Abdul Kasim Mansur (pen name for former U.S. State Department official), "The Crisis in Iran: Why the U.S. Ignored a Quarter Century of Warning," Armed Forces Journal International January 1979: 26-33.
Carter's lack of a clearly defined foreign policy resulted in confusing inconsistencies in the United States' dealings with Iran. The president had initially supported the shah of Iran in spite of the well-known repressive tactics employed by the Iranian leader's repressive secret police. U.S. officials could not come to a consensus on policy toward the increasingly unstable country, which bordered on the Soviet Union and supplied the United States with considerable amounts of oil. A report published in early 1979, a month before the shah fell before the forces led by the Ayatollah, indicated that U.S. policy required serious realignment. The author, a State Department official, noted that many of the factors leading up to the revolution had been evident for close to a quarter century. The pressures created by rapid but inadequate modernization combined with an exploding population to create social unrest that the shah's corrupt and authoritarian government could not control. Furthermore, U.S. officials had appeared unreceptive to intelligence reports indicating the gravity of the situation. The failure to heed the obvious warnings led not only to the fall of the shah but indirectly, to the Iran hostage crisis.
by Abul Kasim Mansur
THERE CAN BE NO QUESTION of the strategic importance of Iran to the United States and its major allies. Iran shares a 1,250 mile border with the USSR, and is a critical check and balance to the expansion of Soviet power in the Near East and Indian Ocean. It now has a vast pool of modern military equipment, and armed forces of over 420,000.
Iran provides the West with oil exports of approximately 5.5 million barrels per day, has a total production capacity of 6.8 MMBD, supplies roughly 9% of US oil imports, and is a key supplier to Israel and Japan. Its gas exports to the USSR and Soviet Bloc reduce communist pressure on the world's oil supplies. Iran also has de facto military control over the West's jugular vein -- the Straits of Hormuzthrough which the free world must get roughly twenty million barrels of oil per day, or 37% of its oil production.
There also, however, can be no question that the United States must now re-think how. to best preserve Iran as an ally and strong strategic force in the Near East. Specifically, the upheavals in Iran during the last year have demonstrated the US must re-think five critical aspects of its strategic relations with Iran and other key allies, such as Saudi Arabia:
The US must accept the risk of broadening its contacts with all the pro-Western elements in developing nations. it must accept the unpredictability and independence of such elements.
The US must adopt a new realism in providing military advice and sales.
The US must improve its approach to analyzing the economic development of allies, and its control of the impact of Western sales and activities.
The US must revise its policy towards assisting developing nations in educating their youth. Virtually without exception, half the population of every developing nation is now under eighteen, The US must help its allies to ensure that their students get an education that matches the capacity of their economy to absorb such student populations, and must re-structure the US educational visa program to reduce the radicalization and alienation of foreign students studying in the US.
Finally, the US must re-think not only its approach to intelligence, but its entire reporting process on developing nations. It must introduce a new emphasis on realism in country team reporting, and in the policy analysis of the NSC, State Department, and Department of Defense. It must treat the crisis in Iran as a failure in policy leadership, and not as a failure in intelligence.
These are demanding requirements for changes in US policy, However, even a broad review of the pressures that led to the crisis in Iran, and of US policy towards Iran, indicates that such changes are vital if the US is to maintain and improve the security and stability of its key strategic allies in the developing world.
A QUARTER CENTURY OF WARNING
It is ironic that events in Iran could have taken the US so much by surprise. There have been countless examples of similar situations producing cultural and economic explosions since World War 11. There have also been countless examples to prove that authoritarian regimes cannot put a lid on political instability; that when they try, the pressure builds-up to the breaking point; and that in the process of repression, such regimes cut themselves off from the contact with their people that give them warning and time to react. The Savak, after all, followed in the footsteps of many other repressive secret polices whose ultimate impact was to cut off the regime they served from the people it governed.
Moreover, in Iran's case there were exceptional long and short term indicators. The US has been intimately involved in Iran since 1943, and it literally should have had a quarter century warning.
The Long Term Warning Indicators
It has been clear for more than two decades that Iran is a society which is undergoing massive internal strain and shock. Its development industrialization, and "westernization" been achieved at the cost of presures which have always been capable of suddenly and unpredictably exploding:
Exploding Population Growth: While demographic estimates are uncertain, Iran's population almost certainly did not exceed 13 million in 1945. It had risen to 26 million by 1970, and is variously estimated, as being from 33 to 37 million today, presenting incredible problems for Iranian government.
And Exploding Youth: Iran has an extraordinarily young population. Something like half the population is under 16, and two-thirds is under 30. This ensures a high rate of cultural instability, problems in education and in creating new jobs, and an inevitable "radicalization" of much of the population.
Unmanageable Shift to Urbanization: By the late 1950s, it was clear that Iran was facing the inevitable problems of a massive and continuing shift of its population from peasant agriculture to "urban" jobs. Iran's population leaped from 5 million in 1956 to 10 million in 1966, and will approach or exceed 20 million by the end of this decade. Much of this population growth has concentrated in the capital city of Tehran. It, and its satellite towns and cities, have grown from 500,000 in 1940 to 2 million in 1962, over 3 million in 1970, and 5 million today. Something like 50% of Iran's population is now "urban" versus 38% in 1956, and 5% in the late 1940s. Roughly 15% of the total population lives in or around Tehran in homes or slums which often lack proper water, electricity, and sewage facilities.
The Creation of a Sleeping Time Bomb of Urban Workers: These twin pressures of population growth and urban migration have gone on in a society that was semi-feudal only two decades ago, and which still has vast inequities in the distribution of its wealth. Moreover, they have occured in a society which has received roughly 70% of its income from oil, and which has created comparatively few productive or industrial jobs for its new urban population. The result has been to create a mass of urban workers with no real skills, and whose employment has been dependent on an ever-continuing construction boom and ever-growing demand for menial laborers.
These pressures have made Iran's cities into sleeping time bombs, acutely vulnerable to the slightest economic downturns, which force masses of people to live under wretched conditions, and then raise their expectations and resentments by exposing them to privileged middle and upper classes. Urbanization has further exposed this population to modern media and a centuries old rumor mill which has kept it fully aware of its government's profiteering and corruption.
