OUU OWN CCIUNTRV BUT A L 8 0 THE INTERE8T8 O r
dT
a2254
ANYOTES
CLn 7 2 8

PAGE S

NNNN
1veaaa
 DEPARTMENT OF DEFENSE
1 0 1 N T C ~ E I S O FSTAFF
Y l X A G t CEYllR

VZCZCMLT~IO CONIIOCNTIA,L zruw

NULT 25948
- - - . 8.9 OF
8LCT . P- 3 D-P I
ACTION
JS(141 A I O l I I A ( i @ I
DXYTR
C J C I t C b Z ) CJC5(81) DJ1C85) )JCI(EO> J l l E 8 1 J I l J R C

--- JSINHCC OXC REVU ( a t ) d l C D L F ( @ 7 1 8CCDLf 8 A8Dt?A(@1]

Nnxc
CMC CC dA8HINGTON DC
C8Af WAUt4INGTON DC
CND WAlHINGTON DC
R I A 1 DIA (10)

C I A WAIIIINGTON DC
FILE

ZNY ccccc zzn

0 I 7 E B S 7 Z JAN 7 0
FM O C C ~ T A T E wrsnoc
TO RULhAM/AMEMBA88Y AMMAN IMMEOlATE 7 0 8 1
RUOMBL/AMEMBASSY BEIRUT lMHEDIATC I 4 0 8
IUEMEG/AMLMBAUSY CALRD IHMCDIATL 4 9 8 3
RUEHDM/AHLtIBASSY o r n r r c u 8 I n n S D z A T e a 7 7 1
HU€HJM/AMCONSUL JLRUIALCM IHM60ZATE 0 8 8 1
RUOlkA/Al4EMBA8SY J I D D A IMMCDIATL 7 1 1 7
R u r n r v / A n e n B r s s r r r L rvrv Inmrorrrr ~ ~ o s
RUUMHfl/ANLHBASSY TCURAN IMHLOIATO 8 6 8 8
RUOMAM/AMLMBASSY MANAMA SBOD
RUDKUT/AMEMBA8SY UABAT 9 8 8 7
RUOHNl/AMEMBASSV I A N A 1 3 7 1
RUUMTI/AMlHBASSV T R I P O L I 7 ) 8 4
RUOUKRfAMEHBASSV TUN18 8SS4
RUUMZN/USnlSSION 8 I N I X 7 8 1 5
WUOMDnlAHCONSUL OMAHWAN2 9 8 0
HUtHtV/USMISSION GENEVA ) a 7 5
RUUHKH/AMSMbA9SV RHAHTDUM 1 8 7 9
a u o t c / A n k n n A s s v LONDON ISDO
R u e n n o / * n S n t u s s v no8com 5 5 8 7
I U F M N I I U Y M I S S I O N UsNATO '4181
RUINPS/AMEHBASIV PAR18 5 5 4 9
R~fHNOtAHEMBA&SY ROME 4 7 5 9
RUBHOtlUSMISS10N UOUN NcW VORK @ i s 8

PAGE I
 ,PARTMENT OF DEFENSE
mNT CHIEFS OP OTAfF
MESSAGE C l N l E 1

PAGE 2 C O N F I D E N T I A L
~UUMLI/AMEMBASSY AUU onrrx arao
ttUEHCUlUSINT UAGHDAO 9 5 0 7
#UUMOO/AF~EHBASSV DOHA 8 0 3 0
n u r n t t r / r n c n e r s s r KUMAIT s35a
ttUfMOL/AnEH0ASSV BONN l 3 Y 7
R U I i K J C 8 l I E C U E F WABHOC a 7 4 4
a U C L J C I / JCS WASHOC 2 3 9 3
W U L A I I A l C I A UASMOC l D S B
I ~ u E A O ~ N / N I C WAlHOC 1 7 9 7
auEtiIAtusxcr
WUJNAAAlUICINCEUU V A I H I N G f N GL
LEN/AMENBA#IY A L G I E R I POUCH
aT
C U N C I O E N T I A L

LIMITLO OFFICIAL use F I N A L s e c r x o N OF OI ITATL etga~4tee

CINCSUR FOR POLAD, T f L 4 V I V FOR CAO, O L L I V E R 8 Y 0 A.M.

rnk IRANIAN PEOPLE, w f 1lELIEV.k THLY O f f E R A CRACTlCAL

B A Y I S FOM COOPLRATION.

I R A N I S I N THE M 1 0 8 T OF A HAJOR I O C I A L C R I I I B . WE HAVE

NO I L L U B I O N S THAT T H I S P R O C E I I W I L L B E RL8OLVCO S A # I L Y ,
ANU IT w o u L o s E n v E NO PURCOIL FOR US TO 8CCCULATC ON
FUTURE T W I I T 8 AN0 TURN8 Of EVENT#.

--fIR81r n t BOTH HAVE 8TRONG R L L I G I O U B HERITAGKB. THE

PEOPLE O f 6OTH CUUNTRISB B C L I L V L I N TMK IMPORTANCC O f
A Lire T H A T IS culoro UY HORAL r R r N c r r L r 8 . we e r L x r v r
T H O I E P W I N C I P L E S MUBT G U I U E A GOVLRNMKNT THAT I B TRULV
JUST*

.-SLCONO, WE s n A n c A e v L I r r IN T n r RQ I HT OF T n c PEOPLE
ro E x P R E ~ ST n E n I E L V L 8 P O L I T I C A L L Y THROUOH I N # T l t U T I O N #
CON~TITUTEO uv Trim. WE IOTH UCLILVC T n l T IT 18 FOR
THE IRANIAN PEOPLE T O orcroc now rnrr wru ~ O V C R N
 1)EPAKTMENT OF DEFENSE
JOINT CHIEFSOF S l h R
UISSaGI C I Y l I l

PAGE J C O N ~ I D E N T I A L 2.3848
T H E M S E L V E S ~ JUST AS IT 18 FOR T n e AMERICAN PEOPLE TO
CHOOSE T H E I R OWN GOVERNMENT.

9-THIRD, BOTH OF US B E L I C V C JN THE USE OF OUR NATIONAL

HEALTH FOR THE BETTERMENT O f OUR PEOPLE. THE U N I T L O
S T h T E L RLNhXNS k I L L I N G TO HELP I R A N DEVELOP THE P O T E N T I A L
O? TkC COUNTRY,

- r C l h A L L Y , BOTH AMERICANS AND I R A N I A N S WANT TO SEE AN

I R A N THAT I S TRULY INDkPENDCNT. WC HAVE NO A 8 P I U A T I O N
TO D I C T A T E THE P O L I C I E S OF THE I R A N I A N GOVERNMkNT.

ON THE B A S I S O f THESE SHARED V I C H S AND OUR CUNMON

INTEREBTS, W E M I L L MAR€ EVERY €?PORT TO AIYURE A CONTXNUCD
CLOSE R E L A T I O N S H I P BETWEEN THE UNXTCD S T A T f S AN0 I R I N .

I N L O O L I h E T O THk FUTURE, THE U N I T T D 3 T A T Y S W I L L CONTINUE

TO WORI WITH THE LEAOERS OF I R A N I N T H E I R EfCORT TO
C O N l O L l O A T E THE C I V I L I A N GOVERNMENT WITH C O P U L I H SUPPORT
?ON N E S T O H l N b ONDER AN0 NOUNAL L X f C AN0 U U I L D I N G A SOUND
P O L Z T I C A L F O U N O A I I O N FOR I R h N P S CONTINUED PROORES8 AND
INOEPENDENCk. VANCE
UT
I2204
ANNOTtS
CLH 7 2 5

PAGE J
NNNN
17(654SZ
 C O N F I D E N T I A L ,
e$-f~
i l r h l \ V ES9014Pv C;3P
QF r CMIV 001927
Tlr 9L1D\;hC X i 5 4 4 d i C l E . 3 5
7'7 I r - P C 7 z r
i 21+35Z J E Y 7 3
4"' AMEFl$A5SY COP:'"IASE:$
"0 ~ ~ ~ ' ~ ~ C / S E C S I YAS!!DC
. ~ T Y . 7776 INFO:
ALL P C COLLPCTIVh AMB
!l\OXPR/AYEVIBASSY TERRAN PI55 DCM
i I ADM
POL2
PM
3 9 J S S E I S A L S 3 FOR USEEC

i 2 12.0(5: 2 3 s 1 / 2 F / P 5 ( G ? I k 6 L z ' , PAHION ?..) OX-? CHRON R 9

T f l S r : L:'C, PAR,?, PL'YH. DA, Fii. I F , X B
ST'FJtC'T: FdENCI! P O n L I 3 N M I Y I S T Z R F R A N C O I S - k 3 h C h T ' S V I S I T T;
COFENBAJEN
1. ( C ) ENTIRL T E S T .
2 . CllVYARY: MEA C F i I C L ' Oh! J f U r J A i i Y 26 i R O B I i J L i l [IS r i I T d
A A E I I E b OF F R E N C d FO3I:ICN EtIljISTXA FaAhC3IS-I.ONCk;T'S
Phi!" JANCARY 23 V I S I T TO C7Yr.NHAGLN. T C P I C S P I S C U S S E 3
IhCLl'nED T!.P i,:UROl'ZAN NONiTIiiY PYSTiM (I::) AlvU -

FYC/YO':ETAR? COKPLASATION AMOUNTS (MCA) L I T i A G E T116 ,

K C C~UNCIL/PAP.LII?!ENT BUDGi"1 P I S P u T E , DISARPA-
N r Y T , 19AN AND I T S 1MPLI;ATIOVS FOR A 14IDCLE LAST S E T I L E -
"h?, ANU ItiDO-CBINA. L N D SUXFAHY.
:.
4
F?ENCB FOHEION MINICTEH FSAY7OIS-PLICET AARIV6D
T'! i F h 3 I N I ; J A h L A R I 73 A!vP L E j T AT 12:C*.) FU 'I,!!: SXPlF
?;I:?*. V I S I T $ A S ONZ C F A S?IiI:'S .!L I S :'A!~riTA..IMC
'.'@:.L.:kIb!C H I S APF'OIETML~~?. Ir1T.r. 1 N COPii;nhGaM, :i.-
" P C 4 + A T , ? "CU3 Y I P T I N G * I ? V LP:II!.r: k'C'?;.I(;h M l , 4 I S T & a :IEuNING
~ l A VhHY I'Lb 01: . K O F k I C I h L C ,
L . ' I $ ' T . I F F ~ , s ~ ~4 h
F b I L C I I I I BY P. YOR; Iti; 3Illhl'P H O S l P D bY r . r 9 1 S W f F i : i l S i l i .

- . . ..
I ~ h Itic,
: rrs, L I V . 4':: CY
V G N t l b i Y CPIPL:USX?.IOH
I::,)lih.!'S 'Tr) IkkLI;C5ATIO'! i E Y f , AN2 T ~ L LDI'?CII:
31 -'

I,?? ' r . i r i 1 H i : LC COJNCIL A N 9 T 5 i ' r I R ( 8 P i A Y T A ~ L I A Y L ' ~ ~

. ) \ r z TLL BUDGET. VFA 3?II!:1'3 LAID T!'RT T':? DAiiaC
S 4 l "?IS-TG-EIL WIT? T ~ E I . ? V I S I T 0 3 0;. T B E S E I S S U S S .
5 , TI'S WOi('IN3 D I N N F 3 k A 5 " M S H ? DJEjNCR P d A I Y ~ D I I ~ ; . "
T " b6W 7 i i E B C k ?ORLIEN Ml;JISTER S P 3 i E 3 3 ? I S 23VEiik-
t! v I ' S !~,iOl'OZFD C O N F 2 1 ' Y C F Obi i ! I F A R I l b M ~ h P I I iil' OP:;
( C I L I ; T F ? D T S I I A T I O Y I N ~ , ( i . ) i : I Z L LATTER'S I I ? P L I C A T I O ~ * S

C O N F I D E N T I A L
 PAGE T Y O C 0 N F I D E N T I A L 19;

'J(!8 I P?IC EAST SETTLEMENT: ANC T h t SI'CCATION IN

SPUTi;TAST ASIA.
A . ON TPS CDL. FRANCOIS-PONCET PUT PRIMARY EYPHASIS
Oh PPTNCIPLPS !TNDERLYItJG TBP PRCPOSAL-4.6.. TBE RIGHT
ny LVFaY CDUNTRY T 3 ASSURE I T S OWN SECURITT. KF CON-
FIHIISD THAT CONYLNTIO:.lhL FOrCPS d E 9 E TO bi: ADDilESSE3
F I E S T AKD FVPBASIZED THE IMP'IRTANCE OF S4TISFACTORT
PfiOVISION FOR VERIFICATION. 91 IHDICATETI THAT TdE
FRENCh ' b l B R E PdEPARED TO 81 PATIENT ABOUT PROGRESS TOWARD
CONV'qSING SUCH A CONFELENCE (BE DREk' A PAhALLLL
1'3 ThE 19-15 YPARS ThAT THE USSR DEVOTID TO
FU?.S!:IWL: T:'r'IR PROPOSAL 1 0 9 A CPCF).
R. FSANCOIS-PONCET dAS P E S S I M I S T I C CONCESNING
A9AQ"BT .
IRAN'S gUrORE AXD SPOIK OF L I K 6 L T " I N S T A B I L I T T AND
H E WAS CONCERNED T:IAT, AS A RbSULT, EUROPS
WOUL9 L A T T i l IN THE TSAR SXPERI2VCE D I F F I C U L T I E S IN
C I L SlrPPLT.
C . TEE FREKCE FOREI;# MI61STFit BELIEVEn TFAT EVPNTS
I k I?AN SERVEC TO INCHEA$E TEE FEELINZS 3 1 INSECURITT
IN I S S b E L AND EGYPT. ISRAPL, CONCERNED INTER ALIA
K I T H FUTCISE U I L S L ' P P L I : . ~ . ~ 0 1 1 ~B7E L a s s P L E Z I B L E I N
CONC!,VDICG TEE B I L A T E R A L ~ A C R E E M E NV T I T Y E G Y P T - A Y D LYSS
t I L L I N G T O , T I E L D TZRhITOHT I T PRZSENTLY OCCUPIES.
RiIG!'TEE;ED INSECURITT WOULD l L S O RENDZR MORE DIFFICULT
CONCLSUION OF 'PHL BROADEK Y I P !APT SITTLIYENT
Pt4YI:AbED AT CAMP CAVIC. FRANCOIS-POdCET SAID TnAT
T L v , 5 F CIRCUYSl'ANCES COMPLICAPZ D?:FINITIOS OF AE BC
??:.T:IR? I F ?RE ISRAELI-4iYPTIAY AGREEYLNT I S CONCLUDED.
!'t3 .41;DP? T!!AT ~ o i l dUOKTLS ASO T P E E C COULD s r n P L r E A V G
AFPLAUDED CONCLUSION OF TRLAT ACRLEMFNT BUT NOW THP
ATPIICPRIATF EC RESPONSF #AS UhCLEAR. (LPFASST 3FFICER
PqhSSBD FOP 1LABORATION OF T L I S REMAR,. 9UT MFA OFFICLB
ZXPLIIIh'D T4AT NONE WAS C I V l N AT THL DINYFR.)
?. Oh IhDO-CPINA, THE FREICH FOREIGV MINISTER TOOK A
P O S I T I O N W B I C A M I A O F F I C L . ~C ~ A R A C T E R I Z E D AS T H E s A n a
L I N E j S TFL U.S. AND DANF? ARE TAlIYC: 1.P.. TPP
V I r T h A M F S I PRESENCE IN EAIPUCPFA WA5 UNACCTPTABL4;
?O*F AID SANCTIONS ARE I Y I I I C A T F ~ , BUT T:L DOOR SBOULD
'i L i l T OPLh TO9 THF VIETNAMLSZ I F THt'T REPILT-- TYE
A "POTLNTIAL PARTNGR
WANSLEL
.
V I i T ~ A K * . b F St3ULD IlNDEfiSTAN3 THAT THE WEST RPMAINED

FT
u 3544
 0. LABCR - 4 0 D E b I N I T E r'LANS HAVE PEEN ITORI tILAlL'D 1 0 OFA!.
:'LA:( iklE QUESTIGII O F HOW T O HANDLE T H E LABOR Q U E S T I O N DEYOllD
I .t 1 STUDES CONCERNING I N C R E A S E D B E N E F I T S AND S O C I A L S E R V I C F S PcJR Th E
UOR '(i!:Q FORCE.

C. INDUSTRY - l(HOMLINI AND H I S ADVISGHS Alt! Sb111

CiOOTFMPLATINQi THE N A T I O N A L I Z A T I O N O F ALL MAJOR P R O D l I C T l V E ci f S I I I
'I
T i E I R A N I A N ECONOMY. B U S I N E S S E S BELONQINO T O B P H A I ' S P A R Y 1 t ~ L A h 1 . y
THE M A J O R ~ A P P L I A N C EI4ANUFACTURER "ARJ", IS PROMINENTLY C I T b O 114 T H I S
F :SPECTI W I L L BE T H E S U B J E C T O F S P E C I A L ATTENTION. NO REFI. ?LPIIS i ud
1 7 i l THE I J A T I O N ~ L I Z A C I O N WILL BE C A R R I E D OUT OR HOW I,I.?:O:~I,~!: .' I)
tOl!TROLS'OF THE P R 0 3 U C T I O t I SECTOR O F THE ECONGIIY W l l L LIF ~ : l r ' L , . ' :.I D
!IRE YET AVAILABLE.
D. BANKING - I N ACCORDANCE WITH I S L A M I C P R I N C I P L E S , D:'
NJ I JNGEIJ OPERATE I N ACCORDANCE W I T H ACCEPTED Y E S I F - N F R A C I I C E S 1t8'U
*S lILL
i I t l T O 0 WILL BE N A T I O ~ I A L I Z E D I BANKS WILL S T I L L LCAN MOllkY, JlJf 11!1 I.
i r CHARGE. I N T E R E S T , SHARING. I N S T E A D IN THE P R O F I T S O F T I 0 .lL,:-
i t I S E THAT THE LOAN F I N A N C E S AND ABSORBING PllY L O S S k S . PGl I C I t S
1&'?!7D S t V I N G S AND OTHER BANK TRAEISACTIONS REMAIN T O PI. tbzf~t I i

3. (SOURCE CiIMfiENT: T H E ECOltOHIC T H l l t K I N G O F Hli)r t l 1 4 I '+bD H I S

3'ITSGRS REMAIIIS VEilY I t r P R E C I S E AND WHEN P R E S S E D P L d C E f A I L 5 , 'i>C~i
I : 0'1 THE ISSUE OF HOW A ! I A T I O ~ I A L I Z A T I O ~ IP R G G P ~ , I ~ I D~ D E~ r a m l r n
, T H E ADVISOSSI : - s p o t D T H A T T H F DETAILS W I I 1. 0 ( *- 3 our. nuon
i l l E T H I N , ( I N G AI .'LARS T O B E NAIVE A I D IIAY ( 1 I 1 C t
r L 5L MEN HAVE TO LISKE HARD D E C I S I O N S t 7 G U T TIIE t C L 1l1,Y 'liD I T ,
~t 1, ,. ,

