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THIS DOCUMENT IS TI PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

NBP 020/J8

BRITISH POLICY 0 IRAN

1974 1978

lY

N W Browne

Foreign and Commonwealth Office

CO IDE T AL COVE I C SEC ET

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Foreword by the Permanent Under-Secretary

In March 1979, Dr David Owen, then Foreign and Commonwealth Secretary, commissioned a detailed historical analysis of British policy towards Iran in the years leading up to the revolution.

The intentlon was not to apportion blame for the fact that, in common with virtually every other observer of Iran during these years, we failed to predict the fall of the Shah: the purpose was rather to examine the history of our policy towards Iran and the information and judgements 011 which it was based, and to examine where, if anywhere, we had gone wrong and how we could do better in the future.

Mr Nicholas Browne has spent almost a year preparing this study, using Foreign and Commonwealth Office files and discussing the issues with those who had primarily been concerned within the Office and with experts from other Government services and from the un lversities.

I believe Mr Browne's study to be of real value. It Is, of course, a personal interpretation of British policy towards Iran and has been printed as he wrote it. I have thought it right, however, thul the views of Sir Anthony Parsons, who was Ambassador in Tehran throughou 1 almost the whole of the period in question, should be attached.

Mr Browne raises questions which arc of general interest to us all in the conduct of foreign relations. Such matters as the balance between political and commercial work, the degree of commitment to u particular ruler, the extent to which it is possible in an authoritarian regime to keep in touch with oppositions and the ability to forecast the future of governments, particularly in the Third World, are of abiding interest.

Mr Browne's conclusions have not yet been submitted to Ministers nor even yet discussed, as J intend, at one of my regular meetings of Deputy Under-Secretaries. His paper will receive serious consideration but [ should be interested first to see any comments which readers may have on the final chapter of the study. beari ng in mind that if we devote more resources to one activity, eg political work, we shull have to devote less to something else. Please send comments in the First instance direct to the Head of Planning Staff.

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BRITISH POLICY ON IRAN 1974 - 1978

Contents
Chapter Introduction
Chapter II Iran 1974-1978
Chapter III British Analysis 1974-1978
Chapter IV Shortcomings of the British analysis
Chapter V Analysis of other governments and institutions
Chapter VI The revolutions in Egypt, Iraq and Libya
Chapter VII British Policy 1974-1978
Chapter VIII Policy of other Western governments
Chapter IX Losses to Britain from the fall of the Shall
Chapter X Could the losses have been avoided?
(i) the analysis
(ii) British policy before the crisis
(ijj) British policy during the crisis
Chapter XI Conclusion: lessons for the FCO
Annexes CONFIDENTIAL

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CHAPTER]

J n trodu ction

This paper was originally commissioned by the former Foreign Secretary, Dr David Owen, in early 1979. According to his instructions it attempts the folJowing tasks. It describes the British analysis of Iranian politics from 1970 to 1978, with particular reference to the period from 1974, and considers whether mistakes were made. It then compares the British analysis with that of other governments, and experts outside government. The paper then describes British policy in Iran during the corresponding period, and considers whether the policy of other Western governments was significantly di ffere n t. It goes on to revie w briefly the Losses to B ri tain from the fall of the Shah.

In its concluding chapters the paper examines whether the losses to Britain could have been mitigated or avoided if political analysis had been more acute or different policy decisions had been taken. Finally it suggests some ways in which mistakes might be avoided in future.

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CHAPTER II

iran 1974-78

In order to set the paper into context it seems best to begin with a brief sketch of events in Iran in the 1970's as they appear to one instant historian in late 1979. At this early stage, and without access to many sources of material, particularly official Iranian papers, the account cannot be definitive and is intended as far as possible to be neutral But the paper demands an interpretation of events not simply a chronology. and there will inevitably be room for disagreement with the account.

Mohammad Reza Pahlavl carne to the throne in Iran in 1941, after his father Reza had been obliged to abdicate following British and Soviet invasion of his country. During the second world war he was hardly able to act independently. Even after the withdrawal of foreign forces by 1946 the Shah played only a diffident role in the political life of the country .. In the early 1950's he was upstaged by Mohammad Mossadeq, who nationalised Iran's oil fields and embarked on a long dispute with the West. Eventually Mossadeq's popularity waned and the Shah was able after a brief period of exile to contrive his dismissal and imprisonment. (The British part in the events or these years is discussed in Chapter VlI.)

In the late 1950's and early 1960's the Shah's political stature grew. In a key confrontation in 1963 he defeated the opposition which was being mobilised against him over the sa-called 'White Revolution', of which the most important provision was land reform. Fortified by this he steadily asserted his personal rule, reducing the national assembly to a rubber stamp. His coronation ceremony in )967 was a symbol of his increasing confidence. Meanwhile an impressive rate of economic growth was being achieved with Iran's oil revenues, and major industrial projects being undertaken.

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In 197 I the Shah embarked on his most successful period. In February a bold challenge to the international oil companies led to the Tehran Agreement, increasing Iran's oil revenues. In August the celebrations of the 2,500th anniversary of the Persian Monarchy drew world leaders to an extravagant party at Persepolis. In December Iranian troops landed at Abu Musa and Tunbs Islands in the Persian Gulf, asserting iran's doubtful claim to the islands on British military withdrawal from the area. During the year Iran had signed contracts for the sale of 700 Chieftain tanks by Britain, showing the resources the Shah had at his disposal to develop his armed forces. The only blot on the regime's record that year was an attack on the police statlon at Siahkal near the Caspian Sea by a guerilla band, the first incident of this kind, and the subsequent assassination of the military prosecutor. Inflation was also becoming a pre-occupation of the Government for the first time for many years.

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1972 was a year of con so li dati on. S pendi ng 0 n econom ic develop men t can tin II ed to increase and there were few internal security problems. The followlng year Iran began sharply to assert a new regional and world Tole. The Shah began to talk of his ambitions for his country - the era of the 'Great Civilisation' - and boasted that han would soon join the ranks of the industrialised countries. He sought to revitalise the bureaucracy with talk of an administrative revolution, and appointed an active new leader of one of the political parties in tile hope of convincing lranians that political activity was not futile.

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The rise in oil prices was followed by 18 months of frenetic commercial activity. In August 1974 the projected expenditurei n the development plan was doubled, and ambitious new targets were set for the improvement of infrastructure, the social services and agriculture in particular. Tehran teemed with foreign businessmen willing to camp on the floors of hotels, Iran lent lts surplus Funds to Western industrialised countries as well as to the developing world. But even in 1974 inflation ami shortages of basic commodities were irritating difficulties, and there was no clue how the Shah would surmount the obstacles of an inefficient bureaucracy and a seriously underdeveloped infrastructure in his march to the 'Grea t Civ ilisu tio n '.

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A new agreement with the consortium of oil companies in Iran was signed in July, giving Iran greatly increased control over its own oil industry. Iran began to forge diplornatle relations with a number of distant third world countries and closer to home an Iranian force was despatched to help the Sultan of Oman. Above all the Shah took a leading part in the OPEC decisions In October and December to quadruple the price of oil, making the momentous announcement himself in Tehran at the second of the two OPEC meetings. On the debit side Inflation continued to be a problem. there were student troubles throughout the year, and in October a plot to kill members of the Shah's family was revealed.

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One or two Iranian leaders who protested at the headlong pace of economic development were ignored. The Shah was by then in a hurry and there was one obvious reason for this; he had often spoken of the possibility of abdicating in favour of his SOil in about ten years' time and wanted Iran to have established a durable base for future economic prosperity by then, Also his optimism at the time was unbounded, and he felt that the sooner his rosy vision of lran under the Pahlavis could be realised the better. Two French doctors have recently maintained privately that they diagnosed lymphona, a cancer of the lymph glands, in the Shah In 1973 and this may well have added to his sense of urgency. But lyrnphonu can be present in widely differing degrees of severity, and there was 110 sign that illness was affecting the Shah's physical or mental performance.

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By February t 975 there were indications that the decision to go for rapid economic growth was causing serious difficulties, and a mood of re-appraisal could be detected in Tehran. The main problem was an unexpected shortage of cash brought about by a decline in world demand for oil as the free world economy experienced a mild recession, and a simultaneous rapid increase in the cost of Iran's imported goods .. in addition the ports and transport had been unable to cope with the rush of new trade and there was a serious shortage of skilled manpower. Souring rents in Tehran were a sign that the economy was out of control. By the summer the brakes were being applied and a severe 'anti-profiteering' campaign was launched against the bazaar merchants and other middlemen and retailers. Meanwhile the Shah had taken another new step in his search for a political structure which would mobilise popular participation in government affairs without threatening his own leadership. Existing political parties were dissolved in March and one party, the 'Rastakhiz' or (Resurgence' party established in their place. Elections to the national assembly took place in June but there was 110 genuine enthusiasm for the new experiment; pressure to join the party was widely resented. Terrorists continued to give the security authorities difficulties: in May two foreigners were assasslnated, the first such attack for two years.

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By 1976 there was a general malaise in Iranian society. In February the allegations that tho Grumman Corporation and Tate and Lyle among others had been offering large inducements to senior Iranians, and the dismissal of the Commander of the Iranian navy fOI corruption. were evidence of financial malpractice in the administration. The Iranian Government were reduced to lying about inflation, claiming that it had been eliminated when it was at <1.\1 annual rate or 20% and still rising. Moreover the economy had become too complicated for the Shah himself to exercise his customary supervising and co-ordinatlng role. Despite this gloomy picture the regime celebrated the 50th anniversary ofthe Pahlavi dynasty in March, an event greeted without enthusiasm; at the same time without regard for public opinion they abandoned the Islamic calendar in favour of a new one taking the Achaernenid dynasty as its starting point.

ln October the Shah finally felt obliged to admit that mistakes hud been made. In an interview with the 10eaJ press he conceded that progress had not been up to expectations, and that unless expenditure was curtailed and productivity increased there would be no Great Civilisation, Everyone should be prepared for sacrifices. Prestige projects began to be cancelled, and there W<.JS no longer talk of Iran spreading its influence far and wide.

The Shah was thus under pressure for the fir~t time for many years. He had been unable to fulfil his promise of greatly increased wealth and improved social services for all Iranians, and Iran was very far from joining the ranks of the industrialised nations. There were other sources of strain: the regime was corni ng under increasing criticism in the West for its treatment of its opponen ts and in Novcm her President Carter came to power in the United States with the intention of making human rights a major international Issue. In December at an OPEC meeting in Doha, Saudi Arabia refused to agree to an Iranian proposal for a sharp increase in price, and effectively thwarted £1·<I.11'S efforts to increase her all revenues by putting more of its own cheaper 011 on the market. This was another dent to the Shah's prestige. Mea.nwhile the Shah had been handicapped by losing the advice of two of his closest confidants. The Court Minister Asadollah Alarn had fallen ill that autumn, and although he returned to work for a while the following May was unable to take his usual heavy burden. The airforce commander General Khademi had died the same year in a ha ng-glid i ng a ccid en t,

The Shah reacted to these circumstances by taking the crucial decision to allow more genu ine political debate in J run - the so-called liberalisation policy. Early in t 977 Iran's prisons were opened for inspection by the International Red Cross, for the first time since 1972 the public were admitted to trials of political prisoners, and prisoners who had allegedly been detained for political reasons began to be released. It seems that he had conclud ed that fifteen years 0 r strict nile had not h ad the effect he 11 ad hoped of mobilising the Iranian people into working together to build the Great Civilisation in their country. His series of experirnen ts with guided democracy, includ ing the Rastakhiz party, h ad all been fallu res. The fu ture of the mo narchy and h is son's position was very m uch in his mind. He may have been advised that in anincreasingly complex and rapidly developing society th e lid could no 10 nger be ke p t Ugh tly down. T he a n I y co urse see m ed to be to gi ve the people more say in their own affairs. hoping that the result would not be chaos that past experience had taught him untrammelled political activity could lead to. His health may have been a factor in the decision to take the plunge. He must also have been aware of the risk of damage to Iran's relations with tile West from the lack of human fights in Iran, though there is no evidence that the United States pushed him into his decision.

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TIle second broad grouping were those who had supported the Shah while the going was good but who were increasingly unhappy now that things were rougher and the economy was in difficulties. The most prominent were the bazaar merchants who had run prosperous businesses throughou t the 1960's and early 1970's in a secure environment for which they were grateful But a combination of inflation the threat of being rapidly superseded by modern productive and distribution methods in the Tush to develop the country, and the regime's anti-profiteering campuign in the summer of 1975 had made them sullen and resentful. The bazaar had strong traditional links with the mosque and funds began to flow into the coffers of mullahs preaching against the regime. This group also included many of the educated middle class, like lawyers and teachers, who had tolerated the regime but were increasingly tired of the repression and vapid propaganda.

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Whatever the reasons for the Shah's move it was to set off a momentous series of events. It is possible to distinguish three broad groupings in Iran in early 1977. First there were the diehard opponents of the Shah's regime, most of whom had either been lying low or been imprisoned since the early 1960's. These included some influential religious leaders. notably Ayatollah Khorneini (who had been exiled in Iraq since opposing the Shah at the time of land reform) and Ayatollah Talaghani, who resented the low esteem in which the regime held Shl'a Islam and their autocratic behaviour and, in Khomeini's case, implacably opposed monarchy itself; their mosques acted as havens of social and political discontent with the regime. They also included the old generation of National Front politicians of Mossadeq's era like Mehdi Bazurgan, Shahpour Bakhtiar, Karim Sanjabi and Dariush Foruhar who had been leading lives or obscurity interspersed with periods of imprisonment. There were also the politically active students who often had links with the two guerilla groups, the Marxist Cherikhaye Fedaiye Khalq and the radical Islamic Mojahedine Khalq. Finally there were poets and writers like Sa'eed Soltanpour and Gholam Hussein Sa'idi who were diehard opponents.

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The third grouping were the ordinary townspeople, many of whom had come into the cities in 1973 and 1974 attracted by stories of astronom ic wages particularly in the construction in du stry, When the boom collapsed work was harder to come by. Housing was extremely costly - in December 1976 the average worker spent 60 or 70% of his pay oil accommodation - and in south Tehran totally inadequate even by regional standards. Basic necessities were expensive and often in short supply. The gap between the poor of south Tehran and the rich of the north whom they served was glaring. The sudden improvement in their fortunes and the equally SUdden reversal, the bewildering changes around them, and the rapid spread of Western customs at the expense of the traditional Islamic based culture were all disorienting experiences. These people can have had no thought that the regime could be overthrown. but they were susceptible to any encouragement, perhaps from the mosques, to make their grievances heard and ready for signs that complaints might achieve something.

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The first reaction to the Shah's decision to llberalise came from writers and lawyers.

Early in 1977 a letter was sent to the Prime Minister complaining of the basic failings of the Rastakhiz Party. and further letters followed to the Shah, Prime Minister and newspapers about free speech, political activity and the rights of the judiciary; Bakhtiar, Sanjabi and Forouhar were among the authors. The regime ignored the letters but took no action against the writers. Meanwhile a series of long power cuts in Tehran had been a humiliating

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demonstration of the regime's mistakes of economic planning, and the dismissal of the whole government including the long standing Prime Minister Arnir Abbas Hoveida In August was a further admission of blame. ln October a reading of literature implicitly critical of the regime at the Goethe Institute in Tehran was attended by some 10,000 people. Ln November the students joined in the protest with a series of demonstrations in Tehran before the Shah's departure to the United States to see President Curter. Later that month the demonstrations were strictly repressed and a gang of thugs organised by the regime broke up a meeting of leading writers and lawyers near Tehran, but the Shah made clear that thi was not to be the norm and that he intended to stand by the policy of liberalisation. In January 1978 the regime placed an article in the press traducing Khorneini as an adventurer and non-believer, which provoked a riot in the religious centre of Qom In which a number of demonstrators were killed.

The Qom riots proved to be tile beginning of an accelerating cycle of violent protest which faltered only once, during the summer months. Despite the threat that was developing to his position the Shah remained determined not to abandon liberalisaticn and not to resort to oppression. On the occasions when the military took a hand in events it was generally after insistent pressure from them on the Shah to allow this, rather than on the Shah's initiative. His own preferred response to the pressure was to look for an accommodation with his opponents, offering them concessions as necessary. This was seen by the opposition as weakness on his part, and each concession was followed by new demands. The politlcal initiative passed from him to Khomeini and his opponents, and the urban masses began to join the Khorneini bandwagon as the Shah's vulnerability became apparent. The security forces, who had loyally supported the Shah, began to be affected by the overwhelming surge of opposition to him. The opposition became emboldened, and by the end or the year they could only be satlsflcd by the Shah's departure from Iran.