A Religion of Alienation: This combination of pressures has also impacted heavily the religious situation in Iran. Iran's population is about 90% Shiite muslim. However the Shiite faith in Iran is a primitive and mystic branch of Islam whose beliefs and "laws" are fundamental incompatible with modern industrialized and whose clergy are traditionally opposed to the State.
Unlike the religious leaders of Turkey and the Levant, the Muhtahids of Iran still not accepted the concept of secular law and government. The result is that the population of Iran is tied to a religion it cannot live by, led by aging, ill educated, and often mystic leaders who oppose a secular government, but are largely incapable of playing any constructive role in leading Iran's present society, her, many of these leaders participated abortive coup in 1963 in protest Iran's modernization; the senior leaders are in their 70s and are out of touch with Iran's social change; and many have been in conflict with Savak for decades. This situation has always been a potential source of political crisis.
Students Without Futures: At the other end of the political spectrum, Iran's youth explosion has created a current student population of nearly 10 million, Iran also now has about 100,000 university students in some form of secondary or advanced education.
More than 60% of both the secondary and university students come form homes where both parents are illiterate. These upwardly mobile students -- and millions of recent graduates -- have grown up in a overstrained and outdated school system which had only 200,000 places in 1945. In spite of major efforts, this system has generally provided an inadequate curriculum, and has often relied on rote learning. It also has received far less of Iran's oil wealth in recent years than has military and economic development.
Most of Iran's youth have experienced corruption in the examination process, and favoritism in the selection process for advancement. And, in spite of constant effort by the Savak, most students have been exposed to radical teaching or influence. While they have little real interest in radical beliefs, they have learned the language of radicalism, and radical leaders have been their only outlet for opposition to the Shah.
At the same time, this school system, and the competition for a restricted number of university places and status, has led 70,000 Iranian students a year to live abroad. About 35,000 of these students study in the US, and most acquire anti-Shah leanings. Over 30% never return to Iran, and many form a permanent cadre of liberal and radical opposition.
At the end of this educational process, Iran's students must enter an oil-oriented economy with few job openings, and the vast majority lack the connections and family influence necessary for advancement. Most are educated to regard small business or non-supervisory jobs as socially inferior. Yet the vast majority are also educated in liberal arts or other programs which hardly equip them to play useful roles in the Iranian economy. Many end up permanently alienated in jobs which can never meet their expectations.
A Divisive and Often Useless Civil Service: The Shah dealt with this situation in a way which has created another sleeping time bomb. He has attempted to co-opt the support of many of these students by creating phoney or largely useless civil service jobs for them as a social relief valve. Depending upon the definitions used, the Iranian government now supports over 800,000 civil servants, and more than a million jobs if various government-owned or subsidized industries are included. At most, only 300,000 to 400,000 of these jobs have any utility, and most of the incumbents know they are locked into deadend sinecures, since they lack the education and connections to escape.
A Potentially Unstable Military: The Shah also created another unstable class. When all military, gendarmerie, and police manpower are counted, there are 700,000 uniformed men in Iran. Contrary to popular impression in the West, most of these men do not enjoy a high degree of privilege, and most have declined both in relative income and status since 1970.
Even Iran's generals have suffered from continuing purges and the Shah's constant shifts in assignments to use one officer as a check against another. The bulk of Iran's officers are conservative, but have encountered patterns of corruption and favoritism that directly conflict with their Western training, and most have seen their status sink steadily relative to the rest of Iran's middle class during the last decade. Many have also experienced the clumsy arm of Savak or military intelligence surveillance.
Iran's trained career NCOs and technicians have a far worse social and economic position. They are locked into long enlistments at salaries far below civilian standards, and are treated as inferior beings by the more traditional officers. The Iranian enlisted man generally has neither privileges or any experiences likely to engender great loyalty to his superiors.
A "White Revolution" That Has Not Worked: The agricultural population is not really capable of protesting or threatening the government. However, even this sector has been a growing potential source of unrest for the last decade.
While the Iranian Government notes with some justification that the Shah's "white revolution" dispersed about 75% of the useful land in Iran to some three million peasant families, it was clear by the early 1960s that such reforms could not hope to support the 16 million people that now make up these families. It was also clear that most of the children in these families had no desire to spend their lives in peasant agriculture, and that small backward peasant farms would never feed all of Iran's people. Thus, land reform did not buy stability.
The "white revolution" also had the effect of cutting the Shah off from much of Iran's traditional aristocracy, who lost their lands in the reform. The Shah then further alienated both the dispossessed land owners, and many peasants, by deeding 25% of Iran's land to the Pahlavi Foundation. This was run by his family, did not pass on the benefits of reform to the workers on Pahlavi lands, and corruptly administered the revenues involved.
The end result is that Iran has shifted from an emphasis on land reform in the 1960s to one on large-scale agribusiness in the 1970s. This further alienated small farmers and also proved a dismal failure. Many of the Western firms which were supposed to lead this effort had pulled out by 1977. Agriculture dropped from 18% of the GNP in 1973 to 8% in 1977, and food imports rose from $32 million in 1973 to $1.5 billion in 1977.
The Short Term Warning Indicators
The grim data that make up these long term indicators describe an inherently explosive society. They do not result in a predictable boiling point or crisis, but they scarcely inspire confidence or complacence. Iran has never been the kind of society that should have led the CIA to produce a draft National Intelligence Estimate in August -- when the crisis was well underway -- whose conclusions have been quoted in the press as stating:
"Iran is not a revolutionary society, or even a pre-revolutionary situation . . . Those who are in opposition, both violent and non-violent, do not have the capacity to be more than troublesome ... There is dissatisfaction with the Shah's tight control of the political process, out this does not threaten the government."
Little wonder that Israel's Director of Military Intelligence reportedly read the US intelligence traffic on the riots in Iran and reached very different conclusions from those of the CIA. More importantly, however, there were many short term warnings that should have indicated a revolutionary crisis might be coming to a head.
