135. Telegram From the Embassy in Iran to the Department of State1

5850. CINCPAC for POLAD. Subj: Comments on Iran NIE. Ref: State 112142.2

1. Unfortunately, as often happens with summaries of lengthy documents, précis of NIE on Iran (reftel) is in our view misleading in its [Page 407] starkness and gives rather alarmist portrayal of Iranian political situation. Full text of NIE has now been received, and we find it more balanced presentation than suggested by précis. While we agree with most of its basic conclusions, some points are overstated and document is occasionally inconsistent. Comments on specific topics follow.

2. Opposition: Statement that opposition is increasingly repressed (précis, Section A) contrasts with NIE’s conclusion that many Iranians (i.e. administrators, middle class professionals and bulk of urban middle class) are essentially passive in their view of regime and satisfied to maximize their economic benefits while “playing the game” (para 15). Shah still plays central role and brooks no direct opposition to his policies, but Embassy made point in its A–71 of April 11, 19753 that Shah and his immediate entourage do not control all day-to-day decisions in today’s Iran so long as those decisions are made within policy guidelines Shah has established. NIE’s conclusion that oppositionists’ desires to share political power today are more troublesome than during Mossadegh era (para 17) is incorrect if it refers to organized political activity and dissent because control from the top has become more effective. Students, for example, do not pose danger to regime today which they did in 1961–63 period. Neither do vast bulk of professional and middle class who are busy making a good living. Peasants and farmers are not and have not been a factor.

3. On other hand, NIE is correct in noting increase in acts of terrorism (para 18). Opposition is negative and wants to destroy existing power structure—it is devoid of alternative strategies for political and economic development. Beginning in 1962, the Shah adopted nationalist proposals for reform, added his own programs, and forged them into the twelve point Shah–People Revolution (A–31 of February 24, 1975).4 He has ambitious plans to provide more benefits for welfare of Iranian public (A–28 of February 20, 1975).5 But Shah has thus far failed to foster effective political participation. One of his reasons for creation of the Resurgence Party was to stimulate broader participation on grounds that former multi-party system resulted in waste of effort without achieving this participation, but it remains to be seen how effective Resurgence Party will be in bringing forth creative energies of its vast membership. We agree with statement in Air Force representative’s footnote to para 20 that problems in modernization program should not all be interpreted as danger signs for regime. Estimate [Page 408] overstates the significance and extent of dissent in Iran and prejudges Shah’s capacity to effect successful reforms.

4. Limitations on Bureaucratic and Government Effectiveness: Administrative ineffectiveness and corruption of many government ministries is still fact of life in Tehran. However, there have evolved such effective economic institutions as Central Bank, NIOC, National Iranian Petro-Chemical Company, Plan and Budget Organization, and Ministry of Economic Affairs and Finance. Provided military remains unified behind leader who takes reins after Shah leaves scene, these organizations and multiple middle class vested interests could provide stability for future and would have political as well as economic benefits.

5. Constraints on Economic Development: NIE is correct in citing limitations on economic growth, but we do not see any shortages today which could cause “significant economic and political problems” (para 29). In short run, shortages of skilled labor can be filled by importing people, but eventually Iran must train its own technicians. Port and transportation bottlenecks can be partially alleviated by projects such as jetty construction by South Koreans now underway in Khorramshahr. However, leveling off or decline of oil revenues would inhibit capacity of GOI to solve above development problems by large infusions of money.

6. Nuclear Weapons: Précis is too dramatic in predicting Shah will attempt to acquire nuclear weapon technology. This distorts main thrust of his policy which is to acquire nationwide nuclear energy network. Obvious by-product would be potential to develop nuclear weapons capability and it could be one he would opt for if area nuclear arms race got underway. It would, of course, depend on whether needed foreign technical assistance would be available.

7. Persian Gulf: Embassy does not see Shah needing to risk confrontation with “Arabs, West, or Soviet Union” to continue to play major role in Gulf (para 51). In recent years he has achieved much in cooperating with Arab states in OPEC and improving bilateral relations with Gulf states, including negotiation of median line agreements in the Gulf. Concept of non-aggression pact and security agreement in Gulf is receiving increasing support from littoral states with Iran and Iraq actively taking soundings in other Gulf states. Issue of unilateral deployment of forces to forestall establishment of radical regime in Gulf area is probably unlikely. Shah is aware of damage this would do to his cooperative image in Gulf area as well as practical limits to such a venture if opposed by other area states. (He would, of course, be prepared to consider rendering assistance if requested as in case of Dhofar rebellion.) Although Shah has stated Iran’s ultimate objective as expulsion of foreign power influence from Persian Gulf and Indian Ocean, [Page 409] these steps could take place only after littoral states had built up their own power and provided for their own security. Although Shah has said he wants to see US forces leave Bahrain, he has linked this to Soviet pull-out from Umm Qasr in Iraq which he knows is unlikely. In view his need for American technical assistance in building up blue water navy and his realization that it will be years before Iranian and other littoral navies could begin to balance Soviet presence, we doubt Shah would press for U.S. withdrawal from Bahrain any time soon.

8. Oil for Israel: Précis’ comment that Iran is becoming less likely to supply Israel with oil in event of resumed hostilities contrasts with more cautious conclusions in body of report that “we cannot be confident” Iran would continue such supply. Although recent public statements by Shah and others have taken on a more pro-Arab and anti-Israel flavor, Iran still finds [1½ lines not declassified].

9. Divergence of Interest: Précis notes “increasing number of areas” where Shah’s interests diverge from ours. Reading the report we note only three: oil prices, Persian Gulf, and Congressional limitations on atomic energy assistance. On other hand, there are many areas in which our interests continue to coincide and in which cooperation is likely to remain effective.

10. Future Attitudes Toward U.S.: We believe paragraph J of précis may be too optimistic. If “more extreme regime” replaced that of Shah, Embassy believes US could not take it for granted that cooperative relationship would continue. Increased xenophobia caused by large influx of foreign technicians, particularly US, and traditional Iranian fear of being dominated by foreigners who make themselves essential to GOI might cause reaction against that close relationship. Result could be cancelling of some arms deals, further diversification of purchases, limits on numbers of Americans working here, and curtailment of some intelligence-gathering facilities.

  1. Source: National Archives, RG 59, Central Foreign Policy Files, D750214–0179. Secret. Repeated to Ankara, Bonn, Cairo, Canberra, Islamabad, Jidda, Kabul, London, Manama, Moscow, Muscat, New Delhi, Ottawa, Paris, Tel Aviv, Tokyo, and CINCPAC.
  2. Telegram 112142 to Tehran, May 20, provided the précis of NIE 34–1–75. (Ibid., D750170–0902) The NIE is Document 121.
  3. The airgram is entitled “The Recent Evolution of Power in Iran.” (National Archives, RG 59, Central Foreign Policy Files, P750065–2420)
  4. The airgram is entitled “The Shah–People Revolution.” (Ibid., P750041–0390)
  5. The airgram is entitled “Movement Toward a Welfare State.” (Ibid., P750039–0303)