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The Qorn riots were followed by a succession of violent demonstrations at 40 day intervals, following the Shi'a practice of commemoration of the dead after this period. There were riots in Tabriz on 1 8/19 Fe bruary in wh lch tanks were used for the first time to restore order, disturbances throughout the country in early April, and on 11 May for the first time riots in Tehran. Meanwhile Khomeini's message of opposition to the regime was being widely circulated in Iran on cassettes and by leaflets. The Shah continued to retreat and on 6 June dismissed the long serving head of SAVAK General Nassiri, a bete noire of the regim's opponents. In June it appeared that the cycle of mourning demonstrations had been broken, but by late July there was unrest in Mashad and in early August tile trouble became so serious in Isfahan that martial law had to be imposed.

The Shall'S response to signs that the unrest was not being quelled was a promise of further Iiberalisation in a major speech on 5 August in which he said that the parliamentary elections due to take place in June 1979 would be "100 per cent free"; on I 7 August he undertook that bills would be presented to the National Assembly to provide for freedom of assembly and expression. After a disastrous ad of arson at a cinema in the south western city of Abadan for which the government blamed religious extremists but which a suspicious people saw as a government attempt to discredit religious leaders, and further sporadic demonstrations in provincial towns, the Shah dismissed Jamshid Arnuzcgar's government which had served for a year and replaced him with Ja'afar Sharif-Emami, Sharif-Emami decided with the Shah's agreement to be conciliatory; among other measures the new

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Achaerne n ian based ca lendu r wh ich had 0 tfend ad religious lenders was scrapped <.I nd attempts were made to open a dialogue with a leading Qorn Ayatollah. Shortly afterwards photographs of Khorneini began to appear in the press, which would have been unthinkable be lore. and on 5 Septum Ill'!", in" restive a tmosphe rc a t the end of t he fast i ng rnon til 0 r Rumadhun thousands marched peace fully th rough Tuh ran in SlI pport 0 r dern oera tisation. Under pressure from the security forces the Shah agreed to a ban on unauthorised processions, but another more liJ tempered march took place all 7 September. Early the next morning martial law was declared in Tehran ami other major cities and the army killed perhaps 100 of a Iurge crowd of demonstrators ut Juleh Square in South Tehran, who were. probably not aware of the declaration. Shortly afterwards press censorship resumed.

I t was widely assu rned In Iran that the Shah WOLI ld then clam p down com pJetely for a time at least. though some liberal politicians were still talking with enthusiasm about the next year's elections. in fad Sltarjf-Eruarni continued the policy of conciliation. For some time there WIiS little violence, but workers took <ldvantage of the government's mood to strike in support of claims for large wage Increases, ull of which the government granted. On 6 October the Shah made a speech to the National Assembly adruitting again that he had Illude III ista kcs in the past. lind on 19 Octo ber lie rc lerred pu hlicly to the na tu ral tra nsfer 0 r power a nd marc constitu tio nal rule. By then K home ini had moved to Pa ris, whence he was much more able to publicise his proclamations against the Shull. [11 late October a second wave of strikes began in which the demands were more political. and included the return of K horne in i lrorn exile. By 29 October I hcse h us spread to the oi lf'ields, und on 1 Novern her oil production ceased, Meanwhile there had been serious disturbances in towns not under martial law, and by 30 October renewed demonstrations in Tehran itself in defiance of the law. The Shah decided that Sharif-Emami's government had to go, but could not persuade the opposition Nul ionul Front. in touch wl th Khorneini, tu join a new government. Although oil production resumed on 2 November he carne under pressure from the military to take strong action. 0 n 4 NOVC111 her there we re vlolcn t demonstrations j n Teh ran, and Dr Brzezinski President Curter's National Security Adviser, telephoned the Shah to tell him that he could do what he thought best, hinting thutm ilitury government would be acceptable to the United Stutes. On 5 November the Sho11'S hand W,IS forced by extensive rioting and destruetion in cen tral Tehran, i ncluding an attack on t he British Em bussy, which the military deliberately did nothing to prevent. 011 6 November General Azharl, the chief of the Supreme Commander's starr, was appointed Prime Minister. a number of generals were made ministers. and an announcement wus made that murtlal law would be strictly implemented.

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The country had thus been plunged again into crisis after the superficial calm resulting Irorn the declaration of martial law in the muior towns on 8 September. The opposition were able to regain the Initiative prirnurily because they were pushing at an open door. Although the rirst wave of strikes in mid September may have been a genuine reac t ion to economic grievun cos, the govern ment response III ust h ave encouraged people to respond to the opposition's urgings to demand polltlcal reform too. The Shah was stating publicly that he was willing to concede this, lind there seemed after all to belittle to fear from the arrny. It must have heen oxh ilnrat i ng after years of authoritarian rule to get what you wanted through public protest, Khorneini's arrival in Paris where he could orchestrate proceedings WaS also a big luctor: by lute October it was he who appeared to be the authorative single minded figure on the scene, not the Shah or Sharif-Emami.

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Opposition leaders like the old National Front politicians who were inclined to be more moderate In their demands could not afford publicly to differ from Kherneini if they were to have any chance of popular support. lt seemed to the Iranian people, most importantly the masses of south Tehran, that it was Khomeini who held the key to an improvement in their living conditions and the humiliation of those who had repressed them. The moths were drawn towards the brightest light.

The installation of Azhari's government, like the declaration of martial law two months earlier, proved not to be the beginning of a period of repression. The Shah spoke on television on 6 November promising the people that the days of tyranny were over. Afterwards several prominent figures who had been bastions of the regime were arrested, including Nassiri and Hoveida, in an attempt to show that there had been a break with the past. The Azhari government took care not to behave in an arbitrary fashion, and generals soon began to return to civilians the ministries they had taken over. The Shah made clear to Azhari that he wanted as soon as possible to return to civilian government, possibly with opposition participation, to pave the way for elections, and left Azhari to run the country as he thought best while he considered ways of achieving this transition.

Even if Azhari had wanted strict military rule it would have been difficult to achieve. Strikes and outbreaks of violence continued, and by the end of the month the economy was virtually at a standstill. On 26 November the opposition began a new tactic of regular power cuts in Tehran, and on I December, the eve of the Shi'a mourning month of Moharram, there was again serious violence in Tehran. Although the military had been able to do little to curb the strikes, they had been able to control the Tehran demonstrations; however they were obliged to rescind an earlier order banning processions in cl ties on the im portant rna u rning days of Ta 'as ua an d Ash u ra on 1 0 and J 1 Decem ber, On both days some one million people marched through Tehran, and a declaration was issued calling for the return of Khomeini and the overthrow or the regime.

Despite this massive show of strength it was still not easy to sec how the opposition could finally bring about the Shah's downfall. Oil production was fluctuating, but was still sufficient for domestic consumption. There had been some signs that morale in the security forces was cracking, but on the whole they continued to stand behind their commanders and the Shah. However a new wave of violence began in Tehran on 23 December after an attempt to re-open the schools. On 27 December oil production plummeted and the next day there were long queues in Tehran for petroleum products, amid heavy firing in the town. The Shah abandoned an attempt to get an elderly politician to form a. neutral government and approached Bakhtiar, one of the National Pront group. By the time this fact became public on 3'1 December the country was in uproar; Azhari resigned the same day and there was effectively no government. It became clear that Bakhtlar was acceptable to the army, but that he would only become Prime Minister if the Shah agreed to leave the country. On 6 January Bakhtiar presented his cabinet to the Shall, who stated publicly that he would leave. A further ten days elapsed, in which Bakhtiar tried unsuccessfully to gain the support of fellow National Front politicians who were afraid to disown Khomeini's condemnation of the new administration, but managed to get the army commanders to acquiesce in the Shah's departure. The Shah finally left on 16 January.

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It is difficult to be sure of why the Shah acted the way he did, persisting with llberallsatlon and rejecting the conventional dictator's last resort of <I military crack down. In the IiISt place although he l1111y have been authoritarian he was not by nature a tyrant. In the early years of his rule he was often reluctant to order the use of military force for political purposes; a leading Iranian commented after the demise of Mossadeq that the Shah's night abroad in August 1953 had been II blessing in disguise: - "If he had been on the pot he would never have allowed the effective U<lC of force." The Shah himself told the American Ambassador when he arrived in Baghdad that month that he had decided that he could not resort to force, since that would have resulted in bloodshed and chaos. He was also prone to indecisiveness in a crisis. In June 1952 he made it known that he wanted Mossadcq's government to full, but that he did not want to take any active part himself. In J 955 he responded hesitantly to attacks all the Baha'i Community in Iran and the Ambassador commented that if in any future situallon the Shah lost tbe initiative he might also falter in determination. Others when necessary were prepared to take ruthless action all his behalf, and the loss of many of his closest advisers by 1978 was an important handicap. It has been rumoured that Alarn, then Prime Minister, gave the order in J 963 to fire on the mob in Tehran. though this cannot be substantiated. After 1963 the Shah had no real threat to face until 1978. and it was assumed that he had put his indecisiveness behind him.

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The Shah must aJso hove round it hard to believe after years of supremacy that his posi tion was really at risk, arul it would have been natural to postpone drust ic decisions un til he was convinced or this. By the time the danger was quite clear he may have fell that military repression would not in any case q uell the opposition. The Shah probably also continued to give weight to the arguments that had brought him to the initial decision to llbcrallsc - the Failure of 15 years of strict rule to mobilise the people, and the need to provide u secure base for his son. In September und October he was being urged by the United States and Britain not to turn the clock back. He may have hoped that Iran would emerge tempered from the fire. Finally his illness Il1:JY have played a part, Although he recovered quickly from a mood of deep depression in early September and did not appear sick, his determination to battle on may have been weakened.

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Once the Shah had left Iran it was only 11 matter of time before KhomeinJ returned.

Bakhtiar, supported by the army, initially sought an undertaking from him that he would abide by the constitution und Tehran airport was closed to him from 24 to 30 January as a show of strength. But Khomeini would make no concession and was allowed to return to Tehran on I February with no terms agreed. On 5 February he made clear that he regarded Bakhtiar's government as a tool of the Shall by appointing a rival administration under Bakhtiar's former National Front colleague Bazargan. Deadlock ensued. with the generals and Bnkhtiar ranged against Khomeini and Bnzargan, and frantic negotiations for a compromise were pursued behind the scenes. They were ended by II chance clash on the evening of 9 February between supporters of Khomeini at all airforee base in East Tehran and the Imperial Guard, which developed the following day into u battle between the army and pro-Khornelni guerilla forces. On 11 February the army commander signalled a willingness to work with Khomeini by ordering the army to return to barracks, anti Bakhtiar resigned. The guerillas then overrun and looted the army barracks In Tehran and the army collapsed. Khorneini had achieved power at last but the country's security force were in ruins and the capital in the hands of armed irregulars.

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CHAPTER 1Il

British AnaJysis 1974·1978

There is no obvious starting date for an account of British political analysis of Iran.

The paper concentrates on events from 1974 to 1978 and this section will look at analysis during that period in detail. It will also glve (L less comprehensive account or analysis from 1970 to J974. The account is throughout based on material in FCO rues alone, and therefore does not draw on any minuting in the Embassy in Tehran which was not copied to London. lt may be helpful to begin by considering selectively some British impressions of Iran from the Second World War until that date, in order to set the 1970's into context.

In 1940, the year before Mohammad Roza Pahlavi succeeded his rather on the throne, the British Minister in Tehran noted that the Crown Prince commanded no respect or affection. Comment on him wus no more favourable until the crisis over the Soviet Union's refusal to withd raw its troops from the north western province of Azerbaijan, ended by the Russian army's occupation of Tabriz. The Minister then believed that there was little doubt that both the initial impulse to act and the crucial decision were taken by the Shah. The Shah received more poor reports from the British in Tehran during the Mossadeq era. The Embassy referred in ]957 to his lack of character and his indecision, and suggested that his popularity had declined. In June they complained of his failure to exercise influence during (he crisis, and by September 1952 when Mossadeq was in almost complete control reported thut it was clearer than ever that the Shah could n01 be expected to play an effectual part in governing the country.

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In 11 1954 despatch the Embassy referred to a lingering affection for Mossadeq as a nationaJ hero who had unfortunately been misguided by his entourage. By the following year however their opinion or the Shah was rather higher. Despi te hi indecisiveness over the persecution of the Baha'is they described the increase in his influence and prestige as the keynote 01' the year, and in 1956 reported that the government's policy was nakedly the Shah's.

This tendency to give the Shah more credit grew steadily over the next few years.

Bu t in J 958 the Em bassy suggested that however effective the regirn e might have become it was not popular; the following year they referred to a good deal of dissatisfaction below the surface. The Shah's agreement in J 960 to dissolve a recently elected National Assembly after allegations of ballot rigging was held to demonstrate his infirmity of purpose. This judgement was revised in 19()3 when the opposition to land 'reform was raised, and the Embassy reported that the Shah had achieved a form of national stability. They later camille nted inciden tally th at the cammi trnen t to the West in Iran was alrn ost entirely dependent on the will of the Shah.

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By ] 965 the Embassy saw ample evidence of the Shah '5 popularity with the masses, and the following year wrote of a spiri t 0 f national regeneration, with the opposition disorganised and apathetic. But they believed the country to be overdependent on one man's leadership. In 1967 they took up this theme again. questioning whether the regime could continue much longer on a one man basis as the pace and complexity of developments mounted, "with the intellectuals apathetic and many students discontented". Optimism

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rcq II i red an ud 0 l' tu i I h, h U I the Shah wus probably more popular lila n he had ever been. By 1969 these doubts seemed to have receded; the Embassy argued (hut I ran presented to the world a picture of the most stable, prosperous and steadily developing country in the Middle East and was therefore u good risk politically anti economically.

In 1970 the Embassy sent u number or reports on agitation by 51 udents and mullahs, anti on the problems caused by lund reform. On student demonstrations, the Foreign and Commonwealth Office department commented t hut there was 'Illite it lot or smoke and therefore some fire. The Embassy suggested that because of the unpopularity of farm corporations, large seale state sponsored farms In which the peasants were used as hired labour, there was a distinct danger of serious rural unrest. But in general an optimistic view continued to be taken of Iran. Thc Export Credits Committee in Whitehall concluded that Iran's economy was strong and the prospects sound, und the department suggested that Iran was the most stable country in the MidJlc East at the time.

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The following year the Eml)1\ssy reported the terrorist attack on the gendarmerie outpost at Siuhkul ill March, hut saw no need to judge whether such activity might present a th rear to the regime. A d espa tell the previous month .. 1 bo u1 I ran ian you til suggested tha t the ideas which hud given birth to the Nalional Front and the communist Tudeh party lived all at universities, and thai the Mossadcq myth wus strong. II drew attention to sermons in one mosque in Tehran wi th the theme that monarchy must be destroyed for religion to be free. It then suggested Lhat the student message too hall become more openly anti-regime, that successful Iran ians did not a utoma t ienlly su pport j he regime however m uch they 111 igh t be getting out or it. lind thai an economic set-huck in lrun could give youth a chance to broaden lts protest. 1t concluded tluu a challenge to autocratic concepts would almost certainly come in the Shah's lilctuuc ami possibly in the next fow years. But a united opposition front W[JS unlikely because or Persian individualism, ami the challenge would in any case probably not be to the Shu h 's person or to the princi pie a r monarchy. When Sir Denis Wright left in April after being Ambassador in Iran for eight years he wrote that the Shah had succeeded beyond his expectations, but that he feared that over-confidence might lead the Shah to take some ill-considered and damaging step. The Foreign and Commonwealth Office department showed little interest in the Embassy's more disturbing conclusions; the dcspa tch on Ira 11 ian you til was not suhm ltted to u ruler secretaries.

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The new Ambassador tended initially to lake U 1110rc optimistic line than his predecessor. In the slimmer he wrote that he accepted General Nassiri's judgcmcnt that the overall security situation had improved. In a despatch on the celebrations of the 2,500th anniversary of the Persian monarchy ill October. the Embussy noted that muttered criticism or the expense could be heard from every quarter and there was a growing sense of disillusionment and frustration. But lhcy went Oil 10 describe the celebrations as u successful exercise in monarchical public relations, suggesting thut they had allayed the traditional cynicism and lIlLIt the people hud shared proudly in the manlfcstution of nationul achievement. Overall the despatch painted a positive picture.

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In 1')72 the Embassy became marc cautious in their judgements. In 1I January letter about the remnants of the Siahkal b'TOUP still ut large, they suggested that there were more thun SAVAK cared to admit hut described them as a rrcgllgihlc threat to the security 0[" the regime. In June II despatch considered the strength of the monarchy and reported that the ground well of discontent and unhappiness had never been so apparent. They suggested that it was a signiflcant new factor that many young Iranians seemed prepared to tire Ior their

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opposition to the regime. The Shah was being told less of the truth and therefore misunderstood his opponents. A companion despatch of the same month entitled "Unrest in Iran" described the guerilla opposition to the regime, and noted the existence of two groups, the Marxist Cherikhaye Fedalye Khalq and the lslamic Nehzate Azadi. The ideology of the Nehzate Azadi was described as religious fundamentalism and they attracted the support of young mullahs. These mullahs were able themselves to play on fear and resentment of the regime. The despatch also suggested that pressure on the have-nets would increase if the economy seriously overheated. anti that although the middle classes might have decided to throw in their lot with the regime many no doubt still harboured radical views. The despatches concluded that despite the problems the Shah was not unpopular, and that there was unlikely to be a fundamental upset to iran's stability over the next five years, but that after rive years or so the dangers to the monarchy could be more acute.