The Shah's Shift Towards Growing Authoritarianism: The Shah's always somewhat erratic leadership moved towards almost total authoritarianism after oil wealth freed him of many of the prior restraints of US influence. He junked even the image of a two party system (in which he had created both parties and then appointed the senior officials of both). He made the Rastakhiz into Iran's only political party, and made it brutally clear that any opposition or criticism (beyond narrow bounds) would be punished.
The Suppression of Good Advice: At the same time, the Shah dealt summarily with civilian officials and military officers who criticized his development and expansion plans. He purged the Army and bureaucracy of anyone who raised embarrassing issues. The style of Iranian government came to be one of avoiding challenges that would irritate the Shah, and covering up problems that might draw his attention.
The Sheer Scale of Corruption: Some degree of corruption is normal in Iran. However, by 1975, the sheer scale of corruption had reached a boiling point The Pahlavi Foundation had become blatant method of grabbing wealth for the Shah's family. Senior military officer obtained vast wealth from commissions and senior officials in government who owned companies like Iran Air and the Iranian National Oil Company hardly bothered to conceal their extortions.
The Shah's brother-in-law and then head of the Air Force, Mohemmed Khatemi became involved in highly publicized contingency deals for Air Force purchase which netted him millions. The Vice Minister of War for Armaments, Genera Hassan Toufanian, acquired equal visibility for similar commission operations. Lower level officials took their cuts, and money began to pour into safe hiding places in the West.
Even conservative estimates indicate that such corruption involved at least a billion dollars between 1973 and 1976. And, this corruption was so open that the workers of Iran's central bank were able to create a list of 144 key Iranians involved in the process. This list, which the present Iranian government is taking very seriously, includes a former premier, two nephews and a niece of the Shah, a senior ambassador, and several top ministerial aides. While charges that these individuals alone transferred $2.4 billion into foreign bank accounts are probably exaggerated, they are not that exaggerated.
A Pervasive Police State Atmosphere: The Shah's rapproachment with Iraq in 1975 also allowed him to give much freer reign to the Savak, military tribunals, arbitrary arrest by the gendarmerie, and the execution or permanent imprisonment of political prisoners. The Shah's "deal" with Iraq freed him from the fear Iraq would pour arms or dollars into his religious and student opposition, and gave him what he thought was the freedom to try to totally suppress any threat to his regime.
The Savak even used houseboys and other servants to spy on US officials, and included Savak personnel among the Iranian officers sent for military training in the US, and constantly spied on Iranian students, businessmen, teachers, politicians, and civil servants.
Spending More Oil Wealth Than Iran Earned: Although oil raised the value of Iranian exports from $6.3 billion in 1973 to $21.5 billion in 1974, oil did not increase in real price after 1974, and the value of Iran's less desirable heavy crudes dropped in constant dollar value. Iran was thus deriving something like 81% of its export income from an asset that was constant or declining in real value. (The landed price of Saudi crude dropped from $11.90 per barrel in 1974 to $10.50 in August 1978 in constant 1974 dollars.)
At the same time, however, the Shah's ambitious development plans swelled to new heights in each successive year, They totalled almost $20 billion in 1978. The Shah also spent something like $19 billion orders for US arms between 1972 and 1978, and had nearly $11 billion more in the pipeline when the crisis began. It was clear as early as mid-1976 that the plans grossly exceeded what Iran's economy and culture could absorb.
A "Compound Interest" Crisis in and Military Development: While a significant delay took place between such Iranian military and economic development purchases and actual deliveries, it was clear by 1976 that deliveries were reaching an incredible level in comparison to their past levels, and would inevitably impose a serious stress on Iranian society. The data on Iranian economic development uncertain, but they indicate that Iran spent nearly as much in current dollars on foreign economic development purchase. between 1973 and 1978 as it did in the thirty years between 1943 and 1972.
Good data are available on US arms deliveries and they illustrate the "compound interest" effect of the Shah's military and economic development purchases. DoD figures show that actual,, US arms deliveries were nearly constant at $.21-.24 billion between 1972 and 1973, when the oil boom started. Deliveries began to catch-up in 1974, however, an& doubled to $.51 billion. They then double again to $.91 billion in 1975, leaped to $1.46 billion in 1976, reached $2.24 billion% in 1977, and were over $2.5 billion in third quarter of 1978.
In short, between 1974 and 1978, Ira took deliveries of $7.62 billion of US arms purchases and purchased over $11 billion more. These US arms deliveries alone were' roughly equivalent to the current dollar, value of all the previous arms imports from all sources in Iran's national history, and' Iran bought arms from many other Western nations. The risks and strains inherent in such geometric growth should have been self-evident.
Growth Without Progress: Although Iran's gross national product showed a real increase on paper of 43% between 1973 and 1976, and both its GNP and industrial product appeared to be growing by more than 10% annually, the flow of money measured in such figures disguised failures in Iran's economic development which were apparent in every sector of the economy, and visible in the industrial outskirts of many Iranian cities.
Project after project began to collapse, fall behind schedule, or cause monumental waste. More money and foreign advisors ceased to be able to fix things and corruption had become rampant. While the Shah talked of overtaking West Germany, and about a "poor" Japan which lacked Iran's natural resources and long term potential, his Plan and Budget Office collapsed by 1977 under the strain of trying to plan and administer his dreams.
A Crisis in Iran's Urban Boom: Iranian political stability had become dependent on the existence of nearly a million relatively highly paid jobs for unskilled construction and other urban workers. This employment was essentially absorbing the impact of urban migration, By 1976, however, Iran's construction boom began to collapse. Unemployment quadrupled during 1976-1977, and by the start of the year it was clear that large numbers of urban workers had nowhere to go but the streets.
No Jobs For Iran's Students: Similarly, job opportunities vanished for many Iranian students. The government could not afford to continue newly subsidized jobs and pay for its ambitious economic and military expansion plans. This was a particularly explosive situation, because at the same time Iran was importing skilled labor to make its development plans work. Many of the students and other Iranians who could not find any job, or a decent one, were constantly exposed to 170,000 foreigners who lived in what was luxury by Iranian standards, and who often were contemptuous of the nation they worked in.
