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16. National Intelligence Estimate0

NIE 34–61

PROSPECTS FOR IRAN

The Problem

To analyze major developments and trends in Iran and to estimate their consequences in the political, economic, and foreign policy fields.

Conclusions

1.
Authority in Iran is concentrated almost exclusively in the hands of the Shah, whose rule rests primarily on the loyalty of the military and security forces. Despite the attention which has been lavished on the armed forces, their capabilities remain low. The growing political unrest of the urban middle class is being manifested more openly than in previous years against the Shah’s blatant rigging of elections for the Majlis (lower house of parliament). Although the Tudeh (Iranian Communist Party) remains neutralized, non-Communist civilian politicians show little promise of effective leadership. (Paras. 6–15)
2.
While a political upheaval could take place in Iran at any time, on the whole, we believe the odds are against such a development in the next year or so. However, profound political and social change in one form or another is virtually inevitable. The nature of Iranian politics and the character of the Shah make it unlikely that this change will be evolutionary. Possibilities for sudden change lie in a move against the Shah by some of his senior military commanders or an alliance between younger military officers and nationalist civilians. At present, neither eventuality would appear likely to result in improved stability in Iran. (Paras. 16–21)
3.
Iran’s economic prospects for the next year or two are not bright: inflation will probably continue; balance of payments deficits will keep foreign exchange reserves low and force foreign borrowing. Nevertheless the new stabilization program holds some promise for putting [Page 38]Iran’s finances in order and for developing responsible and competent economic management. The major determining factor of Iran’s long-term economic success probably will be the willingness of the Shah to support those who are seeking to modernize the country’s economic institutions and practices. In view of the unpalatable political choices involved, and the Shah’s past performances, we believe the Shah is unlikely to take any vigorous action to promote economic reforms. (Paras. 22–30)
4.
Assuming that the Shah remains in power and continues to enjoy US support, we foresee little change in Iran’s international position in the next year or so. A continuing problem for the US will probably be how to give the Shah sufficient support to preserve his present pro-Western policy without encouraging excessive demands for aid. (Paras. 32–34)
5.
For the short run, we think the odds are against a break in the stalemate in Iran’s relations with the USSR which has persisted for the past two years. Over the longer term, it is possible that Iran and the USSR may achieve some kind of modus vivendi, which might eventually be broadened to include Soviet economic and perhaps even military aid for Iran. The chances of such an accommodation would be much greater should the Shah become convinced that the US was withdrawing or significantly reducing its support for him. (Paras. 36–38)

[Here follows the 7-page Discussion section; see Supplement, the compilation on Iran.]

  1. Source: Department of State, S/S Files: Lot 86 D 189, 1961 General. Secret. According to a note on the cover sheet: “The following intelligence organizations participated in the preparation of this estimate: The Central Intelligence Agency and the intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, The Joint Staff, and the National Security Agency.” All members of the U.S. Intelligence Board concurred in the estimate except for the Atomic Energy Commission representative and the Assistant Director of the Federal Bureau of Investigation, who abstained because the subject was outside their jurisdiction.