The Cabinet Office were stimulated by these reports into writing their own assessmen t, agreed in terdepartmen tally, in June. They suggested that the guerilla activity was probably partly due to tile general conditions of polltical life, where there was widespread, if marc or less resigned, resentment against the government. The guerillas had a better organisation than had been supposed. But there was no threat to the stability of the regime apart from the possibility of assassination of the Shah. The Embassy's annual review in December referred again to signs of growing discontent throughout the country, and the Shah's unwillingness to relax a central grip on the nation's affairs.

As in 1971 the Foreign a oct Common wealth Office seemed to attach little importance to the Embassy's worries, and made no comment on the June report about religious fundamentalism. When the Iran Country Director at the State Department saw the department in June he spoke of the level 01' internal discontent and the megalomania of the Shall, but this did not provoke any debate within the Foreign and Commonwealth Office.

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In 1973 the Embassy continued to report plenty of causes for concern. In January they wrote that they were sure there was a radical revivalist Islamic movement, even if it was not large, but they agreed that the authorities seemed to be on top of it, as the Shah claimed. (Some three months earlier the Shah had told the Ambassador that the hand of Ayatollah Khornelnl could be seen in the trouble, but that he counted for nothing.) In March the Embassy reported a ban on sermons by a mullah called Shariati who had been preaching against the Shah, and commented that the influence of the mullahs was likely to remain substantial for a very long time. They added that a mullah could exploit opposition better than any Marxist. There were only a few guerillas, but it was unlikely that they would disappear altogether. Whether or not the opposition to the Shah would tlnd further expression might well depend on his capacity for moderation. The same month the Embassy reported student trouble in Tehran, with a group shouting Khorneinl's name, and there were further student disturbances throughout the year. In October. reporting the plot to assassinate members of the Shah's family, they noted that for the first time plotters of calibre had decided to remain in Iran. The following month they commented that it was difficult to see how a continuing high rate of inn at ion could be supported without political consequences, even in a country whose people saw Little future in political expression. in December they concluded that if SAVAK were to be caught napping the government could be in real difficulty, but that at present they retained control.

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In a July despatch the Embassy again considered the political scene. There were factors for instability: the instruments of government could be cruelly repressive; many mullahs resented the encroachment of the secular state: inflation was rapid; a large section of the population saw too few benefits coming their way. On the other hand the regime was less repressive than it had been and there was more money to go around, the security forces were loyal, and it would be wrong to underestimate the Shah's achievements or dctcnnlnaliou. The despatch concluded that lran was as good n bet for British interests us 1110st I.)OLI1l tries of the world U11(J better than many. I n October a despatch I isted the problems the Shah would encounter in his drive to reach the Great Civilisation, and concluded tha this ambitious targets could not be ach ievcd by the end of the 1980's. But it was felt that this need not concern Britain because the pursuit of the Great Civilisation would in ltsel r present a great commercia] opportunity. The 1974 annual review noted that the bureaucracy was not responding to the Shah's challenge, but concluded that Iran would probably remain internally steady as it advanced up the ladder towards the First Division.

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terrorist bomb attacks that SAY AK seemed not to be on top of the situation. But by August they were writing in a brief for the First Sea Lord that the security forces claimed to be in control and there wall 110 reason to doubt this. Terrorism was the department's main interest, and the Embassy's work on the radical Islamic movement was not submitted or commented on.

In 1974 the Embassy continued to detect difficulties for the Shah. In March they reported a general picture of considerable activity by guerilla group. In June they were concerned again at the rate of inflation and at shortages of basic commodities, but did not believe these would drive people into the arms of the guerillas. However later in the year, when the government had begun its seasonal campaign ugainst "profiteering", they reported that influential Iranians were concerned at the political implications of souring prices. By November they were reporting that inflationary pressures had led to some industrial unrest.

However the conclusion of a number of careful reviews during the year of Iranian politics was optimistic. no doubt in part reflecting tile Shah's own buoyant mood after the oil price rises. Sir Peter Ramsbotham's valedictory despatch in January 1974 suggested that tilt' defects in the Iranian system like corruption and paternalism mattered now that the 51Hlh was driving the country forward at a cracking puce, that repression was wrong and build ing lip trouble for the fu ttl rc: and that many saw in rapid westernisat ion a threat to the trad itio ns of Islam. Btl t he conclud cd that active opponents 0 f the regime were few, the securi ty forces high ly competent and revolution 110 marc than a remote possibility. Britain could safely develop her growing interests, counting on at least a decade of stability to see them fructify. In February a despatch by the Charge cl'Affairs suggested that there were serious flaws in the whole Iranian edifice and that although commercial imperatives dictated close co-operation with the Shall Britain should continue to entertain private reservations about the Shah's future. But the new Ambassador wrote in April shortly after his arrival that by Middle Eastern and muny other standards the lrunian regime was stable, that social stresses would not be serious enough to affect lrnn's fundamental stability, and that he would be prepared to back Iran's future against that of any other state in the area.

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The Foreign and Commonwealth Office department showed some signs of nervousness during the year about the future, minuting that SiT P Ramsbotham's confident prediction of a decade of stabllitv was a hostage to fortune. They saw more gloom than llght In t h (I J ul y despatch abo u t th e political scene and d cc it! cd to talk to th c Am erieans more

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about Iran. (The Anglo/US talks on the Persian Gulf in May had not hall the Shah's position on the agenda.) But they did not question the basic conclusions that lrun was a good bet, and saw no need 10 d raw the attention of undcr-secrcturies to some or the less happy poi 11 ters,

The following year the Embassy reported more problems for the Shah. In February they pointed out that [ran's balance oJ payments surplus might be eroded. by 1976, and detected "a gradual development of an atmosphere which might presage a slight drawing in of horns". LIl March they reported that strikes in the universities were more widespread than usual, and that it seemed that students were becoming more involved in terrorist action. The same month they were reluctant to pass premature judgment on the significance of the newly formed Rastakhiz party, but doubted whether it would help 10 bring the Great Clvilisation any nearer. In May they reported the terrorist assassinations of two Americans, and that the security authorities were worried about the scale of violence. The following month, in II further comment on the economy, they reported that the trends evident in February were now developing. The Iranian economy had been overheating, and there would be a more care ful and price conscio us approach,

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Later in the year visitors from the Embassy to tile provinces also saw some worrying signs. A visitor to Harnadan in western [ran was told by a British carpet dealer resident there that the bazaar merchants openly hated the Shah and his regime, and were far more willing to say so than three or four years ago. The Rastakhiz party was an object or total derision. The visitor concluded that this reflected cynicism rather than a revolutionary situation. In October a visitor to Isfahan concluded that it was wrong to think that the clements who nad supported Mossadeq had disappeared. There wus Il risk or mullahs whose negative influence remained strong capitalising all the considerable a nd grow ing disco n ten t, 1 hough thls was controllable for the moment.

In August the Embassy showed their concern at these and other developments by warning the Foreign and Commonwealth Office that their 1974 reviews had painted a more rosy picture than the situation the following year justified. A new review listed the regime's dlfflcultics, including the political assassinations. student problems. an inflation rate of probably 25% per annum and soaring rents, and an unhealthy "auction atmosphere" In some sections of the economy. The terrorists were becoming increasingly efficient and SA V AI< we rc only con tu ining them, a nd cd ucated youth was alienated. The mullahs were at. best neutral and passive and at worsl obstructive and dissident: they knew their latent power though they feared to use H. The bazaar classes were su ffcring heavily from inflation and had provided mob material in the past. Torture and 'all the other evils of the police state" were extensively practised. The review concluded that a malaise: had Come over the country, which held become mOTC apparent in recent months. But despite the problems the Embassy did not believe that there was a revolutionary situation. Although there was not much love tor the Shah, he was respected und feared. Some positive steps had been taken like price controls and an economy drive. The country would continue to make rapid progress.

The Foreign and Cornrnonweulth Office department agreed that lran was suffering from malaise rather than a revolutionary situation, but added that the omens had not been altogether auspicious recently. They wrote that the internal situation could not be Ignored and that it was important to listen carefully, A Cabinet Office study or the political situation in Iran was commissioned in view of Iran's "paramount importance" to Britain.

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In September the Embassy reviewed Iran's economy, us tile government began to take drastic deflationary measures. They gave a grim description of "rampaging" import costs, static productivity with spiralling inflation. a bonanza for "fixers" and excessive profit margins for both retailers ami wholesalers. A public expenditure review and campaign against "profiteers" had been the result. The Embassy's view was that the end result ofthe collapse of the boom would be in broad terms positive, and that the main thrust of i nd ustrial dcveloprncn t would con tin Lie unha m pered. The Government's measures should be popular. Recent events had not invalidated the judgement that Iran was one of the most promising markets in the world. The Foreign anti Commonwealth Office department agreed with the concl usions, but feared tha t the Shah's posi tion m ight be damaged if unwarranted claims were made fOI the success of the government's measures.

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The Embassy's annual review in December was drafted in reassuring tones. 1975 was described as a patchy year internally. Bu t the review concluded thai the new atmosphere was healthier than in 1974. Iran's economic position was still very strong, her stability was unshaken, and herleadership was as dynamic as ever, if unrealistic. The drive forward would continue.

]976 began with the completion by the Cabinet Office of the assessment cornrnlssloncd the previous autumn by the Foreign and Commonwealth Office department. Referring to some signs of strain in Iran's economic, social and political fabric it described the activities of the two principal guerilla groups, the Cherikhaye Fedaiye Khalq and the Mojahedine Khalq (earlier known by the Embassy !IS Nehzute Azadi), and more general discontent ami cynicism particularly amongst students and young people. It suggested that the government's ability to limit the scope of this discontent would be severely tested in the next few years. But it concluded that SAVAK was both ruthless and effective, that the support for opposition groups was narrowly based, and that they did not represents. threat to tile stability of the regime. A fu rther sentence about the dangers of frustrated expectations among key social groups qualified this judgement somewhat, but the assessment Iel'tthc overall impression that there was little for the Shah La fear.

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Meanwhile the Embassy continued to report incidents or terrorism. In January II convicted terrorists were executed, and the Embassy drew the department's attention to a starernen t in the ir "confessio n" tha l they had been a ttracted to opposition groups because they shared the wish for strict adherence to the principles of Islam. In May they reported swoops by the authorities on safe houses, and II private United States Embassy calculation that 180 alleged terrorists had been killed in the previous nine months, suggesting that it would he premature to assume that the regime would be able to relax its vigilance. Tn July several more operations against the Cherikha were reported, and the Embassy estimated that 47 allcgod terrorists had been k illed in the past three months. In August they reported the assassination of three employees 01" an American ccrnpany.

The state of the Iranian economy also continued to attract the Embassy's attention.

In April numerous problems were cited, including continuing inflation, a wide gap of income between rich and poor, manpower deficiences and inadequate infrastructure, and the Embassy suspected that Iran would need to borrow money. By June they were more optim istic, re lerring to econ 0 111 ic realism on the part 0 r the government and suggesti I1g that although they would not achieve a11 the targets set" in [974 much progress would be made. The Shah's October admission that mistakes had been made d.id not provoke are-assessment.

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In December however the Embassy hat! again become more critical. They ascribed an improvement in the balance 0(' payments more to luck than good management and dwelt again on "a multitude of sins of governmental omission and interference", for example failure to alleviate shortages of key commodities and to control wage rates.

On other matter too the Embassy produced some worrying reports. 1n July Embassy visitors to Tabriz in north western Iran noted a lot of dissatisfaction with central government. The same month a visitor to Kerrnanshah in the west heard stories from the 10caJ British community of the poor standing of the regime, and that the Americans had been very unpopular. In October an assessment or the Rastakhiz Party concluded that it had yet to attract enthusiasm from the educated dUSSllS and was not likely to as long us all policy issues of importance remained banned from public discussion. It was little more than a provincial ginger group. A review the same month of iran's progress towards the welfare state suggested that rising expectations in a society without great social cohesion would have to be carefully watched. fran had the resources to progress steadily, but the strains of reconciling all the factors would be considerable.

ln December the Embassy gave careful consideration to this range of problems in a despatch on the political scene. They referred to the strains in the political system. Public expectations had been raised. but the Shah's ambitious economic policy had backfired leaving a series of economic and social problems which could cause difficulties for the future. Inflationary pressures remained uespite government claims, while an earlier policy of not resisting claims for large wage increases held been put abruptly ill to reverse. There bad been a rush of people to the towns, putting added strain on already inadequate services. The religious leadership still enjoyed much emotional support from the uneducated, and, while they were not expected to take the initiative, could luel discontent. The opposition were detained without trial and often worse.

On the other side of the coin the Embassy maintained that the institution of monarchy still commanded widespread respect and inborn acceptance. lran was not a police state in that criticism of the regime was possible. Moreover factors which worked against mod ernisa tion in Ira n - the conscrva tisrn of m uch 0 r t ho popula rion, til e inc lflclency of the bureaucracy - in themselves blunted the edge of its impact. The Embassy did not therefore think that Iran was in a revolutionary situation, though a similar set of circumstances in a European country migh t be more serious.

The Foreign and Co III rnonwculth Office department, possibly with the re-assuri ng Cabinet Office assessment earlier in the year in mind, were not alarmed by the Embassy's catalogue of problems and appeared if anything to be more optimistic than the previous year. They described the despatch as "valuable .... without attempting to hide the warts", and did not think it necessary to submit it to under secretaries. In a December brief they stated that there was little reason to doubt that SAY AK were in control. They also went so far as to say that although the Shah's autocratic methods created resentment, the regime was basically popular.

The Embassy for their part ended 1976 us they had ended 1975 on an optimistic note. The annual review suggested that the internal political situation was no worse and perhaps marginally healthier than a year before, and that the initiative seemed to have passed to the security organisations. It added, in contradiction to the assessment of October, that the Rastakhiz Party was a significant ginger group. It concluded that iran was still developing at a great rate and was still politically stable.

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During the flrst hal r or 1977 the Embassy seemed in their regular reporting to remain snuguinc about Iran's future. Their views were sometimes echoed in Whitehall, but II the. Foreign and Commonwealth Office were in general considerably more worried than the , Embassy and more pessimistic than they had themselves been the previous year. The Embassy began in February by reporting regular disturbances at the university but concluded: "We broadly agree with the Sh all tha t the trou bles arc not essentially of political origin. " Later they kept the department up to date with the open letters from political dissidents. In an April despatch on the Shah's position the Embassy referred as they had the previous year to a problem of national morale. Among the mass of the population there was passive acquiescence in the regime, not popular enthusiasm for it. The Shah's power to inspire the people us in the days of lund reform had been eroded and the celebrations of the fiftieth anniversary of the Pahlavi dynasty had been totully lacking in spontaneity. The Shah was also no longer able in an increasingly complex economic environment to keep control of all the reins of government. But the Embassy did not believe that the Shah's depoliticlsation of the country was adversely regarded except by a small minority, provided order and prosperity were delivered. Tiley added that so far .. IS the great majority were concerned a democratic political system was inevitably associated with chaos, The Shah had a firm grip on the main levers of power, and the problems 11(' faced were not likely to lead to revolution.

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This despatch influenced another Cabinet Office paper 011 Iran in May, which although primarily about Iran's defence policy, touched on the political scene. 11 concluded that in Iran some discontent was endemic, und hod not customarily overriden general acceptance or the Shah's regime. As long as most lruniuns saw their economic well-being as bound up with the stability 01' the regime there was unlikely to be serious opposition.

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Meanwhile the Foreign and Commonwealth OITke ami others in Whitehall were not

o sure. In January the Minister of State saw the December 1 Q76 despatch on the political scene in a routine general distri bu tio n of papers. ami commented: "L .1 m very wary 0 f believing that Iran is wholly atynical and that factors or instability which would be a cause for alarm in other countries can be thought to have markedly less Influence in lran." A paper III e sa 111(' rno nth 011 tnc Ira nia II economy agreed between Wh itehall departments highlighted the great inequalities or income and wealth and concluded that in time they might lead to economic and social pressure which might be dtfficult to resist. The department submitted the Embassy's April despatch on the Shah's position to under secretaries. commenting that the difficulties which the S11:'lh faced should not be under-estimated, nor the risk thut further serious setbacks could change the mood of Iranian society from passive

I acquiescence to sullen ami rvcn active resentment. This was the first expression of serious concern in the FCO about the Shah's position. A Bank of England visitor to Tehran ill April was disturbed by what he saw and noted that unrecord d capital outflows were considerable: he interpreted this as precautionary trunslcrs by those apprehensive about the future of an oppressive regime .. Despite the FCO's doubts their briefs for ministerial visitors to Teh ran cI id no r change sign i tlca n tly, perhaps a reflection of H natu ral hesitancy to sound the alarm bells. In May they wrote for the Foreign Secretary that there seemed little doubt that the Shah's efficient and severe security force were in control, and continued to describe the regime us. basically popular.