Declining Real Income for Salaried Workers: Inflation reached 30% per year in 1977, and outstripped wage increases. Civil servants, the military, oil workers, airline workers, and much of the middle class had a declining real income. At the same time, Iran's intelligentsia saw Iran's oil wealth lead to growing corruption in the Shah's family and entourage, vast waste in the Shah's development efforts, declining opportunities for their children, and growing political repression.
Smart Money in Exile: Smart money began to leave Iran well before the riots started and it reached peak flows of $20 to S50 million per day. Financially wise, Iranians saw the coming impact of a 1978 budget deficit that originally was planned to be $5.5 billion, but which may now total early $10 billion. They also saw imports that at were rising towards $20 billion annually, the Shah's growing foreign debt and debt service ratio, and rising political trouble signs. They voted with their money long before they voted with their feet.
THE FAILURE TO HEED A QUARTER CENTURY OF WARNING
When the US replaced Britain as the leading Western power in Iran in 1943, it an a relationship with the Shah and his country which has involved it in Iran's economic and military development ever since Between 1943 and 1970, this relationship was one of caution and ration. The US acquired lesson after lesson during this period in the limits of how quickly Iran could absorb change, and in Iran's Political instability. It carefully avoided tying itself too closely to the Shah, moderated his tendency towards authoritarianism, and brought his military and economic development plans back to able levels of growth on many occasions.
Countless State Department, DoD, I CIA, and NSC studies warned during the 1950s and 1960s of the need to exert US influence to control Iran's rate of modernization, to maintain contact beyond the Shah's entourage, and to maintain pressure on the Shah to control his repressive tendencies and ambitions. In fact, until the end of the Johnson Administration, the US paid careful attention to the danger signals in Iranian society, and used its influence to control the Shah's ambitions.
President Nixon's First Blank Check
When the UK announced in 1968 that it would leave the Gulf in 1971, the US faced a situation where Iran appeared to be the only hope of regional stability and continued alignment with the West. It is not surprising, therefore, that the US decided to try to make Iran its "bastion" in the area. The Shah could also interpret such events. He soon made it clear that he would seek a new degree of US support, and quickly moved to make a deal with the UK where he would abandon his claims in the Gulf states if the UK would allow him to take over the key islands controlling the Straits of Hormuz.
From that point on, events proceeded roughly as follows:
By 1970, the Shah made it clear he would not accept the past degree of American advice or tutelage. When the US did not agree to the military sales he wanted, he went to the Soviets., British, and othersthus making it clear that he had alternatives to US support.
At the same time, the British presence in the Gulf had ceased to matter long before 1971. Further, Egypt, Syria, Iraq, Libia, and the Yemens shifted toward the Soviet bloc. Saudi Arabia and the former Trucial States had weak and outdated governments and seemed incapable of self-defense.
As a result, the NSC formulated a policy towards Iran which to all intents and purposes amounted to a blank check of support to the Shah. This culminated during 1971 in a meeting between President Nixon and the Shah when both met at Tehran's airport and the Shah was given the President's personal assurance he could have virtually any military or intelligence support he asked for.
US policy then went from balanced support of the Shah to all-out commitment. The US also virtually ended any attempt to control the Shah's expansion plans. US Foreign Military Sales agreements went from $113 million in FY 70 to $386 million in FY 71, $520 million in FY 72, and $2.1 billion in FY 73.
An End to Objective LIS Analysis and Intelligence Reporting
Equally significant, the Embassy, State Department, US military team in Iran, and Intelligence Community quickly learned that no one in the White House really wanted any negative information about Iran's Shah, its stability, or the military build up. The risk of critical reporting embarrassing to the Administration was particularly sensitive because the Ad ministration was dependent on Congressional support for its military sales program, and was deliberately endrunning Congressional limits on the number of military advisors it could assign overseas -- instead using contractor and technical advisory field teams to pour US manpower into Iran.
The US was also in the awkward position of using CIA and non-uniformed US personnel to help the Kurds fight their rebellion in Iraq. No one wanted an expose that might lead to a domestic crisis over the US aid effort to Iran. And, such an expose seemed the likely result of any honest reporting.
From 1971 onwards, the Iranian military build-up had a facial character. Far too few NCO's and officers could be properly trained for the new jobs the build-up created, Iranian military standards dropped steadily to get anything approaching the required technical manpower. Equipment was lost or "operator damaged" in massive quantities. US advisors often ended up operating and maintaining the equipment they were supposed to train the Iranians to use.
Massive corruption and incompetence appeared in Iranian weapons procurement. Many of the Shah's senior officers shared "10% commissions" on major purchases. The Shah's brother-in-law even set up a dummy corporation called Air Taxi to handle his profits. The Vice Minister of War for Armaments has been implicated in Air Taxi's dealings, and acquired wealth through a more technically legal role as an official in joint WesternIranian co-production firms. Things reached the point where when one staff official in the Vice Ministry of Armament's office got a Buick from a US company, a British firm airlifted a new Jaguar for him, Many other Iranian officials got shares in so-called joint arms manufacture or assembly companies, or became the head of dummy corporations.
The Shah's constant purges of those senior commanders who were not part of his inner cadre did nothing to help this situation. The entire climate in Iran became one of "cover-up." No one reported a constant series of problems and incidents like the one in which an Iranian Air Force general needlessly ejected from his F-4 over a crowded suburb of Tehran and caused several unnecessary deaths. The "world's largest hovercraft fleet" started to deteriorate into junk, and had no useful armament. When the Shah insisted his second best armored division be brought up to the standard of the best, the Iranian Supreme Command Staff simply exchanged the key officers, NCOs, and technicians from the good division to the worst. Chieftain tanks lay deadlined in large number because of design problems and poor maintenance. Iran procured a helicopter from Bell-Augusta which could not fly with useful loads. Millions of dollars got lost in the Iranian handling of its military purchase accounts.
No one really wished to report on the constant problems in the supply and performance of the Iranian troops sent to help suppress the PFLO rebellion in the Dhofar province of Oman. The frequently rotated Iranian forces proved to be significantly inferior in performance to the Jordanian forces in the country, and revealed major weakness in the training and logistic organization of the Iranian Army. The Iranian performance in the capture of Rakhyut and construction of the Demanvand line raised similar issues. Worst of all, the Saudis became acutely sensitive to the fact that although the Shah seemed to be stabilizing Oman, he also seemed to be practicing the takeover of the southern shore of the Gulf.