I ~LuUCTIVITY.)
4. ACC!.: I R h N , TEHRAN ( 4 FEBRUARY 1 9 7 9 ) . F l t l 0 R ~ Z c 3 i;!O.:
l.IT-10,438.
5. F I E L D DISSLM: EMBASSY AND ECOIlOMIC CO(IIt~:Ei c A f l b ~ r n13.
!r711T TO P A R I S , W!VAIT, J I D D A , ABlJ D H A B I , CEIPIAN, C P I 0, T F L A ' J I V ,
E A.iAlIA, ,
MUSCAT, hLW DELI41 M B U L , ISLAMABAD, YARACH ( ? R I ttCI?:l.
( S F I C E R S ONLY).
 - -
- -
?fP3PT CLASS S E C R E T WARNING NOTICE I N T E L L I G E N C E SOURCES &NO
X f i { i O S INYOLMO WOT RELYASABLE TO FOREIGN NATIONALS HOT
RFLEPSASL4 T O CDNTRACfORS C a COrIT3ACTOR/O)NSULTANTS DISSEPII N P l lcll
AW3 F Y T J ~ A C ~ I OOF N I triORNATIOH CONTROLLED BY ORIQINATOR.
RVW ( ~ > ~ E 0 9 3 -D R V D9C. 1 BY RECOFDED REPOHTI NG O F F I C E R .
cAfi 1 Y C L A S S I F I C A T I O I J S AND CONTRSLS OF-0VERAI.L DOCUkElri'.
.
ALL PATIC S
 CONFIDENTIAL
What Went Wrong in Iran?
Stanley T.Erudcro
Throughout t h e post-war p e r i o d
and p a r t i c u l a r l y s i n c e 1953, t h e
United S t a t e s m a i n t a i n e d a n e x t r a -
ordinarily intimate relationship
w i t h t h e S h a h o f I r a n and h i s
regime. W e were instrumental i n
t h e overthrow o f l e f t i s t h a t i o n -
a l i s t P r e m i e r Mossadegh and
t h e r e t u r n o f t h e Shah f r o m h i s
b r i e f European e x i l e . We s p e n t
several b i l l i o n d o l l a r s i n various
b i l a t e r a l a i d p r o j e c t s , many o f
which were w e l l conceived and much
a p p r e c i a t e d . Based on o u r s i m i l a r
r e g i o n a l s e c u r i t y i n t e r e s t s and
I r a n ' s c a p a c i t y t o buy, we h e l p e d
I r a n b u i l d i t s e l f i n t o t h e predom-
i n a n t P e r s i a n Gulf power. We had
t h o u s a n d s o f m i l i t a r y and c i v i l -
i a n a d v i s e r s and t e c h n i c i a n s
i n the country. We w e r e b a c k i n g
a s t r o n g a u t o c r a t who w a s f a r -
s i g h t e d enough t o p e r c e i v e t h e
need f o r n a t i o n a l development and,
a p p a r e n t l y , c o u r a g e o u s enough t o
take the lead i n the kinds, of
n a t i o n a l e c o n o m i c and s o c i a l
r e f o r m s which would l e d I r a n i n t o
t h e 20th Century. The list c o u l d
g o o n b u t , i n s h o r t , we h a d i t
made.
Yet when I r e t u r n e d t o T e h r a n
i n November 1978, a f t e r a n a b s e n c e
of 3-1/2 y e a r s , t h e Shah was on h i s
l a s t leg. American o f f i c i a l s were
t r a v e l l i n g i n armored v e h i c l e s w i t h
armed g u a r d s t o p r o t e c t them, n o t
a g a i n s t i s o l a t e d g r o u p s of t e r r o r -
S t a n E s c u d e r o s e r v e d two t o u r s i n
I r a n ; t h e most r e c e n t a TDY a s s i g n -
ment l a s t November-January. He is
c u r e e n t l y i n IO/UNP.
ists, b u t a g a i n s t mobs o f o r d i n a r y
Iranians. The Embassy and o t h e r
U.S. a n d GO1 i n s t a l l a t i o n s w e r e
protected against similar threats
by t r u c k l o a d s o f I r a n i a n s o l d i e r s
w i t h a u t o m a t i c weapons. Even s o
b o t h t h e Embassy and o u r C o n s u l -
a t e i n T a b r i z w e r e a t t a c k e d and
t h e g r o u n d s o f t h e l a t t e r were
overrun. L a t e r t h e Embassy
i t s e l f was b r i e f l y captured.
V i r u l e n t anti-American. f e e l i n g s
were sweeping v i r t u a l l y every
s e g m e n t o f I r a n i a n s o c i e t y , and
many o f t h e s t r e n g t h s o n which we
had b a s e d o u r p o l i c y had become
liabilities. The s i t u a t i o n g r e w
f a r worse a f t e r t h e S h a h ' s d e p a r t -
u r e i n mid-January and t h e t h r e a t
o f renewed and h e i g h t e n e d anarchy
is v e r y r e a l .
Clearly our lranian policy,
w h i c h had s e r v e d u s w e l l f o r
o v e r 30 y e a r s , had become i r r e l e -
v a n t and i n many ways h a r m f u l t o
o u r i n t e r e s t s some t i m e b e f o r e
t h e f a l l of t h e Shah. I t is
l e g i t i m a t e t o a s k what went wrong
and why, w i t h a l l o u r a s s e t s i n
I r a n , we d i d n ' t s e e t h i s coming.
 CONFIDENTIAL
A complete d e s c r i p t i o n of t h e
.vents and f o r c e s w h i c h l e d
t o t h e c o l l a p s e of t h e Shah's
dictatorship w i l l b e t h e s u b j e c t
o f s c h o l a r l y d e b a t e f o r some t i m e
t o come a n d , i n a n y c a s e , i t i s
w e l l beyond t h e s c o p e o f t h i s
Imper. However, i t c l e a r l y was
the r e s u l t of a g t h u i n e i n t e r n a l
revolution rather than externally
r ~ r c h e s t r a t e du n r e s t .
'Rather s i m p l i s t i c a l l y s t a t e d ,
t h e S h a h ' s system o f r u l e depended
upon a f i r m hand a t t h e t o p s u p -
1 , o r t e d by a r u t h l e s s s e c u r i t y
mechanism and t h e f i n a n c i a l c a -
vacity t o reduce d i s s a t i s f a c t i o n
through development programs,
o u t r i g h t s u b s i d y , and t h e co-
g ~ p t a t i o no f t h o s e who m i g h t o t h e r -
r l s e have opposed t h e regime.
r e a r s of repression, corruption,
mismanagement, sycophancy, hollow
~ r r o m i s e s , and j u s t g e n e r a l i n e f f i -
t i e n c y weakened b o t h o f t h e s e
~ ~ I l l a ro fs t h e regime and b l i n d e d
many I r a n i a n s , who a r e c y n i c a l and
d l a t r u s t f u l o f t h e i r government i n
any e v e n t , t o t h e many s i g n i f i c a n t
and w o r t h w h i l e a c c o m p l i s h m e n t s of
Imperial rule. Rapid moderniza-
t i o n and b u r g e o n i n g e d u c a t i o n a l
o p p o r t u n i t i e s a l s o helped s e t t h e
mtage f o r t h e P a h l a v i c o l l a p s e .
Two developments, i n my o p i n i o n ,
d e l i v e r e d t e coup de grace.
T h e f i r s t , a$d m o s t i m p o r t a n t ,
was t h e 1974 d e c i s i o n taken
hy t h e s h a h p e r s o n a l l y t o u s e
I r a n ' s v a s t l y expanded o i l i n c m e
t o force national development,
accepting t h e r i s k t h a t production
m i g h t n o t i n c r e a s e f a s t enough t o
meet i n c r e a s e d demand and t h e r e b y
offset inflation. When t h i s
d e c i s i o n was made I r a n was a l r e a d y
experiencing double-digit infla-
t l o n , and t h e c o u n t r y l a c k e d t h e
physical infrastructure, the
t r a i n e d manpower, a n d t h e mana-
q e r i a l expertise to absorb anything
h a l f s o ambitious. These defici-
e n c i e s were magnified by t h e S h a h ' s
d e v o t i o n t o h i s o u t s i z e d and
unnecessary m i l i t a r y buildup.
Consequently, i n almost every
l n a t a n c e t h e development programs
f a l l e d b u t i n f l a t i o n succeeded. I t
l a now r u n n i n g a t s o m e t h i n g o v e r 50
CONPlDENTIIL
31
percent. As e c o n o m i c c o n d i t i o n s
worsened t h e d i s p a r i t y i n income
d i s t r i b u t i o n became more o b v i o u s ,
the disaffection of the people
grew, and t h e c a p a c i t y o f t h e
regime t o u s e its f i n a n c i a l re-
sources a s a tool t o maintain
i t s e l f was d i m i n i s h e d .
T h e s e c o n d d e v e l o p m e n t was t h e
advent of t h e C a r t e r administra-
t i o n ' s human r i g h t s p o l i c y . Many
Iranians hold o b s t i n a t e l y t o t h e
belief that the policy of their
country has, since the l a t e 19th
C e n t u r y , b e e n d i r e c t e d by a
f o r e i g n h a n d , f i r s t R u s s i a n or
B r i t i s h a n d , s i n c e 1 9 5 3 , Ameri-
can. Some o p p o s i t i o n i s t s i f l t e r -
p r e t e d t h e human r i g h t s p o l i c y a s
a U.S. s t e p a w a y f r o m t h e S h a h
and a c o n s e q u e n t weakening o f t h e
Throne. They were encouraged and
became more a c t i v e . At t h e s a m e
t i m e t h e Shah, d e s i r i n g a p o l i t i c a l
.climate which would p e r m i t t h e
s m o o t h t r a n s f e r o f power t o h i s
s o n , and p e r h a p s a l s o a s a r e a c t i o n
t o human r i g h t s p r e s s u r e s , b e g a n
taking s t e p s t o l i b e r a l i z e Iranian
political life.
Generally speaking, Iranians
have a p e c u l i a r view o f a u t h o r i t y
- they regard it a s a b a r r i e r i n
t h e way o f i n d i v i d u a l accomplish-
m e n t . and circumvent
it w h e r e v e r p o s s i b l e . Once
c i r c u m v e n t e d , a u t h o r i t y i s contemp-
t i b l e ; a u t h o r i t y which cannot b e
circumvented is accorded g r u d g i n g
The S h a h ' s a b s o l u t e r u l e had
established clearly defined
Parameters of dissent. His
l i b e r a l i z i n g moves and t h e impact
o f o u r human r i g h t s s t a t e m e n t s
altered these parameters without
e s t a b 1 i s h i r . q new o n e s . Unwilling
t o b e l i e v e t h a t t h e r e g i m e would
l e s s e n its c o n t r o l s except through
weakness, t h e I r a n i a n p e o p l e began
i"
p u s h i n g i n a l l d i r e c t ns, a t t e m p t -
i n g t o d e t e r m i n e t h new l i m i t s o f
i n d i v i d u a l p o l i t i c a behavior.
d a t e t h e y h a v e n ' t found any a s t h e
S h a h was u n a b l e or u n w i l l i n g t o
To
t a k e t h e h a r s h measures which m i g h t
have r e - e s t a b l i s h e d h i s p o s i t i o n ,
and t h e new government h a s y e t t o
d e v e l o p t h e i n s t r u m e n t s o f power,
 CONFIDENTIAL
t h e m a n a g e r i a l e x p e r t i b e , and t h e
n a t i o n a l c o h e s i o n wh'ich i t m u s t
have i f i t is t o s u c c e e d .
At t h e a p p r o p r i a t e moment t h e
exiled Islamic leader, Ayatollah
R u h o l l a h KHOMEINI, r e v i t a l i z e d
h i s o p p o s i t i o n and became a
symbol and a f o c u s o f t h e r a g e o f
t h e Deovle. J u s t a s i t had i n
e v e r y s;ccessful n a t i o n a l revolu-
t i o n a r y movement i n modern I r a n i a n
history, the Islamic establishment
offered a respectable Iranian
umbrella f o r t h e c o a l i t i o n of
d i s p a r a t e o p p o s i t i o n e l e m e n t s and
l e n t t o t h e movement i t s i n v a l u a b l e
c a p a c i t y t o m o b i l i z e enormous
numbers o f p e o p l e .
T h i s same r e v o l u t i o n a r y c o a l i -
t i o n has brought about, d i r e c t l y
o r indirectly, t h e death of one
s h a h , t h e o u f t e r o f a n o t h e r , and
t h e temporary e x i l e o f a t h i r d
w i t h i n t h e l a s t 83 years.
h a s b r o u g h t down w h a t may h a v e
Now i t
been t h e l a s t shah. Of a l l t h e
s h a h s who h a v e r u l e d I r a n s i n c e
the establishment of the Qajar
d y n a s t y i n 1796, o n l y one h a s
come t o t h e t h r o n e t h r o u g h a n
u n t r o u b l e d t r a n s f e r o f power.
B'ased o n h i s t o r i c a l p r e c e d e n t
' a l o n e , t h e t h r e a t posed t o Mohammad
Reza P a h l a v i by t h e I r a n i a n r e v o l -
u t i o n s h o u l d h a v e come a s n o
s u r p r i s e . But i t d i d .
S i m p l y p u t , I t h i n k we w e r e
unprepared f o r t h e c o l l a p s e
o f t h e P a h l a v i Regime b e c a u s e we
d i d n o t w a n t t o know t h e t r u t h .
It is a n exaggeration. b u t n o t
such a g r e a t one, t o s a y t h a t t h e
S h a h w a s a U.S. puppet i n the
years immediately following
1953. But w i t h t h e p a s s a g e o f
y e a r s h e b e g a n t o become m o r e
s u r e of h i m s e l f , more indepen-
d e n t , end we b e g a n t o d e a l w i t h
him on a more n e a r l y e q u a l b a s i s .
With t h e g r o w t h o f t h i s h e a l t h i e r
r e l a t i o n s h i p , however,-came t h e
growth of a fundamental e r r o r o f
U.S. p o l i c y - t h e misperception
that'U.S. i n t e r e s t s i n l r a n were
cdterminous with t h o s e of t h e
P a h l a v i Regime. By sometime around
1968, a s n e a r l y a s I c o u l d d e t e r -
mine from o l d Z i l e s , i t had become
t h e unspoken p o l i c y o f t h e Depart-
CONFIDENTIAL
ment and t h e Embassy (and p o s s i b l y
a l s o t h e Administration, although a
j u n i o r o f f i c e r would n e v e r b e i n a
p o s i t i o n t o be c e r t a i n o f t h i s )
t o c u r t a i l reporting c r i t i c a l of
t h e Shah. D u r i n g my own 1 9 7 1 - 7 5
a s s i g n m e n t t o Tehran, t h e same
r e s t r i c t i v e policy prevailed.
When I r a i s e d t h e q u e s t i o n i n
g e n e r a l t e r m s , I was informed
t h a t c r i t i c a l information could
b e l e a k e d and misused by t h e
S h a h ' s enemies i n Washington. On
a s p e c i f i c m a t t e r , when I wa8
instructed to renore nothina
concerning a temporary marriage
w h i c h t h e S h a h had c o n t r a c t e d
w i t h a young I r a n i a n woman, I was
a s s u r e d t h a t t h e m a t t e r was c o v e r e d
fully i n official-informal letters.
Hardly a n adequate means o f
i n f o r m i n g t h e i n t e l l i g e n c e com-
munity o f a p o t e n t i a l l y s i g n i f i c a n t
develbpment .-
Through i m p o s i t i o n o f t h i n
essentially dishonest volicv
over the decade, t h e ' w r t -
ment denied i t s e l f information
which misht have enabled t h e
United s t a t e s t o b e b e t t e r prepared
f o r r e c e n t I r a n i a n developments.
T h i s e r r o r was c o ~ u o u n d e d bv
t h e r e s t " r i c t i o n o f ' ~ m b , a ; s ~c o n t a c t ;
t o t h o s e whose i n t e r a u u r s e w i t h u8
would n o t d i s p l e a s e t h e Shah.
C o n t a c t s w i t h o l d opposition
l e a d e r s a n d w i t h t h e in la mi^
e s t a b l i s h m e n t wer.e f o r b i d d e n .
I n s t e a d t h e Embassy r e s t r i c t e d
i t s e l f p r i m a r i l y t o t h e same c i r c l e
o f c o n t a c t s which it had h d f o r 2 1
years. By a n 3 l a r y e t h e s e p e o p l e
were s u p p o r t e r s o f t h e Shah. T h e i r
w e a l t h , power, i n f l u e n c e , and to
some e x t e n t t h e i r p h y s i c a l w e l l -
b e i n g r e s t e d upon t h e i r r e t d i 6 k
of imperial favor. But i n s e e i n g
I r a n through the eyes o f t h i 8
l i m i t e d g r o u p we w e r e s e e i n g i t
through a n imperial prism. It in
n o t s u r p r i s i n g t h a t t h e b u l k Of t h o
r e p o r t i n g which flowed from t h e s e
s o u r c e s was f a v o r a b l y i n c l i n e d
toward t h e Shah arid h i s programs.
E v e n h a d we b e e n i n c l i n e d t d
r e p o r t t h e views o f a l l element8
o f 1 r a n i a n , s o c i e t y , we would h a v e
b e e n h i n d e r e d by a l a c k o f o f f i c e r 8
who a r e t r u l y competent i n F a r s t .
 CONFIDENTIAL
C o n t a c t s w i t h I s l a m i c and b a z a a r i
l e a d e r s a r e v i r t u a l l y impossible
without fluency i n t h a t language
a n d t h e s a m e i s t r u e f o r many
u n i v e r s i t y p r o f e s s o r s and s t u d e n t s .
A t r a v e l e r i n the provinces is
c l o a k e d i n i g n o r a n c e i f he c a n n o t
#peak t h e l a n g u a g e of t h e p e o p l e .
The S o y i e t s g i v e t h e i r s p e c i a l -
ists f i v e years o f o r i e n t a l
s t u d i e s b e f o r e s e n d i n g them t o
I r a n , and when t h e y a r r i v e t h e y c a n
s p e a k , r e a d , and w r i t e P a r s i v e r y
well indeed. I t would n o t b e
p r a c t i c a l t o c o n s i d e r anything l i k e
t h e S o v i e t program, b u t o u r o f f i -
c e r s a r e f o r t u n a t e t o g e t 1 0 months
of P a r s i training. Before they
a r e thrown i n t o t h e Tehran e n v i r o n -
ment, where E n g l i s h is w i d e l y
spoken, they should s o l i d i f y t h e
b a s i c s which they learned i n t h e
United S t a t e s t h r o u g h s i x months t o
one y e a r of a d d i t i o n a l s t u d i e s a t
an I r a n i a n u n i v e r s i t y o u t s i d e t h e
c a p i t a l s u c h a s Ferdowsi U n i v e r s i t y
i n Mashad, which h a s a n e x c e l l e n t
F a r s i program. This longer
commitment t o more r i g o r o u s
language t r a i n i n g might not be
possible f o r a l l language of-
f i c e r s b u t i t s h o u l d b e demanded
of p o l i t i c a l o f f i c e r s .
I n r e t r o s p e c t it i s c l e a r t h a t
we r e i n f o r q e d o u r t e n d e n c y t o
remain i g n o r a n t o f many a s p e c t s o f
c o n d i t i o n s i n I r a n through a
natural inclination t o take the
e a s y way o u t . We had n o c h o i c e
but t o d e a l with the absolute r u l e r
o f I r a n who, i n a n y c a s e , w a s
g i v i n g u s w h a t e v e r we wanted. So
why l o o k f u r t h e r ? Anyway, i n
t o d a y ' s w o r l d , any p o l i c y t h a t
works f o r 2 5 y e a r s is a good
policy.
Classified by Calen Fox
Subject to General Declasaificstion Schedule
of Executive Order 12065. Autometically
& c k a s i f i e d on June 1. 1985.
The shame of i t is, we need n o t
h a v e come down a t t h e c r u n c h w i t h
no a l t e r n a t i v e b u t t h a t o f backing
a loser. We c o u l d have l n a i n t a i n e d
w i d e r c o n t a c t s w i t h minimum damage
t o o u r r e l a t i o n s w i t h t h e Shah.
When we f i n a l l y informed him o f o u r
d e c i s i o n s t o i n i t i a t e c o n t a c t s with'
t h e o p p o s i t i o n , h e merely grumbled
suspiciously.
A l e s s h e s i t a n t reporting
p o l i c y would n o t have enabled
u s t o s a v e t h e Shah. What happened
t o him would h a v e happened s o o n e r
o r l a t e r , i f n o t t o t h i s Shah t h e n
t o h i s s o n , a n d b y t h e t i m e we
became a w a r e t h a t t h e r e v o l u t i o n
was coming, i t would have been t o o
l a t e t o s t o p it. But provided, o u r
government were w i l l i n g t o a c t o n
t h e b a s i s o f information which
contradicted established policy,
w i d e r c o n t a c t s and a c c u r a t e r e p o r t -
i n g , e v e n a t some c o s t i n t h e
i n t i m a c y o f t h e USG-GO1 r e l a t i o n -
s h i p , might have given us t h e
c a p a c i t y t o a n t i c i p a t e much o f what
was coming and t o minimize t h e
damage t o o u r p o s i t i o n i n I r a n .
Today, i n s o f a r a s t h e p r e s e n t
government and t h e I r a n i a n p e o p l e
a r e c o n c e r n e d , t h a t p o s i t i o n is i n
s h a m b l e s and w i l l o n l y be p a r t i a l l y
revived with g r e a t difficulty.
We m a d e s i m i l a r m i s t a k e s i n
post-war C h i n a , i n Vietnam and we
w i l l c o n t i n u e t o d o s o whenever we
c o n f u s e t h e i n t e r e s t s of a c l i e n t
government w i t h o u r own. Someday
we s i m p l y m u s t l e a r n t h a t t h e
p u r p o s e o f p o l i t i c a l r e p o r t i n g is
t o p r o v i d e i n f o r m a t i o n and informed
a n a l y s i s to a s s i s t i n t h e making o f
policy decisions, not t o support
existing policy. m e r all, the
p o l i c y m i g h t b e wrong.
From: RADM F. C. COLLINS, J r . . USN. 430-32-0914/1110
Chief Navy Section. ARbIISH-MMG. I r a n

To: Chief of Information. Navy Department. Washington. D.C. 20350

Subj: Speech M a t e r i a l Clearance; r e q u e s t f o r

Encl: (1) Framework f o r speech on Revolution i n I r a n

1. From May 1978 t o February 1979 I served a s Chief Advisor t'o t h e

Commander-in-Chief, I m p e r i a l I r a n i a n Navy w h i l e a s s i g n e d a s Chief of
Navy S e c t i o n , AMISH-MAAG. I r a n . Needless t o say i t was an e x c i t i n g
adventure, one which o f f e r e d f a n t a s t i c o p p o r t u n i t i e s a s I r a n made i t s
l e a p from a WUII Navy t o t h e l a t t e r 20th Century technology of t h e 993
KOROUSH C l a s s C r u i s e r , and an u n b e l i e v a b l e box seat t o a v i o l e n t revolu-
t i o n where a 50-year dynasty of a u t o c r a t i c r u l e was crumbled.

2. A n t i c i p a t i n g t h a t t h e r e w i l l b e t h o s e who a r e i n t e r e s t e d i n h e a r i n g
a f i r s t person account of t h e a c t i o n . I have composed a n o u t l i n e of
f a c t s I have t i t l e d "Anatomy of Revolt" which I i n t e n d t o be t h e b a s i s
f o r any remarks I make. The o u t l i n e is f a c t u a l and t h e only d e v i a t i o n
from f a c t s t o o p i n i o n is found i n t h e l a s t two pages i n which I show
my opinion of why i t happened. They w i l l b e c l e a r l y l a b e l e d a s such.
Xy s u p p o r t i n g v i s u a l a i d s c o n s i s t of Vu-graphs and 35 mm s l i d e s of
v a r i o u s f r o n t page s h o t s ; Kayhan and Tehran J o u r n a l -- Tehran's two
English language newspapera d u r i n g t h e period.

3. I would a p p r e c i a t e your c l e a r a n c e t o u s e t h i s i n f u t u r e speaking

commitments on t h e s u b j e c t of t h e r e v o l t i n I r a n . I w i l l b e d e p a r t i n g
t h e Washington a r e a f o r a s h o r t s t i n t of TAD and l e a v e on t h e West
Coast, s o between 28 A p r i l and 7 May I can b e reached through Commander
S u r f a c e , ? o r c e s P a c i f i c i n San Diego. A f t e r t h a t I w i l l be r e p o r t i n g
t o OP-40 f o r duty.

4. Thanks.

Copy t o :
Chief, ARflISH-MMC. Iran
CINC. EURCOM
 AMMm OF REVOLT

PROLOGUE
*

i
END OF 2507 YEAR OLD PERSIAN W I R E 11 FEBRUARY CAUGHT EVERYONE

INCLUDING AYATOLLAH RUHOLLAH KHOMEINI AND PRIME MINISTER BAKHTIII Bi

SURPRISE. WHAT HAPPrnED? HOW DID IT HAPPEN? THIS IS MY VIEW.

THE BEGINNING

1 JANU.\RY 1963 - "WHITE REVOLUTION" OR "SHAH AND PEOPLE'S REVOLUTION"

1 WHEN SHAH TOOK ROYAL AND CHURCH LANDHOLDINGS AND REDISTRIBUTED TO

/
I
PEASANTS. SPECULATION AT TIME THAT CLERGY OWNED 601 OF LAND IN IRAN.
TO GAIN INSIGHT INTO INFLUENCE OF CLERGY. CONSIDER THAT CURRENTLY THERE
ARE SOME 80,000 MOSQUES; 180.000 MULLAHS; AND OVER 1200 AYATOLLAHS IN
A COUNTRY OF ABOUT 35 MILLION PEOPLE. OWE DISSIDENT WHO TOOK VOCAL AND

VIOLENT ISSUE WITH THE SHAH ON LAND REDISTRIBUTION WAS RUHOLLAH KHOMEINI

WHO TAUGHT IN HOLY c I m OF qon ABOUT 90 MILES soum OF TEHRAN. FOR HIS
OPPOSITION HE WAS EXILED AND LIVED IN IRAQI HOLY CITY OF NAJAF UNTIL

6 OCTOBER 1978 WHEN HE MOVED TO PARIS. THE HOVE WAS PROMPTED BY IRAQI

OFFICIALS WHO WERE INTERESTED IN PRESERVING THE RECENTLY MENDED RELATIONS

WITH NEIGHBORING IRAN.

THE REVOLUTION'S EXTERNAL WIFESTATION IN IRAN COULD BE DATED

8 JANL'ARY 1978 WITH STUDENT RIOTS IN QOH AND ESFAHAN. MARTIAL LAh' WAS

DECLARED IN ESFAHAN AND OTHER OUTLYING CITIES PROM TIME TO TIME.

RELATIVE CALM IN TEHRAN THROUGH JULY 1978. THO THERE WERE DEMONSTRA-

TIONS AND DESTRUCTION OF PROPERTY (MAINLY BANKS. LIQUOR STORES AND CARS.)
SHAH AND FAMILY SPENT MOST OP SUPMER ON CASPIAN. RUMOR THAT SHAH HAD

BEEN SHOT BY AN ARMY J.O. (LT. IMATANI. SON OF DECEASED GEN KHATAMI? WAS

Enclosure (1)
DENIED, AND SHAH AND SIUHBANOU'S PIclUBXS AND PBONOVRC-S DAILY
APPEARED IN PAPERS.
EARLY AUGUST 1978 BOHBING OF WANSOLAR RESTAURANT IN TEHRAN,FOLLOWED
BY R I M S IN ESFAHAN ON 11 AUGUST AND THE TRAGIC REX THEATRE FIRE IN
ABADAN 17 AUGUST WHICH CLAIMED 377 LIVES BEGAN THE ACTIVE - CONTINUOUS
PERIOD OF REVOLT.
AYATOLLAH SHARIAT W A R I , THE SENIOR HOLY MAN IN COUNTRY. BEGAN
SPEAKING OUT ACTIVELY ON NEED FOR REFORM, AND HE WAS JOINED BY AYATOLLAH
TALECHANI WHO WIS IN THE VANGUARD OF POLITICAL PRISONERS RELEASED BY THE
SHAH. GOVERNMENT ALSO TRIED TO NEGOTIATE WITH KHOMEINI IN IRAQ AT THIS
TIME. BUT NO SUCCESS.
* 27 AUGUST 1978. D W T I C INDICATION OF TROUBLE WAS PRIME MINISTER
JAMISHID AMOUZEGOR'S RESIGNATION AFTER JUST OVER YEAR IN OFFICE.
* 28 AUGUST 1978. JAPAR SHARIF DWU, VllO HIU) BEEN PM 1960-61 WAS
APPOINTED AS PM. FELT m BE MODERATE VHO COULD C ~ I C A T WITH
E CLERGY,
NATIONAL FRONT ETC.; UNFORTUNATELY M I NOT DYNAMIC OR DECISIVE ENOUGH
AND DMONSTRATIONS AND DESTRUCTION CONTINUED.
' 8 SEPTMBER AT 0600. MARTIAL LAW DECLARED IN TEHRAN (CURFEW 9PH -
SAM) AND 9 OTHER W O R IBANIAN CITIES- SIGNIFICANTLY ENOUGH, NEITHER OF
THE NAVY CONTROLLED CITIES WERE INCLUDED. GENERAL OVEISI. CINC IIGF WAS
MARTIAL LAW ADMINISTRATOR OF TEHRAN. AT MID W I N G 8 SEPT, A LARGE MOB
ASSEneLED IN JALLEH SQUARE TO SEE IF COV-T WAS SERIOUS ABOUT MARTIAL
LAW. PUSHED TO LIMIT, TROOPS FIRED ON MOB KILLING AN ESTIMATED 300 AND
WOUNDING PERHAPS A 1000 MORE- (COVERIWENT FIGURES SAID 70 KILLED. 280
WOUNDED).
i
b .
1 7 SEPTEMBER 1 9 7 8 . EARTHQUAKE I N NE lIUNM CITY OF TABAS KILLED
I

AN ESTIMATED 25.000 TO ADD TO SHAHANSHAH'S WOES.

- -
6 OCTOBER 1978. KHOMEINI LWVES WAF, IRAQ FOR PARIS; BEGINS FULL

rl ALE PROPAGANDA CAWA~GN AGAINST PAHLAVI "DYNASTY" A N ~WVERNHENT.

EARLY OCTOBER SAW BEGINNING OF STRIKES -- POSTAL, tlOSPITAL WRYERS.

fT( ON 11 OCTOBER, 4 DAY STRIKE OF NEWSPAPmS WHO PROTESTED CSlQORSHIP.

26 OCTOBER - SHAH'S BIRTHDAY. A SUBDUED AFFAIR; RECEPTION AT

~ I W L E S T A NPALACE IN WWNTW IRAN WIW BUSINESS, A W ~ I C . CLERGY llll~

t l N l O R MILITARY ,INVITED TO PAY RESPECTS TO HIM. HIM LOOKED CKWID, PEOPLE

UIKL IMPRESSED, SHAH RODE TO AND FROM RECEPTION I N MOTORCADE WITW NO

(IN1 'sUAL SECURITY.

' LATE OCTOBER SAVAK, STATE POLICE/INTELLIGENCE CAME UNDER F I R E ,

LlNERAL NASSIRI, FORMER LEADER, CHARGED WITll l4LlRDER.

' . 1 NOVEMBER O I L STRIKE BECAN.
I ' 4 NOVEMBER KARINS SANJABI, NATIONAL FRONT LEADER WAS INVITED TO
1
/
I
!
( c l H t BACK FROM PARIS WHERE HE WAS CONFKBRING WITH KHOMEINI TO FORM GOVERN-
MINI; KHOMEINI SQUASHED T H I S OPPORTUNITY FOR PEACEFUL SETTLEKWT.

5 NOVEMBER $ TRANSFER OUT OF COUNTRY RESTRICTED.

' 5 NOVEMBER ATTACK ON BANKS, C I N E U S , LIQUOR S T O W S I W C H P D P W O R T I O N S

0, ANARCHY. 3 0 0 BANKS DESTROYED, 11 STORY BMI B L W RK@Q, ? S%R% BANK

mrl.LI HDQTRS GUTTED. COUNTLESS THEATRES AND LIQUOR S ~ =NED.

S

' SHARIF EMAMIGOVTRESIGNS.

6 NOVEMBER SHAH APPOINTED GENERAL C H O W R E W AWVLRI. CHIEF OF SCS,

I %PM. CALLS FOR ORDER AND CALM. I)SHITTED CORRUPTION AND ERROR XN COVT.

8IrttCH WELL RECEIVED EXCEPT BY THOSE WHO TOOK EXCEPTION TO H I S ADMITTING

IKRSONAL ERROR; CONSTITUTION SAYS SHAH CAll W NO W N G - ONLY GOV-ENT.

 SERVICE CHIEFS APPOINTED TO MINISTRIES; RABI-HOUSING. OVESI-LABOR,

EDUCATION, QARABAHI-IN'I'ELIOK
HABIBOLLAHI-LUULA~IO~/TECHNOLOGY/CULTURE/H~GHER

ETC., RESIGN1 I WEEh LATER DUE CONSTITUTION RESTRICTIONS AGAINST HAVlNL

TWO KEY GOVT PUSITIONS.