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One report was also written in the Embassy during this period which matched the more pessimistic views or the rca. A memorandum by the departing Head of Chancery in June cust considerable doubt an whether tho calm of the last fifteen years was likely to last. It suggested that discontent with the arbitrariness of" government was approaching politically

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dangerous levels, that people were questioning the performance not just of the government but the Shah too, that the margin for economic error was diminishing and rhat expectations had been whipped artificially lugh, There was a major suction of the clergy with widespread popular support fundamentally opposed to the government. It concluded that discontent could coalesce more rapidly than 1.11 any time since the early 1960's, and that Britain could find herself opposed by a nationalist movement with pro Western liberals swept aside. The FCO department considered the memorandum to be a sound analysis.

Ln the second half of the year the Embassy reported regularly on tilt: Shah's growing problems, but in general continued to conclude that there was no real cause for alarm. In August they saw some danger of interreaction between the protests of the dissidents and the hardships of the urban poor, foresaw the change of government that the Shah felt obliged to make in response, and were concerned that this might be thought a sign of weakness. But they subsequently commented that the policies of the new Prime Minister, Amouzegar, seemed to be arranged in a sensible order and welcomed the fact that "the Shah has at last made clear to the country that he shares their view of the government's performance". In their annual review of 1977 they continued to be concerned at the by now familiar social and political problems caused by the collapse of till' economic boom. They believed that although it was too early to judge the new government the omens wore not favourable; there was a sense of drift in areas or central planning. But lhcy sUU saw no threat to the Shah's regime. He was in control, the armed forces were loyal, and the opposition was fragmented, The problems were troublesome rather than dangerous,

To the end of the year Wh itchall seemed more doubtful. A visitor to Tehran from the pea department reported on his return that he had the uneasy feeling that tile dangers of internal unrest were increasing not growing less. In December it was thought necessary for tile First time since February I Q76 for the Assessment Staff in the Cabinet Office to convene a meeting to discuss the Iranian political scene. The meeting concluded that at that time opposition groups did not constitute a threat to the Shah's regime, but that the revival of an opposition movement demonstrated increasingly open discontent.

III Jan uary 1978 the Em bassy ad vised the FCO tha t it would be an exaggeration to portray the Qorn disturbances a a serious clash between the mullahs and the person of the Shah, and suggested that there was no danger at present provided the government took greater care in its handling of the religious leaders. This was consistent with their message over the preceding months that all the Identifiable problems In Iran did not add tip to a real threat to the Shah's position. Nevertheless the Embassy decided that to be on the safe side they should embark on another careful analysis of the mood of social and political tI iscon ten tin Ira n,

The review was completed on 31 January. It identi tied three strand S 0 r opposition, the students, whose protests contributed significantly to the public's lack of confidence in the government, many members of tile professional middle class who continued to circulate letters critical of the regime, and Islamic fundamentalism. The clash in QOIll had brought relations between the government and the Shi'a establishment to their lowest level for several years, and the protest closure of Tehran's bazaar was the first for twelve ycars.Jn addition there was a general malaise stemming from the regime's failure to solve economic problems and to fulfil still steeply rising expectations. There was a restless and unstable element in city populations, the gulf between the government Lind the people had widened while people's awareness of this had been awakened, and there was a feeling of unease that the socalled Shah/People revolution might not be the best way of delivering the goods for lran.

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Moreover the Shah was losing the initiative. The Rastukhiz party Wi]S a Ilusco, I n a notably more pessimistic assessment tlH111 in August it was judged that the Amouzcgar government showed no sign or being able to overcome economic problems and that the change to di He rent people a nd a diffcrcn t sly lc had been too late to make a signi fican t i r11 pact. The opt ion s for I h e S ha h were increasi ngl y lim i led i r th i ngs W U 11 t wro ng.

Despite this catalogue 0 r problems the Em bassy eoncl ud ed that i r [he Shah failed to recover the initiative the results would not be very serious in the short Icrm. The terrorists were extremists who could not be placated by any political measure, the students were no threat alone, and the professional middle classes were not in LI posit jon to ad as a focus of discontent. Any lurther violent attack on the religious community could C:;IllSC unrest on a larger scale, but the government should be seeing thai this did not happen again. In the longer term d iscon ten t W;lS likely to grow i r the Shah d it! not recover the initiative! and he would have to find some way or convincing lranians that it wus worth paying a price for economic development. In SLLm the Embassy considered that for most Iranians there was still a 1ll00U 0 r malaise rather than active com plaint, and L hat there was no q uestion of the Shah being confronted with tI united opposition posing a significant threat. The Fea did

I not argue with this assessment hut remained uneasy; they commented that if popular cpposi tio n became a w idesprcad phenomenon the will to rule of the Shah 11 imsel f might be sapped,

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D II ri ng (he spri ng the Em hassy were concerned w hcthcr thei r concl usions at the end of J a nuary rCnHJ incd val id , LI ml j udgcmcn rs seemed [0 di Ifcr from time to ti me, no doubt rcn~'cti!lg dchutc w II h i n the M isslo 11. The Tu hrix riot sill Feb ruury we re d eseri bell us 1 he worst clash lo r it long time, and it was suggested thut t hey would be likely to have u d isq uict i I1g C l'lcct 011 people's con lillcnl.:c in thcgovcrnmcn L Bu t U 111 i IlU to l1Y a member a I' Chancery who visited Tabrlz concluded that "ruther than being tile tip or the iceberg, the riots were something or U aile-orr job". LULer the S<1IllC member or Chancery commented 1110re pessimistically shortly before his departure lrorn Tehrun thai the riota in Qorn and Tubriz had shown the political power that the religious hierarchy could still command, and that atte n L ion had come to locus ugu i 11 on K h ornein i, It wo uld req uire consu 111 rna te skill for ! 11~ Sh ah to d e ruse all tile tensions. He conclud cd that he d id not wish to sound alarmist but the intensi ty 01" opposi tion activi ty III igh t 'Increase. I n May a further clcspu tch about the Sh:.l11':-; position warned that the Shah had lost the ability to deliver the good life which for him had always been the way to keep the initiative, But it suggested that it was easier to predict the worst than to make an optimistic forecast. ami continued that lf things hecarne serious the regime could always damp down without difficulty, The Embassy concluded that they did not believe t here w a~ a serious risk 0 I" lin ovorth row a r I he regi me while the Shah was at the helm.

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WIlI,m a further escalation 01" opposition was 111111"kcd in Muy hy the spread of the riots to Tc h ru 11 fo r the first ti me, the Embassy com merited that th e coun try III igh t be in for 11101·C d isturhanccs 11U I the seeuri tv forces seemed alert. In late Muy [he A III bussad or wrote a I'll rt her review of the polit ical scone before returning home on leave, I Ic rcpcuted that the Shah had lost the lniuutivc arnl the country was drining.:; it was [lard to sec a way forward. B lit he report ed that lew people unlici pared tile colla pSI:! OJ violent overthrow a r the regime. I-Ie concluded that if it came to a test or sturuina, his money would be 011 the Shah.

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Meanwhile the Fea department seemed in general to accept the Embassy's assessments, despite having been rather more uneasy earlier ill the year. In mid March after the Tabriz riots they commented that there was no reason to doubt thut the Shah and his government could remai.n firmly in control. In mid May the Assessments Staff, after a discussion at wh ich an FCO representative was present, concluded tha t although ucmonstrn tions were likely to con tin ue the security authorit les would be capable of suppression if the Shall gave the order. The disturbances were not a significant threat to his position. Commenting later that month on the Ambassador's review before returning home the department suggested that if anything he erred on the side of optimism. But they saw no reason to dissent from his basic judgements.

By mid June the regular dlsturbances had stopped and the Embassy commented that it appeared the cycle of mourning had been broken. Perhaps deceived by the apparent calm they produced little reporting on the political scene and the opposition in June and July; for example they did not report to the department the continued circulation of Knorneini's taped messages. In early August they gave a favourable reception to the Shah's major speech prom ising ex tensive 1 iberalisaticn, a nd d id not exam inc the possi bility that the policy would.

I be seen as <1 sign of weakness. Shortly afterwards they had to be alerted by the department to disturbances in Is fahan, w h ich had been reported to the Fea by a British company represented there. They said in reply that events in Isfahan did not give particular cause for concern. Four days later martial law was declared in the city.

No doubt put all their guard by this, the Embassy warned H few days later that there might be a good deal of further disturbance. But they added that it would be alarmist to prcd let thu t the regime would be unable to con rain the trouble. The ncx t day, 17 August, they reported that tile extremist religious line was becoming more popular and for the first lime since the spring drew attention to Khornelni's pamphlets. When the Amouzegar government resigned and his successor announced a number of conciliatory measures, the Embassy reported in a telegram that the decision had been forced on the Shah, and that it represented a very significant concession to his religious opponents. But they judged that in the shorter term the appointment or II new government would bring a breathing space, and that the regime would be able to get through. to tho end of Rurnadhan (6 August to 5 September) without serious disorders. In the longer term, the second change in government after a year meant that the Shah would not be able to disclaim responsibility for what was happening. But if the I1l:W team were competent they might well prove capable of changing the country's rnood, and "one might reasonably expect more moderate religious forces to re-assert themselves". The overall impression left by the telegram was reassuring.

During mid-summer the FeD took the precaution of reviewing policy towards [ran and British support for the Shah in the light of the difficulties he was in. (This review is considered in Chapter VII.) But, receiving few reports from the Embassy, they saw no reason to believe that the Shah was under serious threat. The declaration of martial law in Isfahan rekindled the disquiet they had feltcurly ill the your and they again became less sanguine than til e Em bassy: t hey wondered how long d istu rba nces could go on "w ithou t the Shah cracking up or cracking down." After the change or government they supposed that the prospect of a workable compromise between the Shah and his opponents could not be rated highly, though it remained in the British interest that he should come out on top. On 5 September, after receiving information suggesting that the Shah's morale was low, they

, showed real alarm for tile first Lime and recommended that ministers should be warned of the seriousness of the situation ..

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A despatch a few day. later made many of the same points but was more gloomy about the future. The despatch predicted that disturbances would probably continue. and that political demands might be grafted on the economic demands of strikes, creating a severe threat to stability. The army seemed capable of holding the ring for a period, but its morale could weU crack if opposition were to be protracted. For the flrst time. the Embassy felt able to state that the stability and future of the Puhlavi regime was seriously threatened and that Iran was faced with a crisis. But they remained reluctant to look too far into the future. or to speculate about the Shah's fate. suggesting that only a fool would predict whether the new government's programme would be successful. On 10 October the Ambassador reported that .his assessment had to be bleaker than in late September; there was no sign of the opposition losing momentum. He was inclined to think that the crisis had begun, and that there would be an outcome of one kind or another within two or three months. Meanwhile the FCa department had seen little reason to change their initially

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On 4 September the Embassy had reported un air of considerable apprehension in Tehran, and that people were saying that the change of government had not defused the opposition, but they were reluctant to commit themselves 011 this basis to a change in their earlier assessment. After the 5 September march in Tehran in support of democratisation the Embassy maintained that no foreign observer in Tehran had expected events to move so quickly. There had been renewed demands from the mullahs, the government was being criticised as no different from its predecessors, il was hard to see how a majority of pro Shah forces could be obtained, and it did not seem at all likely that the demon trations would peter out. But there was no doubt that the Shah had the military and political forces to re-assert himself without too much difficulty should he decide to do so. After the declaration of martial law in Tehran the Embassy commented that they were pretty certain that the security forces would succeed in putting clown the "unruliness" of the past few weeks.

The immediate reaction in London to these events in Tehran was again rather more pessimistic. The Minister of State commented that he was impressed by the width of political ground covered by those in opposition. The Assessments Staff judged that the declaration of martial law and subsequent casualties would probably have strengthened the extremists. They anticipated a period of strict rule, suggesting that the Shah would conclude that he could no longer pursue a libcralisation policy if he wished to remain in power.

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After the return of the Ambassador to Tehran in mid September the Embassy began to lose confidence that the Shall could surmount his problems, and became reluctant to give firm forecasts. When the Ambassador saw the Shah he was struck by his depressed condition. In an assessment of 25 September he wrote that his intuition still suggested that the Shah would make it. but thllt only a fool would dogmatise. In early October the Embassy suggested that the wave of industrial unrest which had developed would be very hard for the martial law authorities to control, even though it did not appear to them at that stage to be politically motivuted. Another general review shortly afterwards pointed out that the Islamic clergy had emerged as the most powerful clement in the opposition. and that Khomeini's simple message that the Shah must be overthrown commanded widespread su pport, But the Embassy believed tha t the Iranians did not wan t theocratic government and the ayatollahs did not want to take the regime over. People ill Iran were unccnvinced of the ability of the army to maintain order, especially against strikes. The Embassy avoided a judgement on the Shah's prospects. concluding with the thought that the future was very uncertain.

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pessimistic reaction to the declaration of martial 1,IW, and were less coy about the Shah's future; commenting on the Embassy despatch in curly October they wrote that if the opposition steamroller continued on its path the dynasty would be lucky to survive until Christmas. Although this judgement was made with a proviso. it showed that by that stage the department gave the Shah only a poor chance of survival.

In mid October the Embassy became rather less concerned, after the 40th day after the Jalch Square shootings had passed without serious incident, LInd reported that it was their impression that Sharif Emami was in a stronger position. On 19 October they found the general outlook slightly more hopeful as increasing numbers of Iranians had begun to "sober dow n". Bu t they fou nd the lack of respect for tile Shah alarmi ng and reared that if 0 fresh crisis developed the danger of the generals losing patience and insisting on harsh measures would increase. However by 29 October a second wave or strikes had begun and spread to the oilfieJds, and the Embassy reported that negative elements were again in the ascendant. Shortly afterwards the Embassy reported that the Shah had decided to sack Sharif Emami and to appoint a neutral figure as Prime Minister, and that there was strong pressure on the Shah from his generals to allow them to take over. This news confirmed the FCO in their pes imlsm; they commented on 31 October that the chances of the Shah's new political initiative succeeding could not be rated highly, and the Permanent Under Secretary added that the curtains seemed to be drawing. The FCO [rom this point were working on tile assumption that the Shah would lose absolute power, and that once he had lost it he would either leave the scene or have negligible influence, though as it will be seen in Chapter VU they continued to See no advantage in backing his opponents. The Assessments Staff wrote on I November that further serious disorder and a military takeover were likely.

On the installation of General Azhari's government on 6 November the Embassy reported that it was impossible to judge whether the count ry could be brought to accept the Shah's move. B lit Wh itehall saw no prospect a r the new govern men l putting an end to disorder. The Cabinet Office concluded the same day there would be continuing unrest and two days later the FCO found it difficult to sec how the Shah COLIJ(j get out ofhls corner; they referred to the inexorable progress of a Greek tragedy. On 10 November the Cabinet Office continued LO see a risk of renewed demonstrations, and suggested that the Shah had already made every concession he could short of sacrificing effective power. Late in the month they concluded that the odds were against the Shah surviving in power much longer.

Events after 6 November persuaded the Embassy to take a similar view. On 20 November they reported u total loss of confidence in the economy and evidence of troops fraternising with demonstrators. They saw no sign of even the first seeds of a moderate solution, for example the retention of the Shah as constitutional head of State. Later they reported that already General Azhari was making most of the decisions, not the Shah. In early December they suggested that the credibility of the military had been seriously eroded and they round it as difficult liS ever to detect any reversal of the downward trend, though they did not go so far as to SI:lY that the Shah's chances of surviving in power had gone.

After the army had successfully avoided a confrontation with the opposition by allowing massive demonstrations on Ta'asua and Ashura (10 and 11 December) hesitant assessments were written both in the Embassy and ill Whitehall. The Embassy saw no end to tile crisis but were still unsure about the Shah's futuro. They wrote on 19 December that the

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unqualified clamour for the Shah to go had drowned any voice the middle ground might have had. But they reported that the army was standing surprisingly firm, and concluded that it was as difficult as ever to predict the outcome. The FCO and the Cabinet Office were ill no doubt lhut the Shah would lose power, but wen: 110t clear how soon or in what circumstances. After feeling some confidence at the end or November that the odds were against him surviving in power much longer, the Cabinet Orrico wrote on 21 December that a state of uncertainty might persist lor some time, since the oppositlon appeared to luck the means to provoke a decisive confrontation.