The expansion of military sales also created serious problems in the US aid program. Corruption appeared within the US advisory team, and the sales bonanza led to the "suspect" handling of key sales in Washington. While successive Secretaries of Defense made efforts to control the situation, these efforts were only partially successful. No one really wished to analyze or discuss the resulting mess.
The October War: The End of US Restraint
The October War sharply reinforced these problems. Although Iran gave some token support to the Arabs, the Shah's defacto support of the US and Israel was vital. The Shah also acquired vast and instant wealth. The rise in oil prices raised the annual value of Iranian exports from $6 to $22 billion in about four months.
The Iranian market became critical as Iran used its new oil revenue from Europe and Japan to buy from the US. Iran spent nearly $2 on US goods for every $1 the US spent on Iranian oil. The Shah's vast development schemes cost nearly as much as Iran's total annual oil revenues, and the Shah committed himself to future expenditures of incredible proportions. The Shah's nuclear development plan alone was planned to cost $60 billion. Iran became the goose that laid golden eggs, and few of its customers were willing to worry whether the goose might choke to death on what it was fed.
The Iranian defense budget became a similar golden goose. By 1974, Iranian military purchases reached a multi-billion dollar level which made the post-1969 expansion seem unimportant.
The US also found Iran to be its one clear ally in the Near East during the early period following the October War. It was not until 1976 that the US fully realized the extent of the alliance it could work out with Saudi Arabia; in the interim it avoided doing anything that might upset the Shah. Ambassador Helms totally committed the US mission to supporting the Shah.
As a result, any "boat rocking" became even less desirable. Several major policy studies were cancelled or suppressed when they seemed likely to produce embarrassing results. Much of the analytic intelligence reporting on Iran was deferred or dropped. Intelligence studies of the regional balance were cancelled. Realistic reporting on Iran's political, economic, and military problems, was confined to back channel or "eyes only" messages. This cut off staff experts from the policyrnaker, and vice versa. Official reporting out of Tehran lost objectivity, depth, and realism. 0 The CIA, which had always had close ties with the Savak, found itself being aligned with the Shah's view of Iran and needs, rather than serving as an independent body. The agency became deeply involved in the Shah's support of the Kurds and his actions in Oman. The Savak was tacitly allowed to operate in the United States. The US looked the other way when Iran indirectly funneled large amounts of money into lobbying efforts, and into winning the support of key members of the Congress.
During this process, the Shah privately came to regard the US and West as weak and ineffectual, He showed less and less regard for any advice that warned him of limits on his power. His military and economic plans became more and more grandiose.
In spite of several re-organization attempts, defense advisors, and missions from Washington, the US advisory effort began to get even more out of control. The mission was too big and trying to achieve too many impossible force improvement goals. The 1,100 US military and 8,000 contract US "advisors" in Iran became involved in too many marginal or unworkable programs for anyone in Washington to want to dwell too much on what was happening.
The Carter Administration: "Regional Influential" and Human Rights
Few of these problems were apparent at the surface when the Carter Administration took over. The intelligence reforms carried out by President Ford and CIA Director Colby had previously reduced many of the most visible abuses in the CIA's ties to the Savak. Secretaries of Defense Schlesinger and Rumsfeld had cleaned up many of the most blatant abuses in the military sales effort. The assessment of Iran given to the new Administration was that the nation faced many obstacles, but ones that could be overcome. The events of the preceding five years had effectively suppressed the kind of US thinking and concern that might -- and should -- have provided proper warning.
The new Administration found itself in an awkward position dealing with Iran:
At one level, the NSC under Brzezinski was as determined to build-up Iran as a "regional influential" as Henry Kissinger had been. At another level, the Carter cadre concerned with controlling arms sales and with human rights faced an acute potential embarrassment if events in Iran developed too high a profile. The United States could not afford a "dual standard" which. tolerated the Shah, but not wealthy leaders. It became convenient, everyone to ignore the negative accentuate the positive.
The Shah also made it painfully clear to the Carter Administration that he expected continued US support, and would not tolerate criticism, advice or interference. His oil wealth, strategic importance, influence in OPEC, and appetite for dollars gave him unwarranted power over both US policy and the actions of US officials in Tehran and Washington. No one had a desire to irritate the Shah. The Department of Defense also came to be increasingly dependent on the volume of arms sales to Iran to lower unit prices, to maintain production lines, and to offset the impact of inflation and President's planned FY 80 defense budget cuts to "balance" the budget.
The US had never reorganized its political and economic reporting nations like Iran after the oil boom to take account of their vastly increased importance to the US or to understand how the sudden flood of $22-billion a year in revenue might have effected the Iranian society. The Carter Administration proceeded to make things worse by shakeups in the organization of OSD, the military assistance effort, and defense intelligence community: these focus virtually all their attention on budgets and "turf" fights, and did nothing to improve the quality of management and analysis.
The end result was that the Carter Administration re-issued the Nixion-Kissinger blank check. No one at the, highest level of the Carter Administration wanted to hear "bad thoughts." As a result the Carter bureaucracy continued to act as a filter that reported what the Administration wanted to hear. The PRMs, NIEs, and other Carter Administration reports were written to support US policy -- not risk embarrassing it.
A New Realism and New Policies
It has taken the continuing crisis of the last year to make the US re-think its blank check. However, there are now signs that the US is shifting its "blank check" policy to one of realism. The US Ambassador in Iran, William Sullivan, has been instructed to establish meaningful political contact with the Shah's opposition, and other US officials such as Treasury Secretary Blumenthal and Sen. Robert Byrd have begun to seriously discuss Iran's future with Iranians it dismissed as radicals only a few months ago, President Carter has called for improved intelligence on Iran. The Administration has broadened its range of contacts with outside experts on Iran, and has even gone so far as to consult with former Ambassador Helms. And, the Department of Defense has shown at least some moderation in accepting the Shah's need to cancel orders for much of the $11 billion dollars worth of unnecessary and unabsorbable US military equipment yet to be delivered.
The US also put real pressure on the Shah to free 3,000 of his political prisoners, and has urged him to Support the anticorruption drive by Justice Miinister Janafi that now touches the Shah's closest personal friends and family. The US is further reported to have been a strong factor in the current negotiations by Ali Amini to replace General Gholam Reze Azhari's military government with a meaningful coalition of technocrats, the Shah's more liberal Supporters, and his more moderate opponents.
However, the Nixon-Kissinger "blank check" heritage still lingers, and major reforms are needed in US policy to ensure that the US is better prepared in the future for similar crises in both Iran and nations like Saudi Arabia, Korea, and Indonesia.
An Expendable Shah
President Carter has now publicly hinted that the Shah may have to go, and that -- at a minimum -- Tehran's government must be expanded and liberalized. Yet, the US has always had great trouble practicing what it preaches regarding governments of the developing world. US policymakers rave long verbally supported the theory hat it is better to risk supporting potentially unstable progressive and democratic elements -- in spite of their instability, tendency toward non-alignment, merit, and willingness to challenge US policies -- than to support fading elites or one-man rules with no ultimate future. Yet, US practice under pressure has been to fall back on short term security, back pro-US authoritarian elites -- and hope the future will never arrive.
In fact, there are indications this could happen again in the case of Iran in spite of enhanced US contacts with the Shah's opposition. The US initially made far too many unqualified statements of support to the Shah, and his increasingly more repressive military government, and reiterated them far too long. The President was overcommitting the US to the Shah as late as November 30, when he said, "We trust in the Shah to maintain stability in Iran."
Several senior members of the NSC and late Department associated with the Presidential Review Committee and task forces on Iran also seem to have virtually panicked when the Shah;s brief fling with a liberal government lead to a "Tehran Spring" that allowed the media and opposition politicians to speak their minds. None evidently anticipated the depth of opposition to the Shah, and the resentment of his US support that this "Spring" revealed. many began to fear that "demoraticization" might lead to a Soviet takeover. As a result, they evidently gave the Shah the riot equipment they had previously refused him, and offered US Army assistance to train Iranian troops in riot control. The US was reported at one point to be drafting contingency plans for emergency US military support, although it would seem that all such discussion of US support with the Shah involved definite quid pro quos regarding liberalization of Iran's government.
The US had also shown far too much fear of the negative elements in the Iranian opposition, and far too little faith that Iran's Army, technocrats, or middle class could evolve a reasonably stable, pro-western and liberal government -- with or without the Shah. Ironically, the US is now acutely frightened of the Western-educated students that it once tried so hard to produce. It has taken Iran's neo-Tudeh party factions too seriously as a communist threat, and put too much emphasis on the USSR's token "actions" in support of the Shah's opposition.
There is no question that the various left wing extremist groups like the heirs of the Organization of Iranian People's Fedayee Guerrillas, the Organization of Majaheddin, and National Front of Moslem Youth are terrorist and violently anti-US and Israel in character. At the same time, however, the vast majority of students would quickly accept a reasonable degree of liberalism. They now follow extremist leaders largely because no other leaders could exist under the Shah's repression.
Similarly, most of the educated Iranian population necessary to run the country is at worst no more left-wing than the social-democratic side of the National Front. The vast majority are, if anything, apolitical technocrats. They will support any regime that seems likely to end the Savak's repression, bring order and balance to Iran's economic growth, and offer them and their children a hope of living the Western life style they desire.
Even Iran's street mobs are far more interested in the hope of jobs and decent living conditions than anything else. They are vulnerable to student left wing slogans, and the Medievalism muslim extremist Ayatollahs like Khomein, because they have no hope, and not because they wish to align themselves with either Moscow or the 12th Century. Even many of the younger Mullahs would accept a half-way liberal regime that avoided unnecessary interference in their religion, and acts like raids on the homes and offices of Iran's more "moderate" religious leaders like Ayatollah Sharia Madari.
The students, workers, and religious figures are polarized around extremists today because they have no other relief valve. The Savak's 5,000 odd professionals and 50,000 informants, and the political and security elements of the gendarmeire and Army have succeeded only in silencing the middle ground or depriving it of political influence.
It is the Savak which has made Khomeni into a public hero and potential martyr, simply because he could speak from his position in exile. In a freer society, he would be identified as what he is, a political reactionary who was involved in an abortive in 1963, who has traded assassination attempts with the Shah for fifteen years, who has fronted terrorist groups in Iraq, and who is now made respectable only by a thin veneer of' media spokesmen of decidedly uncertain background.
Even the "mysterious" death of Khomemi's son in Iraq shortly before the riots started in Qum would have aroused little sympathy in a more open society where extremism and terrorism could be separated from reasonable opposition. Without repression, seventy year-old religious leaders like Khomeni and Madari would be recognized as the spokesmen for a hopelessly vanished past.
US policy must now firmly align itself with the effort of leaders like Ali Amini to create a coalition government or regency council that will at least effectively end the Shah's one rule. It must avoid the temptation to try to continue to rely on a 59 year old man with delusions of grandeur, or his 18 year-old son. It must continue to try to establish better ties with the heirs of' Mossadegh's National Front, such as its leader, Karim Sanjabi, and spokesman, Dariush Forohar.
The US must also expand its ties and contacts with Iran's younger and influential technocrats, and accept their justifiable hostility towards the role the US has played in the economic crisis Iran now faces, and towards the US' tacit support of repression under the Shah, It must stop issuing statements of support to the Shah, and put daylight between the US and his imperial majesty. The US must publically avoid supporting a rebirth of authoritarianism under the Shah and the military government of General Golam Reza Azhari -- or a man on horseback -- simply to get through the next few months, It must publicly resist any return of the Savak under General Nassar Noghadam to its past abuses, end active and retired CIA ties to the Savak security forces, and carefully control its role in Savak training, It must use its influence to pressure both the Shah and the Iranian military to avoid return to the jailing of political prisoners, mass political arrests. military tribunals and executions.
The US must now risk facing the future, rather than trying to live in the past. There is no long term security for the US supporting attempts to bottle-up the pressures in Iran or suppress moderate opposition. In the long run, the risks of the brief "Tehran Spring" under Prime Minister Sharif-Emami offers the US a far better hope of a friendly Iran. Unlike the Soviet Union in a similar spring in Prague, the US can afford an open Iranian society. The Shah has made himself expendable, and the US must now practice what it preaches.
Bringing Iran's Military Forces Into Balance
Directly and indirectly, the Shall has spent roughly $36 billion to make Iran a majority military power. Both the numbers of' weapons he has purchased, and the advanced technologies involved, are far beyond what Iran needs or can absorb, The US must act decisively to re-evaluate what Iran actually needs and persuade Iran's military to accept a smaller, more balanced force structure.
In the short run, this means encouraging Iran to cancel or stretch out much of its $11.56 billion in outstanding US arms orders, and to do the same with as many of its non-US orders as possible. Steps have already been taken to cancel or stretch out Iran's Wild Weasel and additional F-14 and F-16 orders, Similar cancellation is needed of such other programs as Iran's $1.2 billion order for the E-3A AWACS, Improved Hawk purchases, costly ship and submarines programs, and needless investment in a next generation of Shir Iran ranks.
It will also mean finding some way to help Iran cope with strain of paying for the large pay raises -- reported to be 30-56% -- the Shah recently granted the military in an attempt to secure their loyalty, and similar pay raises for the Iranian Army's civil servants. This will require a major short term effort by the US military advisory team to somehow bring Iran's force structure into a balance that will meet these commitments, eliminate surplus conscript manpower. and minimize the need to mortgage more of' Iran's budget to hire additional officers and technicians to cope with the heritage of Iran's force expansion plans.
In the longer run, it means adopting a more realistic attitude about the military role Iran can and should play. It means realizing that a strong Iran self-defense capability is enough, and that Iran is not now capable of becoming the equivalent of a major Western military power.
There are, after all, only three Soviet category one divisions with about 33,000 men in the Transcaucasus, and the Soviets have shown little interest in building up regional air power infrastructure to efficiently support a direct attack on Iran. Iran decisively overtook its only regional threat, Iraq, in the 1970s, and has been edging towards better relations with Iraq ever since it traded an Iraqi-Iran accord for the Shah's 1975 sacrifice of the Kurds.
The Shah's dreams of empire are now effectively dead, and so must be US dreams that one nation could stabilize a region in the place of a balanced and complex US diplomacy with many nations. The US must now broaden its military ties with 'Turkey, Pakistan, India, and Saudi Arabia. For its own protection, the US must also totally eliminate the payment by US firms of "10% commissions" to Iranian officials, and the creation of dummy corporations as bribes for the Iranian military. It must be equally critical of other Western arms sales efforts.
The military advisory and sales effort in Washington and Iran should be reorganized so that it has civilian heads, is decoupled from the Shah, and is placed directly under the State Department. It must be shifted to serve US policy interests instead of trying to get a bigger buck for a bang. While the 1, 100 men in the advisory team will probably still be needed indefinitely, the 7,700 men in contract roles should be ruthlessly pared down. Past arrangements have also made senior military officers responsible for political and policy judgments for which they lack proper background, and where their natural tendency was to support maximum sales and force growth. They have put DoD, and particularly OSD ISA and the OJCS, in the position of determining how much military equipment Iran could absorb or needed, Both have proved to be poachers who made singularly bad gameskeepers for more than a decade, and neither Deputy Secretary of Defense Duncan or arms sales director Lt. Gen. Ernest Graves seem the men who should lead the forces of change.
Putting military sales and advice under direct State Department control would give political considerations primacy, provide the necessary experience to look beyond arms sales and force growth, and provide reporting on the assistance effort which is fully responsive to the Ambassador, and which does not filter through the Pentagon before reaching State and the NSC.
Revising US Economic Policies
The United States can never have as much economic influence over Iran as it has had military influence. It can, however, do a better job of providing economic analysis and advice than it does today. It can also work far more closely with US and western businessmen, and help work out a sound approach to supporting Iran's economic development.
The US now has only a token effort A trying to understand the socio-economic dynamics of Iran. There are probably significantly less than 100 People in the entire US government, including almost negligible staff of economic specialists in the Embassy in Iran, to deal with a critical country with which the US does $3 billion of trade a year, and in which it has over 10,000 business professionals.
The US effort has been so understaffed that even its basic statistical reporting lacks credibility. This was absurd before the axe fell on the Shah's talk of over-taking West Germany today it is acutely dangerous, The US needs to create a strong socioeconomic team in Iran, backed by proportionate number of specialists in State, the NSC, DoD, and CIA.
The US should begin immediately to reevaluate Iran's economic development plan and seek ways of aiding Iran's Office of Plan and Budget. Iran is going to experience incredible traumas simply trying to live with 25-35% wage increases the Shall has given the military, civil service, and oil workers in his attempts to buy their support. Iran's economic planning is in chaos, whether or not the Shah survives.
The US is going to have to provide independent help and advice if Iran is to cope with the structural problems in its agriculture sector and urban work force Some kind of order must now be evolved from the mess caused by such dreams of the Shah as: 23,000 megawatts of nuclear power, agri-businesses replacing peasant farms, becoming a major steel exporter, building a $2 billion subway in Tehran, and annually exporting 100,000 tons of copper products in spite of low world prices. The US must also find ways to expedite Iran's sounder development concepts, such as petrochemical and massive gas exports; and find ways to put Iran's population and urban growth to work.
Coping with the Problems of Iran's Students
As part of this crash effort at economic analysis and aid, the US must re-examine the structure of its educational policies towards Iran. It obviously cannot continue to educate 70,000 members of Iran's future leadership in liberal democracy in the US each year, and hope for their support of a repressive autocrat. It must actively back liberalism to have any hope of their support. It also, however, must ensure that they and then counterparts in Iran are trained for an economic role in Iranian society.
New visa and assistance programs are needed that stress a careful mesh between academic programs and what Iran's economy needs. Massive cutbacks are needed in liberal arts and graduate studies. The US must use its influence and visa powers to stress business, engineering, medicine, and short term technical training. It must also insist that Iranian students return to Iran, and not become professional students in the US. No on needs more Iranians who are trained only to be Americans or Europeans, and whose options are to become radicals or expatriates
Taking An Intelligent Approach to Intelligence
The US needs to do far more to improve its reporting on nations like Iran than conduct another pointless intelligence post-mortem arid find a few scapegoats in the Intelligence Community. The Community failed to give warning because senior US policymakers made it clear the didn't want to hear any. As was the case in Vietnam, Cambodia, and Angola, few are inspired to seek out and deliver bad new by the reward of destroying their careers The President's November I I complain about US analysis of events in Iran was properly addressed to "Cy" and "Zbig" a well as "Stan."
If the US is going to get good "intelligence," it is going to have to make such changes as:
The "country team" concept of which Secretary Vance is one of the now tends to suppress the truth rather than achieve it. It filters policy economic, and intelligence reporting to an agreed lowest common denominator. It often has the effect of limiting Intelligence Community reporting to what won't embarrass senior embassy officials or the military advisor. One only has to remember Ambassador Graham Marti's apalling performance in Vietnam to realize how easy it is to misuse the "country team"
Washington must now demand accurate, in-depth reporting by the Embassy; run spot inspections; and encourage CIA and DIA to report to Washington by separate channels. The only way that truth can be demanded is to hold the Ambassador and his Deputy Chief of Mission personally responsible for the result. Blaming a few intelligence personnel in the field is useless. The buck in Iran rightly stops at former Ambassador Richard Helms and present Ambassador William H. Sullivan.
It is also fundamentally incorrect to talk of Iran as an intelligence problem. The political and economic counselors of the State Department and the military advisory team in the Embassy -- and State, DoD and NSC experts in Washington -- play a vital and senior role in country reporting and analysis. The NSC, and not CIA, must be held solely responsible for ensuring that all US sources are integrated with intelligence. On Iran, NSC failed.
The vast technical capacity of US intelligence that makes up three-quarters of its budget should not disguis the fact it has remarkably few personnel assigned as political and economic analysts, and almost no analytic depth in nations like Iran. While the CIA has been too close to the Savak, and Tire New York Times reported in July that CIA's station in Iran had 50 agents, but that 100 other retired US intelligence agents now work in US firms in Iran, this disguises the fact that virtually all their effort has gone into counter-terrorism and security.
Continuing cuts in the community's analytic and humanitarian staffs -- which disastrously accelerated under Admiral Stansfield Turner -- have left very few CIA and DIA personnel assigned to Iran for intelligence analysis, and virtually all political reporting has gone through State Department channels. There are also remarkably few intelligence analysts working on Iran in Washington, and this is an area where only people count, not technical collection.
The Intelligence Community is now largely cut off from any criticism or examination of two critical aspects of virtually all developing nations: the US military assistance effort and the actions of US business personnel. DIA is tacitly forbidden to examine the effectiveness of US military advisory efforts, to analyze the details and impact of' US arms sales, and to criticize the effectiveness of US-advised or equipped forces.
The Office, Joint Chiefs of Staff ensures that DIA is threat-oriented and discourages any independent "negativism" from the advisory team. The CIA has similarly learned not to look too independently at US military aid, arid is increasingly cut off from the business community.
Both CIA and DIA are also largely cut off from tile highest level policy talks with foreign Countries, and discouraged from talking to or contacting opposition moderates and other "mainstream" contacts, They are focused on the political extremes and avoid embarrassing incidents, because the State Department reserves this function to itself.
No post mortem can be successful which does not take a hard look at Iranian operations in Washington. Intelligence cannot be blamed for lobbying operations -- registered and unregistered -- by the Embassy, Pahlaval foundations, various fronts, and paid US spokesmen which influenced policymakers to support the Shah. It cannot be blamed for a tacit willingness to allow Iranian pressure to be exerted on Iranians in the US, And, it cannot be blamed for the funneling of Iranian funds into the campaigns or causes favored by influential policy makers in the Congress. This is a task for the Attorney General's office, and one that needs active attention.
At the same time, however, the President clearly needs to reexamine what has happened to the Intelligence Community under his Administration. It is particularly striking that some of the most senior defense intelligence officials under Harold Brown had been shunted aside, or found wanting, by the Ford Administration when it sought to try to improve the quality of intelligence and its integration with other reporting. Similarly, CIA Director Turner has yet to demonstrate he can do anything significant to improve the intelligence product, His personal appointees have been singularly ineffective, and his emphasis on hardware, budget fights, and organizational squabbles has succeeded largely in reducing and disorganizing the analytic effort. It is incredible, for example, that officials like Robert R. Bowie, CIA's head of political analysis, and Lt. Gen. Eugene Tighe should be assigned to took into the quality of the reporting effort on Iran. They are precisely the kind of senior officials who have bureaucratized US intelligence and reduced it to a consensus oriented, lowest common denominator product.
In summary, it is a farce to talk about intelligence failures under such circumstances. What is needed is an overall re-examination of how the US organized to report on Iran, and not an intelligence post mortem. The US must reorganize an overall "system" that now has critical weak links at virtually every point where fusion and objectivity must occur. And, above all, it is the NSC and Ambassador which must be made accountable, Vietnam Cyprus, Portugal, 1, Cambodia, Ethiopia, Afghanistan, and Angola have all demonstrated that a witch hunt of the Intelligence Community simply ends with the pursuer lost and frustrated -- and more damage to US intelligence.
Looking Toward Saudi Arabia, Indonesia, Korea, and the Philippines
Finally, the US must take a close look at how all these changes in its policy towards Iran apply to the other key nations where it is also trying to maintain a special regional relationship. Iran is only the current case in point. There are painful similarities between US policy in Iran and in Saudi Arabia, Indonesia, Korea, and the Philippines, There were equal similarities in events which led to defeat in Vietnam and Angola.
In dealing with the developing countries we need the most, a combination of reaction and self-delusion is lethal. It can give us a few months or years of false security -- but only at the cost of cutting ourselves off from their future.