' MOHARKA?I (1-10 DECEMBER DEEP MOURNING PERIOD FOR lMEWl HOSSLIN,
3RD IMMAII, SOH OF ALI, MOHAMMED'S SUCCESSOR), MARKED BEGINNING OF WIDESPREAD
..I,OTCSI- C U K F ~ WVIOLATION THE NORM - ROOF TOP CHANTING OF "ALLAH ALBAR"

BECAME N O W AS DID CONTDP? FOR MARTIAL LAW.

DECE.ZBER EVACUATION OF DEPENDENTS BEGAN, TO LESShN DANGER FRO?!
EXPECTED RIOlS ON 9 - 10 DECEMBER.
TASHUA (9 DECUIB'R) PARADE PERMITTED BY AZAHARI. 314 MILLION 10
MILLION PARADEI) TO SHAHYAD PEACEFULLY.
O ASHURA (10 DECEMBER) REPEAT OF TASHUA. CROWDS ABOUT SAME, "MOIWl

NEISS"

DECEMBER NIGHlLY BLACKOUTS. BENZENE, NAFT, GAS-OIL SHORlAGE. BENZENE

LINE5 48 HOUR5 LONG - NAFT MINIMUM 8-10 HOURS. GAS OIL SHORTAGE PRODUCED

COLD HOUSES ANI? SHOWERS!

30-I)E( 1 k--
- IHII< GLN AZAHAKI HAS SLIGHT HEART ATTALI AND ASKED FOl<

RELIEF AS PM.
3 JAX 79 SADI(.HI ASKED TO FORM GOVT - COULD NOT GET CABIhET. GENERAL

OVEISI. CINC IlGF AND MARTIAL LAW ADMINISTRATOR FOR TEHRAN LEFT COUNTRY
FOR USA. BAD OHES. S. BAKHTIAR GIVEN CHANCE TO F O W GOVERNMENT. AGREES

TO TRY UNDER THREE CONDITIONS: SHAH LEAVE COUNTRY; HE BE GIVEN FREE REIN;
HE CONTROL MILITARY. SHAH AGREES.

7 JAN 79 BAKHTIAR PRESENTS CABINET - ALL ANTI SHAH. MUST NOW BE

APPROVtD BY MAJLIS AND SENATE. CURFEW EASED TO 11-5. COUP TALK.

15 JAN 79 APPROVAL OF BAKHTIAR CABINET GAINED.

4
THE DOWN TURN

16 JAN 79 SHAH LEAVES IRAN FOR REST,. LEAVES REGENCY COUNCIL IN

CHARGE. TEHRAN1 PRESIDENT OF COUNCIL. MUCH ELATION. SPENT DAY IN

BANDAR ABBAS.

17 JAN 79 SPENT DAY IN BUSHU1R. SPIRITS W W BUT NOT OUT.

21 JAN 79 CO-IST CONDUCT BIG PARADE IN DOWN TOWN TEHRAN. MET

SOME OPPOSITION.

23 JAN 79 KHOMEINI THREATENS TO COME TO TEHRAN; MEHARABAD CLOSED

FOR 5 DAYS.

25 JAN 79 CONSTITUTIONISTS CONDUCT SUCCESSFUL PARADE FOR BAKHTIAR

TO BARHESTARAN SQUARE IN FRONT OF IWLIS. 3 - 500,000.

27 JAN 79 BAKHTIAR OFFERS TO MEET KHOHEINI IN PARIS; YOMEINI SAYS,

"COME WITH RESIGNATION IN HAND."

1 FEB 79 KHOMEINI IlETURNS TO IRAN AFTER 15 YEARS ABSENCE - 750.000

TO 1 MILLION PEOPLE TURN OUT TO GREET "AGHA UHAD" (THE MASTER HAS COME)

6 FEB 79 KHOMEINI NAMES 70 YR OLD MEHUI BAZARGAN AS PM OF REVOLUTIONARY

WVERNHENT. BALMTZAR RESPONDS THAT REVOLUTIONARY GOVT IS "JOKE".

8 FEB 79 7 OF BAKHTIAR'S MINISTERS SWING TO BA'LARGAN. QARABAGlll TO

CADETS AT OFFICERS SCHOOL SAYS "ARMY'S JOB NOT POLITICS. BUT DEFENDING COUNTRY.'

9 FEB 79 SERMON 'LITLE "WHEN NOTHING HAKES SENSE" AT TEHRAN COHMUNITY

CHURCH. HOMOFAR DISTURBANCE AT DOSHAN TAPPEH. IMPERIAL GUARD u L L m OUT

TO QUELL.
10 FEB 79 WORD OUT THAT ARMY FIGHTING AIR FORCE. SHWTING AND

BURNING TO SOUTH OF IIN HDQTRS. CURFEW LOWERED TO 1630. AF SECTION RESCUED

PllOH WSHEN TAFPM BY HEM: NAVY SECTION DRIVES HOME; A M I S H U M G STAFF

ELECTS TO STAY AT SCS HDQTRS. POLICE STATIONS METHODICALLY KNOCKED OVER.

5
END O F A DYNASTY

11 FEB 7 9 ALL HANDS TOLD TO STAY HOME. SPORADIC SHOOTINC. 1100

QARABAGHI NEUTRALIZES ARn' "POLITICS FOR POLITICIANS." IKPERIAL GUARD

RETURNS TO GARRISON. CRCUDS CO WILD. RUMOR THAT WATER SYSTEM POISONED.

GENS BADARIE, JAFARIAN AND B E W G I ALL KILLED TODAY.

1 2 PEB 79 IMPERIAL GUARD ARMORYS KNOCKED OVER. THOUSANDS O F WEAPONS

AND MILLIONS O F ROUNDS O F SMALL ARMS M O NOW I N HANDS O F REVOLUTIONARIES.

RADIO ANNOUNCES AMERICANS ARE J O I N I N G IMPERIAL GUARDS I N COUNTER REVOLT.

IMPERIAL GUARD J O I N S ReVOLhIONARY FORCES OR DESERTS. MUCH SHOOTINC.

0 4 3 0 GAST AND COMPANY RESCUED BY IBRAHIM YAZDI AND TAKEN TO EMBASSY.

1 3 F E B 79 AMlIRAL HABIBOLLAHI ON BAD10 ASKS NAVY TO RETURN TO WORK.

1 4 F E B 79 1 1 2 0 RECEIVE CALL FROM GAST, m A S S Y UNDER ATTACK. I CALL

& HABIBOLLAHI AND ASK FOR HELP - ALSO KHOMEINI POLICE STATION. 1145

CAST CALLS BACK, "MBASSY OVERRUN, WE'VE SURRENDERED." YAZDI AND KHOMEINI

FORCES ARRIVE AND TALK GUERILLAS INTO SURRENDERING PRISONERS WHO ARE

TAKEN TO KHOMEINI HEADQUARTERS FOR QUESTIONING. GUERILLAS CLAIM TO BE

W I S T ; FEtEYEh'. CLAIM TO BE LOOKING FOR SAVAK MEMBERS AND RECORDS AT U.S.

fMIASSY. ALL PlBASSYfMILPERS RETURNED T O EMBASSY I N . A T E AFTERNOON. BOB

PRYOR C W S BY AND 1 I N V I T E HIM T O STAY. DESCRIBES Dl SECHATION OF CHURCtl 11 1

15 FEB 1 9 7 9 AWED HEN COME TO m GATE. GARDNER IELLS THEM NO ONE OF

IMPORTANCE L I V E S HERE.

16.FEB 1979 ACCOMPANY BOB PRYOR TO SERVICES HE I S HOLDING AT SAADI

ROOM O F HILTON. KHOMEINI M I L I T I A GUARD ENTRANCE. 1210 WHILE F I X I N G LUNCH,

ABWLANNOUNCES l o ~ ~ TO~ CALL
~HAS~ COME ~ AND
~ WOULI)
~ * m PRESENCE.
* LIKE

8 OF 2 5 COME INTO COMPOUND. QUERY 1IE A S TO WHY I AM S T I L L HERE, ADVISE ME

TO GO. NOT SAFE. THEY CANNOT C U R A N T E E PROTECTION, !:TC.. COURTEOUSLY TREATEl

 1 7 FEB 7 9 IRANIAN NAW BACK TO WORK. C W I T T E E SCREENS FLAG

O F F I C E R S ; CAFT SULTAN I S S E N I O R NAVY R E P - MULLAH I S I N CHARGE. POURZAND

BROTHERS DU NOT FARE WELL. KAYHAN HAS F I R S T P I C T U R t S O F "ISLAMIC J U S T I C E " .

REVOLUTIONAR" COURTS CONDEMNED A h ' HAD SHOT GENS N A S S I R l (SAVAK). N A J I

(ESFAHAN MARTIAL LAW ADMIN),RAHIMI (TEHRAN MARTIAL LAW ADMIN) AND

KHROWSHODAD ( O I C ARMY AVIATION). GORY P I C T U R E . ALSO P I C T U R E S O F FOUR

OTHER GENERAL O F F I C E R S WITH HANDS T l E D BEHIND BACKS. ALSO WILL LIKELY

SUFFER SAXE FATE. PLO LEADER AIUFAT I N TOWS.

18 FEB 7 9 G I V E CLOTHES TO SERVANTS, PACK BAG. MOVE TO HILTON. BOMB

SCARE WHEN WE ARRIVE.

1 9 FEB 7 9 SEARCHED THOROUGHLY AT MEHRABAD AND PASSPORT CHECKED 7

TIMES. 1 5 0 2 WHEELS UP FOR FREEDOM.

"KEYS TO DOWNFALL OF PHALAVI DYNASTY"

"KHOMEINI IS HATRED O F SHAHANSHAH"

f i IN GOVERNMENT"
~ ~ ~ ~ ~ ~

t l OF SHAH~ TO 'MIND
~ THE STORE"'
~ ~ ~ ~ ~

"AUTHORITARIAN RULE O F SHAHANSHAH"

"LACK O F VALID/TIMELY INTELLIGENCE BY USG/W)I AGENCIES"

"SHAH'S WITHDRAWAL FROM P U B L I C L I F E I N SEPTEMBER"

"FRENCH SUPPORT O F KHOMEINI"

"FARSI LANGUAGE NEWS FROM BBC"

"FAILURE TO ENFORCE MARTIAL LAW"

"FAILURE TO DEAL WITH I U O M E I N I OR OPPOSITION"

"FAILURE TO DEAL EFFECTIVELY WITH STRIKES"

"LACK OF 'GUSTY* MILITARY"

"OVER ESTIMATION OF ABSORPTIVE WABILITIES OF IRAN'S PERSONNEL RESOURCES"
"HL?LAN RIGHTS POLICY"
"LACK OF UNDERSTANDING OF MIDEASTERN CULTURE BY WESTERNERS"

KEY UNANSWERED QUESTIONS

"WHY DID SHAH WITHDRAW FROM ACTIVE LEADERSHIP?"

"WI{S DID GENERAL QARABAGHI NEUTRALIZE AREN?"
"kns DIDN'T GOVERNMENT E I ~ E RTRY TO SELL ITSELF TO PEOPLE, OR DISCREDIT
AYATOLLAH KHO?lEINI?"
"hns DIDA'T EI~LITARYHOVE TO TAKE OVER STRIKE-BOUND INDUSTRIES OR
SERVICES SUCK AS REFINERIES AND CUSTOMS?"
 .
. ' .t?T C h A Q I F Y 1 : R BhSI:. 'I I.AU <'lFb'PICZI CP VISA
leSUlN$F, AT TRE nOMillT OIlFS'IT3N O i T H i Pt.31.. .V:
Fhflrr.? P?YIU:: ILI 7 3 E U! Dl'. h O T A l i l S L A5 T H E Y
h p p . ::" n ?' ' F A D Y D F37 3 T ' i i . b'S'PIINhTIO". !'bET3FP
1'1 4 " 'i1'4.' TI;iN I ' J 3 j t i 1 T V T H E ?A3LSYI$, C'GMi:
PION745 A t 3 1:. r::i ' f . h .

.. l ' , r . O i i t i I C " I 3 N WITH l : Y 4 ~ ! T N ? l ' ! O . i 3F '!:-IkPNIAA!

R I ! ATI'~;.s, r ? r r ~I '~S I~P X. S A T E ~ P O I N T S M ~ : \ P Q: :'!'Hc
 CONPIDPNTIAL
#V"lL ,. +.*
' ~ T , E H R A N h25/11
CI"GT:
,,
" @,.
STAPE 5/3/79
I,
0 P4B9181 "t \ l 7 3
m AMSMEASSY T - M A N APPRV: SH::CkNAhS
20 S E C S T A T E WASHDC I M M E D I l T E 1742 DRPTD: E/C:CDTATLOR
BT CLEAR: 1. NOYE
C 0 N F I D B N T I A L T S S F A N l4625 DISTR: ECON-2 DCM P O L
CRU R F I C A PAAO
t.0. 12065 GDS 5/3/85 ( T A T L O R . C L Y D E D.) OR-E
ZAGS: EAGR, ECON, E T R D , PPOR. I H
S U B J I CBARGE'S C A L L ON A G R I C U L T U R E M ~ N I S T E R DR. MOHAMMAD
IZADIL
P E P : S T A T E 110124
1. (C - ENTIRE TEXT)
2. S U W I A R T : T H E CHARGE, I N H I S MAT 2 CALL ON A G R I C U L T U R E
M I N I S T E R I Z A D I , CONVEYED T H E SAME P O L I T I C A L MESSAGE
D E L I V E R E D I N 91s P R E V I O U S C A L L S AND I Z A D I R E S P O N D E D W I T H
A POLITE I F SOMEYAAT.COOL EXPRESSION OP DESIRE TO ovm-
COME T H E D E X I C I E N C I E S O F U S F O R E I G N P O L I C T AND B U I L D
B I L A T E R A L AGRICULTURAL R E L A T I O N S H I P S ON OUR E I S T O R I C
EDUCATIONAL, T Z C H N I C A L AND COMMODITT T I E S . L I T T L E NEW OR
S P E C I F I C WAS LEARNED CONCERNING A G R I C U L T U R A L P O L I C I E S RUT
T H E M I N I S T E R D I D I N V I T E US AGRICULTURAL E Q U I P M E N T MANU-
FACTURERS T O S U B M I T P R O P O S A L S FOR LONG-TERM PRODUCTION
ARRANGEPIENTS I N I R A N . END SUMMART
3. T H E CHARGE, ACCOMPANIED B T T H E A C T I N G ECONOVIC
COUNSELOR.CALLED MAT 2 ON DR. MOHAMMAD I Z A E I . M I N I S T F R FOR
A G R I C U L T U R E AND RURAL DEVELOPMENT ( H A R D ) . MR.
HAGRSOOB-POUR O F T E E I N T E R N A T I O N A L R E L A T I O N S O Y F I C E S A T I N .
T E E CHARGE D E S C R I B E D T E E USG'S B A S I C P O L I C T O B J E C T I V E S V I S -
A-VIS IRAN--IRAN'S T E R R I T O R I A L I N T E G R I T T AND ECONOMIC
S T R E N C T H AND U S NOH-INTERFERENCE-AND P X P R E S S L D R O P E THAT'
ON T H E B A S I S O P MUTUAL R E S P E C T . H I S T O R I C T I E S AND MUTUALLT
B L N E F I C I A L TRADE WE COULD COOPERARATE I N T H I S NEW
ENVIRONMENT. T E E CHARGE RECOUNTED V A R I O U S B I L A T E R A L
Z E C E N I C A L PROGPAMS, P A R T I C U L A R L T T H O S E I N V O L V I N C OUR
DEPARTMENT O P A G R I C U L T U R E AND. Y E I L E ACTNOVLEDGING T H E PRE-
M A T U R I T T O F SUCH C O N S I D E R A T I O N S , I N V I T E D T a E M I N I S T X R T O
K E E P I N MIND T H E P U B L I C AND P R I V A T E A S S E T S W I T H I N T H E US
WHEN H E D E V E L O P S H I S A S R I C U L T U R A L PROGRAMS.
4. DR. I Z A D I , I N R E S P O N S E , R E F E R R E D T O T H E I N C O R R E C T
fCONOMIC S T R A T F G T q P T H E P R E V I O U S R E G I M E WHICH E M P H A S I Z E D
SHOW-OPTPROJECTS AND P U R S U E D U N R L A L I S T I C I N D U S T R I A L
GOALS. I R A N , 9 E S A I D , S F O U L D RETURN T O I T S T R A D I T I O N A L
AGRICULTURIL.,EMPHASIS THOUGH W I T 8 U S E O P 4 L L A P P R O P R I A T E
TECHNIQUES. WE WANT HELP PROM A N T FRIEND. AS CONCERNS
F O R E I G N R E L A T I O N S I N A G R I C U L T U R E , H E S A I D T H A T T E E US I S
IRAN'S NUMBER O N E LOGICAL SOURCE FOR KNOWLEDGE A N D TECSNICAL
A S S I S T A N C E OWINO T O T E 9 US C L I M A T E AND T E E P R I M A C T O F US
E D U C A T I O N A L I N S T I T U T I O N S I N T R A I N I N G I R A N I A N S . WHETHER
OR NOT T H I S R E L A T I O N S H I P C O N T I N U E S D I P E N D S , H E S A I D , ON
US POLICT-kHETHER T H E U S ENCOURAGES T I E S .
URING TO T H E P O L I T I C A L DR. I Z A D I EXPOUNDED ON T H E
HENCE BETWEEN AMERICAN^ ( I I N D , E E L P F U L , E T C . ) AND U S
CONFIDENTIAL TG. RAY 4 5'>1
 CONFIJENTIAL
POLICY. THE LATTER, ar SAID, 1s BASED ON US AGENTS REPORTS
AhD THE US MEDIA, WHICH WITH THE EXCEPTION OF PBS I S
CONTROLLED BY THE SAME MONOPLY WHICH CONTROLS US MOVIES,
ETC. I P THE US FEELS UNLOVED, I T I S BECAUSE FOREIGNERS
ARE REACTING TO THE DISTORTED VIEW OF THEM CREATED P I OUR
MEDIA. HE EMPHASIZED E I S BELIEF THAT I P WE WISH, AS T9E
CHARGE EXPRESSED, TO IMPROVE RELATIONS THEN T I E USG MUST
IMPROVE THE US MEDIA. THE PGOI, HE SAID, is OPEN" A N D
WANTS TO DEAk HONESTLY. SINCE WE ARE ALL CHILDRRN OF
ADAM AND EVE WE SHOULD BE ABLE TO COOPERATE ON THF BASIS
OF KNOWING FACE OTHZR AND MUTUAL RESPECT- THE 30 MINUTES
CALL ENDED WITH DR. IZADI RETURNING TO H I S CRITICISM OF
THE US PRESS* ADDING THAT HE CONCLUDED DUBING HIS MANY
YEARS AS A S&DENT I N THE US THAT THE US HEDIA YAS
MANIPULATED B t " l ~ MONOPOLY. THE USG, HE SAID, NEEDS A
LAW TO SOLVE THIS PROBLEMi HE ADDED, ALMOST AS AN AFT'ER-
THOUOHT, THAT FE, OF COURSE, FAVORS FREEDOM OF THE PRESS.
6. THE CHARGE, GIVEN T9E MINISTER'S ARTICULATE AND SINCERI
ESPOUSAL OP HIS ANTI-MEDIA CONVICTIONS, CONFINED HIS
RESPONSE TO A BRIEP RECOUNTING OF THE SHAH'S SIMILAR FOCUS
ON TEE EVILS OP TFE US PRESS AND THE OBSBRVATION THAT A
MEDIA HATED BY SUCH DISPARATE PEOPLES CAN'T BE ALL TH4T BAD.
7 . THE CHARGE. IN AN ATTEMPT TO GET THE DISCUSSION BACY
O N THE PABM, SOLICIATED THE HINISTER'S VIEWS CONCERNIYG
THE D I ECTION OF AGRICULTURAL POLICY AND PROGRAMS. AGAIN
ALLOWIL FOR THE NEWNESS or THE GOVERNMENT, HE A s n D P o f
ANY INDICATION OF BOW THE GOVERNMENT PLANNED TO MOVE OY
RURAL DEVELOPMRNT (ROADS, ELECTRIFICATION), STRUCTURAL
POLICIES FOR AGRICULTURE (COOPERATIVES, CORPORATIONS,
AGROINDUSTRY) AND COMMODITY PRICE POLICY. DR. IZADI SAIC
LITTLE HAD BEEN DECIDED. PARTICULABLY CONCEPNING TEE
SITUATION O r THE ASRICULTIIRAL STRUCTURE.ADMITTING TO SOHF'
EISPUTE ON TRIS. HZ SAID HP PERSONALLY PAVORS PRIVATE
ENTERPRISE, WITH GOVERNMENT INVOLVEMENTONLY TO THE EXTENT
NEEDED TO STIMlTL4TR TIGHT DIRPCTIONS AND PROVIDE WHAT
CON?IDINTI AL TEHRIN 4ai5/@1
 - CONPIDENTIAL
T'iE P R l f n T F , S Z C T O R C I 4 Y O T . r.:. r A Y S POL( I I . R I % C m I O Y .
TSPRAN

FEEDER ROADS W I L L a, P R I O 2 I T Y . T K S O P F I C I k L P S I C T PO9

WXEAT AS BEEN I N C R ~ A S E D4 , p~a I r ? s FOQ B ~ Q L ~ YSYGA* , EEET
ANY R I C E A Z E UNDEB RWVIEW. *H'N F Y B O P d D E S C R I B E D T H E
SUCCESSES O F T P I .jS I A T I O N A L RURAL E L E C T Q I C C O O P E S A T I V F
I N OTHER COiJNTRI?S AND I T S P F S I R E T O A S S I T I R A N , CR. I Z A D I
S A I D AURAL E L E C T B I S I C A T I O N PR0b"AMS Y E S E IMPORTANT, BUT
WOULD POLLOW T H E F R O V I S I O N O P ADEQUATF D I S T R I B U T I O N AND
VAREHOUSING O? ALREADY E X I S T I N G AGRICULTRUAL PRODUCTION.
( D E T A I L ~ D I N F O S M A T I O N SOUGET P E R R E F T E L , R E C E I V E D A F T E R
OUR CALL, I S N O N E P H E L Z S S MOPE A P P R O P R I A T E T O T H E 3 F P O R T S
O P THE P A S ATTACHE AN O F F I C E ABANDONED O F ?AS' S T A P F OR
CONTACT S I N C E K I D - ~ P E R U A R Y .
e. ~ I N I S T EI Z~ A D I I N V I T E D US MANUFACTURERS O F AGRICULTURAL
R P U I P M ~ N T TO S U B M I T INPORMATION AND P R O P O S A L S T O T R E MARD
I P I N T E ~ E S T E D I N A LON3-TEPM PRODUCTION P O S I T I O N I N I R A N .
I.&S A I D TRAT I N K E E P I N G Y I T H I R A N ' S NEW AGBICULTURAL
E M P d A S I S I T WOULC S E L S C T T H R F E (3) C O M P A N I E S T O PRODUCR
ANS S E L L HERE. THEIR A B I L I T Y TO PROVIDE SBRVICE AND SPARE
P A R T S WOULD BP T A g E N I Y T O ACCOUNT. I N T E R E S T E D COMPANIES
SHOULD P R O V I D E C A T A L 0 3 S 01 T H 3 I R PRODUCTS W I T H P R I C E S .
EMBOPP A S i E 3 M A T T H I S P O L I C Y I S D I C A T E D F O R T H E FUTURE 01
P O R E I O t i T I Q r S ALREEDY HERE (SUCH A S ROMANIAN TRACTORS W I T H
n l s s r y r ~ ~ s u sATo T~A B R I Z AND JOHN DEERT A N D INTERNATIONAL
BARVFSTER A T A R A < ) kND T K E M I Y I S T E R S A I D THAT T H O S E
F A C I L I T I E S COULD EF C P i N G E D . (NOTE: OUR COMMERCIAL S T A P P
AND P A S P S N S W I L L COORDINATZ E I P O B T S T O F L E S H OUT T H I S
I K V I T A T I O N AND R E P O R T ACCORDINGLY .)
Q. DURIN: T H E 25 M I N O r E S WE WERE K P P T W A I T I N G FOR T H E
A P P O I N T M ~ N Td E E X P L A I N E D TO NARD O F F I C I A L MAGHSOOB-POUR
T X Z OUTSTANCINS $21 700 DEBT T O OUR DEPARTMENT O F
AGRICULTURE POX A D V ~ N C B S 1.0 I R A N I A N M R E S T R T T R A I N E E S .
E E O F F E R E 3 E I S A S S I S T I N C T I N R E S O L V I N G T H E I S S U S AND OUR
P A S F S N S W I L L CONTACT RIM. MA3ESOOB-POUX, A 25 YEAR
VETERAN W I T H T H E YABD, S A I D THAT T E E M I N I S T R Y WAS B E G I N N I N G
T O RESUME YORL. I T S Z I E R A R C H Y I S REDUCED FROM N I N X T O
r O U R O N D E R S E C R E T A R I E S , ONE O F WHICH I S A CARRYOVER.
 CONFIDZNTIAL TEHRAN 4 6 2 5 / # 2
ING THE FABRICATIONS AND DISTORTIONS BEI?C PED THE IRANILN
PUBLIC BY KEOUEINI AND H I S "TRUTH SQUAD. IZADI SEOULD
BE AS WELL QOALIPIED POR HIS PORTPOLIO AS ANY MINISTER IN
TEE BAZAGEN CABINET AND H I S PRIVATE ENTERPRISE LEANINGS
BODE WELL POR A PRA3HATIC APPROACB TO A SECTOR CURBILNTLY
DEVOID OF INVESTORS CONPIDENCE. THIS, OUR PIRST START
AT DIALOGUE WITH HIM, SHOULD IDEALLY BE FOLLOWED BY
SECOND LEVEL CONTACT I? STAFF RESOOOCES PERUIT. IZADI'S
CLEAR RECOGNITION OP IRAN'S NITUBAL I N C L I N ~ T I O N TO TAE
US IN AGRICULTURAL MATTERS NEEDS CAREFUL TILLING,
ESPECIALLY BY OUR PRIVATE SECTOR,TO OVBRCOHE H I S SUSPICION,
I F NOT HOSTILITY, TO USC POSTURES. NAAS
BT
Y4625

NNNN
TEHRAN 4 6 2 5 / 8 2
 I n t h e Name o f t h e Al.might;v

OFFICE OF 1':i.L MIIISTE3 OF FOREIGlI AFF.11, 2

II
, ; , r a h l e Yr. S e c r e t a r y of S t a t e :

v j ir Excellency'? l e t t e r dated May 13, 1979, was received with : > l c i c r r i .