However all doubts about the Shah were soon resolved when violence resumed in Tehran on 25 December, oil production plumrnettcd, and the Shah began to look for a new Prime Minister to replace the ailing Azhari, The Embassy reported on 29 December that short 01' the Shah's withdrawal from government it would be difficult to imagine H civilian politician being able to restore normality, implicitly acknowledging for the first time that the Shah was to lose all power. On 2 January 1979 they reported that only the Shah's departure from fran was likely to restore calm. In the New Year they correctly gave Bakhtiar's government little chance of survival, and believed the return of Khomeini and the establishment of a republic to be inevitable.

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CHAPTER IV

Shortcomings of the British analysis

It may now be useful to summarise the shortcomings of the British analysis which this review has brought out. A later chapter will consider whether the shortcomings were avoidable. or whether, given the hazards of political prediction, the British performance was as good as it is reasonable to expect. It would be convenient to divide this summary into two section . The first will cover the years from 1970 to 1976, when it was debatable whether the Shah was faced with a serious opposition movement, and when the job of the Embassy and the FCO department was to identify and evaluate the various elements in the political pictu reo (J t has not been possible to read enough papers for the years before 1970 to make a firm judgement, and in any case it seems unnecessary for the purpose of this section to go back that far in time.) The second will cover 1977 and 1978 when the development of organised opposition became common knowledge ami the task was to assess its significance correctly.

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It should first be stated that in general the Embassy in Tehran made a diligent attempt to follow Lranian politics and to keep the PCO informed. There was no question of sitting back complacently on the assumption that the Shah would survive for ever, and devoting the Embassy's resources entirely to co-operation with the regime. The review has shown that the Embassy were aware to some degree of the important elements in the Iranian political picture. ami with the benefit of hindsight it can be seen that their analysis and predictions were often quite close to the mark.

For example, Sir Denis Wright saw in 1971 that a challenge to autocratic concepts would come in the Shah's lifetime and probably in the succeeding few years, though. he believed that neither the principle of monarchy nor the Shah personally would come under attack. He also saw a danger that the Shah would become overconfident. Although he was thinking more of foreign Ulan economic policy, the Shah's overambitious development plans in 1974 were certainly a symptom of his excessive fuith in his ability to achieve difficult targets. The problem of Islamic fundamentalism was clearly appreciated in 1972, and despatches that year suggested that after five years or so the dangers to the monarchy could become more acute. In August 1975, when the economic boom had begun to collapse, the Embassy warned the department about all the problems that were later to threaten the regime, including the strains on the economy and the resentment of the religious classes. At that time they were no doubt correct to describe the country as being in a state of malaise rather than revolution.

However the review has shown that there were naturally also lapses in analysis and organisation, It might be convenient to divide these into sins of omission and sins or misiudgernent. 11,e first sin of omission was a failure to pay due attention to the continuing importance of SW'a Islam in Iranian political life. and to the political activities of the religious classes and their supporters in the bazaars of [ran. From 1970 to 1975 the Embassy

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noted from time to time that religious opposition to the regime was a factor to be taken into account. But this was usually reserved for general reviews or despatches, as if the Embassy were aware that it SllOU III not be left out hu l d ill not have 111 uch in formation abou t it. There was little coverage or political activity by the mullahs in routine Chancery reporting, and some slgnificun t events went unnoticed. for example the banishment of 40 dissident mullahs from Qom in late 1973. There is also 110 sign of Embassy appreciation of the politico religious thought which inspired many or the young mullahs in their opposition to the Pahlavi regime, like the work of Shariati. In ! 974 am] 1975 these were readily available in Tehran bookshops. It may be that the Embassy felt it pointless to report to U1C FCO on religious affairs. from 1970 to 1973 in particular the department took little interest in these matters and did not encou rage the Embassy to PllTSLlC them . .By 1976 the Embassy seemed partly to have lost sigh tor the importance 0 r tile religious leadership as a focus of political opposition; the change to a pre-Islamic calendar early that year provoked widespread resen tmen t, bu t th LS was not reported hy [he Embassy. Ln Decem ber or that year it was recognised that the religious leadership still enjoyed much emotional support, but it was felt that they would not lake the initiative against the regime.

There was also insufficient awareness of the attitudes among the traditional merchant classes in the bazaar to the regime. The warning signs were there from 1975 when rising costs. deflation and 'anti-profiteering' begun to hit <ll their livelihood; a report from Hamadan that year that the bazaar merchants openly hated the Shah and his regime has been quoted. The same year the Embassy warned thut the bazaar classes were suffering and had provided mob material in the past, but later seemed to lose sight of this. TIley were also insufficiently alert to the dangc r til at mu llahs and hazaa r would corn bi ne as they h ad in the past in opposition to the regime. It was this ulliance of politico religious fervour and a steady flow of funds which did so much to maintain the momentum of opposition.

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The second sin of omission was an unwillingness by those concerned with Iran to give much thought to tho less savoury aspects or the Shall' regime. One example was the FCO department's attitude in the curly 1970's to the uetivities or SAVAK and the treatment of prisoners. SA V AK was certainly not regarded by the FCO us u benevolent organisation, but reports of torture and other malpractice were not usually given much attention. Their view seemed to be that it was in any case or peripheral interest to Britain J10W the regime treated its own subjects, and that the less Britain concerned itself with this the less the danger of damaging Anglo-l ranian relations. Ln eu rly 1972 Am nesty In tcmationaJ reported that SAY AK did not hesitate to use torture. and the Embassy received a first hand account of signs of torture on a prisoner being brough t to trial for a terrorist offence. TIle FCO did not bother to ask the Emba sy for their comments on the Amnesty report. and carne 10 their own conclusion that tho evidence of torture was unreliable. In 1973 the Embassy reported that there was li ttlc d au bt tha t tortu rc was used systematically. In 1974 they wrote that the instrument of government could be cruelly oppressive, and that torture and all the other evils of a police state were extensively practised. But by early 1975 the department were still writing that they had 110 speclfic or general knowledge of the use of torture. By )976 there had been considerable criticism ill Britain of the activities of SAVAK and the department began to take a more realistic view of the situation: in the spring of the following year they were describing Amnesty In lernational reports as disturbing, and writing that reports of torture were too persistent to discount. At that stage the Embassy had curiously gone into reverse, concerned :IS the department had been in previous years that if Iran had a bad image in Britain it could affect Anglo-Iranian relations; they conceded that many reports of detention and torture were probably true but tried to rebut many of Amnesty's allegations.

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Th e tru til abou t the aotiv ities uf SA V AK w ill never be known. Bu t it is clear that the behaviour of the security authorities was at best insensitive and at worst brutal and that this was an important cause of the alienations of the regime from the people, This applies in many third world countries and does not in itself lead to a regime's downfall, But it handicaps analysis of the strengths and weaknesses of any regime if an Embassy or peo department buries its head in the sand and fails to apply inquiring minds to the extent of repression a nd to the effect iL is having on the people, I t seems likely that in the case of Iran this failure was one reason for the misjudgement of the realities of the Shah's position.

The Embassy and PCO also saw no need La report on the prtvate Financial activities of leading Iranians, ill particular the Pahlavi family, regarding corruption as a way of life in Iran, They believed that whatever the practice of the Pahlavl family might be the Iranians would assume that they were enriching themselves and regard it as normal behaviour for the filling class, No particular interest was shown in the Puhlavi foundation, publicly described as a charitable institution but which is now known to have received a chunk of Iran's oil revenues for the Shah's private disposal. It now appears that the ability of some members of the Pahlavi family and their associates, including the he-ad of SAVAK, to ignore the Jaw and line their own pockets helped significantly to fuel resentment against the regime, particularly among the traditional bazaar traders, Whereas before the economic boom this activity had been fairly discreet and was probubly widely accepted, in 1974/5 caution was abandoned. When Sharif Emami opened the books in 1978 and tile fun extent of these activities began to become apparent, even the cynics in the Embassy were surprised, A greater appreciation at the time of the extent of corruption and the popular reaction to it would have been ~l helpful contribution to the Embassy's political analysis.

The third omission was to pay insufficient attention to the intellectual life of Iran.

Much of the work of Iran's writers in the 1970'f; was at least implicitly anti regime and expressed L1IC unease felt in lran about the politics and values or the Puhlavi era. The American academic James Bill has written of the sobriety and nihilism of Iran's modern poets in the face of what they regarded as cultural oppression. For example the poet Kaptan i began to I'll blish work wh ich was fa irly specifically an ti regime in 1975, after the execution of his colleague Hassan Golesorkhi, accused of plotting to kill members of the royal family, Some knowledge or these intellectual trends might have led to a greater understanding of modern Iran. The Embassy also seemed to take little interest in the attitude of the regime towards Iran's leading writers. For example the arrest in 1979 of Gholarn Hussein Sai'd i, a well known novelist and writer of film scripts, and his detention for a year with intermittent severe interrogation was not reported, nor was the arrest in 1975 of an entire touring theatre company for presenting the works of Maxim Gorky and Bertoli Brecht. (The company was led by Sa'eed Soltanpour, who in 1978 was to take a leading part in the poetry rcudi ng u t the Goethe lnst itu tc.) The Em bassy might usefully have asked itself what the regime IIUd to tear from these people, whether their work was elitist, or whether it gave expression to popular feelings otherwise lying hidden,

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The first sin of misiudgcmont was a tendency to overrate the personal popularity of the Shah in Iran. The suggestion after the 2500th anniversary celebrations in 1971 that they had been ,I successful exercise in monarchical public relations may have been valid for the Shah's foreign guests. but it seems clear now that it did not apply to most Iranians outside

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the ruling circle, who probably regarded the whole performance as a self indulgent waste of money. In succeed ing years U, e question or whether the Shah WDS a popular monarch was not specifically addressed, the assumption being thul the Iranians lIid not feel great loyalty to the Pall lav is, bu t proba bly acq ulesced h appily enough in their rule. Mean while I run was passing through the economic boom and a period of rapidly rising expectations into relative slump and disappcintment. In their re-assessment in August [975 of the political scene the Embassy wrote that there was not much love lor the Shah, but that he was respected and feared, This seems likely to have been about righ t at the time. During 1976 things continued to go badly for the Shah and in October he was obliged to admit that mistakes had been made. I t can now been seen that it was at this poin t that evert respect for the Pahlavi regime began to be seriously eroded. But in December of that year the Embassy wrote that the institution of monarchy still commanded widespread respect am! inborn acceptance. As has been shown, the FCO department the same month wrote that although the Shah's autocratic methods created resentment, the regime was basically popular. It now seems clear that both estimates were lao rosy.

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The second misjuugement was a natural tendency 10 be uncritical about the Shah's regime when tho Lranian propaganda machine was working al full blast. It has already been suggested that the Em bassy allowed themselves to be seduced by the splendour of the 1971 celebrations into concluding that they were popular in Iran. Early In 1974, when Iran appcurcd to be on top or (he world alter till: oil price rises, lin: Hrnbassy wrote that the security forces were highly competent, and revolution a remote possibility, and that Britain could count on at least a decade or stability. SAVAK wore never highly competent, and it is doubtful whether the Embassy would have. wished La defend their final judgement in more sober times. Indeed by October they were concluding that despite the razzmatazz the Great Civilisation as the Shah envisaged it was an impossibility. From then on the Embassy again tended to become more critical. But the image of the Shah as a strong monarch presiding over a stable country was aile that tended to stick in Whitehall, and to make it harder to accept when the time came that his downfall was a possibility.

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A further misjudgemcn t, though perhaps not a lasting one. was the Embassy's view in late 1975 that the end or the economic boom would have a broadly positive effect, and that the atmosphere would be healthier as a result. At that stage they clearly underestimated the adverse political effects of the failures or economic policy. When the Shah publicly admitted his mistakes in October 1976 they did not suggest that a dangerous effect might be to attach to him blame for the failures. By the end of the year however they were more alert to this and, as has been shown, warned that the series of economic and social problems left by the boom could cause trouble for the future,

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The review has shown that during this crucial period, as in earlier years, the Embassy were in some measure aware of all the problems which led to the downfall or the Shah. For example in April 1977 a despatch noted that the Shah's power to inspire his people had been eroded. The perceptive memorandum by the departing Ilead of Chancery in June of that year showed caution in the Embassy about the future. In August the Embassy noted the danger of interreaction between urban unrest and political d issiden ts, and were concerned that the sacking of the Hoveidu government might encourage further trouble. In January 1978 the Embassy warned that the Shah had lost the lnltiative, and in May that he was no longer able to "deliver the good life."

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However the conclusions the Embassy drew lrcm their analysis consistently proved to be too optim istic, In April 1977 they th ough t the Sh uh '8 troubles unllkely to lead to revolution. 111 December they believed the problems to be troublesome not dangerous. In a key despatch in January 1978 they concluded that there was no question of the Shah being confronted with a united opposition posing a significant threat. They were still describing Iran as being in the state or malaise they had first detected in the summer of 1975, and did not apparently consider that the difficulties I1tU'! become graver. They thought the discontent likely to grow if the Shah failed to recapture the initiative, but saw this as a longer term problem. In May they judged that the Shah would survive any test of stamina.

Against this background the Embassy saw no need for particular concern during the summer. As has been shown, they sent few reports to the department in June and July. They underestimated the importance of the troubles in Isfahan in August and the Abadan cinema fire, and saw a good chance of moderate religious forces reasserting themselves after the appointment of the Shanf-Emami government. Tiley described the demonstrations in Tehran leading up La the Jaleh Square shootings as 'unruliness', and expected the security forces to re-assert themselves.

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The Embassy's consisten t conclusions during this period that the gravity of the Shah's troubles should not be overestimated led the FeD department too into taking a reasonably optimistic line. Thus it was not until early September that they became concerned that there was a serious threat to the Shah's regime. By cady October they were inclined to see no future 1'01' the Shah in Iran if the opposition continued, and by late October the Permanent Under Secretary typified the mood by writing that the curtains were drawing. The Embassy began to hedge their bets in mid September and became reluctant to make forecasts, but it was not until 9 October that they suggested that stability in Iran was seriously threatened. By late November they were sharing the department's pessimism, but it was not until the end of December that they believed the departure of the Shah to be inevitable.

There are a number of possible reasons for the Embassy's failure as opposition developed to warn U1e FCO earlier of the seriousness of the threat to the regime. In the first place the Embassy continued to pay little attention to the opposition of religious leaders and bazaar merchants, and to underestimate the importance of this. The significance of the January 1978 article traducing Khomeini was not properly understood, nor was the importance of the riots at Qorn and Tabriz. In March the Embassy wrote of the re-appearance of the religious community as a major political force, hut in succeeding months produced very little about them. There was no report about Khomclni's tape recorded messages. 111 July when Ali Shariati, the leading politico religious philosopher who was a cult figure for many young Iranians, died in London the Embassy in Tehran were not even able to say who he was. By mid August the Embassy were beginning to report again that the extremist religious line was becoming more popular, but at the end of that month they were still doubtful of the value of 'a daily stream of reports' about tile attitudes or the religious community and Khomeini's standing, It was not until early October that they concluded that the clergy hud emerged as the most powerful political element. On 22 November the Embassy enclosed a translation of one of Khorneini's circulars, explaining that they had 110t sent the e In the past as they had not been "well-expressed". In these circumstances the FeO department appear to have been justified in their complaints during the autumn that they had not received sufficient reports about the religious community.

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One conseq lIl'I1Cl' 0 r undcrestl 111:11 i I1g I!J~ i I11IH.HtanI..'L' 0 r mosq lIC and bazau r W<lS a False sense of SCl,:U ri ty ahou l tho opposit inl1'~ <J hilily I o organ i:.;~ themselves. It was not lu Ily ujlp rccia ted I h lit d lscoutc 11 ted bazaar mcrch <111 L1i were I'i nauci 11 ~ the uctiv itics of d issidcn [ mullu lis, and lhu I til is trud it ionul nlliuncc wus hi provide .111 e Ilicien t organisation al he t work th rougliou t the cou n try. j( n owi ng 100 li I til' uhou t rh l' activi I ics of Khomeiui's followers in I run the Em bassy also underestimated I he ;J urac li ens 0 r his sim pie il nd consis te 111 message that the Shah must be ove rth rown.

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The Em bassy 's tl!l1dcl1t.:y in previous yuan, to be too suugu ine U bout the Shuh \. popularity with till' lrunian people was nlso evident in I q17. Their jutlgC!111.:111 ill April of' thut year that only :1 small minority cared Uhlll!l the Sh.rhs "dcpoliucisation" of the country as long .IS order und prosperity were delivered Sl'l'I11S certain to have been inuccurntc, lt was ~I mistake the Shah himscll' was making <lL the same time. As a result till:' Em bussy and tile FeD saw lhc li be ra I isalion decision as ;1 positive devel oprne 11 t, wh ich would hel p the S11 u h to sccu re Ii is posi I ion ill I he 10 ng term w hile happen i ng also to uppeul to Western dernocra 1 ic opin ion. I t now seems dua r thatoven us carl y as I h C SLI m me r 0 r 197 7 the mood or 1111' 11<1 tin n wus III rI1 ing rr0111 passive ucq uicsccn cc in the regi me to OLl leigh t d isl i kc of it, ant! (l'<lt li hcrnlisu tion was rcgurdud in i nail y by diehard 0 [1[1011('11 ts and afterwards by growing numbers or lrunians nut just as a welcome alleviation of the burden or repression hilt us an opportunity to make lire very difficult for the Shull. If the Embassy 11 ad up precia ted this more, LI1I.:Y III igh l have considered the possi bi lily earlier that the Shah \ policy or liheralisation could amount 10 :1 rhrcut to the regime not, as the SIHJh (and the Bri tish govern men t) hoped, ,I means ol' su Icguan! iug it.

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The Em bassy also seemed 11 ot I n respond to the ap peu run cc of <I rlnngcr signal wh ich they th emsclvcs had W:J riled could be illl poria Ill. I n April 1.977 they had suggested, as had alread y been shown, that III c Shull 'H pusi I i Oil was secu rc provided ord er and prosperi ly continued to be delivered. III January 197H they rioted a lucllng of unease thai the Sha hI People revolu [jon III igh I no I be the hcxt wuy 0 r tlclivc rI rtg 11.1 e good s for I run, In AIHil they reported that it was the ability of the Shuh La deliver till.' good life which comprised the i niti a tivc ]'0 r 11 im, uud tllu L th is h ad escaped 11 i 111. III () the r words I hey were de tee [i i1g u tendency among Iranians 10 believe thai the regime wag no longer the best bet for their futu rc p rospe rity, ami to move in to ;1 nell trn I posl tiou i I' no I ac 1 ively to oppose the Shah. II seems cu riousi 11 Ull' li!:\ll t or III clr curlie r v icws 1I III t I he Em hussy diu no I see til is as LI very SeT] ous d cv clop me n t.

The Embassy also lulled to loresce in late 1977 and early 1978 til,ll the PUl:C or eve 11 Is would become so lust. It wus 1101 U 11 Li I I.!LII'ly October thu t they warned th (I t there would probably have La be u rcsolu lion of aile kind or another to thecrisis within the next two or three mouths. One or till' marc difficult nspccts or the revolution to understand is wh y it hap pencd so q 1I ic k ly anti even opposi t inn leaders have ex pressed thci r surprise a I th is. TIH.! kcy luctor was probably III c need or opposl lion IC<lllcr~ to main tal 11 morneu tum. for fear that i r they faltered tlH':y would never 1l<IVl: <J nolhcr 0 pportun i ty to break lhe Shah. In the later stages they WL\fC able to achieve this in large purl through the strike weapon, which in tum depended upon the willingness or large numbers or lranians in the centres or population actively to oppose the regime, A l;Ulllp:lign or civil dlscbcdicnce and conseq uen Ily rapid puce or even ts would peril a ps have seemed more likely in th e su 111111':1' and early all tumn 0 l' 191H i I' the irrevcrc nee sh.id j ng in [0 ou trigh t hostili ty of these people towards th e rcgi me 11 ad been I'll lly CI P prcciu led.

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It h as also been sugges ted that the pri ncipal reason for the EJ11b~1SSY'5 rniscalcu lation was a misunderstanding of the Shah's character and past performance and a lack of knowledge of his medical condition. lL 1S certainly true that the Embassy and the FCO believed that the Shah would be prepared to resort to repression if tile going became tough; this was implied in the Embassy's judgement in May 1978 thut if demonstrations became serious the regime could clamp down without difficulty.The Shah's personal reluctance in the past to use military force to suppress political opposition might have served as a warning til at he would be more likely to hesitate over this until it was too late to save ills position. Moreover, the Shah's tendency to act irresolutely in the face of political challenge might have suggested to observers or lran that he might be inclined to make piecemeal concessions apparently forced out of him, ruther than wrest the initiative from the opposition by a major gesture like immediate free elections, and that this would be seen 3S weakness on his part. The Embassy rnigh l well have been more pessimistic in May if they had had the Shah's record in these respects uppermost in their minds. On the other hand it would be an oversimplification to suggest that the Shah fell because he was a hopeless prisoner of his own inadequate character in the mould of the classic tragic figure. In a way it was not lack of resol uti 0 11 tit u t co n tribu ted to his down fall, but uno bd u rn te d e term j na tion topless all with "liberalisation" even when the roof was in danger of falling ill on top of him, arising from a fatal lack of appreciation of the strength anti nature of the opposition facing him. If his understanding of this had been better he might have been able despite his past failings to tum the obduracy he seemed to be showing to greater effect to save his position. It is unlikely that his medical condition in itself was a crucial determining factor in his behaviour, though it bas already been suggested thal it may have weakened his resolve. On balance it is fnir 10 conclude that the Embassy might have been more pessimistic in May if they had hat! the Shah's record 1I p pcrmost in thei r min us.

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CHAPTER V

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Analysis 0 rot her governl11cn ts unu i nsti tll tions

It has been suggested that the British analysis of events before the fall of the Shah compares unfavourably with that or other Individuals and institutions, and that in particular others were able to give earlier notice of the revolution. This section will examine the analysis during the 1970's of events in Iran by other interested governments and by journalists and academics. and comment briefly on the view of the FeO's performance taken by other British government departments and by British business. It will seek to show whether the Bri tish analysis shows u p badly agai us] others.

US government

The United States govern men t b roadly shared the British assessment 0 f political events in Iran during the early 1970's, The general tone of the reporting from Tehran to Washington was that the Shah had problems, but that he was well in control. Concern was occasiorrullyexpressed by individual officers: for example in June 1972 the State Department country director tor Iran told MED after returning fromaccompanying President Nixon on his visit to I ran that he had been struck by the level of internal d iscon ten l, the disill usion with corruption, and the "megalomania" of the Shah. This was at a time when the British Embassy were referring to a groundswell of discontent <Inti unhappiness. However these reservations do not appear to have had much impact in Washlngton,

During till' incumbency of Ambassador l lelms in Tehran from 1973 to [976 it seems clear that US Embassy officers were discouraged from reporting to Washington indications of d i lflcu Ity For the reg] me, for example the Iai III ru of the Rastakhiz party to generate popular enthusiasm. Ambassador Helms' view see111S to have been that it was the business of his Embassy to support the Shah, not to interest themselves in his possible fallibility, The overall view or Iran reaching Washington was therefore almost certainty more optimistic during this period than that in London, During the Anglo/US talks on the Middle Eastin April 1976, lhe State Department described the Shah's position as being as strong as ever, though <Lulling tha: they hoped they were not living in 11 focls' paradise! The UK assessment the previous February, though concluding that opposl tion grou ps did not represen t a threat to the regime, took more accoun t of signs of strains in tile I ranian political fabric,

A Iter Am bassad or Helms I replacernen t by Am hassador Sulliven the US Embassy i 11 Tehran began to take a more. critical look at the regime's position, and rully reported the events of ]977 Gnu the cycle of violence starting at Qom in January 1978. They did not however see these developments lIS a serious threat to the Shah's position. Moreover, according to US officials, it was widely believed in Washington after years of co-operation with the Shah that he was a permanent fixture, and there was a consequent reluctanceto pay attention to the troubles he found himself in. The CIA produced a long memorandum in August 1978, subseq uen tly to their em harrassrnen t leaked to the press, wh ich concluded that Iran was "not in a revolutionary situation". Even four days after the declaration of martial

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law in Tehran on 8 September, the State Department were saying that it would be premature to conclude that tile Shah would 110t find his wily successfully through the year. On 27 September they admitted that they had not yet made a full a sessment of events in Iran, and while maintaining thai they did not underestimate the seriousness of the situation. felt that the Shah had a rair chance. At this stage the CIA were still talking in terms or the Shah winning an election. In geucrul Ihe US administration wert' less ulcrt than the FCO throughout September to the possible dangers.

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The turning point for many US officials appears to have come at about the beginning of October, when the strike weapon was beginning to be deployed in earnest in Iran and serious demonstrations had begun in lawns not under III arti a I law. Tile State Department Iran country director told a visiting FCO team on 10 October that chaos was to come, that the Shah was being opposed more anti more by the Whole country, and that it was difficult to sec how he could survive. Ambassador Sullivan spoke at the same time of the 'crisis being on LIS'. However there was some optimism in Washington even in late October; an official of the National Security Council said on '27 October that he was worried about the tendency or the State Department La assess that the Shah could not survive, implying that th y had overrated the strength or the opposition. Despite Stute Department gloom therefore, the United Stales were still in October more optimistic about the Shull's chances than the FCO.

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Arter the riots in Tehran on 5 November and the appointment of the Azhari government the views or the two governments converged, both tending to give the Shah little chance 0 r su rvi val. On 6 November the Sta te Department said they though t it highly u nli kely that the now military government would succeed. The CIA claim that they were working on the assumption at this stage that the Shah would go. As late as 12 December President Carter was saying publicly that he fully expected the Shah to remain in power, but this was clearly in the hope that til is would bolster the Shah \ not a realistic asseSS11lCI1 t of the situation. Mr Vance had told the Secretary of State privately three days before that he thought the Shah unlikely to survive. The NSC remained reluctant to countenance the idea of the Shah's dern isc !IS lu tc as 22 Decem her wh en Dr Brzezinsk i was still speaking privately of the need for the Shah to institute militury government "with the wraps olf", hut the other principal actors in Washington saw this to be unrealistic. After further disturbances began in Tehran during the Christmas period US policy was based on the supposition that the Shah would have to go.

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It can therefore be seen that the US government analysis or Iranian politics was if' anything inferior to the British analysis. There was less consciousness of the defects of the Shah's system during the middle years of the decade, und no better appreciation of the i 111 parlance of the even ts in 1977 anti early 1978. In particular the US ad 11l i nistra tion were slower than WhitchuJI to realise that after the imposition or martial law in Tehran in early September the situation bad become very serious,

The US government have conducted their own post mortem on their failure to foresee the fall of the ShD h U nd have identi l'ied a 111.1 ruber or de ficiencies in their analysis. They naturally lay stress all many or the same railings as the British, including the lack of information about the religious community (Jill! the bazaar, tile misunderstanding of the implications or economic set hacks, and the lack of appreciation of the Shah's character. They also feel that they railed to realise till' unpopularity or the Western presence in Iran; as early us .I u ly 1976 one visitor Irom the British Em bassy to Kermanshah in Western r ran was noting that the Americans had become very unpopular, and insufficient attention was evidently paid in Washington tosuch trends.

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France and Germany

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The French and Germans also did no better than the British. Some French officials have made extravagant claims shout their perspicacity, but judging by conversations between them and the British Embassy in Paris it was in fact their view as late as 20 September that the Shah would pull through. The Germans closely followed American assessments and did not question them.

The Soviet Union

Information about Soviet assessments is obviously scanty. But there is no reason to believe that the Soviet Union expected before the British that a strong opposition would develop. They were not well placed ideologically to understand the strength of Islamic forces. Even in mid November the evidence suggested that they were expecting the Shah to survive in power, and not until late November are there indications that they were beginning to write the Shah off.

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There is evidence that the Israeli government took a pessimistic view of the Shah's future some time before the West. According to the head of the Israeli mission in Tehran from 1 <) 7 3 to 1978, his mission had begu n to ad vise t he govern men t in early 1974 that it should reduce its heavy dependence on Iranian all supplies, and that businessmen should a void long term in vestrnen ts. He cia i ms t ha t in 1975 he had come to the can elusion that the Shah's downfall was only a question of time, and that religious leaders were the greatest threat. By March 1978 he believed this to be much closer and warned the israeli foreign minister. Some confirmation of his story has come From a former Israeli Minister who has said privately tha t tile cabinet had reached the conclusion in May 1978 that the Shah's regime was doomed. He claims that they discussed whether to tell the Americans to do something, but in the end took no action.

It is possible that the lsraelis felt the need over Iran to assume that the worst could happen, and to make dispositions accordingly. They do 110t claim to have been in a position at any stage to make a convincing case from evidence that the Shah's regime was in serious trouble. Nevertheless, if the Israell head of mission '5 account is to be believed their hunches were right when the West's were wrong.

Other Regional governments

Saudi Arabia and Pakistan are two neighbouring countries with traditional links with Iran, whose governments might have been expected to have a fair appreciation of the situation there. The Saudis ignored the situation in Iran until the Shah's troubles were well advanced. It is significant that they apparently did not believe that the Shah's hostility to the Shi'a establishment and his interest in creating historical links with the pre-Islamic period were a danger to him. It was not until late 1977 at the earliest that they showed concern. They still believed in Oetoberl978 that the Shah was doing enough to save himself. The Crown Prince issued a statement of support for the Shah in January 1979, but, like President Carter's December statements, this would have been more in the hope than the expectation of the Shah's survival.

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Pakistan was the first country to recognise the government of Mehdi Bazargan appolntcd by Ayatollah K horneini, hu 1 It seems 1 hat this was a piece or opportun ism rather than evidence of earlier preparation for the Shah's lull, Then! is no indication that during 1978 the Pakistanis were anticipating the Shah's replacement, ami indeed they made continued efforts to keep on good terms with him.

Academics and journalists

DUring the 1970's the Lam' or much media conuncnt on Irnn was more sceptical than that of the Embassy and FCO and some academics were less inclined to take the Shah's power tor grunted. But until tile end or 1977 there is no evidence of dissent by Western journalists and academics from tile basic FCO view that the Shah's position was secure. It may be useful to illustrate this by referring to some of tile more notable work on han during the period.

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In. 1971 the Western media generally was not convinced, Li ke the Embassy I that the celebrations of the 2,SOOth anniversary of the monarchy in Iran were a popular event. The EI..:OJ1Qmist noted that they helped to provoke the growth of an urban guerilla movement without the compensating advantage or being u focus lor popular loyalty to the crown. The Financial Times added that there wert' some signs that the new middle class brought into being by the Shah were implacable opposed to monarchy. "Le Mende", irritated by the vain Iranian reaction to President l'ompidou's decision not to attend the celebrations, even suggested that if the Shah d it! not uhd kate there would be a rcvolu tion, btl t this line was hot pursued ill following years, The French mood was illustrated by a cartoon caption in 'Le Canard Enl!haille' - Perse ct Police. But there W~IS no serious snggcstion that the Shah had trou blc in store.

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In 1972 commentators shared tile British Embassy's 1110rc concerned attitude. In June the economist Julian Bhuricr gave a paper drawing attention to l hc growing disparity between rich and poor and 10 Ute poor state 01" agricultural production and foresaw developing inflation. In August a Guurdian survey suggested that a society undergoing c uch rapid change would he bound to SLItTer severe internal strains, anti that the poor had developed political expectations. The Embassy that year paid less attention than cornmc n ttl tors to econom ic pro hlcms, IHI t concl uded nevertheless in Decem ber that there were signs or urowina discontent throughout the country.

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In 1973 commentaries were broadly in line with the official British view. By October 1974 however criticism of till! Shah's performance was becoming mort' insistent, no doubt partly as a reaction to till! apparent reverence with which the Shah was regarded by Western governments at the time. The Emhassy had concluded that the Shah would not be able to achieve his economic targets, but was not notably concerned at the prospect or partial fail urc, The Financial Times all the other hand dwctt on the potential dangers of over rapid economic expansio 11, particula rly tnfla tion, and dcscri bod the Shah as ove rloaded. By 1975 the Embassy Wl!I'C taking a greater interest in the implications of cconornlc set hacks, and fell back into Bile with the views of outside cornmentuters,

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1976 saw two major su rveys of Iran in the Bri tish press. In June the Financial Times, Like the Embassy, identified the Shah's VariOLIS problems, the gap between rich and poor, the hostili ty of the bazaar, thc resurgence of religious opposition, the rliilllr~ or the Rastakhlz party - but concluded that lrun was still doing as well as it" not better than other developing countries. The Economist in August described economic problems 3S a personal humiliation for the Shah, taking a more seriou view of Ius personal position than the Embassy at the time, but the piece was written on the assumption that the Shah would remain on the throne.

In 1977 the Western press become more alert to the Shah's difficulties, but, like the Embassy, saw no reason why he should not surmount them. A Times editorial in January 1977 suggested that the Shah had been quick to realise the dangers facing him. There was consistently gOOlI coverage throughout the year by the Guardian of the opposition by then developing, but the paper again saw no threat to tile Shall.

In January 1978 an article appeared in tile New State man which was the first to suggest that the troubles might be serious. It argued that intimidation could nat suppress an opposition movement with such wide support, that opposition was being expressed not just by the "intellectuals", ami that it had been demonstrated how deep the antipathy to the government had become. Despite this it concluded that no one believed the collapse of the government to be imminent. By March the Guardian correspondent in Tehran was warning that the religious revival would continue to grow and with it inevitable friction with the regime. 111 Maya lecturer at St Antony's College, Oxford told his audience that Islamic fundamentalism was the most dangerous form of opposition.

1n genera) though Western commentators continued to share the official British view that the opposition to the Shah was not yet serious, while reminding their readership of its existence. Commentators gave no warning of the pace of change that was to come. ln March an Economist review stated that dissent had so far had little discernible effect on stability. Like the Embassy in January it therefore foresaw no serious difficulty in the short term, but referred to "the rough waters of the next five years or so", and added that over this period the odds were not good for the Shah. In April the Observer Middle East correspondent wrote that although the Shah was grappling with a difficult situation his regime did not seem to be in real danger. The Sunday Times the sume month described the collapse of the regime as extremely unlikely. The Financial Times in Muy wrote that the Shah's throne was not judged to be in danger, an opinion shared the same month by II Daily Telegraph leader writer. Even a May meeting in Brussels of academics and politicians unsympathetic to the Shah saw the downfall of the regime as unlikely. though it concluded that socio-economic problems would sooner or Inter bring this about. As late as mid July a Chatham House semi nar concluded that the rule of the Shah seemed secu re for the foreseeable fu ture.

There is therefore no evidence of public prediction in the West that trouble for the Shah would begin In earnest in late summer with the declaration of martial law in Tehran. From September onwards there was so much comment from the Western press on Iran that it would require a further study to do justice to it. But doubt about the Shall's future remained in the minds of Western commentators at least as long a it remained in the minds of the fCO. On 28 September the Guardian Correspondent in Tehran, who had been among the first to recognise the importauce of the religious opposition, told the Minister of State that she saw no credible alternative leader to the Shah. (Khornelnl was then still in Iraq). A group of experts on [ran meeting on 9 October were giving the Shah a 50/50 chance.

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The great majority or .icnuemics and journalists with a long standing interest In Iran are willing to confirm privately that, to their regret, they had no greater foresight than the FCO. Some academics, for example Professor Elwell Sutton of Edinburgh University and Mr Robert Mabro of St Antony's College, Oxford claim that they believed the downfall of the Shah to be inevitable after the declaration of martial law in Tehran, but it seems doubtful that they were as adamant at the time. Sir Denis Wright former British Ambassador in Tehran, has suggested that it was not until October that there was a widespread belief in the academic community that the Shah could not survive, u view shared by then by the Middle East Department or the FeO. One exception is an Oxford fellow in Persian studies who prefers not to be named in LItis paper. He has been on good terms with dissidents in Iran since the early J 970's, anti clahns to have concluded during the summer of 1978 that the regime could not last. He hus referred in private conversation to the bitter atmosphere of the Lime, particularly 111 Isfahan and the poor area of Tehran, and the pervasiveness of Khorneini's message. There is no reason to doubt his integrity, and his appraisal was clearly more accurate than that of the Embassy, who saw little to be alarmed about during the summer, Unfortunately he prefers to avoid official contacts and rarely publishe work, so the Embassy would not have had an opportunity to exchange views with him, One or two enemies of the Shah in the Bouse of Commons were also by the slimmer predicting his downfall, but this assessment was naturally coloured by their interest in undermining government support for the lranlan regime and diu not appear to result from objective political analysis.

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The onset of tile revolution in autumn 1978 was not therefore foreseen by commentators, and even the academic just cited became convinced only in the summer of that year that the Shah's position was in jeopardy, It is however possible to find a considerable amount of published material which, while not predicting the Shah's downfall, was more inclined than the Embassy to describe Pahlavi Iran as an unhealthy and vulnerable society. In this the material reflects the tendency of commentators throughout the 1970's to take a rather more sceptical line. Two well known examples of this are "Iran: the Illusion of Power" by Robert Graham, completed by mid 1978 but mostly written by the end of 1977 and "Iran: Dictatorship ami Development" by Fred Halliday, finally revised in Septern ber 1978.

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Robert Graham was the Financial Times correspondent in Tehran from 1975 to 1977 and some of his work has already been quoted. Ilis b ok is a study of the characteristics of the Iranian .regime, and the weaknes es as he saw them. There is no suggestion that its inadequacies, in particular the failings of economic policy from 1973 to 1977, would precipitate the down fall to the Shah. On the contrary there is a reference to the Shah '8 position becoming progressively harder to challenge, Nevertheless the book paints a more unsavoury, and perhaps more .realistle, picture 01' PHhlavi rule than most of the Embassy's work. One chapter describes haw the Pahlavi Foundation. ostensibly a charitable foundation under the Shah's allspices, siphoned off state fUJlUS and used them to finance the activities of the Shah's family and tor royal bribes. There is no reason to doubt the authenticity of this account, yet no comparable work was produced by the Embassy, and the FeD were probably ignorant of the Pahlavi Foundation's true purpose, Another useful chapter on cultural problems maintained that modern Iran was culturally bankrupt and wrote of a troubled national psychology.

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The book by Fred Halliday, a Marxist academic, was written on the assumption that monarchy was unpopular and the victory of the proletariat in lran was inevitable in due COllIS!!. But even though it was finally revised for publication after the imposition of martial law in Tehran it was 110t optimistic that the opposition would be strong enough to unseat the regime. It suggested that a "workers movement" would not be able to emerge under conditions of severe repression such as existed in lran, and that while the opposition movement lacked organisation it would not be able to marshal a challenge to the Shah's government. On guerilla groups the book concluded that they were virtually isolated from the population in whose name they claimed to be acting. The book foresaw increased trouble for the Shah into the 1980's but suggested that if the Pahlavis lost their grip the army would probably take over and that there would be no force in Iranian society that could stop it The publisher's description of the book as a prophetic account ofa tom land is therefore hard to juatlfy. But for all that Halliday's chapter on opposition in Iran includes references to leading intellectual figures largely ignored by the Embassy, like Samad Behrangi and Gholam Hussein Sa'idi, Although such figures were not subsequently in the vanguard of the revolution, they were writing obliquely of a mood of deep discontent in lran with the existing political system,and a knowledge of their work like Halliday's would have been a useful piece of the jigsaw for the Embassy to possess.

T here is also a piece 0 r wo rk, fi rst prod uced in 1 969 and revised in 1972, by an American academic, Hamid Algar·, which gives a remarkably acute analysis of the importance of Shi'a Islam as a political force in Iran. Algar'sarticle began by stating the basic Shi'a belief' that all monarchs are usurpatory. He then described the mosque's challenge to the Qajar monarchy, particularly for its sin of associatlng with aggressive non Muslim powers wh a th rea te ned to a ch ieve to tal can t rol over Ira n, In the ca usc of th is c hall enge, the rnosq ue aligned itself with the merchant classes who disliked both the extortionate practices of an assertive state and the competition from foreigners. (Those who believed that history repeats itself are unlikely to find a betterexample to cite.) Moving on to recent events, he described the work of Ayatollah Borujerdi, who died in 1961, in establishing a register of local agents authorized to collect money for Qorn, affording a ready means to disseminate political guidance. He saw Khomeini as having taken up the traditional political role of opposition to absolutism and foreign domination, conducting his campaign from Najaf in Iraq where the opponents of the Qajar r~gime had been before him, Khornelni was accepted by the majority of Shi'a in Iran as the leading religious figure, particularly after Ayatollah Shariatmadari (whom the government tried to woo in the autumn of 1978 as a possible moderate alternative although he was deeply involved in opposition activities) had sent an effusive message to the Shah in J 970. He claimed that by 1972 there had been a remarkable resurgence in the role of the mosque as the leader of the popular opposition to the regime, and that this was not an anachronistic curiosity. His conclusion deserves quoting in full:

"Despite all the inroads of the modem age, the Iranian national consciousness remains welded to Shi'a Islam, and when the integrity of the nation is held to be threatened by internal autocracy and foreign hegemony protests in religious terms wLJI continue to be voiced, and the appeals of men such .C1S Ayatollah Khomeini widely heeded." For any student familiar with Algar's work the alann bells should have been ringing in 1976.

"'''The Oppositional Role of the Ulema in Twentieth Century Iran", in a collection of essays "Scholars, Saints, and Sufis" edited by Nikki Keddie.

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There" were other academics who were more alert than the Embassy to the continued importance of religion in modern Iran. Michael Fischer of Harvard University wrote in late 1976 of the Shi'a Islam as a <major Idiom of protest' In modern Iran, and had excellent can tacts in Qorn from 1975 to 1977; the US ad miuist ration now regret that they were scarcely in touch with him during this period. The views of Professor Ann Lambton of the School of Oriental and African Studies tended to be discredited by the rco because of her unconcealed dislike for the Shah. But she consistently rated highly Khomelni's standing among the people of Iran and did not lose sight of the importance of mosque and bazaar. Neither however is known to have predicted the call rse of even ts in 1978.

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It is fair to conclude that some outside experts attached more importance than the British government to, variously, religion as a political force, the Shah's abuses of his. power, and to the in tellectual clima te or the time, They were [usti (jed in doing so. A greater awareness by the Embassy and thence the rco of these factors might well have helped them LO piece together a more complete picture or Iranian politics. The overall tone of much work by journalists was more sceptical than the Embassy saw a need to be. But despite this no one can claim much more loresight than the FCO achieved ..

British business

British businesses which have su ffered financially from the collapse of the Shah's nfgimc do not seem disposed to criticise the FCO for a Lack of Ioreslght, ln general they see it as an example or the bad luck with which theyare always threatened when trading with developing countries. Nor is there evidence that business organisations believed the ship to be sinking before the autumn of 1978, and were starling to desert it. By 1976 there wasa slackening interest in Iran, hut this was because of economic problems ami the difficulties of doing business there, rather than any perception that the Shah was in trouble, For example a recommendation by the local representatives of the merchant bank S G Warburg that their Tehran office should be closed referred to the 'lies and hypocrisy', and to the failure of most of their foreign clients to see tile real operatlonal problems below the "veneer of sophlsttcatlon". Even in May 1978 British businessmen in Tehran whom an FCO member met did not see political instability as a factor in forward planning.

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Other goverrrmen t de partmcn ts

There is a natural tendency in other departments in Whitehall to question why the FCO gave so llttle warning of' the Shah's demise. The Department of Trade speak of organising the British stand at the trade fair in Tehran in September 1978 in an atmosphere of normality, then being plunged into panic by early November. But no other department claims to have been ahead of the FCO in foreseeing the Shah's falL The Treasury did not see a political threat to the Shah from his 1974 decision to make a dash for economic growth. The Bank of England, who often have good independent sources, believed in the early months of the Shah's difficulties that he could ride out the storm.

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CHAPTER VI

The revolutions in Egypt, IIUq and Libya

It has been suggested that a brief consideration of the revolu Lions In Egypt in 1951, in Iraq in ] 958, and in Libya in 1969 might throw some light on the FCO's performance in analysing political developments in han. H would no doubt also be instructive to compare British policy towards these three countries before the revolutions, but this would require further extensive research beyond the scope of this paper.

The PCO hall no difficulty anticipating the revolution in Egypt. The Annual Review in December 1951 referred to the total failure of the party in power and warned that the King's personal popularity was diminishing. It concluded with the thought that Egypt was in classical revolutionary situation. It was known ln 1952 that a small body of officers were taking advantage of the discontent to organise a movement against the monarchy. The parallel with Iran can thus not be taken very far; since it was the fact that the West was caught unawares by the strength of opposition in Iran that has been the source of its embarrassment.

In the case of Iraq Britain was certainly caught unawares by the success of Brigadier Qasim. In April J958, only some three months before the coup that deposed the monarch, the Embassy wrote of the factors for stability; they suggested that without the monarchy Iraq would fall apart and that the security forces were in control. In their view a revolutionary situation did not exist. Afterwards opinion was divided, the peo claiming that they knew what was happening ("a revolutionary situation had been building up for years") and the Embassy that all would have been well but for the pernicious influence of C010nel Nasser. It seems from the papers readily available that in fact very little thought had been given by either to the possibility of a coup. But [or different reasons there again is 110 close parallel with iran. The problem over Iran was not so much complacency about the future as miscalculation of the importance of various developments well identified. Moreover Qasirn's coup was planned in secrecy ami executed suddenly with great efficiency; Qasim was no popular hero like Khorneini, challenging a monarch to a test of strength over a period and winning. To detect Qasim's plans the Embassy in Baghdad would have needed much improved contacts in the armed Iorces: although the Embassy in Tehran also knew little about political feelings in the armed forces this was not a factor in their failings of analysis.

In Libya too the King was ousted by swift action by a taction within the armed forces. The Embassy failed to see this coming. writing in March 1969 of a period of stability and prosperity ahead, Three weeks before the coup the office in Benghazi wrote that there was no ground for thinking that disturbing political changes were imminent. For them. as for the Embassy in Baghdad In 1978. lack of sufficient information about political developments in the armed forces was the main reason for being caught by surprise. Unlike in Iran there was no protracted development of broadly based opposition. In the case of Libya too therefore the parallel is tenuous.

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CHAPTERVU

BriL_ish PoJil:Y 1974-197 X

Tile paper's account or British political analysis of Iran covered tile period from 1970 to 1978, with particular reference to 1974 onwards, and gave an illustrative selection of reports of earlier years. This section 011 British policy on Iran will follow a similar pattern, except that an attempt will he made to begin a detailed account of British policy in 1972, rather than 1974. The earlier date is appropriate because December 197 L was a watershed for Bri tish polity, with tile l11il i tury wi til 1I rawal from the. Persian Gul f, I he solu tlon of the preble III ()I" the Gu I f islands, uud [he I;I1ilIH';~ given to take udvun tuge of a more trouble free atmosphere.

1900-1970

Brita-in never colonised Iran, yet during this century she has continuously been actively involved in the country and bas often intervened when it suited her interests. It was an important concern of the British administrution in India that events in neighbouring Iran should not present a threat to Imperial possessions in the region, nor give an opportunity to Czarist Russia and subsequently the Soviet Union to extend influence southward. In the early years 0 r the cen ill ry there were periods when Bri taln came to terms with M OSl:OW by restricting her ambition to dominating the southern purt of the country. This included tile major ail producing area of Knuzcstan, and the Anglo-Persian Oil Company, the ancestor of British Petroleum, was established in 1909 with exclusive righ t to exploit the fields. British and Soviet influences became more circumscribed after the coup d'etat in 1921 by Reza Puhluvi (which, nevertheless, many lraniuns believe was arranged by the British) and the return of more assertive government in Tehran. But not long after the outbreak of the Second Worlll War the British and Soviet govcrnmcnu s uguin combined to threaten Reza Shah with dire consequences if he did not agree to be less forthcoming ro Nazi Germany, When he re fused Iran was in vad ed, in A ugu s t 1941, by B ri tish an d Sov let forces. Reza Shah was obliged to abdicate shortly afterwards in favour of his Sal] Mohammad Reza, his fall deliberately precipitated by BBC broadcasts referring to his mismanagement, greed and cruelty. Britain's domination is shown by Tehran's Annual Review for that year, which records that "His Majesty's Government agreed that Mohammad Reza should be given a trial, subject to good behaviour." In 1942:1 tripartite treaty followed giving the allies the right to lise Iran as a supply route to tlre Soviet Union, ami that year the British were arresting at will Iranians they regarded as Nazi sympathisers.

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Most British troops had been withdrawn by the end of 1945 and Soviet troops by mid 1946 after initial reluctance to let go of the north western province of AZerbaijan. But the British continued to playa leading role in Iranian politics as the new Shalt tried to get to grips with his job. A period of attempts at political reform supported by the British was ended by the assassination of the Prime Minister General Rczmara in March 1951, and the rise of Mohammad Mossadeq. The British tried to encourage tJ10 Shah to stand linn but, as the EIl1 hussy noted at the time, "n urnerous approaches hy His Majesty's Ambassador to the

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lrresolute Shah produced no tangible result." AU oil shipment from han stopped in June 1951 and Mossadeq broke diplernatic relations wilh Britain in October 1952. By mid 1954 Mossaueq's support was falling away. In Augustl after a short crisis in which he left the coun try, the Shah was able to regain con trol with I h e help of street dcmonstratlons in Jus favour It is universally believed ill Iran that L11C United States ami Britain were instrumental in restoring the Shah to power.

When diplomatic relations with Iran wert) restored in December 1954 the FCO decided on a new policy. Sir Denis Wright, who was sent to Tehran to re-open the British mission, records in his prlvutc papers that he gave an assurance to the Shah that Britain would not interfere in Iranian internal affairs. It was also decided to deal with the government only directly ami, us a despatch of that year put it, "to discredit the many former hangers-on who claimed to speak 011 our behalf." By 1955 this policy was being described as "a principal objective," ami in 1956 "the new look", but the annual review for that year noted ruefully that the British were still widely credited as the power behind the government of the time. In 1955 Britain and Lran had finally become allies when they acceded to the Baghdad Puct, later to. become the Cuntrul Treaty Organisation. During this period contact was maintained with politicians not in favour with the Shah like the remnants of Mossadeq's Natlonal Front, but this became rare after the Shah's successful brush with the opposition in 1963 arul had effectively lapsed by the mid 1960's. By the end of the decade, the Embassy regarded interference in Iranian politics, including any more than casual ami intermittent contact with Iranians unreconciled to the Shah, as a thing of the past.

This brief sketch illustrates the background against which British policy was to evolve in future years. The British earned themselves a reputation for interference in Iran and for an ability to exercise power there which was remarkably persistent. They therefore remained open to potentially dangerous accusations of improper behaviour by the British government or tile Embassy. Mohammad Reza SI1al1 himself "ever forgot the fate of his father and retained an undcrly ing neurosis abou t the British; for ex ample he remained obsessed with the idea that the BBC was being used against him as it had been against his father. On the other hand the Embassy profited from past history by being able to keep up the tradition of close contact with the Shah and his senior advisers, and to enjoy access to. the regime second only to that or the Americans, though the closeness was noticeably less in the late 70's than in the early 60's.

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Meanwhile Britain had been steadily strengthening political, commercial and defence links with Iran as the Shah's political stature grew. The Labour government in 1970 believed that it was wise to emphasise common Interests with lran and the need for partnership with tile West, as a means or preventing clashes with the Shah over Iranian claims to Bahrain and the Persian Gulf islands of Tunbs and Abu Musa, then protected by Treaty by Britain, The Foreign Secretary told the Iranian Ambassador in February that the two countries should aim for a firm joint front in the Persian Gulf. The Iranians renounced their claim to Bahrain in May 1970, leaving the islands problem for tile following year. The Conservative government which came to power in June took the same broad line as its

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predecessor; the new Foreign Secretary told the Shah in Brussels in July that Britain could sati fy her interests in the Persian Gulf by increased commitment to the Central Treaty Organisation. But despite this readiness to look for partnership with Iran, it was not thought necessary to avoid some risk of giving offence. For example the Feo decided in February that they should not consider whether to aJlow the sale of Chieftain tanks to Iran until the Bahrain problem was out of the way. However the sale of Rapier missiles, seen as a defensive weapon, was allowed during the year.

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In 1971 British policy towards Iran was dominated by the need to resolve satisfactorily the Shah's claim to the Gulf islands by the time Britain's treaty relationship with the de facto owners of the islands Ras al Khairnah and Sharjah was due to come to an end. Since the FCO were faced throughout the year with a potential crisis in relations with Iran, they became more anxious not to offend tilt: Shah. For example attempts were made in 197] to persuade "The Times" to publish a leading article in praise of the ShaJl and the Persepolis celebrations of that month, after, as was noted earlier, the British press had taken a rather sceptical view. On arms sales, restraints became fewer and it was explicitly argued that the sale of equipment would enable Iran to playa leading role in the security of the region after British military withdrawal from the Gulf. In a June message to the Shall the Foreign Secretary described the security or the Indian Ocean as a joint interest of Britain and Iran. In May 1971 a contract was signed for the sale of 330 Chieftain tanks by the end of 1973, closely followed in June by a second contract for the sale of a further 470 tanks by the end of J 976.

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There were some qualms in the FCO about this arms sales policy, The department felt themselves to have been insufficiently Informed by the Ministry of Defence about the Chieftain negotiations. They were concerned that by the time they were asked for formal approval for a sale it was impracticable for the FCO to refuse, since the Iranians had by then had extensive discussions with the MOD and would have regarded refusal as a politically hostile act. Final negotiations for the first sale proceeded at such a pace that the FCa only had time to seek formal agrecrncn t orally from a Minister of State over the telephone during a weekend; no submission was ever made. TIle FCO did not suggest that there was a danger of becoming too committed politically and commercially to the Shah's regime, nor did they see a potential threat to the Shah's own position from extravagant arms purchases at the expense of civil projects. lIowever there were FCO reservations apart From their disquiet about the time available to them to consider an importan t policy decision. It was thought that a heavily armed Iran might be a threat to neighbouring countries. Departmental minuting In July argued that [ran's financial position was shaky, and that the Shah's appetite for advanced weapons would tempt him to seek a further increase in Iran's oil revenues. (He had already secured an increase under the Tehran Agreement of February, the first occasion that the oil producing countries of the Gulf area had worked together against the oil cornpanies.) In All!,'1.ISt the department thought it best not to drum up arms sales business in Iran but only to respond to requests, and resolved to watch MOD arms salesmen closely. Nevertheless the sale of the Chieftains was consistent with the need to come unscathed through the argument with the Iranians over the islands, the dominant theme of British policy, and it would be wrong to imply that the MOD were acting without regard for British government policy of the time.

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December 1954 had been a turning point for British policy in Iran. The next such point came in December 1971 with the Iraniun occupation of the Gulf Islands and the removal of this bone of contention from the relationship between the two countries. The FeD saw an opportunity. Iran was an apparently stable coun try wi tb which Britain had a traditionally close involvement and as a result of this close contact with her leaders. Britain was Iran's ally in ('ENTO and had already laid the basis for general military co-operation as well as for arms sales. Commercial contacts were being developed which, with the political boost which would now be easier to give, could lead to a rapid increase in exports to the promising Iranian market. The Shall was anxious to assume Britain's responsibility for security in the Persian Gulf area, and to stand against Soviet influences. In general he appeared ready for partnership with the British now that there was no political dispute between the two countries. The rco accordingly took every step they could to consolidate and expand the relationship with the Shah's regime and to avoid any move which might sour the atmosphere.

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An early example of this purposeful policy was a proposal by the Embassy in December 1971 that confidential discussions should be held with the Iranians on Indian Ocean security. The Ministry of Defence had no difficulty In agreeing to U11s. In February the Permanent Under Secretary at the FCO offered the Iranian Ambassador the view that British and Iranian interests in the Gulf region were complementary. In these circumstances discussion of arms sales blossomed. During the Shah's visit to Britain as a private guest of The Queen in the summer, in which he joined Her in the traditional procession at Royal Ascot. there was talk of the supply of armoured personal carriers, helicopters, submarines und ll1 incswccpcrs an d till' const ruction of an industrial com plcx in I ran for the manu lucturor of military equip men t (the so-called military ind ustrial com plex). Negotiations were contin ued for the supply of the all weather Blind fire system for the Rapier missile. (The FCO had agreed to the sale of this system in February, apparently without being advised that it was necessary to consider whether such a technically advanced product would be secure in Iranian hands.) After the visit the Foreign Secretary, in response to an inspired parliamentary question, described the Shall as a "close and valued ally". The FeD told the MOD that they had no objection in principle to discussion with the lranians of the whole shopping list, not considering it necessary to submit this decision to ministers. The only FCa reservation was over the military industrial complex, the FCO being concerned that the MOD were hurrying negotiations forward without sufficient consideration in Whitehall, and pressing for a right to be consulted before any definite proposal was put to the Iranians. In general arms sales to iran were governed by a paper on "Policy Restraints on Trade" submitted by the Foreign Secretary to the Prime Minister in the early part of the year, which stated: "We impose no policy restraints on military sales in the lucrative Iranian market." In July the Prime Minister congratulated the MOD on their good work in securing arms contracts with Lran and instructed that the process of rnanufacturing and delivering should be carried out as quickly as possible. In October the Defence Policy Staff in the MOD suggested that if thc defence relationship with Iran became too close the Iranians would expect operational help, but the rest of Whitehall did not find this persuasive.

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Contacts also intensifed in the commercial field. In December 1971 the Iranian Minister of the Economy, Hushang Ansari floated the idea of an Anglo-Iranian intergovernmental commission to study the possibllities for greater trade and economic co-operation. Departments in London were initially sceptical, wondering whether a new

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layer of bureaucracy would really help trade and whether the Iranians would not use any commission to attempt to force their non-oil exports on all unreceptive British market. However given the FCO's policy of taking every possible step to expand relations with the Shah's regime it was quickly decided to agree to the Iranian proposal. A commission might, it was felt, improve the chances of obtaining public sector contracts, provide advance warning of opportunities in the private sector, and establish a forum for resolving commercial disputes. On top of all this refusal might risk offending the Shah and Ansari. The first session of the commission was held ln June, During the year British exports rose to £ 117 million.

In June the oil companies, after heavy pressure from the Shah, agreed to increase their capital investment in Iran, to hand over the Abadan refinery to the national oil company, and to construct a new refinery, in return for the Shah's assurances of future security of oil supplies. The agreement seemed to offer the prospect of long term cc -operatlon and the FCO briefed the Foreign Secretary to congratulate Ute Shah on the deal, notwithstanding the Iranians' tough tactics with the companies.

The FCO also took care not to allow critical comment in Britain about the Shah's regime to become an issue between the two governments. In curly spring they received 1111 Amnesty International report which concluded that SAYAK did not hesitate to usc torture, sometimes leading to death, of people "under its oontrol." They did not ask the Embassy to comment on this. in March they instructed tho Embassy to show the Shah for his approval a draft reply to a parliamentary question about torture in Iran, and accepted an amendment that the Shall prepared. The department noted at the time: "Iran is i:1J1 ally. We would not wish to risk prejud tCblg au r cu rrent close relatio ns." In June the Em bassy asked the PCO to tell a yOUI1!:\ British economist who had written critically of Iran to be more tactful, When the Shah complained the same month about BBC broadcasts on Iran he was told that in future the British government would try its best to arrange for remedial steps. The FCO told the BBC that it was in everyone's interest to avoid unnecessarily disturbing the friendly atmosphere, and drew there attention to the Shah's sensitivities. TJ)e Minister of State at the FCO commented: "If we get further trouble with these gentlemen we shall have to take it lip higher."

With the ,CO in this mood, suggestions during the year that there might be dangers fur Britain in an uncritical attitude to the Shah's regimu fell on stony ground. In Murch the Embassy showed some concern about the rapid development of arms sales, arguing that it could affect stability in Iran by reducing money available for civil development. TIley also reverted to the reservation en tertained by the F('O themselves the previous year - that arms spending con tri buted to upward p rcssu re on oil prices. They concluded that "i t rnigh t be in our overall interest to seek tactfully to persuade the Iranians to cut down on any particular grandiose scheme they might put forward." The FCO department did not think it necessary to submit these arguments to under Secretaries, and replied that any such policy would only risk upsetting the Shah and giving business to rivals. In June the Embassy were reporting a "groundswell of discontent" in iran, and suggested that consideration should be given to speaking gently to the Shah about the virtue of' Ilexlbility, delegation of authority. and increased political freedom. This idea was no more attractive to the FCO, who replied that it was not worth risking a row with the Shah, and that in any case there was no prospect of persuading the Shall to behave differently. The FCO did however concede that a close relationship with the Shah entailed some risk of Britain becoming a focus of any disillusion with the regime.

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1973 was the year in which the Shalt's confidence was at its height. Bolstered by his SUCCtlSS in negotiation with Ow oil companies in the summer of 1972, but disappointed that the Saudis in particular seemed to be winning a still better deal, he gave notice early of his intention to re-open U10 whole question of Iran's relationship with the member companies of the consortium operating in Iran, and to announce his demands publicly in late January. The Foreign Secretary sent a message to the Shah urging him to settle with the co III pan ies "privately. in a spirit of partncrsh ip", argu ing that Ira 11 anti Western Europe were essential to each at Iter. The Embassy were authorised to add thai the companies would aim to settle in a way which plainly dernonstrated the Shah's leadership over the other members of the Organisation or Petroleum Exporting Countries. The Shah undertook to water down the public speech he had drafted, but in the event made all the points he had been urged to avoid.

The Shah's action put the FCD in <L dilemma. On the one hand they were seeing valuable political and commercial benefits accruing from the policy of maximum co-operation from the Shah and the avoidance of quarrels. The tradition of easy access to the Shah and ills close advisers was proving to be a useful asset. On the other hand they were seeing the man whom they publicly described as a "close and valued ally" attacking the vital British interest of a secure and stably priced oil su pply. The Em bassy recorn mended that Britain should for u while keep her distance [rom the Shah, to bring home to him how seriously the government viewed the situation. They suggested postponing planned high level visits, making dlfflculties over Iran's relationship with the ERC and lran's interest in participation in the North Sea oil operation, and publicity for the oil companies' case among other possible measures. The FeD agreed to encourage some publicity. but after careful consideration judged that Britain stood to lose more than Iran from any quarrel, particularly the lucrative market for military and civil exports, It was argued that Iranian withdrawal from CENTO would be an "enormous political loss." It was also suggested that the Shah would "undoubtedly" harbour a grudge against Britain for a very long time. This meant that full scale co-operation with the Sh uh would sUU be BTi tish policy; the difference now was that because of Britain's oconornlc circumstances she could not afford to change course even if Iranian behaviour might merit this. For till! first time, in the rco's judgement, Britain needed [ran more than Iran needed Britain.

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lran and Britain thus continued to work amicably together. 250 Scorpion armoured reconnaissance vehicles were sold ill July, and a firm Iranian order was received for a through deck cruiser. During his visit to Tehran in September the Minister of Defence described to the Shah the highlights or Britain's future arms equipment programme. He was briefed to welcome the expansion of the Iranian navy. The Prime Minister had told his Iranian opposite number curlier in the year that Britain greatly appreciated the assistance Iran was giving to Oman, which had started in August 1972 with the despatch or a small lrunian combat team to serve limier the British CULllIlHJI1t.1cr or the Sultan's armed forces. As in 1972 the Embassy showell some concern about the implications of British military involvement with Iran. In May they suggested that there was a danger of a classical arms race in the region. which could lead to confrontations which would be serious for the West. In September, after the Mirtistur of Defence's visit, they pointed to the risks of the Iranians becoming overcommitted then blaming their suppliers for their own shortcomings. Neither argument caused concern to the rco.

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The Embassy also continued to leave the Shah with the impression that the FCO would be prepared strongly to discourage critical comment on Iran by the British media, especially the B BC. In M tty tlll'Y managed to hold to the Ii no that wh i le tile Bri tish govc rruue 11 t regretted tillY OITl'IlCl' caused by cri rica I com 1111,.'1,1 lhey did not control the Corporation. In September t!l~ Iranians expelled the BEC correspondent after taking exception to u "Panorama" progrurnmo, The FCO again decided not to try to reproach the BBC but this time arranged publication or a letter in "The Times" referring to the "inspired leadership of (I deeply revered ruler." The Ambassador later told the Shah in an attempt finally to mollify him that the BB Panorama reporter had "exaggerated" and that he had been "remonstrated with."

British exports continued to prosper. The Export Credits Guarantee Department noted in till' spring that the ready availability of credit ill lrun could he unhealthy unless It was matched by the creation of real resources, but concluded despite this reservation that to limit their commitment in Iran would be to risk losing out in a major market. In June the second session of the Joint Ministerial Economic Commission decided to study the possibility of joint ventures in Iran to supply nearby markets, to examine the potential benefits of nuclear co-operation, and to hold an investment conference in November attended by leading industrialists. The oil negotiations finished in July with the signature by the Shah of a new oil bill which put an end to the position in Iran enjoyed by the oil companies since 1954. The Embassy concluded thai the outcome hod not been bad; the consortium COll1 pa 11 ies would sl ill have .1 roil' to pili y, a lid would be less open to clu1l"ges of colonialist exploitation of Iran's oil for the benefit or the Westem consumer. But they predicted further upward pressure on oil prices.

They were soon proved right. In October an OPEC meeting in Vienna proposed doubling the price of a standard barrel of oil from $3 to $6, a bombshell to ::I world used to gradual rises by cents. The Foreign Secretary ent a message to the Shah, emphasising tJ1C extreme importance which he and the Prime Minister attached to stable all prices and arguing that a rapid rise would only benefit the Soviet bloc. A rise to $3.85 per barrel was announced in Kuwait before this message could be delivered, but despite this relatively small increase there were worrying straws in the wind. The Shah said thai prices would from then 011 be decided without reference to companies. Libya and Iraq were making fiercer noises, and a further increase was dearly in the offing. Unfortunately for British ministers OP C pressure for higher prices had built up so rapidly that there was no time to co-ordinate an effective response among Western governments WiU, di ffercnt tactical ideas. The oil companies for their part tended to value security of supply more than stability of price. In the case of Iran it had already been decided that Britain should not attempt to bring pressure to bear. So British policy focussed on the need to compensate as much as possible rOT the increasing cost of importing oil by redoubling efforts to promote exports to pay for it and to attract Iranian investment in Britain. