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

8233. Subject: Shah on Corruption.

1. After Ambassador Byroade’s audience with Shah2 was finished, I asked to stay behind to discuss with Shah approach of Soviet Ambassador to Swedish Ambassador and others about alleged increase in domestic opposition to GOI as result Shah’s recent decrees on corruption and on new requirement that government ministers and immediate subordinates divest themselves of any shares they hold in any companies or industries.3 Shah was obviously startled to learn that Soviets were claiming to note increased opposition and asked rhetorically how anyone could imagine such a thing. We agreed that this was Soviet psychological warfare designed to unsettle the government. The Shah immediately tied it in to the recent Tudeh Party/Iraqi Communist proclamation criticizing GOI activities. Shah is convinced that Soviets are attempting to recreate Tudeh Party and put money into strengthening of Iranian Communist movement.

2. Being pensive for a moment about what we had been discussing, the Shah said, “Perhaps I have been too tough on corruption.” To which I immediately replied, “No, sir, you cannot be too tough on corruption.” There then ensued a discussion of what will happen in Iran in the years ahead if corruption is not stemmed with billions of dollars floating around in the economy. It was quite clear from this discussion that the Shah indeed is convinced that his program and the country’s future will go right downhill if he is not able to deal with the corruption issue.

3. When the Shah mentioned his insistence that certain high government officials divest themselves of stocks and holdings, I said, “Won’t many of them have to unload?” The Shah replied, “A few, not all.”

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 603, Country Files—Middle East, Iran, Vol. V, May–December 1973. Secret; Exdis.
  2. Henry Byroade, Ambassador to Pakistan, met with the Shah on November 21 and reported his conversation in telegram 10097 from Islamabad, November 22. (Ibid., Box 1295, Harold H. Saunders Files, Iran, May 16, 1973–December 31, 1973)
  3. In telegram 7652 from Tehran, October 31, the Embassy advised the Department of the Shah’s Royal decree on corruption, in which he promised a crackdown on influence-peddling, profit-making, and no-bid contracts, and demanded civil servants’ divestment from commercial enterprises. (Ibid., RG 59, Central Foreign Policy Files, [no film number])