1 :~!ipreciat,ct h e c o n 6 ~ a t u l a t i o n sand good wishes t h a t you have e x p r . - s s ~ ?

.,( the occasion of appointment a s M i n i s t e r of F o r e i ~A f f a i r s of thi:
I.v,visioriel Government of t h e I s l a m i c Republic of I r a n , and wish t.o assi:r:?
Y.,,I~.k c e l l ~ : i i c j / m ~ i t u a l l yt h a t t h e I s l a m i c Republic of Irm i s a l s o ready
co-operxtc i n t h e j o i n t i s s u e s and m a t t e r s o f common i n t e r a t t o t h e
t d , ~'3;lr:tries.

I ? ! ~ n l . :rou f o r informind me of t h e appointment of Mr. C u t l e r as t h e Ambds-

u (lor of tti. United S t a t e s of America t o I r a n , and I hope t h a t a s sooll ?E
atrnosphtsre of dialomatic r e l a t i o n s between tho two c o u n t r i e s beclm ,s
1 !I o t

. r ~ r a b l rhr car1 proceed t u I r a n and commence h i s d r t i e s .

/ : w.1come your views on t h e n e c e s s i t y of f d 1 and f r a n k e x c h a ~ . uf i . i r % ,

- t c t h e r d i ~ e s t l y?r through r e p r e s e n t a t i v e s of t h e two c o u n t r i e r , 3nd in
b~ruuit of t h a t i d e a may I s e t f o r t h t h e following m i n t and i n v i t e :m~r
, #c i a 1 a t t e n t i o n t o it:
I +' . '5ecr.etbry of S t a t e ,

r.11, st.: t . 2 i r i your l e t t e r t h a t your government has no i n t e n t i o n 't,o intc!rv+:c

I . , .in:. w-iy i i l I r a n ' s i n t e r n a l a f f a i r s . I a p p r e c i a t e t h i s e?l>lir?l+.ness.
u~,v,i:, 1 :;.,vs t o s t n t e t h a t i n t h e v i e of t h e provisiorial i,ovc: m~wrrt

q, t.ion yli:
.
* t h i I L ~i t . !ic.:.~blic of I r a n t h e r e

. ~ . ~ . ; o l u t i oof
i"
l u t i o n dated May 17, 1979 or' :.o~.-
r l t r j ~ ' . .3 . i ~ t ae c n c e r n i ~t h e p e n a l i a t i o n of t h e former ra=cimt:'-
, -111iirla1s d;,:. not a t a l l comply with he above p r i n c i p l e , but i,; c l . : j r
I t , . tancc of i n t e r v e n t i o n i n our c o u n t r y ' s i n t e r n a l a f f a i r s a

n t h e United S t a t e s Senate.
$:

;n:itl.orcby
,
~ t , l ~ e l l e dt h, e I r a n i a n Government s t r o n g l y p r o t e s t s a g a i n a t t h ~ 1ir:r.
t a'

! I 1s a source of n u r p r i s e f o r t h e I r a n i a n people who wonder how i t weri

11 , t when ti.,? p a s t redime was r u t h l e s s l y f e l l i n g down our yoiml:- pcople
ITnjted 3t.3tes Senate remained s i l e n t and d i d n o t seem t o f e e l t i n t .
ri:+t:; were being v i o l a t e d i n I r a n , whereas now t h z t t h e r e v s l n t i.,.
I .s 51.
trilirnphrd an; t h e c r i m i n a l s
,):.
-
re,:ardless of t h e i r r~li:;iou:l a f f i l i:r-
- a r c In..ted t h e p e ~ i a l t yof t h e i r deeds, i t has r a i s e d t!i? C P ~o t
-1 r :
'
:! t s v i o l a t , i o n in I r n n a i d supports those who have comnni t t e J th,'
t sii:~.,af.il crilnos f o r more than h a l f a century.

8 -nnfi:!er,t tlrnf; Your Jbcellency is q u i t e f a m i l i a r w i tli tl~c * * r t tb.?t

9.' t ! )r.jnr.il,al and conttnuouv obj(,ctivc.s 'of +,lid I~r-:~iini. ':-
p * ~ o !.~ l
? - : + l n ~;,- t,o h r i n e , t o er,.l any s o r t o' intervorlt.inn l?:. for..i; r-z ' ; .
the i n l r v ,nl a l ' r - i r s of t h e i r country. Under ti c o . ~ u i + i o r c 1 I.. '
0 . s ~

:-tat<. wit5 conac?, th:t n ~ qnly t does the acLior. td: L I b-r ;.r7.r
ro1m:ry' Send'? not h t l p t o create mutual u n d e r = t u ~ d snd i ~ a b s ~ ;f ~ s '
f r t d t f i , ? o-opcratjon aa c i t e d i? your l e t t e r , b ~ itt com:~ell, t r l -
Iranisl. :pvcnunent, u'l2er strong pressure from the nation's ru'rl?c
opinjon, t o ma:.^ revisi0r.n i n its t i e s with the United States C I V I~Y I -
rnent In I . . air-ction of limiting tlhem.

I :LLSUL.C Your 5ccellency t h a t my government is a l s o deairo~iso p

estahlls:.ing closc t i e s of friendship and co-operation with th- Cnited
S t a t e s 0:' America on the baois of preserving the country's independerice
and national i n t e r e s t s and based on mutual respect. Rut theoe r e l n t j o n s
a s a l s o pointed out by Your fioellency, must be based on a new foumdatio
In tho view of n\y flvenunent t h i s foundation is consideration and rasp-c
f o r the f e e l i n g s and aspirations of tho Iranian people and acceptance
of t h e r o z l i t i e s derived from t h e i r heroic revolution.

I aesure you t!lat i n the event tho new r e l a t i o n s between our t110 countri
a r e founded on the above bases, they w i l l c o n s t i t u t e a favsrablt :~ound
f o r t b r kinds of co-operation mentioned i n Your Excellency', 1attc.r.

l l y f o r an opportunity t o meet you i n the future.

I m u t ~ ~ ~wish

With regards,

/s/ Ebrnhim Yazdi

9. Lkc. Cjrils Viubce

Thr S u c r o t a r y of S t a t e of the United S t a t e s of b e r i c a
 -
Z ? Y ('CCCC t 2 H
e
r
" , * m d ~ 6N A~ Y 79 z F F 4
BrqTATE. V A S m C
T ~ Jn " t P o A 6 0 Y TEHRAN NIACf I ~ H E D I A T E2568
24 J.; K;

I
2. ~ ' 5CIPYPlt VJ EVBPQSr FOR £ 1 9 PREPkRhTJ9013 TO. IY,PQVI.
' ? .SCY t7Clb)ITY Am I T S PLANS TO DISPERSE CKBASSf
'=ii C t j d N n TO hXT E l l l P Q 9 S I U E OM DAY OF SCHEDULED DEPIOIBTRA-
T' ' ce WE ARE NOT SATISFIED* HOWEVER* WITH PGOI.8
). .Sc~711'= TC DATE TO YOUl REQUEST FOR ADDItlONAL SECURITYI
T q r P f F 0 R C V O I D YOU R E A S E SEE PM HAZhRQIIW OR FONNIW
'AlD! O N LllGEWT BAS18 TO MAKE FOLLOWIllG POINTS:
fi. AS IRANIAN GOVSRNMENT WILL HAVE NOTICED* T H I S ADRINIS-
REEM MAKING A nAXIMUN ECFCltT TO IMPROVE
T R k ' i l O C Hh::
"<I ATIOdS* RESTORE OUR T I E S TO A NORMAL COIRSE* b&D L I f l I T
n' ( Y T ~ N T PO+SIBLE E ~ O T I O N K a I I S I I T O R MRESPONSES.
~
1;'' PAUF NO ABILITY TO COWROLSTATEIERTS FROM THE ANERICAN
F;,-S; OR IJ. S. COUGRESS.
" W : r $ V T DONE OUR B W T , HOWEVER, TO PRESENT L FACTUAL
~ FVPhTS IM IRAN A m TO DESCRIBE TO ALL INT@REStED
~ . i r t l ! FOF
7.c Irk'. Y&?TIES THE PlUTUfi INTERESTS AM0 C O N C n R S WE
5IJ:.RE I :TH IRhN.
r. Wh M F D15;TUREm BY THE PHENOMENON Olr I U C R E A S ~ N QANTf-
r 3 r r , x c + t s J s a 11) I R A N , MU n o t vnlcn sems TO BE 9AsED ON A
I rDil hv r q s u w E R s r f i w I ) I S OF THE ATTITWE OF T H I S ADMINI*-
l u r T ltlt!. WC REALIZE THAT tWL PBOI F*CES RAnY
r o r w R n I r m A ~ OWE APRE-
r l A T F Tt'. EFFORTS TO DLTE TO ORFUSE TnfE'MSGHLX4HARGfb
AT* t*SPHEHG.
9, I!f ARE S E 3 1OUSLY CONCERNED A f F'RQSYECfS THAT QEblON-
5TRtTIOHS N A Y T H i E A T D N THE SAFETY OF A ~ ~ L C AEWB4SSY
N
FERSOMdFI. I N TEHRRN. YE VOLLB L I n P THE IUAWIAN QIJVDRWNC@:I'I
f!'F EMDTIONALLY-CHARGED CfRCUflFTANCFs. A C ~ W ~ I M G L Y 'W
,C
4FQUFST G7CENTI.Y THAT AbEPUfitE NUMBERS OF lSFKLflIUE A @
OISCTPLINFD SECURITY P!ZRSOW)Ia EF PROU:3DFX) TQ,@RBT.~C? tw
6r''FR ICAN QYBASSY COMPOUYD #.Y) IT8 PLRSOIYNEL.

F. W t fiI.TO REQUEST THST STEPS BE TAKEN T Q PRSVENT

Sch,D tJLFD DEXONSTRAT SONS WHICH i4AY'BROdWE VIdLkNT *?'ROA
1rltEATEh'lNC T H E PR'EMISSSOf TI% ANERlCW ~ @ ~ P S S Y .
 IRANIAN ECONOMIC TRENDS
A REPORT PREPARED BY THE AMERICAN EMBASSY IN TEHRAN

JUNE 1979

by mid-1979 Iran's economy was ?till in the main paralyzed as

a result of the revolutionary turnmil which umhered in the Islamic
Republic last February. Despite dOc*iving elenmnts of n0rIMl~yt
such as basic infrastructural services, the level of productive
economic activity is still less than half that of a year ago.
Agriculture has been least affected and within the industrial roc-
tor, food and pharmaceutical industries are near normal operation.
1t is estimated, in the absence of any official economic data or
estimates, that the real GNP declined s m 20 percent in 1357, the
year ending March 20. Econolaic recovery is maon as a medium term
prospect and one determined more by political than economic factor..
Iran's revolutionary leader8 inherited an almost moribund oconary,
but also the fortunate factors of high foreign romerves, low pub-
llc debt, the revenue oil base and long-term potentialities which
justify moderately ambitious social and economic aspirations. Tho
impact of the revolution on foreign camnwrcial interests in Iran
has been adverse and substantial. The status of most pre-rovolu-
tionary contracts is still uncertain and busines.mcm are advised
to obtain the latest information before visiting Iran or navigating
~ t sstill revolutionary waters.
CURRENT ECONOMIC SITUATION AND TRENDS
MARCO ECONOMIC SITUATION: Iran'. post revolution economy romains
In serious disrepair as of late June. Thi8 reflects in great
part the continuing nature of the revolution, which saw the Monar-
chial Government overthrown February 11. Iran is governed by a
Provisional Government and awaits the seemingly illusive procesm
of adopting a new constitution and electing a poraunent government.
The impermanence of government and wide-spread negative expecta-
tions foster the continuing economic malaime. The Revolutionuy
Government and authoritiem inherited in February an economy, already
suffering from disequilibria, shattered by pro-revolution strike#
and concessions to workers. Industry, apart from the generally
strike-exempt food and pharmaceutical sectors, was virtually mori-
bund. The construction mector was shut down. Commerce was suffo-
ring from consumption slacknoas, cumtoms ombargoes, and an almost
bankrupt bank system. The oil soator was barely meeting do~oemtic
requirements. Agriculture, alone, appeared little affectd by the
traumatic events. But, unlik. rost revolutionary benchmarks, Iran'#
new leaders inherited a good foreign exchange reserve, low public
debt and the hard currency revenue earning power of the eamily
resumed oil sector.
Non economrc t d ~ ~ o rhave
s been pre-eminent since the Chdnge or go
ment. Typical of most revolutions, priority is given tc the "puri
tion process," and economic consequences thereof are subordinated
revolutionary goals. This "backward looking'' phase of the rrvolut
seems not yet comolete. Contracts, financial movements and person
wealth accumuiatl~n are all scrutinized and revolutionary justice
out to those consideled gullty. This process has not enhanced the
tors requisite to economic recovery --the fabrlc of authority, eft
tive decision making, worker discipline and positive expectations.
the contrary, a ma]ority of Iran's senior governmental and buslness
leadership has been removed--imprisoned, executed, voluntarily exi
or just told t~ vacate-- and with the continuing substantial loss
middle level mdndgers, professionals and technicians through emlgra
Iran's economy 1s suffering lrom lac^ of adequate leadership and ex
time, with the concurrent erosion of authority with all its consequ
ces. Offlclals, public and business, are reluctant to make decisio
and their subordrnates, llkewise fearing the uncertain consequences
from action in this continuing revolutlon, impede the execution of
programs.
Many aspects of Iran's post-revolution economy are almost disconcer
tingly normal. The lnfrastzuctural fabric of water, electricity,
telecommunicarlons, post, petroleum supplies (and record traffic) i
essentrally sound and supports ones expectations that all else shou
lrkewise be normal. Offrces are etaffed and banks and most stores
open, but the functional level of the economy is still well below n
mal, a factor understandable in a revolutzon, but nonetheless often
hard to appreciate in the midst of "normal" trappings. In June, a
senior government offlcral said that Iran's industries were worklng
at 40 percent ot capacity; 40 percent of "normal" may have been wha
he meant. He recognized as~~npedinents to economlc recovery the sho
tage of c r e d ~ rand uncertarntres.
Few econornlc data are available srnce September 1978, the beglnnlng
of revolutronary ~urmoll The Central Bank's Annual Report, whlch
presents the year's economrc data, will not be available before Sap
tember, at least three months late. Our best, educated-guess esti
of economic performance in 1357, the year which ended March 20, 19
is a GNP In c ~ r r t n tvalue of some $70 billion, down 8 percent, ve
sus a 17 percent increase in 1356. At this level, per capita GNP
would be $1,988, off 10 percent. We estimate that in constant 1353
prices the GNP fell about 20 percent to $44 billlon, which compares
wlth a 2.8 percent growth in 1356. The fall in GNP was a consequen
of the political turmoil which led the country to near economic par
lysis. Oil production, erratic during the fall, fell to a bare sub
sistence level December 26, wlth exports curtailed until March 5 an
valued at but $14.8 billlon ror the year. Value added in the group
of industrial sectors declined by at least 20 percent, with constru
tion the most depressed sector. Government expenditures contracted
to just about the payroll minimum by February.
Most observers do not anticipate full economic recovery for at leas
several years, so drabtic have been the shock waves of the revoluti

2
The oil sectur, rl"w more essential to the economy, is producing at
an average 4 ~ I I I ~ LB/D,
L O ~ almost 40 pezcent below the level a year
ago. But it this level is sustained, production in 1358 will be
roughly rqudl t o last'year's. In 1978, oil production at 1.9 Bil-
lion 8bli was d&n 8.3 percent. Revenue, however, will be at least
40 percent gredtt:~, runniny now at an annual rate around $24 billion.
Industry, little recavered, and construction considered but 20 per-
cent of normal, will depress the GNP. Agriculture will probably
post a negative tigure since, apart from even to favorable prospects
for wheat (5.4 million MT), soya and dairy, meat, rice and other
production prospects are down. Fiscal policy is reportedly to be
expansionary, but by the time the yet embryoric 1358 budget is adop-
ted, obligated and disbursed, little economic impact will be felt
this year. Foreign non-oil trade will be but half previous levels,
with imports not exceeding $9 Billion. Major projects are either
cancelled or inoperative, awaiting reconfirmation and remobiliza-
tion. Unemployment continues as the country's primary economic
and political issue, and Government leaders have complained con-
cerning the "Workers' Dictatorship." Inflationary factors have
built up and are expected to be unleashed by economic recovery, an
unfortunate price but hard to avoid. Private investment, down
slightly in real terms in 1356, is absent and will unlikely occur
in the private sector given prospects of increasing nationalization
and other uncertainties. In summary, Iran's economic performance
in the near-term will be conditioned principally by its political
environment- Continued uncertainty will impede recovery; restora-
tion of stability and achievement of a reasonable level of economic
activity will require substantial government initiative. Fortunately,
if oil production is maintained at or near a 4 MMB/D level, feasible
even without fsreign technicians in the short term, Iran will not
face financial resource problems..
Economic policy 1s st111 in a state Of flux. All that was past is
suspect. Shra lslam apparently i a sufficiently flexible in much of
the economlc area thdt, apart from an oft-declared tenent of private
property rights and an equal~tarian thrust, policy determrnation
would seem more a product of Iran's third world pobrtion and per-
ceived socio-economlc needs. The eventual mix of private and public
sectors in the econonty may be quite different from the currently
~ncreasingpublic ~nterventionin the economy, which is justified as
necessary due to the chaotic post-revolution conditions. Numerous
changes in p o l ~ c yhave been noted, witness the nationalization of
banks June 7 and insurance June 25. Nationalizatron authority is
currently pendrng for the industrial and agricultural sectors. Mini-
mum tax liability has been raised and the range of government sala-
ries narrowed. Trade pollcy seems to f a w r autatky, the relaxation
of price controls, reliance on market forces and greater attention*=
the priorities of the rural/agrarian sector. "Show-casen projects
and sophisticated military system. are out.
Iran, a8 we have said previously, has better than average long-term
prospect.. With oil reserves of around 60 br.llion barrels, the
world'. second largest known gas reserves and a not insignificant
m i n w a l s sector, its foreign exchange earning potential is capab
of dupporting a moderately ambitious long-term development progr
Eaqily overlooked in reltolutionary rhetoric is the fact that fro
th$ overly ambitious, oil-boom spending spree, Iran emerged with a
mdch improved infrastrqcture, higher level of literacy and man-
Rower skills and per qapita consumption capable of supporting a
larger indigenous industry. Revolutions are seldom efficient, and
Iran's has cost it dearly in human and physical terms. Its chal-
lenges include a population growth of some three percent, still-
high adult illiteracy, a badly skewed income distribution and
social factionalism. The country now must find or develop new
political and even social fabrics and a self-identity that can be
directed constructively to attain its individual, social welfare
and economic aspirations.
FISCAL DEVELOPpENT: Iran's fiscal performance has been abnormal
since late 1978. Disbursements for major capital projects gene-
rally ceased and arrearages from 1357 persist. Current expendi-
tures have ontinued to be restrained, hardly exceeding payrolling
Foreign len2ing and investment have been negligible for over a
year and will continue so. Tax collections ceased last fall and
an amnesty on payments was granted until June 21. Debt financing
through bonds and foreign credits ceased by October and neither
are considered short-term revenue prospects. Expenditure restrain
is credited with minimizing the government's 1357 deficit to below
$3 billion. Government external debt is virtually current, but
early resolaion of payments owed foreign companies is problematic.
A temporary budget for the first quarter of 1358 has expired and
a permanent budget is, at this writing, pending approval. The
budget is reportedly rials 2240 Billion ($31.8 BN), with Rls. 800
BN ($11.3 BNI allocated for capital expenditures and the balance
for current and miscellaneous activities. These levels are sub-
stantially below those authorized for 1357, but probably close to
actual levels of spending in the last two years. Government com-
pensation features have heen trimmed to offset somewhat the sub-
stantial basic pay increases granted last fall. The chief announ-
ced tilts in the budget favor agriculture, rural development and
housing. Decisions are still awaited on the continuation of most
major projects, but the overall capital allotment appears adequate,
especially in light of the lag between decision and disbursement.
The chief issue will be the political capacity to allocate and
disburse. The learning curve of the new leadership, lengthened
by the weakened second level manpower support which has been deple-
ted by. emigration or revolutionaryfewor must be taken into accoun
in expbctations. Another issue will be the ability or will to cle
up the sizeable arrearages from 1357. A projected $5 bn deficit
is to be resolved by higher oil revenues and personal (not institu
tional) government bond purchases. Receipts from Iran's $7 billion
external, non-monetary protfolio, ahould be around $1 billion.

4
The net of revenues from a major tax amnaaty program and the result.
from a large increase in personal tax exempt income is hard to cal-
culate, but non-oil revenues seem destined to be a rrmaller share of
the resource pie.
MONETARY AND P-RJCE DEVELOPMENT: Iran's banking system was reaso-
nably operational at this writing. The health of banks was uneven
prior to the June 7 nationalization with about 15 banks highly
liquid and about six deposit banks in substantial foreign arrearage..
Banks reopened after the revolution on a regular basis but with
erratic service; the foreign axcha a market has been particularly
chaotic, with Central Bank r e g u l a ~ o n schanged a1mo.t completely
May 5 and revised often since. Bank management, as elsewhere in the
economy, was shattered, with about two-thirds changed. Revolutio-
nary Committees often controlled evon the most routine tran8actions.
An amnesty on payment of comnurcial instruments waa granted through
June 21, at which time all except penalty fees and interest would be
due. With bank nationalization, there came an almost complete chang.
of management in the private and mixed capital banks. It in antici-
pated that with the government now liable for all claims'on tha ban-
king system, the problem of weak banks as well as the reluc+nm of
most banks to extend credit will be resolved. Continuing postpone-
ment of domestic and private debt repayment to banks in expected;
most banks, on the other hand, are current on their domestic and
foreign debt. U.S. banks, with direct outstandings in Iran of about
$3 billion early 1979, are slowly reducing their exposure. A. in
the case of other foreign banks, they are booking little new debt.
The issue of compensation of foreign as well as Iranian private bank
shareholders has yet to be determined, but the Provimional Govern-
ment has espoused the compensation principle.
Official uonetary data are not available since October 1978, but
liquidity (M2) is thought to h a w increased by Five percent from
September 21 to February 19, with notes in circulation up 103 per-
cent and savings and term deposits down 20 pcircent. Thus, the dec-
line in velocity of money offset almost entirely the large note
Issue activity which was required to sustain bank. during the eriod
of heavy withdrawals. Notes in circulation of blarch 20, were {ills
912 billion, compared with Rls. 450 billion September 22. The Cen-
tral Bank has not yet reinmtated the reservo requiraonts reduced
last October and banks are not required to purchase aovernment bonds.
Liquid banks have been enrolled in the Government's program of cre-
dits for economic recovery, which were mad. availablain May to
mdustry, agriculture, housing and various state-owned companies.
Lnterest zates or "fees" are six percent or less. The Central Bank
is concentrating on bank recovery and has not yetb adopted a mone-
tary budget. It does wek, however, a negative note issue for 1358,
which would be aided by Rial repatriation. Iran appears to face no
short-term difficulties on it. external =counts, Preliminary
eleven month balance of payments data suggest a 1357 basic foreign
exchange account balance in balance to slight surplus. Official
foreign exchange in mid-June, after some three months with virtually
no oil receipts, were a little over $10 billion. Assuming payments
in 1158 at $13 blllion, off over40 percent, and oil exports (crude
and product) averaging 3.4 MMB/D, Iran's current surplus could reach
$10 billion, with end-year reserves of over $20 billion. Such a pros-
pect may tempt Iran to repay high cost foreign debt, enjoy a cushion
until the level of economic need is restored, reduce the earnings '
rate or escalate expenditures. There is debate concerning the exchange
rate policy, with argments pro and con on devaluation and revaluation.
The Central Bank has a two tier rate, with officially sanctioned
1,
I
exchange needs sold at Rial8 70.60 to the Dollar with other exchange
purchases sanctioned at Rial8 79.00. Non-oil export earnings benefit
from the higher Rials 77.50 selling rate.
TRADE DEVELOPMENTS: Iran's trade fell substantially in 1978 and is
expected to be off some 40 percent from that level in 1979. The most
recent Iranian trade data are through December 1977. Preliminary
data for the first seven months of 1357 (through October 22) reveal
non-military imports of $@157 million, or an annual rate of $14
billion. We doubt, due to the customs and other strikes, that 8UCh
imports exceeded $11-11 bn in 1357, with total merchandime payments
around $14.5-15.0 billion, versus $18 billion in 1356. ~on-oil/4as
exports probably did not exceed $350 million in 1357. Receipts from
oil exports should reach $21 billion in 1358 if production continues
at the 4 million B/D rate. Non-oil/gas exports, dependent largely
upon the presently crippled industrial and mining sector, should be
off half. The 1358 import regulations reflect not only Islamic pro-
hibitions but a more autarkic philosophy. For example, vehicle
imports are prohibited.
Conditions at the ports after the revolutien were chaotic due to
the prolonged strikes. Despite subsequent preoccupations with poli-
tical and management issues, operations slowly resumed and Iran-
destined goods off-loaded in the Gulf during the strikes were deli-
vered. Then ethnic/political problems In Xhorramhahr resulted In
the closing of that port in May. Fortunately, almost all of Iran's
food imports, which in turn account for most current import activity,
enter through other, calm ports. Imports in customs' holding areas,
abandoned or benefitting from a warehouse-cost amnesty, are sizeable
and becoming a problem. Lack of liquidy, again, is a major impedi-
ment to resolving this problem. Financial terms for trade are new.
Most exporters to Iran desire a confirmed Letter of Credit and most
Iranian banks have in turn asked for a 100 percent prior deposit.
It is too early to see whether this obstacle will lessen due to bank's
nationalization. Iranian exporters must agree in advancu to sell
foreign exchange proceeds to the banking system.
INFLATION ISSUE: It appears that Iran will have to pay the price of
high inflation as a cost of economic recovery. Its rate of inflation
was braked in 1978 due principally to a slowing of the economy and
policies which affected real estate prices. The wholessle and consu-
mer price indexes moved an averago 9.4 and 9.7 percent in 1357, con-
siderable declines from the doubla digit previous rates. Unfortunately,
the coefficients of these indexes were virtually inapplicable during
the last halt of 1357 due to the changed expenditure patterns
caused by the economrc paralysis and uncertainties. Thus, we
consider more llkely 1357 inflation rates of 15 and 11 percent
CPI and WPI, w ~ t ha GNP implicit deflator of 12. A recent examr-
nation of current price movements suggest an annual consumer price
~nflationrate of 15-17 percent. Real estate prlces and rents have
declined. Utilities are down slightly while transport and clothing
costs are up somewhat. Food costs, apart from the generally sub-
aidized staples, push the rndex up. Fruit, meats and vegetables
suffer periodic shortages and prices in some items wrll run two
to ff3mtimee a year ago. Overall, food costs are up some 30 per-
cent in the last six to nine months. Spare vehicle and machinery
parts, plastics and industrial chemicals are in short supply. The
Government's price policy is not yet determined. Food subsidies
apparqntly will generally continue. The wage increases of last
fall, shortages, pent-up demand due mainly to political factors,
decreased productlvity and the prospect of increased Government
spending and consequent lessening of unemployment together sup-
port a prospect of high, over 30 porcent, inflation in the near
future. Essentrally, a moderate price movement in the near-term
would be a conrequence of economic inactivity, low demandi higher
rntlation rates wrll be an unavoidable price of near-term economic
recovery or stagflation will develop over the longer term.
LABOR CONDITIONS: Unemployment is perhaps Iran's greatest eco-
nomic and political problem. It's magnitude is disguised by the
present policy ot voluntary or involuntary employment at previous
levels regardless of need. Few reportedly are participating in
the Government's iinemployment Loan Program, financed atRials 10
blllion a month. Nonetheless, many wonder when the cushions of
personal sav-ngs and societal relief will run out tor the several
mlllion unemployed and millions more underemployed. These are
found particularly in the depressed construction and transport
sectors, wtth slacKness in industry and private services also con-
tributing tc the problem. The costs of compensation for little
ur no work will eventually have to be paid by the economy. A
familiar situar~onis a factory with virtually the same complement
of employees as A. year ago, but producing 20-30 percent of nor-
mal and paying hlgher wages. In commerce, employers maintain
staffs out of therr pockets, awaiting an upturn in business.
GOVerNasnt bureaucracy, like private, is still pre-occupied with
political and organizational concerns. Ironically, Iran's new
nascent labor movement, having successfully flexed its muscles
during the polit~callymotivated strikes last fall, faces a depress&
economy and urgings from the revolutionary leadership to foresake
material goods and sacrifice for the revolution. Indeed, even the
off-frustrated formal Government recently established a special f o r m
to regulate labor and put down worker interference. in operations.
The Government's trscal Droaram 18 said to include am~lovmentcrea-
tron in the rural areas Lhich it hopes will induce migraZion. from
the urban centerb.

7
THE ENVIRONMENT: Iran's political and econoinic environment is
still revolutiondry at this June writing. The populace awaits
certain specific and other, nebulous developments essential to
a perception of security and motivation to work and resume nor-
mal economrc rzsks. Amnesty of political prisoners and others
considered suspect is seen by many as a requisite to clear the
atmosphere of tear and uncertainty. Likewise, adoption of a
new constitution and election of a permanent government with
general public acceptance is seen as necessary to reducing the
political malalse and negative expectations. Establishment of
an adequate and just security and judical system is also sought.
The diffusron of authority among governmental and revolutionary
fabrics persists. Westerners, as well as western trained Ira-
nians, often feel the effects of the revolution's judgement
against western influence and presence. While physical danger
has lessened, the atmosphere can be inhospitable.
IMPLICATIONS FOR THE UNITED STATES
The economic impact of Iran's prolonged paralysis and revolution
on its foreign suppliers of goods and services has been signifi-
cant and will be felt for some time. Foreign exports to Iran
fell dramatically from late 1978 and orders in the pipeline are
almost exclusively food, pharmaceuticals, paper products and
spares. U.S.. non-military exports, which increased in 1978 by
$1 billion to $3 7 billion were but $245 million the first quar-
ter of 1979, off 72 percent. U.S. export potential remains good
in agricultural commodities and such shipments have resumed at
normal levels. Investment prospects are, of course, uncertain
and U.S. j o ~ n tventures in many cases are anxiously awaiting word
on their f u t u ~ e . Some, as is the case in the minimally affected
food and drug ~ndustries,report a brighter situation.
Many Iranian Government contracts with foreign firms have been
cancelled, few have been reconfirmed and a good number remain
rn suspense. One calculatron of the value of cancelled civilian
contracts with forelgn firms is $38 billion. The value of can-
celled mrllt-ry-related contracts with the Unlted States is at
least $15 blllson, apart from many related services. To the extent
that these sales are not redirected, the loss to the U.S. economy
must include the multlpller effect and loss of U.S. employment.
Among major c i v ~ l i a ncontracts declared or considered "dead" are
the aromatics plant at Abadan, Kalingas LNG, the two French 900 MW
nuclear power plants, the Tehran/Khorramshahr/Bandar Khmeini (Ex-
Shahpour) rallroad electrification and Tehran's Center City Deve-
lopment "Shahestan", Projects presently considered unlikely to be
continued or, I £ so In a highly modified form or not with foreign
contractors, Include Tehran's International Airport, the Qom-
Bandar Khomerni Hlghway and Tehran-Tabriz railroad electrification.
In the undecided but unlikely column are the IGAT I1 $as pipeline,
the two German 1200 MW nuclear power plants (over two-thirds com-
pleted), the Italian steel mill at Bandar Abbas, and Tehran% Metro
subway. Projects to be continued include the Iran-Japan Petro Chem
cal complex, the Sarcheshmeh coppar complex, gas recovery/rein-
jactlon in Khuzestan (though modified) and, also in modified form,
the telecommunications projects. Businessmen are urged to contact
the Departments of Commerce and State to obtain the most current
information concerning specific projects as well as general econo-
mic conditions in Iran.
Most foreign firms having outstanding contracts or joint ventures
in Iran have resumrd contact with their Iranian colleagues since
the revolution. Many believed that had they not returned --
and some did not interrupt their presence -- it would have indi-
cated to the Iranian agency nomething between disinterest and
culpability for past actions in Iran. The results of renewed con-
tract have differed greatly, but on the whole the foreign business-
men see their visits justified even if all issues were not settled.
In many instances the foreign businessman has found that the govern-
ment was not yet able to obtain a decision on a given contact.
Public agencies, in cases where renogotiation has occurred, appear
in general to seek downward modifications in contracts, a decrease
In unit labor costs, lower expatriate presence and a waiver by the
foreign firm of demobilization/rclmobilization and other costs
relating to the revolution. Thus, even when a contract receives
a 'Go-aheadn, the foreign firm, in most cases reluctant to resume
work until arrearage6 are cleared up, faces some difficult public
policies. Iran's formerly large foreign population is reduced to
a few thousand legally documented workers. The former U.S. popu-
lation of at least 45,500 is down to several hundred, excluding
permanent resident dual nationals. A new and highly restrictive
foreign work permit policy seeks to maximize employment of Iranians,
but will make difficult the resumption of old or execution of new
contracts.
The Embassy continues to provide current guidance on travel to Iran
either in response to direct queries or through Washington agencies.
While many U.S. businessmen have continued their work or returned
permanently or periodically without incident, there have been nume-
rous instances in which businessmen have been detained, restrained
from leaving Iran or subjected to varying forms of employee harass-
ment. The Embassy's Security Adviorylate June continues to recog-
nize its inability to afford normal protection to American lives
and property. Business travel for specific objectives, other than
general commercial promotion, may be warranted, but visitors are
urged to obtain a current assessment before initiating travel and
to maintain contact with the Embaeey while in Iran.
 0..
. 'Jc.>.;> s z , : l ~ / ;1 1 7 1 :::;

ZNY CCCCC 225

5 BT
C~ 0 N F I D 3 N T I A L TE3RhN 05415
5 3.0. 12063: S P S 6 / 2 0 / 9 5 (TRYLO:, C L I P 3 3 . ) OR-S
%TAGS: i,ALE, EEIL Oi'KJ, ? F I N , I F
SUaJ2CT: ( U ) I ;AS'S EO3EISN ASSISTASCE. INVISTYPNT,
[ l i Y i l ? l S AWL C1II 1 6 R Y I C ?

I DSPT PLSS EXIKbAV3

P A R I S ALSO FOR OECD
:l. ( C ) ENTIRE TEXT.
2. ACTIb!G ECONCCUh'S OSTAINEC JUNE 12 FROM DR. REZA
S A L l K I , ACTING P3PSICENT OF TEE ORGANIZATION POX
IKVLSTXEIT ANC ECONFMIC ANC TECKYICAL ASSISTANCE OF IEA
( O I ? F A ) ( L O C A T B S I N A N D S U B O R D I N A T P TO 5 3 M ~ I N I S T R Yos
Z ~ & V O M IAFFAILS ~ ACE YINAYCE), SUXrthRY INPOR3ATIO.Y 20;;-
CPRNIYC Ti45 STkTUS AND POLICIES O f TZE PSOI'S 1 3 a E I S N
SERYICS. !.
ASS1STA)ICF A:dL INVESTYENTS, SEVENUXS ANI: EXTPSN'L DEBT
L I S T I E ; OF IRAI'S C J d C L l T I V E ( b S O S S )
PGBEICA GRAFTS. 2RELITS AN? INVES?%ZT BY :HE O I E T A ,
ACTIOUS CIXSYJLLY OUC3CE3 BY T A 3 PREVIOUS =OV3RKX!NT,
YAS CARRIEE IN 1 3 E TEERAN PRESS MASCk 29, EAVI'IS 3EEN
RBLEhSED .BY SOMX YORXERS OF T E 3 OIETA. L SENIOR O I P T h
C P S I C I A L MlINTAINS TBAf I T CONTAINEC SOME E9a03. 1 E HA
d i i l N IVAIZL'LE .
BPEN PROHISS3 A 2ORRECTED ;?TAILING AND WILL 3'JBNIT I ?
IN TEI M/J.?lTIPK;, Ti?E ?UiLISAEZ L I S T S
ACEBE36TES ILL SERVE %S b 3EN3RtL INDIC!?IO.Y 3 F T F 3
MLSNITUDZS INVOLVEC: ;RLP!TS - 5126,'d50,15Si 1 3 3 D I T S
$ 7 , 9 € 9 , 5 2 3 , 4 4 5 4YD INVESTYEYTS $354 3ILLIOE;.
-
3 . FOZEICN ASSISTAY:3: TEE FCBZION LSSISTLVCE BUD3XT
POX T E 3 CUHXZKT l'J57- TF?.9, :71IC9 BZ.:dN Unkc3 2 1 , I S NOT
YET F O B Y F L ~ T E D , LCCOEDI:~: TO DR. s m n r . TEE owsr
DISBURSE32NZ SIX?: :3E t b B . 1 2 IZVOLUTION B i S iZ3Y I 0
TiiE OPEC ??!is. 5E S b I C 9E HOPED CGNNITU.S:;TS ?C,?LD 3 1
M3T. A I S C 3 M L N T S ON S T P 2 I P I C CSUNTBY PRO:RXP'i, ?90;J3Y

EISSURSENBNTS SINCE ' 1 ~ 4 ~ ' RZVOLUTION.

s
 COY3CNT: GIVEN CURSENT BIT,ATRRAL F E I C T I G N , * E D3 LDT
j - EXPECT MUCH I R A N I N A LARGESS.

/
1
T
-
-
-- DESPITE THE EARSY MARCH P 3 0 I AVN3UNCEME'IP OF
SLSPENSION OF FURTHER AID, SALIMI SEFPQHED I 0 PENDING
PROGfiAKS PBROUG3 THZ J O I N T INVESTMENT CO3PAVIES IN A
- WAY TO INDICATE TEAT TEET WERE ALIVE.
-
TLhEGAL
- A R E DBAD .
THE PROGRAMS, TFRMEC "uEVER PROVEN V I A B L F "

--INDIA - DISPURSEYENTS k 3 A I N S T THE TUDRTMU<S IRON PROJXCT,

i1HICH HAVE BEEN VIRTUALLY COYPLETEC, 2EMAIN SUSPSfICEt
DUE TO PEBFOSYALCE DISPUTES.
OPEC FUND -
DR. S A L I Y I S I I 3 THAT IRAN ZECENTLT REFUSED
- TO RESPONC TO A FINLNCIAL CALL ANE 3 h I S E 3 .'ITB T 2 9
- FUND I T S CONTZNTIOL TBAT IR4N'S QUOTA 4 0 3 s N3T
-- PROPEELY REFLECT I T S O I L PROCUCTION HJLATIVE TO OTFES
T d E PBRTIC'JLAR REFXPENCS YAS TO Sk'JDI CBA3IA.
- MZ3BRP.S.
SALIMI S A I D TEAT IRAN'S COXP!IW&V'I' OF 6 4 2 3 3ILLIG.V

I
- (INCLGDFD $120 MILLIOY FOR I F I D ) COfl?Ai?ES 6'1" $ 4 5
- MILLION BY SAUCI AilA9IA. A NUCH LAAGER O I L PBOCUCBS
- AND COWSIDERB3LY 3 6 4 4 E R OFF. BE S L I D TH4T DISBURSE-
- MENT BY IRAN TO THE FUND THUS FAR EXCEED $220 MILLION.
(4. FORZIZN IliVESTME!IT: DR. SALIMI S L I D THAT THE
REVGLUTIONXEY. GOVERNMENT'S POLrCY OF F O R E I M INVEST'IENT
I I S S T I L L UYDXR STUDY. BUT IN TAE MSANTHILE THERE ARE N3
'PLANS Tt C I S I N V F S T . 'HE AC1X0h'189DbED COUSIDPTkSSE
C R I T I C I S K C O N C P R ~ I N 2 THE PREVIOUS GOVIRNMZNT'S FOdEI3N
INVXSStYENT. THE FCCT FRAT IN SU?SEQJENT CAYS TBF PSESS
PLAYED PBOKINENiLY THE TRAVEL 01 MINISTER OP INDUSTRY
IbDc;!INTS TO ATT2ND A BOARC YEETIYC TO XRUPI? 9LTH.79 SU3-
OESN
INVESTMENTS .
AN UNDCRSTANDABLE IRANIAN PRIDE IN SUCS FOREIGN

5. R E V ~ N U E SFaOY TZE OIETA POSTFOLIO: 93. ASERAFI,

SALIMI'S P K E 3 2 C 3 S S 0 8 , ESTI?llTED f E l T INTZREST LKI!
FRINCIPAL BECEIPTS BY IRAN FROM THIS PORTFOLIO C F ?GREI:V.
ASSETS VOULC RPACH $1.2 BILLION I N THE C09RBNT I B I N I A S
XEIW. dEEN SMBOFF NENTIONEL T H I S ESTI?lbTE, WITBOUT
ATTRIJUTION, TO SALIMI, a E S A I D I T SOUNDED SIGN. 9Uf fix
THEN ACMITTEC TEAT I N 31s NEVNFSS TO THE POSITION EE
HEALLI HAD NOT ASSESSED T E 4 ISSUE. TWO P a I N C I P h L B?PAI-
n E K r s , $463 M I L L I ~ KSR3'l TilE LONDON YATER N A R C CNC AN
BT
d6415

YNKN
 ACCELBRATED RZPAYMENT OF $380 MILL13C ?:.OM TiiE ERE1 OF
F2hEiC3, ALONI: L I L L ?BII4G IN $ 7 Z a MILLIOx; INTEREST 4ND
OTaER PRINCIPAL SHOULD PUSE T B 3 BLVXiiUIS TO OR 3VER
ONE BILL,IGN SCLLARS. CRLINQUEN5IES TO T A T IN ISAY 'S
F O R b I l C b S S I S T A h 2 E P2039AH ASP TiiOST ?F.i7BIO'JS!,Y REP031'5D:
EGYPT, SUCAN AMC PACISThN. ESYPT'S 9PB7 J 4 S RESC.fEDUL19
LONG A 3 0 h'E %\V3 KO DETAILS COSCERNIHS S 3 C I N Clr
P A ~ I S T I N ' S D&FLIq?UEECY EVBLES ALONG dITiiOUT AYi' F0QY:L
RESCHECi'LING. 2EVFIIOE CATA FRO'&' T3E I>VEST;.',Z:(P PORXOLIO
CONTINUE TO BE UNAVLILA3LE.
6. CCST SERVICZ BY IRAN: THE 3 1 6 T A I S ESSPOVSISL7
FOR SERVICIk; OF IRqSq0S P i l S L I 2 D?hT ( C I R T C T AND, I F KPID
33. GUPi?i.YTZED! 95 YZLL FOR h P F 2 3 V I S ; '.LL F3RTI;d DC31,
G Y ~ G O V E : N M Z ~ I T I:KNCIRS. IF" Ta?. AFTEXM~~:? O? THE
REVOLUTION. WiiICfl lSLS PRECEDED SY CXIPPLING B Z ; : P A;JJ
,PUELIC SECTOR S T R I S E S . T 9 E O I X T k V1S UN33P 3 9-.P L T. PB?FS3PZ ..
~TO-~~PLAI:-LAT~ 6.4 rj:!,a~
~~ ~ ~

F.IY~~I;;T~--~.::P-TO
?TI!E nRAP :!AD 3iJA?AP;TC?D. I?1 S9M.I. 0 9 TBJ LATT39 CAS?S,
$ T E E OIETA CEPXRHEE ON PAYMENT AS GUAXACTG3 UNTII 4
aREASONABLS FF'FOST COULD 33 Y 4 3 E TO ;>T PL?PIY?RT

~ ~ , X C ~ P T I Oii-13:
HS THE I'IDLS'I'RIAL C3s'"IT S k J Z , ' d 3 S E FqQ'
I S NCT CVAPBNTI'ED 3Y ?HI. ,979?', AVC I%AK I.3;DTOil COkPkkY,
!A SUdSIDIARY OF ICRO. i)UT VOT ~iJ~.Rl?\lTZSll.DR. SALI-II
!COMPLAINED A 3 0 U I 172 L i T Z PfLYYIYi i E N A L ' i I ~ S 5 1 'If13
USG (EXIMaPi;' Lr AT,) A?II: A S i E D 1 2 , IY. C O f J S I C I : B I T I O ~ ~
?- O. P TIiS . D I F B I C ~ L T I E S l R > X YAD' aEEl T H ' R O U ~ K .WtiICK JERZ
*NOT FINANCIAL, T a E USC .COULD -NDT P O R 3 I V s TIIES.L LMOIINIS.
: H E ' S k I D TE4T T I i l OIETA. i3.d.D ?{IF SPVSKAL I 7 N L L T I S S FLkOSR
TEE MATTER Y I S LOTIZED AND TH!.T ROY TKE MPLP I S DSCLI%Ih'G.
CLAIMING FORCE HAJFUEE. Fa!BO?F S-XrC HE UNC,F!?Sl'3CI P'i9
COKCERN, 3GT OESEBVED TK4T TEE PZOI YAS I R Y I K S TO 3 8 7 5
I T EOTB WAYS. 33VE2NKr1'11 AGFNCIXS ~ l ? i Z BEJZC1IINS I 3 3 C F
MAJSUKE C L 4 I Y S 6Y FChXICN CONTP4CIOiiS C O N C E S ~ I NYO: ~<
NOT ACCOFIPLISHED DIi?IA: TIIZ ?ZVOLUTIO,<. E'IBOFF lZ3
THE MACNITUCZ CF THE PXN4LTIES LNC I F TEEY YERE NOSTiT
P30Y TiiX VS:. EE ESTIYRTED THAT Z Z Y A 3 C ? T 3 b Y TO
OVZR $1 # I L L I O N AND TBbT ALMOST ALL YAS PROM T 3 3 US:.
EMBOPF EXPLbINEC*TRAT "RE OSG HAS XIPTLE LLTITrJC3 IN
THE HATT68 OF DEaT COLLECTION, TO 'lilICA S A L I ' I I SXII!
THAT I F TZZ US: ?RESSES, HZ # I L L iIAVE T 5 SEZ: T I P
NECESSAIIY TUNDS FROfl TiIE ECCNOMIC COUNCIL. NBAS
BT
116415
NNNN
C 0 N F I D E N T I A L TEHRAN P6415/2
IINNNBFOI1VV ESACM9BRA274
00 RUQMHR
DE RUEHC 1 3 8 0 1 7 5 1 7 4 8
Z N Y CCCCC ZZ H
0 2 4 1 7 4 6 2 JUN 79
FM SECSTATE WASHDC
T O AMEMBASSY TEHRAN
BT
- IMMEDIATE 3
17 588
C 0 N F I D E N T I A L STATE 163:;i
FOR CHARGE
E.O. 1208 GDS U23/85 (PRECHT, HENRY)
TAGS:PEPR, IR, US
SUBJECT : AMIR-ENTEZAM STATEMENT
1. (C) ENTIRE TEXT.
2. WHEN YOU SEE YAZDI OR AMIR-ENTEZAM, R E A S E CONVEY OUR
APPRECIATION FOR THE LATTER'S HELPFUL TV STATEMENT ON U.5.-
lRANlAN RELATIONS. WE HOPE THAT WE CAN CONTINUE T O COOL
THE RHETORIC AND BEGIN TO MAKE SOME REAL PROGRESS ON THE
THORNY PROBLEMS I N OUR RELATIONSHIP.
5. I F THE ASSIGNMENT OF AN AMBASSADOR I S RAISED PLEASE
OISCOURAOE SPECLLAT ION ON TIMING OF ANY ANNOUNCEMENT. AS
YOU KNOW, THERE I S STILL STRONG FEELINQ HERE OVER
IRANIAN-REJEQION OF AMBASSADOR CUTLER AID I T MAY BE SOME
TIME BEFORE-SENATE WOULD BE RECEPTIVE T O ANOTHER NOMINATION.
CHRISTOPHER
RT
 FAHWV ESA829BRA839
P R R UQMHR
DE R UEHC A 8 0 4 7 1 8 0 2 2 4 0
ZNY S S S S S ZZH
P 2920092 JUN 79
FM S E C S T A T E WASHDC
T O AMEMBASSY TEHRAN P R I O R I T Y 3 2 3 2
BT
S E C R E T STATE 1 6 8 0 4 7

E.O. 18065 GDS 6/29/85 ( P R E C H T , HENRY)

TAGS: RINR, IR

SUBJECT: REPORTING S U B J E C T S

REF: TEHRAN 6605

1. (SECRET - ENTIRE TEXT)

2. FOLLOWING I S TEXT O F R E F B REQUESTED I N R E F T E L . REF

CABLE POUCHED JUNE 2 8 .

, A S YOU REQUESTED AND A S O P P O R T U N I T I E S DEVELOP I N THE ,

WEEKS AHEAD, HERE ARE SOME O F THE T O P I C S ON WHICH WE
COULD USE ADDITIONAL OR COUNTINUINC, INFORMATION:

1. P O L I T I C A L R E L A T I O N S H I P S W I T H I N THE REVOLUTIONARY
LEADERSHIP.

,A) WHO ARE POTENT F I G U R E S W I T H AND WITHOUT O F F I C I A L

POSITIONS? WHOM SHOULD WE WATCH A S COMERS? NEED B I O S .

"B) WHAT ARE THE P O L I T I C A L A L L I A N C E S AND STRENGTHS O F AM

ENTEZAM AND SABAGHIAN? WE KNOW RELATIVELY L I T T L E O F
EITHER.

C ) WHERE DOES YAZDI STAND I N THE HIERARCHY A F T E R H I S

S H I F T TO MFA? D I D HE G A I N OR L O S E POWER? HO; HAVE PZFA
PERSONNEL REACTED TO HIM AND ARE THERE ANY PREDICTABLE
A F F E C T S ON P O L I C Y ?

'2. WHAT IS THE PO'ULAR IMPRESSION OF BAZARGAN? . HOV IS

HE REGARDED BY V A R I O W KEY GROUPS? DOES HE HAVE ANY
RIVALS?

' 3 . WE DO NOT HAVE A VERY GOOD F I X ON TALEGHANI, H I S

ENTOURACE AND L I N K S T O OTHERS I N THE R E L I G I O U S AND
SECULAR ESTABLISHMEXTS .
 /4. WE NEED SOME F A I R t Y SYSTEMATIC APPIiOACH TO THE D E P I C -
'I'ION OF TRENDS, I N C L U D I N G A D E S I G N A T I O N O F S O E C I F I C P O L I -
TICAL AND ECONOMIC AREAS T O WATCH AND P E S I O D I D REPORTING.
SEVERAL CATEGORIES WERE PIENTIONED I N OUR E A R L I E R CABLE.

' 5 . HOW I S T H E US P E R C E I V E D ? W3AT A C T I O N S OR I N A C T I O N S

S I N C E MID-FEBRUARY HAVE HELPED OR HURT US? WHAT COULD WE
I10 BETTER?
t .6. REPORTS O F M I L I T A R Y CONVERSATIONS ARE PIOST IIELPFUL.
I,'ROM T I M E TO T I M E I T WOULD BE USEFUL T O SUMMARIZE, D E P I C -
' r I N G TRENDS, FOR EACH O F THE S E R V I C E S . P O L I C E AND
(;ENDARMERIE I N F O ALSO VALUABLE.

1. WE A P P R E C I A T E EXTREMELY VALUABLE ECON REPORTING. E

('OULD USE ( A S PART O F NO, 4 IWOVE) REGULAR COVERAGE O F
MARKET BASKET P R I C E S AND SHORTAGES, EMPLOYMENT, G R I P E S .
IlOW ARE THE UNEMPLOYED MAKING ENDS MEET?

8. WHAT ARE THE A C T I V I T I E S , STRENGTHS, PLANS OF L I B E R A L

IIEMOCRATS (MATIN-DAFTARY) , NATIONAL FRONT ( S A N J A B I ) L E F T
GUERRILLAS (FADEYEEN), VARIOUS MUJAHEDIN GROUPS, PRO-
SHAH ELEMENTS?

'9. HOW FARE THE P R O V I N C E S , PANTICULARY HARVEST, FOOD

AVAILABILITY?

'10.WHAT I S STATUS O F E F O R T S TO CLOSE DOWN, S E L L O F F OR

!;HIP OUT M I L I T A R Y F A C I L I T A R I E S AND EQUIPMENT?

; 1 1 . WHAT CAN YOU GATHER O F P E R C E P T I O N S O F KEY E M B A S S I E S ?

WHAT ARE THE S O V I E T S U P TO?

'12. WHAT I S THE S I T U A T I O N WITH THE U N I V E R S I T I E S , NIRT,

OTHER MEDIA?

13. STATUS O F PLANNING F O R THE C O N S T I T U T I O N AND E L E C T -

IONS.

' 1 4 . WHAT HAVE P G O I / K H O M E I N I DONE ON AMNESTY F O R

M I L I T A R Y P O L I C E , OTHERS?

'15. AND, I N BETWEEN, D O N ' T FORGET TO PLAN THE FOURTH O F

J U L Y PAOTY. CHRISTOPHER
BT
#8047
1s I O Q ~ I ~ L W ~ ~ / I P I**
ZYY CCCCC
i u i 4 2 e z JUL 79
m cmnIss/nAAa T m r m I l r w
9 0 IUZgJCS/SLCDLT V W I DC
INTO IOEBC/SLCSTATX IASBDC
PULKJCS/JCS VASI DC
RUtADVD/CSA UASI DC
IULNAAA/CYO VUI DC
PULAllUCSA1 VASE DC
IUSNAAA/USCINCLOI 1AIBIY~LW@L
RUZIJCS/DIA VASE DC
RUulO1/CARMISI/HAA A L u 1A
a*

1OI: AS?: ISAIDSAA; NLA: IIN/PW-SAS8 DJCS-J-4/5!

DACS-IIW, OP-63; PAI-UTT; tCDC/LCJ-4/T, J-8-J-2
SUBJ: IIAYIAY CONSTITUTIOW ( 8 )
1. ( 0 1 TIL TLIPAN T I n r s , rscwrp xr A srnrrs 01nrrorrs.
PURLISILD ITS,,TIANSLATIOY 01 TIL DIAPT 01 T I L IIANIAY
CONSTIWTION. THL I t P O I T S 1OITBLI STATLD TIAT TIE
WIYISTP 01 STAXI TADOLLAI SAIABI BAD,,COY1IRMtD T l I S
TBANSLATIOY w SL~MTAWTIALLT COIIICT. m~ BIAPT COY-
TAIYS 151 AITICLIS LYCOMPASSIIC ALL 1ACtTS BY V I I C I T l l
WLU ISLAMIC ILPOBLIC WILL B t C O l L I Y L D , ~ I 1 APPllOlLD. T I I S
n l s s l i a t CONTAINS A STYOPIS 0 1 A r t I c L x s , w1cr D t r r c z L r
OR IYDIPLCTLY. VOOLD U 1 t C T TBL IIAYIAY AIMID TOICLS AYB

--A. AITICLL 6
TIMt OF MAP.
- CENSORSBIP VILL ONLY DL IMPOSED IN
--B. ULICLL - TBL PILSIDLNT IAS TO B t 0 1 IIAYIAN OIICIW
76
AND BAS TO BL AN IRANIAN CITIZlM.
--C. AITICLL 8 2 - "TUB PILSIDMT'S OATB," INTLI ASIA,
RPQUIBLS TPL PRISIDLNT TO OSL ALL XIS POUPS TO 00111)
THE TI1LIITOIIAL INTLQBITY 0 1 TIE COUNTIT.
--D. -
ARTICLE 93 TIE PILSIDLYT I S T I 1 SU?ISML Con-
WANDLP 01TBL C O U Y T R Y ~ S nILITArtT mrcrs. rrr carrr or
STA11 0 1 TBL ISLAMIC ILPUBLIC'S AIMIB POICES VILL BB
SELECTZD AT TBI SOCCLSTIOY 0 1 THL CABINET MIWISTLIS
AND APPI01LD BY TBL P I L S I D L R .
--L. AITICLL 9 4 -
LWPOISLMLNT 01 1lAY.S PACTS UITB
O T I P COUYTPIU AN1 IWtKBYATIOWAL T I I A T I U , . I S T I E
RPSWNSIIILITT 0 1 TBt PIESIDXUT. ?OLLOUIYO PAILIAMLYTAIY
PACTS AND T I L A T I P
-4. ABTICLL 95 - DLCLAIATIOY 0 1 I A I . TIPOL AND T I L
HAKIWO 01PIACL IS A POVLI 0 1 TEE P r n I n s w t ~~OLLOVIWO
U P P O ~ U BT rat PAnLrwrNt. INc ~ s u01mnorncr,
THE P R I I D I N T CAN.MAKE SUCH DECLARATIONS f0LLOvING CON-
SULTATION WITH TEE UEUBERS 01 TEE CABINET.
--Go ARTICLE 1#3 -
CONDUCTING T I 8 A11AIRS O? TEE COUNTRY
AND BESPONSIBILITT FOR ALL C I V I L AND M r L r r r r r o a o r N r e r -
I I O N S LITS WITH TEE C ~ N C I L01MINISTERS.
--H. ARTICLE 121 -
TEE ARMED 1ORCtS 0 1 TEE ISLAUIC
REPUBLIC 0 1 IRAN ARE RESPONSIBLE ?OR TEE COUNTRY'S
INDEPENDINCE AND TEBBITORIAL INTEORITY.
--I. ARTICLE 122 - NO ?OREIGN SOLDIER 0 1 OITICER I S AL-
LOWED TO S ~ V IPN THE IIANIIN rrnn mrcrs. T a r STAY
OF ~ O R E I C N ARnED POPCIS I N n r couwrrr or rnrIr rwsror
THPOUGB TIE COUNTRY r n L ONLY BE ALLOWED varn I N T a r
INTLBDT 0 1 THE COUNTIIY, AND V I T I T I E APPlOlAL O? S/4
OF TEE w n o L s PARLIAMENT.
--J.
TO BE UPPOVLD
-
ARTICLE 12s TEE ANNUAL HILITART B u w r r WILL mrr
a THE PARLIAMENT. rxrrwsts ?or B u r r r e
WEAPONS AND THE REASONS 101 IAVINQ TO PURCPASE THEM
WILL HAVE TO BE MADE CLEAR IN THE MILITARY DUDGrT.
--K. -
ARTTICLE 123 ESTABLISEUENT 01 ANY KIND 01 lOBEIQN
BASE IN IRAN, EVEN ?OR PSACEIOL PURPOSES I S S T I I C T L I
FORBIDDEN.
--L. -
ARTICLS 138 U I L I T A I T TBIBDNALS A l t TO B t SET
UP TO CONSIDQ VIOLATIONS 01 smclrrc nnxrrrr r o T r r s
A N D RLSPONSIBILITIPS. T a r c o w s r D r r r r r o N or a t r r r r L
OPPINSU lix,LEGEnLy c o u u I T r r r BY nnrrrrr r o L x c r PEE-
SONNEL IS TEE DUTY or GENERAL comts o~ Jusrrcr.
-
--u. r R r r x c L r i m TO n o T r c T AND ourm rrr c o r s r x T u r r o n ,
AND TO INSURE TIE C O N ~ O R M I T Y 01OTIER urs wxtr I T , . A
COUNCIL TO PROTECT TEE CONSTITUTION WILL BE S R UP WITE
THE 1OLLOWINO COHPOSITIONI
---- I. FIVE RPLIGIOUS L r r r r n s WHO ARE AWARE or TEE
REQUIRPIENTS 0 1 CoNTltntoaAuY TIMES. rrr P r r t r A n r N r WILL
BT

NNNN
CONIIDEN TIAL
CHOOSE THESE ?IVE PERSQUS MOM A L I S T OF VELL-KNOWN
RELIC IOUS LEADERS.
----2. S I X EXPERTS IN JUnICIAL MATTmSZ TEREL OF VEOM
WILL BE LAW PROFESSORS AT TEE COUNTRY S COLLLGES 0 1 LAW,
AND THE OTHER TPRPE JUDGLS or THE C O U N T ~ T'S s u ? R m L
COURT WIO WILL BE ELECTtD BY PARLIAMtNT.
2. (C/N?) COMMENT: 11 TEE ABOVE COISTITUTION I S
FORCES AS THE SUPREME COMMANDER (ARTICLI -
RATI?IED, THE P R E S I D t l l t WILL HXAD 211 IRANIAN MILITARY
APPEARS THAT T H t CEIEF O? STA?? WILL BE EQUIVALINT TO
95). I T
OUR CHAIRMAN O? THE JOINT CEIEFS OF STAT?. I F TEE
PRESIDENT I S ALSO HEAD 01 TllL ISLARIC RELIGION (TEE
OFFICIAL FAITH, JA??ABI SHIAISR). AS WOULD BX I N TEE
CASE OF lEOMEIY1 BECOMING PRESIDENT, EE WOULD BE IN AN
ESPECIALLY POVERIUL POSITION VIS-A-VIS TEE MILITARY.
TBIS ALMOST TOTALITARIAN SITULTION COULD BMBWL BLCAUSE
I T CAN BE ASSUMED TEAT TEE LEADZR (HEAD OR CEIEF
GUARD THE CONSTITUTION (ARTICLE -
AYATOLLAR) O? THE FIVE RXLIOIOUS LEADERS INTRUSTED TO
i r e ) COULD nu BE
KROMEINI. SBOULD A LrynAn rr r t r c T r D P n l r s r o r n T . T a x
RELIGIOUS LEADERSHIP WILL S T I L L BE A PlOMINENT ?ACTOR
IN DECISION UAfING. STRATIOICALLTt T l t I ?ORBIDDING OF ANY
FOREIGN BASES ON IRANIAN SOIL EVEN 101 ?EACE?UL PURPOSES
(ARTICLE -124). 11 EWIdREIb (AND WB AS9UME I T WOULD BE
AS LONG AS K a o n r r n r nw POWER), roun r s r n u D t r r E s T r a -
LISEMEW 0 1 1 . 9 . MILITARY ?BE-REVOLUTIONARY OPLRATIONS,
OTREP THAN MUG RELATED ?UNCTIONS. 1l)PLEMtNTATION O?
TEOSE ARTICLES NOT sunnmrzm IN T a r s nrssmr, A n r NOT
CONSIDWED TO IMPACT ON T E l IRANIAN ARMBD FORCIS. IT
I S REITtRATLD TEAT TEE CONSTITUTION I S ONLY I N DRAFT
FORU, A POINT RtCENTLY MADS ONCE AOAIN BY SAHABI TO EUB
TEERAN O??ICtRS. NVMtROUS OBJECTIONS HAVt ALRIADY
SURFACED BY DI??ERENT ?ACTIONS O t THE POPULATION. CAST
BT
Y6965

NNNN
CONIIDENT IAL
 CONFIDENTIAL TEHRAN 7 6 4 8 / 1 O F 2
DE RUPMHR # 7 6 4 8 / 0 1 203**
ZNY CCCCC ZZH CLASS: CONFIDENTIAL
P 2212512 JUL 7 9 CHRGE: CHG:LBLAINGEI
FM AMEMBASSY TEHRAN APPRV: EC0N:MJOHNSON
TO S E C S T A T E WASHDC P R I O R I T Y 2 7 4 8 DRFTD: EC0N:RBASH
BT CLEAR: ECON-3 CHG
C O N F I D E N T I A L S E C T I O N O l O F TEHRAN07648 POL RF CHRON

E.C. 1 2 0 6 5 : GDS 7 / 2 2 / 8 5 (JOHNSON, MARK) OR-E

TAGS: E I N V , BEXP, B D I S , I R
SUBJECT: U.S,.-IRAN COMMERCIAL RELATIONS

REF: STATE 1 8 0 9 5 7

1. (C - E N T I R E TEXT)

2. V I S I T I N G DEPTOFF CALLED ON BANK M E L L I P R E S I D E N T J A L I L

SHORAKA J U L Y 2 2 FOR D I S C U S S I O N O F U . S . - I R A N I A N COMMERCIAL
R E L A T I O N S H I P S , DRAWING ON P O I N T S CONTAINED R E F T E L . WE
PARTICULARLY WANTED TO S E E K H I S VIEWS CONCERNING P O S S I -
B I L I T Y O F REACTIVATING CHAMBER O F COMMERCE OR B U S I N E S S
COUNCIL S I N C E SHORAKA HAD BEEN IRANIAN CHAIRMAN O F THE
ECONOMY AND FINANCE COMMITTEE UNDER THE U.S.-IRAN JOINT
COMMISSION.

3. DEPTOFF OPENED CONVERSATION BY B R E I F L Y SKETCHING THE

MOOD OF U.S. B U S I N E S S , BASED ON CONVERSATIONS WITH SOME
3 0 0 F I R M S S I N C E THE REVOLUTION. B A S I C MESSAGE WAS THAT
THERE WAS S T I L L I N T E R E S T I N MAINTAINING COMMERCIAL T I E S
WITH IRAN BUT ALSO SOME IGNORANCE O F AND CONSIDERABLE
UNCERTAINTY OVER EVENTS I N IRAN. U.S. COMPANIES COULD
ADAPT TO "BAD" S I T U A T I O N S , BUT THEY HAD D I F F I C U L T Y
COPING WITH THE UNCERTAIqTY, ALTHOUGH SOME F I R M S , L I K E
GM AND DUPONT, HAD EXPERIENCED P O S I T I V E V I S I T S . OTHERS,
L I K E GTE, WERE ENCOUNTERING S E R I O U S D I F F I C U L T I E S .
(COMMENT: SHORAKA SHARES OUR PUZZLEMENT A S TO WHY GTE
I S B E I N G SUBJECTED TO T H I S TREATMENT. END COMMENT.) WE
HOPED THAT THROUGH SOME INFORMAL CHANNEL WE COULD IMPROVE
COMMUNICATIONS AND HELP M I N I M I Z E FURTHER COMMERCIAL
DISPUTES.

4. SHORAKA S A I D HE WAS "FRANKLY VERY WORRIED" ABOUT THE

CURRENT S I T U A T I O N . THE REVOLUTION HAD CHANGED T H I N G S
1 8 0 DEGREES. THERE WAS VIRTUALLX NO ONE L E F T I N THE
M I N I S T E R I E S WHO WAS F A M I L I A R WITH THE PROBLEMS. NEARLY
ONE L E F T , HE S A I D . COMPANIES, TOO, HAD EXPERIENCED T H I S
R A P I D TURNOVER I N S E N I O R MANAGEMENT. SHORAKA OFFERED T H I S
A S A MAJOR REASON WHY THE ECONOMY WAS S T I L L I N A P E R I L O U S
STATE AND WHY MANY FOREIGN F I R M S WERE E X P E R I E N C I N G
D I F F I C U L T I E S REESTABLISHING RELATIONSHIP.

5. SHORAKA THEN REVEALED THAT HE HAD RECENTLY MADE A

T R I P TO NEW YORK AND LONDON AT THE BEHEST O F P R I M E
M I N I S T E R BAZARGAN. PURPOSE WAS TO EXPLAIN BANK NATIONALI-
ZATION AND ALLAY CONCERNS ON PART O F MAJOR
FOREIGN BANKS. TWO WEEKS AGO HE HAD CONVENED MEETING
O F B I G G E S T AMERICAN BANKS I N NEW YORK AND OFFERED THEM
FULL P G O I ASSURANCES CONCERNING RESPECT FOR T H E I R A S S E T S

CONFIDENTIAL TEHRAN 7 6 4 8 / 1 01 2
 CONFIDENTIAL TEHRAN 7 6 4 8 / 1 OF 2

AND OPERATIONS. SHORAXA STRESSED THAT IRANIANS HAD

POSITIVE RECORD ON T H I S SCORE, CITING CASES WHEN HE WAS
I N MINISTRY OF FINANCE WHERE RIGHTS OF SHAREHOLDERS
WERE m L L Y PROTECTED.

6 . WITH REGARD TO REJUVENATION OF BUSINESS COUNCIL,

SHORAXA AGREED THAT IDEA HAD MERIT. PROBLEM WAS THAT
IRANIAN S I D E WOULD HAVE TO BE RECONSTITUTED AND I N LIGHT
OF THE LARGE-SCALE EXODUS OF SENIOR BUSINESSMEN, T H I S
WOULD TAKE TIME. SHORAXA FRANKLY FELT I T WOULD BE BETTER
TO WAIT ON T H I S PROPOSAL UNTIL AFTER A NEW GOVERNMENT
EMERGES. DEPTOFF REPLIED THAT WE WOULD, OF COURSE, BE
GUIDED BY IRANIAN VIEWS AS TO TIMING, BUT THAT I T SEEMED
DESIRABLE TO HAVE SOME MECHANISM FOR INFORMAL CONSULTA-
TION. SHORAXA FELT THAT DURING T H I S TIME I T WOULD BE
BETTER FOR U.S. COMPANIES TO PURUSE THEIR INTERESTS ON
I N D I V I D U a BASIS, WITH REGARD TO J O I N T COMMISSION.
SHORAXA SAID THERE HAD BEEN NO TALK ON T H I S SUBJECT WITHIN
PGOI. HE FELT THE COMMISSION COULD BE USEFUL VEHICLE
AND SUGGESTED WE RAISE SUBJECT I N CALLS ON MINISTER OF
F I N W C E AND OTHERS.

7. P O S S I B I L I T Y OF ARRANGING SMALL DELEGATION OF LEADING

AMERICAN FIRMS TO V I S I T TEHRAN WAS ALSO DISCUSSED.
AGAIN, HE FELT I T WAS PREMRTURE FOR T H I S TO OCCUR. IT
WOULD BE BETTER TO WAIT UNTIL IMPLEMENTING REGULATION
COVERING INDUSTRIAL NATIONALIZATION WAS PROMULGATED.
EXPECTED T H I S TO HAPPEN SOMETIME NEXT WEEK. SHORAXA
SUGGESTED THAT WE SEEK ADVICE OF CTHERS I N PGOI BEFORE
PURSUING IDEA. (CO-T: WITH RAMAZAN BEGINNING LATER
T H I S WEEK, ANY SUCH T R I P WOULD HAVE TO BE CONSIDERED FOR
S F T I M E I N FALL, AT EARLIEST. END COMMENT)
BANK MELLI (HE WAS APPOINTED I N FEBRUARY 1 9 7 8 BY THE
SHAH) WAS UNIQUE. HE ATTRIBUTED T H I S TO H I S STRONG
FAMILY T I E S I N Y E BAZAAR. T H I S MADE HIM ACCEPTABLE TO
THE "OTHER SIDE. FROM SHORAKA'S REMARKS, ONE HAS THE
BT
17648

NNNN
CONFIDENTIAL. TEHRAN 7 6 4 8 / 1 OF 2
 C 0 N F I D E N T I A L SECTION 0 2 OF 0 2 TEHRAN 0 7 6 4 8

IMPRESSION THAT HE AND H I S SMALL BRAIN TRUST AT BANK

MELLI SERVE AS A "BRIDGE" BETWEEN THE BAZARGAN GOVERNMENT
AND THE REVOLUTIONARY PERSONALITIES ON MATTERS OF
ECONOMIC POLICY. LAINGEN
BT
t7648

NNNN
C 0 N F I D E N T I A L SECTION 0 2 OF02 TEHRAN 0 7 6 4 8
CONFIDENTIAL
STATE 7 / 2 3 / 7 9
CHARGE:LBLAINGEN
P0L:VLTOMSETH:GO
NONE
P O L 2 DCM RF

AMEMBASSY TEHRAN
SECSTATE WASHDC, I M M E D I A T E
I N F O AMEMBASSY ABU D H A B I
AMEMBASSY ANKARA
U S I N T BAGHDAD
AMEMBASSY DOHA
AMEMBASSY I S L A M A B A D
AMEMBASSY J I D D A
AMEMBASSY K A B U L
AMEMBASSY K U W A I T
AMEMBASSY LONDON
AMEMBASSY MANAMA
AMEMBASSY MOSCOW
AMEMBASSY MUSCAT
AMEMBASSY P A R I S

E.O. 12065: GDS 7 / 2 3 / 8 5 (TOMSETHI V I C T O R L.) OR-P

TAGS: PGOVI P I N S , P I N T , I R
SUBJECT: P G O I T R I E S (ONCE A G A I N ) TO CONTROL THE
REVOLUTIONARY MOVEMENT

REF: F B I S LONDON 2 0 1 5 5 4 2 J U L Y 7 9

1. (C - E N T I R E TEXT)

2. SUMMARY: I N A T E L E V I S E D SPEECH TO THE N A T I O N JULY 2 0

PM BAZARGAN REVIEWED THE REASONS FOR I R A N ' S ANOMALOUS
P A R A L L E L SYSTEMS OF GOVERNMENT AND ANNOUNCED THE P G O I ' S
L A T E S T ANSWER TO THE PROBLEM. THE E F F E C T OF THE L A T T E R *
WE ARE I N C L I N E D TO CONCLUDE, W I L L B E MARGINAL. THE
PROGNOSIS FOR THE FORESEEABLE FUTURE I S THAT THE
REVOLUTIONARY COMMITTEES, THE REVOLUTIONARY COURTS AND
V A R I O U S ARMED M I L I T I A S W I L L CONTINUE TO ACT INDEPENDENTLY
OF BOTH THE P G O I AND THE I S L A N I C MOVEMENT'S L E A D E R S H I P .
END SUMMARY.

CONFIDENTIAL
i CONFIDENTIAL

3. B A Z A R G A N T O L D T H E . I R A N I A N N A T I O N J U L Y 20 ( R E F T E L )
T H A T T H E R E HAD B E E N T H R E E K I N D S OF R E V O L U T I O N S THROUGHOUT
// HISTORY, 1 . E . r M I L I T A R Y , P A R T Y AND N A T I O N A L . T H E 1920
COUP L E D B Y R E Z A K H A N ( L A T E R S H A H ) WAS AN E X A M P L E OF T H E
I F I R S T TYPE, T H E 1917 R U S S I A N R E V O L U T I O N AN E X A M P L E OF T H E
SECOND, AND, O F C O U R S E # T H E 1979 I R A N I A N R E V O L U T I O N WAS
AN E X A M P L E " S C A R C E L Y MATCHED I N T H E H I S T O R Y O F T H E WORLD"
OF T H E L A T T E R . A CONSEQUENCE O F MASS P A R T I C I P A T I O N I N T H E
I R A N I A N R E V O L U T I O N # H E S A I D ) HAD B E E N T H E D E C E N T R A L I Z A -
T I O N OF POWER W I T H A L L MANNER O F I N D I V I D U A L S AND
O R G A N I Z A T I O N S S E E K I N G TO E X E R C I S E I T .

I
4. T H I S S I T U A T I O N , B A Z A R G A N S A I D , COULD NOT P E R S I S T
S I N C E A L L TOO F R E Q U E N T L Y THOSE A T T E M P T I N G TO E X E R C I S E
POWER, I N T E N T I O N A L L Y OR OTHERWISE, WORKED A T CROSS-
PURPOSES. T H E P G O I , T H E R E V O L U T I O N A R Y C O U N C I L AND
K H O M E I N I HAD M E T TO D I S C U S S R E S O L U T I O N O F T H I S PROBLEM.
THEY SAW T H R E E A L T E R N A T I V E S : D I S S O L U T I O N OF T H E REVOLU-
T I O N A R Y C O M M I T T E E S AND A L L T H E OTHER E L E M E N T S OF T H E
I N F O R M A L S T R U C T U R E O F GOVERNMENT, P U T T I N G T H E GOVERNMENT
D I R E C T U L Y UNDER T H E R E V O L U T I O N A R Y C O U N C I L " I N T H E SAME
WAY T H A T T H E I M A M ' S C O M M I T T E E S ARE UNDER T H E S U P E R V I S I O N
O F " I T , AND M I N G L I N G T H E M E M B E R S H I P S O F T H E GOVERNMENT
AND T H E R E V O L U T I O N A R Y C O U N C I L . THEY P I C K E D T H E L A T T E R ,
AND B A Z A R G A N ANNOUNCED T H A T F I V E MEMBERS OF T H E REVOLU-
T I O N A R Y C O U N C I L WOULD B E A S S I G N E D TO P O S I T I O N S AS UNDER
S E C R E T A R I E S I N T H R E E D I F F E R E N T M I N I S T R I E S OF T H E P G O I .
T H E S E I N C L U D E D N A T I O N A L D E F E N S E # E C O N O M I C AND F I N A N C I A L
A F F A I R S AND S C I E N C E AND H I G H E R E D U C A T I O N .

5. T H I S C H O I C E P R O B A B L Y H A S T H E L E A S T CHANCE OF T H E
T H R E E A L T E R N A T I V E S TO B E E F F E C T I V E I N R E S O L V I N G T H E
I S S U E OF D U A L A U T H O R I T I E S . I T I S HARD TO I M A G I N E HOW T H E
T H R E E M U L L A H S AND ONE C I V I L I A N NAMED AS UNDER S E C R E T A R I E S
(ECONOMIC T H E O R E T I C I A N ABOL HASSAN B A N I S A D R D E C L I N E D
T H E O F F E R TO T A K E U P T H E P O S I T I O N A T T H E M I N I S T R Y OF
E C O N O M I C AND F I N A N C I A L A F F A I R S , A P P A R E N T L Y MUCH TO T H E
R E L I E F OF M I N I S T E R A L I A R D A L A N ) W I L L H E L P T H E P G O I W I T H
I T S R E A L P R O B L E M ) W H I C H I S ONE OF A S S E R T I N G A U T H O R I T Y
OVER T H E R E V O L U T I O N A R Y C O M M I T T E E S AND COURTS AND T H E
V A R I O U S P A R A M I L I T A R Y FORCES. A L L OF THESE HAVE ACTED
NOT ONLY I N I N D E P E N D E N C E OF T H E P G O I , B U T O F EVERYONE
AND E V E R Y T H I N G E L S E AS W E L L r AND T H E R E I S NO REASON
WHY THEY W I L L N O T S T O P A C T I N G I N D E P E N D E N T L Y . LAINGEN##

CONFIDENTIAL
 i
nnaal
I
- I
I
'- 1' l l L I O c d T CuMChh;ll) S I Y
/ I . P # : u I I T IlSS J O S F P H STRAUSS
lS32'5ZZ A u ~"9
Y - I x ' ~ 4 S d I h 3 1 0 N LC//DN-ZC

I L L ~ I ,:I l P / U L D L ? S O F I A B?
. ? Y I I U S D A S 1 0 S C O U UR

'.. i
09,lk
? R!JL\JCS 1582 C 0 t4 F I E P N T I A L
OF; 15 A'!JUST BFCAI!SE O P TPF' C3MMZMOYATION OF TirZ D E A C ~O f
:_:, 1rnr.r cr.t, A ; n u H E L I G I O U s L e A D i R . ~ X A I ~ ~ I ~ I PLRLE .S S ntP3ilT::
1It:DITATF TPRS O P TEOPSANBS 3F C I T I Z t t I S BELT A lA?tGd :K OJ* 7 0
I'LFCZY Sl'PPOhT FOR XPOMEIHI :--
I?; ('1) 'TE9 ?ARCIiELS B E P O R ~ L L L T I S S f I F D A P I V i - P 3 I Y I ?<SdLUklCQ
I!IT STATED, "P? IRANIAN NATION, UNLLS TAF LYADLBSliI? Q f : 8 O % l i I ,
"nn!'I,l!.L VTP I N , . I B 3 POD ANT POaM C P PLOT. S P D I T I D N , I N Y I L T P A T I Z V .
. - ITI!M!:LT, 0!1 UFHEAVAI. 3 P ; S P I l Z ALL INTI:i3NATIONAL P L O P S , I . jLG"
' CnizT:W:l'. \LO113 I T S PAT:!. Ti17 hYEOLI1"IOV ALSO I!r:YhNL'Eh TL')..
I;'~VdLl!:l3\!AR7 C 3 0 9 T S EXECUTE T l l i Z I O i 4 I S T HIlrCZ.lhDE:~S ANI; Til)S'l.
(- I~C~OCIITYD Y I T R TBCP.
1':. (:/,42?03N) 'T015 RFSOSUTION G A I N R C Y L B C T Z Th.' >Z1'Rh!:. ~ i 3 2 ! ' k ~ i ' l A
TYE PEOPLE SLt:M ' . h h B L L " T f : 4 S C F P T R . ' : S P W I b l L l T I
PQ:VAIT,I.!S I Y IKAN.
-..
, , 1 7 ~ 3#.fir :IP~!~FSIIOIFLE ACTIDNC* OP CONDI?IONS. I , ~ - . . T B A D , T L ~ Yyb.t .
'- : :a.;.~:COhOYIC S I T U A T I O N , TV7 ZT:!::IC U N i ; r - S , ah3 T!:L hKi'1-
"l\?VIh I D?ONSTRATIONS AS 5LE:lLNTS OP FO.<iI;?i PLOTS. P 3 i ? & w ! ,
C l \ l ! : L I L;Y 7°F OSN AND ISRAEL.
(..
1;. (C/'!CYOSN) T E E STROUC DLflONST4ATiOK Oil S O P P O X ? F 3 d ..13ak!IN1
f i f i f l f l l ~ ~ 1 ~ ~ TH::
* ! . PASSAGE O? S T R I C T P i t d S S CCNIit3LS. I T I S AGUIULR
 : I h l I N G kAYS TO LPAL W I T 6 T H I S C I F F I C U L T 9 P l l y E .

f . PARTLY, AS RGFTEL P O I N T S OUT, I T I S THE RSVOLUTIONARY

r J O L I P I C I h N , THE A K B I T I 3 U S P O L I T I C A N THAT YAZDI I S . THAT
I'OF'PULTION h):QUIHES HIM TO TALK AND LOOK L I K E A REVOLU-
I IONARY, E S P E C I A L L T I N T H I S F I R S T RETURN TO THE U . S . AFTER
' I S 16 YEARS I N TEXAS AND OTHER WAYPOINTS -- A PART O F
1 1 s P A S T THAT HE NOW F I N D S SOMEVUAT BURDENSOME POLITICAL1.T.
C R S E Q U E N T L Y - I T W A S - IMPORTANT FOR Y A Z D I ~ T H A T THE-BEIDLINES -
ACE AOME SHOW HIM I N TRUEREVOLUTIONARY COLORS. PREPARED
'rE!TAL S L A V E R T " TEAT HE DECRIED I N H I S HkVANA S P E E C H
kS T H E HOST D I S T R I N C T CONSEQUENCE O P I M P E R I A L I S M IN THE
COLTEYPORARY YORLD...A CHEAP AND E P F E C T I V E TOOL O F
0RBPZ:TUATING I M P E R I A L I S T D O M I N A T I O N " . .
,I. b U T THERE I S MORE THAN THAT I N H I S TOUGH STANCE WITH
11.5. BOTH I N H I S B I L A T E R A L WITH THE SECRETARY A N D H I S
I ~ U ~ L I C - S P E E C H ~ STAZDI-IS
. P O L I T I C A L L Y AMBITIOUSBUT HE
I S ALSO A B E L I E V I N G REVOLUTIONARY. I T I S THEREFORE
. i ( O R E THAN THE REVOLUTIONARY R E F U R B I S H I N G B I S CREDENTIALS.
11.1sAPFROACH S A Y S THINES TBAT ARE FUNDAMENTAL ABOUT THS
i . t j T I R E REVOLUTIONARY APPARATUS HZRE -- ONE T H I N 3 THAT I S
f lAC1'ICAL AND REASONABLY SHORT-RANGE; THE OTHER MORE
t L~NDAHENTAL AND LONG-RANGE.
S
.; h S S ( CI N1 A TTHE
SHORT-TERM YAZDI AND OTHERS O F H I S C L O S E
ES
I N THE PGOI R E F L E C T , WE T H I N K , AN INCREASING
I tOb!CERN FOR CONSOLIDATION O F T H E I R P O L I T I C A L POWER AT
I / T I f i E C F h F A L OR INAGINEC THREAT TO I T . THUS THE SHARP
1 I ' L C T I O N TO THE hr PW OUTBRTAK O F D I F F I C U L T I E S IN KURDESTAN

Il.I'C YHUZESTAN, A REACTION MAPPED BY A BARRAGE O F INTERNAL

ITOPAGAKDA TO THE F F F E C T TFAT THE U . S . ,
l h r E E C TKAT I R A Q I S ALSO INVOLVEC I N SOME CONVOLUTEC
B E H I N D THE FACkDP
: ( O L i U S I O N J I T H AIERICAN AGENTS AND I N F L U E N C E . WHATEVER
TS R E L A T I O N S H I P TO THE REAL S I T U A T I O N ON THE GROUND IN
' I 1 S E TWO TROUBLED FROVINCES, THE S P A T E O F PROPAGANDA SpEflS
I - 5 IChEL l U h T B E R TO STRENSTHEN C L E R I C A L ANC RRVOLUTIONARY
I 'f ~tl!T4 ? RAPPARATUS
O LOVLB T E E S E C U R I T Y FORCES AND THE EVOLVING G O V E S N ~
/ ~~I~ITITUIIO
THAT I S TO B E PUT I N PL.4CE WHEN THE
I SN COYPLEl'E. THE EFFORT AT CONSOLIDATION 0 1
I 1 OILB I S ALSO SEEN I N THE I N C R E A S I N S E M P H A S I S ON THE NEED
. O * F U ~ G E " FROM THE STRUCTURE O F GOVERNMENT BOTH T E E
' EP'KANTS O F THE ANCIEN REGIME AND T H E I R P O L I T I C A L OPPONENTS.
I

t US y A Z D I I S QUOTED FROM NEW TORT A S SAYING THAT THE

I 'i
1 ,' 351
 IUECE OF THE FOHLISN M I N I S T RHAS
~ YET TO B E COYPLETED.
CFAKRAN TALKS OF THE PURGE HE INTENDS TO PURSUE IN THE
''.I AfiMlD FORCIS. THE NAZI6 &FFAlR AT NIOC I S ACCOlPANlED By.
TALK OF A NECESSARY PURGINO PROCESS TBAT NAZIE BAD
IGNORED OR SET ASICE. ANC KEOMEINI TALKS OF THE PURGE
CECESSARY FOR THE ENTIRE SOCIAL AND ECONOMIC STRUCTURE
I T THE REVOLUTION I S TO BE CONSOLIDATED.
la. RELATED TO TEIS BUT LONGER-TEW I N I T S NATURE I S AN
XXPhESSEC CONCERN OVER ANOTEBB AND GREATER DANGER FOR TEE
REVOLUTION, I T S COALS AND PURPOSES. TEAT CONCERN RELATES
TO TEE N,EED TOELIMINATE FOREIGN AND PARTICULARLY WESTERN
CULTURAL DOMINATION -- AN ALSEGEC LEGACY OF THE PREVIOUS REGIM
TBAT THE REVOLUTIONARIES SEE AS CORROSIVE FOR TRE EFFECTIVE-
NESS OF ISLAM AS THE DRIVING FORCE AND tlOTIlATION FOR IRAN'S
ENTIRE POLITICAL, SOCIAL A N D ECONOMIC MAKE-UP: INDEED TREY
SEE TBIS CORROSION AS TBREATENING EVERYYEERE IN TRE ISLAMIC
LORLD, AN ICEOLOCICAL C o n p u L s I o ~TEAT COMBINES WITB LOOSE
TALC OF IRBIDENTISM IN S E I A MESSIANIC TERMS TO
MUCCT THE WATERS FOR THE ISLAMIC REPUBLIC'S RELATIONS
:U I T H MOST OF ITS MUSLIM NEICRBORS.
11. TAZDI CEVOTED A GOOC PART OF B I S REVEALING SPEECB AT
:IIAVANA TO TBlS PARTICULAR EONCBRN OF TEE IRANIAN REVOLU-
"I'IONARIES. AS HE PUT I T TEE STANDARDIZATION OF VALUES,
9 GOALS A N D ASPIRATIONS A Y ~ N C TEE RULING BLITB OF TAB WORLD
;HAS ADDED A NEW DIMFNSION 0 1 CULTURAL DOHINATION TO THE
fr:VOLVI!G CBARACTER OF IMPERIALISM IN TEE CONTEMPORARY
:VOPLD. TAZDI CALLED FOR A REC03NITION OF "THE ALIENATING
i AhC HABITULL CUTLURAL ALIGNMENT WITH TEE SUPERPOWERS
:AND A STSTEYATIC EPPORT TO pRpEnOUaSILIES PROM TEE MENTAL
BOt!I!diE OP CULTUiIAL DOMINATION.
5 12. I T I S NOT AND I T WILL NOT BE EASY FOR US TO YORE
Z LITB A LEADIXISHIP TPAT BELIEVES AND ACTS AS THIS ONE DOES;
i CHAT 6NOT TdBY NEED US BUT TET FEAR FOB THEIR BEVOLUTION
.F 4dET GET TOO CLOSE TO US. TIME AND TEB COHPELLING
CIfCUMSTANCES' OF AN ALREADY BUILT-IN HOHENTUN IN THE
>LCULARIZATION LND MODERNIZATION OF IRAN'S ECONOMY AND
I T S URBAN SOCIAL STRUCTURE KILL CHANCE SOME 01 T H I S -
nUT THAT # I L L BE A SLOW PROCESS BARRING SOME DRAMATIC
POLITICAL TURNAROUND TEAT SEEMS'UNLIKELT I N TEE SBORT-TERM.
r E CILL NEED TO ACT YITE A nAxIMuM OF PATIENCE AND SENSI-
'I'IVIlT AS dE PURSUE OUR INTERESTS IN TEE ATMOSPEERE OF
SUSPICION MANIFESTEC BT YAZDI IN NEU YORE.

13. WITE TEIS AS BACKGROUND WE COMMENT BELOW ON TEREE

SPECIFIC AXEAS OF POLICY: F ~ R S T ,MILITARY SUPPLY: SECOND,
CLH PUBLIC POSTUhE ON TEE REVOLUTION: AND TAIRC. THE
5pXCIAL STHBOLISM OF c i i i ~ l EO N - ~ ~ E O M E I NAND
I NO~INATINS

14. TAZDI DID NOT FAIL IN NEW TORK TO MAKE CLEhR THAT OUR
PERFORMANCE IN THE MILITARY SUPPLY PIELD WILL CONTINUE
TO P AN ACID TEST OP OURATTIrUDES TOWARD TEE REVOLUTION.
THE P I E WILL BE ROUGE, NOT SIMPLY 3ECAUSE OF WHAT SEEMS
DCST ED TO BE A PRICKLY RELATIONSEIP WITE CHAYRAY AS TRE
TEBRAN 109E
 CONFIDENTIAL TL'HRAN 10E91 2 /
1 \EL HEAD CF THE DEFENSE ESTABLISHMENT. BUT n O R P FUNCAtlENTALLY
bLChUSE OF THE FEAR OF AMERICAN INFLUENCE IN AND VIA THE
i PllLlTARY IN IRAN S O C I E T Y . (AS YAZDI NOTE0 I N HAVANA.

/ FORE THAN 1200 IRANIAN I I L I T A R T PERSONNEL WERE TRAINED

1N THE UNITED STATES
ESTIMATE).
-- A CONSERVATIVE FIGUREBI OUR
THERE-IS ALSO T ~ E ~ A B I D ~ N G ~ S O S P I CON-.TRE
~OW
PART O F YAZDI AND OTHERS THAT IRAN HAS BEEN FINANCIALLY
FAD BY MEANS OF THE TRUST FUND.

/ 15. WE W U S FACE THE CHALLENGE 0 1 S A T I S F Y I N G BOTH THE

P O L I T I C I A N S SUCH AS YAZDI AND CRAMRAN 101 ALSO THE
I YILITARY PROPPSSIONALS, YE0 ARB BEGIYNINO TO R P F L I C T A
CONCERN THAT T H P 1 WILL BE D E N I I D T H I LOGISTICAL AND
TECHNICAL SUPPORT THEY PBEL THEY N U D FROM THE U.S.
NONETHELESS YE S E E OUR CURRENT POLICY STANCE ON MILITARY
I
SUPPLY AS ESSENTIALLY SOUND -- AN OPEN AND STRAIGHT-
IORVARD POSTURE CONCERNING B I L L I N G S AND ACCOUNTS, FRANK
/ AND FORCEFUL REMINIiERS ABOUT OUR OWN LAYS AND REGULATIONS
THAT APPLY, A DEMONSIRATED WILLINGNESS TO GO ALL OUT
.IN RESPONCING TO P G O l QUESTIONS ABOUT FINANCIAL DETAIL,
BT
C2891
:KNNN
CONFIDENTIAL TEHRAN 10891 2/
y* ANE BAKING SPARE PARTS AVAILABLE AS RAPIDLY AS THE PC01
CAN GET ITS OWN HOUSE IN ORCER. WE BELIEVE WE SHOULD,
HOWEVER, ALSO BE PREPARED TO 1111 SOME RISKS IN THE
CASE BY CASE POLICY WE ENVISAGE AS APFECTING CLASSIFIED
ANP SENSITIVE MATERIAL. LS A CASE I N - P O I N T WE BELIEVE WE
SllOULD MOVE ATTIRMA~IVELY IN RESPONSE TO THE PGOI REQUEST
CONCERNIN3 THE RT4E S . TO DELAY OR TO DENY THESE AIRCRAFT
UILL AROUSE NEW SUSPICIONS,OP AN INTENT TO PENALIZE THE
PC01 ON BOTH FINANCIAL AND POLITICAL COUNTS; APPROVAL OF
THIS SMALL NUMBER OF AIRCRAPT ALREADY LARGELY PAID POR
A N C ADDITIONAL TO AN ALREADY E X I S T I N G i i l ~
INVENTORY IS
CERTAINLY DEFENSIBLE ( I N WHAT WE ASSUME WILL BE REQUIHED
CONGRESSIO%AL CONSULTATIONS) IN TERMS 01 OUR INTERESTS
IN IRAN.
16. SECONDLY, AS THIS EMBLSSY HAS RECOMMENDED ,EARLIER, WE
BELIEVE WE CAN AND SROULD FIND WAYS TO SPEAE PUBLICLY
ANP POSITIVELY MORE THAN WE RAVE TO DATE ABOUT RAVING
ACCEPTED THE CHANGE IN IRAN. THERE ARE TWO REASONS TOR
THIS; THE ONE O a v I o u s L r TO HELP REDUCE PGOI SUSPICIONS ABOUT
.OUR PURPOSES ANC THE OTHER TO REMIND OUR OWN PUBLIC (ONLY
SUPERPICIALLT INFORMED BY TEE U.S. PRESS) ABOUT OUR LONG-
"FRM INTERESTS IN IRAN. THIS I S NOT TO SAY TBkT WE NEED
; PUBLICLY TO EHBRACE AND ENDORSE YBONPINI, OR TO APPLAUD
SUCH FIGURES AS TAZCI AND CHAMRAN AND ALL TEAT THEY SAY
E AND DO, OR TO COMEND PGOI POLICY IN KURDESTAN. WHAT WL
t DO NEED TO SAT, IN WAYS THAT WE HAVE NOT YET DONE. I S TRAT
:YE RAVE LONG-TERM INTERESTS IN IRAN THAT CONTINUE AND WHICH
! WE BELIEVE CAN BE PRESERVED IN AN ISLAMIC IRAN.

t 17. SPECIFICALLY, WE URGE TEE DEPARTMENT TO FIND WAYS

) PUBLICLY TO SAY TRAT WE WISE IRAN WELL IN PUTTING I T S
"REVOLUTIONARY OBJECTIVES INTO FORMS AND INSTITUTIONS THAT
UILL COMMAND THE SUPPORT OF ALL I T S PEOPLE; THAT THE U.S.
' FAS NO INTEREST IN OR INTENTION OP IMPOSING ANY REGIME.
MONARCHY OR OTHERWISE, ON IRAN; THAT WE RATE AN ABIDING
INTEREST IN IRAN'S INTEGRITY AND INCEPENDENCE; TRAT AYERICAN
INTZRPSTS IN ACCESS TO IRANIAN O I L ARE SYNONYMOUS J I T H
IRANIAN INTERESTS IN SUSTAINING ANC FINANCING I T S FUTURE
INDUSTRIAL AND AGRICULTURAL DEVELOPMENT. WE SHOULD
FIND OPPORTUNITIES AS WELL TO WELCOME REIOLUTIONAPY IRAN'S
E'lPEASIS .ON ISLAM AND I T S SPIRITUAL CONTRIBUTION TO
SOCIETY AS SOHETRING THAT AHERICANS UNDERSTAND AND RESPECT.
GIVEN THE VAT IN WHICH AMERICANS ALSO SEE THINGS OF THE
S P I R I T AS IMPORTANT TO HUMN ENDEAVOR.
18. ASSISTANT SECRETARY SAUNDPRS' TSSTIMONY OF SOME
MONTHS BACC BEFORE THE H I R C ON THE MIDDLE EAST AS A
WHOLE HAS THE ESSENCE OF MUCH OP THIS AND I S THE KIND OF
THING WE SHOULD BE HEARD SAYING MOBB PRLQUPNTLT ABOUT
IRAN.
19. THIRDLY, AND BRIEFLY, THERE IS'THE VERY LARGE
IMPORTANCE OF TEE SYMBOLIC ACTS OP SEEING XHOMEINI AND
NTRAL TO TEE WAY IN WHICH TAZDI AND INDEED MOST
NS SEE OUR ATTITUDES TOWARD THE~REVOLUTION. I P A
BASSADOR I S TO BE FURTHER CELATED, WE RECOMMEND TEAT
U
C O N F I D E N T I A L TEHRAK le9E
* F SEEK A tEFFIN3 NOV YITB KBOMEINI AT THE CRARCE IEVFL.
AS POR DESIGNATING AN A%BASSADOR. T H E TIMING WILL N E V ~ R
bE TOTALLY RIGHT; T H E ACTION SHOULD NO LONGER B E DEIAYEC.
L A 1 bGEN
al
Y0891

GNNN
C O N F I D E N T I A L TEHRAN 10851 3/3
 11223/1
DE BOOMER 1)1223/01 2 9 6 ** t -7.-1
ZNT CCCCC ZZE CLASS : CONPIDENTIA
R 2 3 1 3 1 9 Z OCT 79 CBRGE: STAT 1 8 / 2 3 /
IW MtMBASST TEHRAN APPRV I ECON: ADSENS
TO SICSTATE WASBDC PIIORITY 4491 DR1TD: ECON$MKENNI
111 ----- - NONE
i - 0 N I I D P N T I A L SECTION I 1 01 TLIRAN 1 1 2 2 3 I: ECON-3 CBAR
CBRON
~ . s . i z t ~ ~ons
s : ir/zs/es (SLNS, A.D.) 01-I
TAGS: ECON. E f I N . PINT, I 1
SUBJECT: ECONOMIC lLCOlL1T -
WILIL NOW?

1. (C-ENTIRE T L X t )

Lxon DoLLlrns A noma IN OIL Intnors. r~owi2.4 N ILL ION

0 1 IRAN'S WORKlORCL ( 0 1 2 1 PEICXNT) A l l UNLHPLOTLD. MAN1
PLANTS .- ABI IDLLD.
. - - - - .A l n A O L S PIODUCTION
... -.-..-I--
S LSTIMATLD
-... --- AT
-.
~IRY PERCENT or CAPACITT V I n1 ~ IX~OLOTION e nontas
PAST AND TBE PIPST INITIAL s t ~ a s n, r c o i m T n o u csros,
A C E I ~ V Z D . MANY IIANIANS AIL IWINIIIR t o ASK n T n r IS-
C O ~ E I I Y CURVE IS NOT IISINO rrsnr.
3. TBIS TELEGRAM EXPLORtS A BASIC PIOILDM, TUX PAILUIL TO
TRANSLATE EXCESS L l Q O I D I t T IN IAIKS INTO BADLY NLIDLD IN-
vtsrnlnz on CRLDIT t o 1 A LIMPI# INDUSTDIAL SWTOI.
TIGET CREDIT T s w l i l T s nt DLCLAISB I ~ I I T I O N Sor G o i t l N n t N T t
AND CONTRIBUTES TO T I 1 INSTAlILITY AND LACK O r CONlIDLNCL
WBICB ARE T E ~ S L L V E STACTOIS I N ns n o n m . otata c~usts
DISCUSSED BELOW ARE TBL LACK 01 I N l B S T U S AND I I l I S t U E W T ,
CAPITAL TLIGBT, OOlE1WnfNt INCAPACITY A t ALL LLILLS. PLR-
SONAL INSPCUIITT. YAILUI1 01 T B 1 I1SD@SICT CILDIT PROGRAM,
AND TEE I N S O L ~ L N C Y01 INTLNDIWO IOIIOIIIS.UPON TBL corrrw-
ntwr's snccsss I N T n r conrra mornr IN IB~OLVING SUCH
PnoBLrms A N D I N LAUNCIINO PIO~IAIU wrcr I w s P I n r cowrI-
DLNCE, MAT DEPEND T I 1 111TUBS 01 T I I S IS@IML- 1ND
INTPOEUCTION AND SUWAlT.
4. LACK or CONIIDLNCE, t n o I N T ~ T M B I I T L, I Q ~ I D I T Y
PRtYERENCE AND CAPITAL I L I Q I T . SXCISS LIQUIDITY CAN BL
MADE PRODUCTIVE TBROUGB INl%TMLNT, I N NSU 01 LXISTING
PLANT, OR THROUGB T 1 1 LOAN 01 UOIIIWQ C U I T A L . INIXSTMLWT
TODAY I S ALMOST ION-SIISTSNT IN PAIT BlCAUSL TEE OLD
ENTIEPRENEURIAL CLASS BAS P L ~ B211 COllWTlT. SADIGI SAMXI,
DEPUTY MANAGING DIILCTOI O t T I 1 I U N - A I A l 1ANK. AND
rstrtunr tut TODAY t r n r
B I M S E L ~or TEAT K I N D 01~ A ~ I L Y
rmxn NOT noat t u n nnm I ~ U I A I UOI 91s NLC~SSAIT
PPISONAL ~ I N A N C I A Lst~wls. mr tm~t'so o r D I T I o N s .
r r n WILL NOT MAXI A 11011.
5. TBL BAZARI ( C O N S I I l A t I l I M P C U I I T ) CLASS AIL TIADEIS.
NOT RISK-TAKING I N l I S T O l S . ACCOIDIW M BIIECTOR AITABI
0 1 TEE TOREIGN DLPAITMLNT 01 BANI MILL1 . I I A N 0 S LARGEST
COMMERCIAL BANK. tasst IAZAIIS AIL S X ~ I ~ M E L Tnu arnro.
I N THE FACL or TPE srnr u n c n t ~ r N z x s s , rowsin. TILT prm-
IER TO P I L L UP T B L I I MBALII I N I A U S , 01 1 L t T S R STILL, TO
~ON~IDSNT~AL TEERAN1 1 1 2 2 3 / 1
NNNNVZCZC 346
PP RUEHC
QE RIlnMHR # 1 2 2 3 / f l 2 296 1345
ZNY CCCCC ZZV
P 2 3 1 3 191 OCT 19
m PMEMBASSY TEHRAN
TO SECSTATE WASHDC PRIORITY 4 4 2 1
RT
C 0 N F I D F N T IA L SECTION 82 W 1 3 ' T F H R A N ' 1 1 2 ~ 3
TRADITIONAL CLERICAL FUNCTION I N TRADITIONAL ISLAM, I T S
S I M P L I S T I C APPROACH, AND THE D I S @ U I E T THAT W C I R B I A S
M A I N S T PROFIT MUST GENERATE, SHOIILD B E AN ADDITIOWAL
DETERENT TO INVESTMENT OR L c n D I t a .
9e CONFIDENCE MRYAE ERODED B Y THE QUALITY OF PARA-
GERS APPOINTED TO RUN THE NATIONALIZED IWDUSTRIES.
W E N THE WORKERS, APPARENTLYI RAY COMPLAINe RANKERS
TELL OF M9NAGKRS WHO HAVE TO B E INTRODlfCED TO THE DIFFER-
ENCE RETWEfN THE D E R I T S I D E OF THE BALANCE SHEET, AND THE
CRFDIT. CONPOIINDIM THE RCLIICTANCI: OF BANKERS TO LEWD TO
FIRMS WITH INEXPERIENCEb MANAfiEMENT I S UNCERTAINTY AS TO
WHO OWNS AND COITROLS TPFI FIRMS. I n s a M t CASES r n m
ALL THE SHARES HAVE: nor BMN TAKEN ovcw, B u t WHERE mr:
GOVERYMENT OR A CHARITABLE FOUMDATlON APPOINTS CERTAIn
DIRFCTORS TO THE POARD, L l NES O? AUTHORITY AND U t T I M A T E
F l Y A N C I A L RESPONSIBILITY R M A I N UIICLEAR.
IR. THE aPPo1 nTMEnT OF INEXPERIENCED ADMI NISTRATO s RE-
m c T s T u F F L I G H T o r THE r x p c u t E ~ c m . YET, 1 N u m b o r
TrlE LATTER REMAIN, AND ARE F I l N C T l O N I ~W I T H I N THE SYSTEP*
THFIR A P I L I T Y , POWEVER, BRIb(iC THC EXPCRIEllCE GAP bND
EFFLCTIVBNEPS I N M A U I M THE ECONOMY TICK, I S R!!DIlCED B Y
PSYCHOLOGICAL DISCOMFORTI I N THEIR ROLES. 'DO YOU REALIZE'
bSKED APTPHI, 'THAT MY TtNttRE H n E MAY D L P E m ON WETHER
OR NOT I PRAY?" OTHERS HAVE S A I D THE SAME, WHO, L I K E
ARTAHI ARF I I N W I L L I M TO PLAY THE HYPOCPITI!. ALL ARE
VULNERABLE TO SOME EXTENT, A LESSON DRIVCM HOME RY THE
FIRIN[; OF THE NIOC CHIEF NA7IH. THERE ARISES A TENDENCY
TO AVOID n E c I s r o n s LIKELY TO GIVE O C ~ N S EOR TO DRAW
ATTENTION TO THEMSELVES.' I T EVRN AFFECTS THEIR DESIRE
TO WORK OVFRTINE (ESPECIALLY AFTER THE RECENT MAJOR CUTS
I N PAY I N NIOC AND THk BANKS.)
11. PNOTHFP, AND RFLATFD PRESSIIRr, I S THE FEAR NOT THAT
T H I S REGIME, RUT THAT I T S SUCCESSOR MAY CALL MANMERS TO
PCCOllNT FOR HAVING CARRIED OUT THE INStRtlCTIONS OF THE
PRESENT ONF. WHbT HAPPENED TO RANY W O CARRIED OUT THE
ORDERS OF THE SHAH* THE PATENT I N S T A B I L I T Y OF T H I S REOIME,
AND THF: FELT P O S S I P I L I T Y OF COUNTER-REVOLUTI(In, ALL CON-
PINE TO DISCOURAGE r r t ~ ~ r t ~ von c .THE FOSITIVI! srac, OF
OURSE, THE FXAMPLE O? WHAT HAP?CNED TO THOSE WHO PENT THE
R t n F s TO TAPE CARE OF THE SHAH*S CROIII~S was S T R E ~ T N E N E D
THE RACCS Of PANKERS TO RESIST t!WUDE INtERFl!RENCES B Y
CLFRGY AND KOMITEVS ANXIOUS TO HAVE THEIR PET PROJECTS
FINAICFD, HOWEVFR UN~CONOMIC. 'm)BODYeS GOINQ TO STAND
MF MP AGbINST THE WALL L I K E THEY D I D TO SOMF O? THOSE
GUYS," SAYS MANABIM! DIRECTOR M H I L I OF THE BANK OF IRAN
AND TUF MIDDLE PhST.
 12. ON BALANCE, HOWEVER, THE EFFECT O F THESE PRESSURES,
PARTICULARLY ON RANKERS WHO ARE NOW C I V I L SERVANTS HAS
REEN TO DISCOIJRABE INNOVATION, B O L D N ~ S I I AND F L E X I RLITY.
~
THESE QUALITIES ARE PARTICULARLY NEEDED AS MANY INSOLVENT
IRANIAN INDIISTRIFS CALL OUT I N VAIN FOR CREDIT.
13. TO IINDERSTAND THE IMPORTANCE O F CREDIT FOR IRANIAN
INDUSTRIFS, ONE SHOULD RECALL THAT MIlCH O F I T CONSISTS OF
THE ASSEMRLY O F FOREIBN MMPONENTS, OR, AT LEAST, DEPENDS
HEAVILY ON IMPORTED RAW MATERIALS* INDUSTRIALISTS WERE AT
PAINS TO MAINTAIN THEIR CREDIT RAT1 WOSA .! flANAB!N(I DIREC-
TOR SARHETTLIAN O F THE FOREIGN TRADE RANK OF IRAN ( F T B I )
CUMMENTED, THEY TOOK CARE O F THEIR SUPPLIERS YELL REFORE
THEIR IRANIAN RANKERS. I N RETURN* MANY ENJOYED THE
PRIVILEGE O F RUYIN[; ON OPEN ACCOUNT* OTHERS TOOK OUT TEFM
LETTERS O F CREDIT O F 1 8 0 DAYS OR BETTER. AT t 8 B DAY TERMS
HAVINB ALLOWED A MONTH FOR TRANSPORT OF THE IMPORTED IN-
PIJTS, A MONTH FOR PROCESSINQ AND A mmns BRACE TO THE
PIIRCHASER OF THE FINISHFDPRODUCT REFORE HE HAD T o PAY,
THE INDUSTRIALIST ENJOYED A 3-MONTH HOLIDAY P E W R E HE HAD
TO REPAY WIS SIIPPLIERS. THE FLOAT WAS AN IMPORTANT
FACTOR IN H I S PROFIT MARQIN.
14. WITW THE REVOLUTION, FOREION SUPPLIERS RECiAN TO IN-
S I S T ON CONFIRMED LETTERS O F CREDIT, WHICH EFFECTIVELY
MEANT CASH. FIRMS I N TURN BEGAN TO DEMAND CASH PAYMENT
FROM THEIR CUSTOMERS. THE FLOAT WAS LOST, AND, IN
MANY CASES, PRODllCTION IS DOWN (AND EARNIllOS),WHILE. FULL
PAYROLLS MUST S T I L L B E MAINTAINED WITH A 241 PERCENT PAY
BOOST. CUSTOMERS HAVE WITHHELD PAYMENT. EFFECTIVELY
IYSOLVEUT, WITH THEIR AVAILABLE COLLATERAL (LAND) RENDERED
VALUELESS, MANY INDUSTRIES, ALREADY LENT UP, WERE TRYING
TO BORROW EVEN TO MEET THEIR PAYROLLS, AWD USUALLY WITH-
OIJT SUCCESS.
15. THE CRY FOR EMERGENCY CREDIT* F I R S T HEARD FIVE MONTHS
, REVOLUTIONARY COMMITTEE I N QUM. I N L t n R u E WITH RIBHT-
THINKING RAZARIS, THEIR WELL-PUBLICIZED 8fl RILLION RIAL
MERGENCY CREDIT (REF A) BUILT UP OREAT HOPES. AT S I X
PERCENT I NTFREST, AND WITH COLLATERAL RECIUIREMENTS
EFFECTIVELY WAIVED* THE CBI WAS TO CHANNEL Rm B I L L I O N
RIALS IN I 0 TRANCHES THROWH I 0 BANKS (RECENTLY RECOP(E 1 1 )
OF THE STRONGER COMMERCIAL BANKS' F I F T Y PERCENT OF THE
BT
PP RUEHC
DL RllrJMHR 4 1823/85 e96 1534
ZNY CCCCC Z t H
P 2 3 1 3 1 9 2 OCT 79
FM AMEMRASSY TEHRAN
TO SECSTATF WASHDC PRIORITY 4 4 2 2
er
C 0 N F I D K N T 1 A L SECTION 03 OF 03 TEHRAN 1 1 2 2 3
APPLICANTS' REQUIREMENTS WERE TO B E DRAWN FROM T H I S
,
F A C I L I T Y WHILE THE RALANCF: WOULD COME FROM THE RANKS OWN
FIJNDS. HPNCE 16B P I L L I O N R I A L S WOULD RE INJECTED INTO THK
ECONOMY WITH 1.6 B I L L I O N R I A L S EXPECTED FROM EACH DESIG-
NATED RANK I N THE F I R S T TRANCHE. THE CREDITS COIILD R F
IJSEI) EITHER TO MEET PaYRnLLs, OR TO PURCHASE R A W MATERIAL

16. WITH ONE POSSIBLE EXCEPTION, ALL OUR RANKING CONTACTS

AGREE THAT THE SCHEME HAS PROVEN TO RE A TOTAL F4ILIIRF:
THE RANY SANAYE, THE ONLY ONE OF THE DESIGNATED RANKS TO
G I \ l E US FIGIIRES, NOTED TMAT OF I T S 1.6 R I L L I O N , ONLY 3 0 9
V I L L I O N , OR 2 n PFRCENT OF TARQET HAS BEEN ADVANCED. THE
P R I YCIPAL ROADRLOCK, ALL, ADMIT, WAS THE HOPELESSLY COMPL
REDTAPE ENCOUNTERED PY THE APPLICANT. SAGHETELIAN OF FTB
TELLS OF ONE APPLICANT WHO APPLIED FOR A CREDIT TO B W R
MATERIALS, ONLY TO B E REQUESTED B Y THE LOAN COMMITTEE OF
THE MINISTRY OF I N D U S T R I t S AND MINES TO SIIPPLY THE NAMFS
OF ALL H I S EMPLOYEES. INADVERTENTLY, HE HAD APPLIFD FOR
THF: WRONG KIND OF CREDIT. (THE BIIESTION RENAI NS WHETHER
I N ORDER TO MAKE AN EMERGENCY PAYROLL LOAN, ONF REALLY
NEFDS ALL THOSE NAMES.) THE I R A N I A N BIIREAUCRACY I N THE
MIYISTRY HbD A F I E L D DAY AS D I D THE CLERICAL REPRESENTA-
TT\ltS, I N S O L I C I T I N G N I G G L I l AND IRRELEVANT DETAILS.
MnNTHS WOlILTl GO BY, WITHOUT ACTION ?N THE PART OF THE
MINISTRY OF CFNTPRL PANK.
17. ALONE AMONG THE RANKPlRS, SAGHATELIAN APPEARED [IN-
TPOtfQLED P Y THESE D I F F I C U L T I E S e WHEN THE CENTRAL BANW WAS
SLOW I N COMING THR0116H, HE WOIILD ADVANCE THE ENTTRE AMOIIN
FPOM F T P I * S OWN FUNDS, AND CORRECT THE ACCOllNT LATFR. I N
CnNCFDING TwaT THE DRAW-DOWN RATE I N OTHER RANKS WAS LOW,
HF: ALI.OWFD THAT H I S BANK HAD TRADITIONALLY ENJOYPD THE
CUSTOM OF TPE "CREAM" OF I R A N I A N INDUSTRY. I N OTHER
WDRrS, HF WAS LENDING TO THE FEW WHO DIDNT REALLY NEED
MEPGENCY CREDITS. AS NOTED ABOVE, THE CONSKNSIJS WAS THAT
THOSF: WHO D I D NEED THEM WEREN'T G E T T I l THEM.
le. THE OVERRIDING QUESTION, THEREFORE, RFMAI NS THE
CRFDITWORTHINESS OF THE I N D I V I D U A L INDUSTRIALIST. RANK
MELLI, S A I D ABTAHI, HAD DONE ALL I T COULD TO MAKE CREDIT
AVAILARLF. BlIT WHEN A COMPANY 1 9 PATENTLY INSOLVENT, WHEN
I T HAS TO RORROV EVEN TO MEET I T S PAYROLL, THEN A L I N E HAS
TO P E DRAWN. ABTAHI MADE I T CLEAR THAT HE HAD NO MiRE
DESIRE THAN A G H I L I , SOMEDAY TO 01: STOOD UP AGAINST A WALL.
19. CONCLIJSIONS. FACED WITH THE INEPTITUDE OF THE
RF'SPONSIRLE MINISTRY, NO COLLATERAL REQUIRMFNTS, AND
ASKED TO PUT THEIR OWN MONEY INTO INSOLVENT OPERATIONS,
THC COMMERCIAL RAWS ARE UNDERSTANDABLY NOT RESPONnIW
Tn T H I S NPTIONAL PRIORITY. THE CONSF(JUENCES ARE FELT I N
fi NUMRCR OF WAYS.
1
20. FOR FXAMPLF, THE TRUCKING INDUSTRY FACES A SERIOUS
9ORT4GE OF SPAPE PARTS. ONE OF THE LARGEST SPARE PARTS
IMPORTERS CAN MFET ONLY 65 PERCENT OF ORDERS. ADDITIOMAL
STOCK I S AVAILABLE* PUT UNPAID FORI I N CUSTOMS WAREHOIISES.
THE FIRM I S INSOL\ftMT, AND NO RANK WILL LEND I T FUNDS TO
PAY OFF THE L t T T f R S 0 0 CREDIT AND CLEAR CtJSTOMS. MFAN-
WHILF, GOVFRNMFNT MINISTEPS ARE JAWRONIW MANIIFACTURERS
AND IMPORTERS TO "DO SOMETHINO" ABOUT THE PROBLEM.
21. T H I S MAY PF AN EXTREMS CASE. INDUSTRIES OWNFD
BY THE GOVERNMENT, AT LEAST ACCORDING TO PRO-GOVERNMENT
MAYAGING DIRECTOR AFGHANI OF THE RANK SADERAT IRAN, 6RE
ARLE TO FIND ENOUGH CREDIT TO IMPORT AND TO KFEP PRODUC-
TION GO1 NG. 9 NUMRER OF PROBLEMS WERE INHFRITED FROM THE
DAYS OF THE SHAH. AGRICULTURAL MACHINERY, WE ARE TOLD, I S
DOING BETTER.

22. THFPE 19, NFVFRTHELESS, CAUSE FOR CONCERN I N THE

PPECEDI NC; ANALYSIS. AS REVOLIITIONARY EVENTS RECEDE INTO
TPE PAST, PEOPLE WILL EXPECT MORE OF GOVERNMENT W A N
GOVERNMENT I S PRESENTLY DELIVERING. THF NEXT FEW MONTHS
snolnn GIVE CIS A BETTER SDEA OF WHETHER TWF STABILITY AND
CONFIDENCE CUFVF WILL GO UP, OR DOWN. LAINGEN
BT
 1 11268

DE RUQMER #1268/01 297 **

ZNT CCCCC ZZE CLASS: CONFIDENTIAL
R 2412212 OCT 7 9 CHRGE: STAT 1 0 / 2 4 / 7
Fn AMEMBASST TEERAN APPRV : EC0N:MKENNED
TO SECSTATE WASBDC 4445 DRlTD : EC0N:CMAST:K
BT CLEAR : NONE
C 0 N F I D E N T I A L SECTION Bl OF TEHRAN 11288 R: ECON-3 CHAR3
CERON
E.0.120658 GDS 1 0 / 2 4 / 8 5 (KENNPDT. M.1 OR-E
TAGS: BIND, P I N S . I R
SUBJECT: POST-REVOLUTIONART INDUSTRT IN TABRIZ: MERCEDES
BEN2
1. (C-ENTIRE TEXT)
2 . SOWART: DURING A RECLNT V I S I T TO TABRIZ, TDT COMMO??
VISITLD MIRCLDES-BENZ JOINT-VINTURL DIESEL ENGINL PLANT.
connotr raon r r n L r r a TOUR I N TABRIZ ( i s w - 7 4 ) wAs WELL-
ACQUAINTED WITB PLANT, I T S PREVIOUS IRANIAN MANAGING
DIRECTOR AND I T S NEW IRANIAN MANAOINO DIRECTOR. CHRIST
AGEABIGIAN WE0 RAPPLNS TO BE AN ARMENIAN. BT POST-
REVOLUTIONART IRANIAN INDUSTRIAL STANDARDS, PRODUCTION
AT 5~ PLRCENT OF PAST PRODUCTION CAN couwxrn h s succt.ss
STORT OY BOW PLANT I S WEATBERING C R I S I S PROVIDES INTEREST-
ING VIUNITTEE ON REVOLUTIONART IRAN AS WLLL AS LIAMPLE 0 1
HOW TALLNTPD ARMENIAN MANAGER CAN JUUGLL OFTEN CONILICT-
ING INTERESTS 0 1 GOVERNMINT, PRIlATE SHARtEOLDERS. BANKS,
REVOLUTIONART c o n n x T r r a s , n u t L A a s A N D woartas. END
SUMMART.
3. TEE IRANIAN DIESEL LNGINE MANU1ACTURING CWPANT (IDEM)
WAS ESTABLISEED IN 1970 AS A MERCIDES-BEN2 JOINT VINTURE
TO HANUFACTURE TRUCK AND BUS DIESEL ENGINES. APPROXIMATE-
LT EQUAL SHARES ARE HELD IN THIS PRIVATE JOINT-STOCK
DEVLLOPtlENT BANK 0 1 IRAN (IMDBI). KilAlAR COMPANT AND
IRAN NATIONAL. KRAVAR AND IRAN NATIONAL ARE MERCEDES-BEN2
MANUYACTURLRS IN TEERAN 0 1 M-B TRUCK? AND BUSES BESPECTI-
VELT. IDEM RAS BEEN A SUCCESS STORY, BT 1977 PRODUCTION
HAD RISEN TO it? B e @ INGINES A TEAR (APPROXIMATLLT EAL?
EACE y o n KHAVAR'AND IRAN NATIONAL) AND A VIGOROUS EXPAN-
SION PROGRAM WAS ENSURING STLADT INCREASE IN IRANIAN VALUE
ADDED. PRODUCTION YOR TBL CURRENT IRANIAN TLAR (MARCH TO
SEPTWBER) BAS DROPPLD TO 758 LNOINLS A MONTE OR ABOUT
9.00# P t R TEAR.

4. IESH BAS BEEN BOTH FORTUNATE AND UNIORTUNATE IN I T S

CAPTIVE MARKET. KEAVAR COMPANT BAS BAD VERY SERIOUS CREDIT
AND PRODUCTION PROBLEMS S I N C I TEE REVOLUTION. WHILE I T S
~ R I L I s r o c r a o L D r R ( T a r SOUDLVAR r m I L r ) EAS R P ~ A I N L D I N
IRAN, TEE GOVERNMENT BAS INSTALLED NEW MNAGtMENT AND A NEW
BOARD O? QIRECTORS. K M l A R WAS OVER-LXTLNDLD EVIN PRIOR
TO TEE REVOLUTION; TRUCKS WtBL SOLD ON CREDIT IN IRAN AND
KEAVAR ALWATS RID TO STRUGGLE 1 0 1 OPERATINU CAtITAL. WITH
TEE RLVOLUTION. TEE SBUT-DOWN Of LARUE CONSTRUCTION PRO-
JECTS, TEE REFUSAL OR I N A B I L I R O? I T S CUSTOMERS TO PAT
THEIR DEBTS. COUPLED WITB CREDIT SBORTAGES AND TBL INEX-
PERIENCE 01 I T S NEW MANAGLMENT, TUX COMPANT I S NIARLT
B A N K R U ~ . WORKERS WAGES BAVL BLEN RAISED WEILE PRODUCTION
C O N Y I D E N T I A L TEBR1tN 11288
I S VIRTUALLY NIL. IRAN NATIONAL,ON TEE OTEIR BANE, WAS A
MONEY MACRINE ?OR ITS OWNERS, THE KfiAYYAMIS , IN PRE-REV-
OLUTIONARY IRAN. PAYKAN AUTOMOBILES MADE BY TEE FIRM WERE
IN SUCB DENAND TEAT CUSTOMERS FAID CASE 6 MONTES IN AD-
VANCE AND I T S M-B BUS MARKIT WAS GROWING STEADILY. TKE
KhATTAMlS HAVE SLED FROM IRAN, TEEIR PROPERTY HAS BSEN
NATIONALfZED BUT EVEN TRE PGOI BAS NOT BEEN ABLE YET TO
RUIN IRAN N A ~ I O N A L . THE COMPANY BAD SURPLUS CASH OPERAT-
ING CAPITAL OP OVER 1 BILLION TOHAN (ABOUT 135 MILLION
DOLLARS) ON TEE EVE 01 TEE REVOLUTION. THIS HAS PROVIDED
A COMPORTABLE TEMPORART CUSBION TO ABSORB INCREASED WORKER
WAGES AND TEE CONTINUING D ~ N ?OR C M-m B u s r s ars PROVIDED
A n A n r R FOR IDEM.

5. B Y TABRIZ A N D EVEN IBAWIAN STANDARDS, IDEM HAS BEEN A

PROFITABLE COMPANY M R I T S SlAREROLDERS. TURNOVER WAS
OVER 600 MILLION TOMAN PSR YEAU (NEARLY 100 MILLION DOL),
IMPORTS OF COHPONSNTS FROM DAIMLXB-BEN2 WERE OVER 100 n.
DM PEE YEAR. TEE PLANT URNSD A PUO?IT O? 88 MILLION
40HANS (OVER 10 MILLION DOLLAUS) I N 1977 AND PROVIDED
EMPLOYMENT ?OR 1308 TABRIZIS. PLANT I S NOW AT EALT-PRO-
DUCTION, IS PAYING ITS srnr w o ~ t i r o ~(waxen c ~ CANNOT BE
RECUCID) KIGBER WACLS AND I S 1051110 ABOUT 5 HILLION TOMANS
A norm (ABOUT ser.sre DOLLUS). L o s s r s ARB TO A LARGE
FXTEN'I BEING FINANCED TE100011 EIPPING INTO DEPRECIATION
RESERVES AND SOKE BANK CREDITS. PRIOR TO TRE RElOLUTION,
D-H CInnANY SOLD c o n p o n r n r s AT 50 P r a c r n T DOWN AND se PER-
CENT I N 9. 12. A N D IS MONTE TRANCHES. n r t n r n t nrvar.u-
TION, D-M EXTENDED TIRES TO A- 28 P ~ R C E N ~ ~ T O ~ B ~ - P E R ~ E N ?
RATIO, BUT WEEN BERMES ELIMINATED I T S EXPORT INSUIANCt,
ICEM WAS FORCED TO PURCIIASE ON A CON?I1MSD LtTTER O?
CREDIT BASIS.
6. TEE REVOLUTION HAS DRAMATICALLY GBANGED HANAGPMENT-
LABOR RELATIONS AT IDEM, AT LEAST I N THE SPORT-RUN.
ACHABEOIAN BECAME ACTING HANAGING DIRSCTOR IN EARL1 lDT0.
AGHhBtGIAN, A NATIVE TABRIZ ARMENIAN, BAD SPENT 13 YEARS
IN GERMANY, BUT RETURKED TO TABRIZ I N 1970 AS AN ENGINEER
AND BAS WORKED E I S WAY TO TEE TOP 0 1 TEE COMPANY.
AGBABLCIAN WAS APPOINTED MANAGING DIRECTOR BY TEE BOARD O?
ET
*1268
NNNN
C O N l I D E N T I A L TEERAN 11268
 C O N T I D L N T I A L TEBRAN
LIRPCTORS APTER TRE REVOLUTION AND BE-CONTIRMED IN THIS
POSITION BT THB REVOLUTIONART PLANT COUUITTSS IN A NOISY
MEETING OF ALL 1300 EMPLOTEES. TEE IARLT PLANT COMMITTEE
HAD 29 MEMBERS (SOUR LETTISTS). BUT TEE WORKERS RAVt SINCE
ELECTED A NEW 5-MAN COMMITTEB COUPRISED OT VERY RELIOIOUS
bORKERS. AGBABEGIAN I S SOMNHAT CONCIRNfD TEAT TIIIS
COMMITTEE I S INCREASINCLT BEING BT-PASSED BT WORKERS WBO
WANT TO BRING TBEIR PROBLWS TO B1H DIRICTLT. W I L E THIS
INDICATES TRUST I T PLACES AN IMPOSSIBLE DEMAND ON HIS
TIME.
7. EVEN PRIOR TO TEE REVOLUTION, ADBABLCIAN BAD
ASTUTELT REACTED TO WOPKP FWSTPATIONS AND JXALOUSIES.
'I0 TBS CHAGRIN O? STATT. BE ALLOWED WORfSRS TO USE THE
IDEU CLUB, SUIUMSHG POOL AND TENNIS COURTS. BE STOPPED
CONSTRUCTION ON A 259.8BI DOL ROOSE E f HAD BEIN CONSTRUC-
T I N G AND BAS CONTINUED TO LIVE I N A s n A L L t a aousa I N
TABBIZ. HE NOTED TEAT RSLICIOUS WORKEBS RID NO WEERE TO
PRIT AND BEGAN TEE CONSTPUCTION or A s n r u n o s ~ u tON TEE
PLANT SITE. BE REmSED A CBAFIIUR. SOLD TIIS NEW MXRCLDES
COMPANY CAR AND DRIVES A 5 TEAR OLD UXPCEDES. ALL O r
THIS BAS PAID OFF IN BETTER YOBKER BPLATIONS. BUT PERBAPS
EVEN nom IMPORTANTLY BAS PROMOTED ACBABECIAN'S RELATIONS
YITE THE CITT'S NEW REV9bOTIONART ES?ABLISHMtNT. THP
SINGING 01 HIS PRAISES BT E I S PIOUS WOHKtP COMUITTEE BAS
BBOUCBT VISITS ANE COMMENDATIONS 1110M T B I CITT'S CEILlF
AYbTOLLAHS. HIS RELATIVELT SUCCESSlUL PLEAS YOR CREDIT
FROM THE CAUTIOUS BANKERS IN TABRIZ HAVE BEEN BACKED BT
REQUESTS PROM THE CHIEF REVOLUTIONART COUMITTEE TO TEE
GOVERNOR GENERAL TO TEE CITT'S C B I I F ATATOLLABS.

C O N T I D E N T I A L TEHRAN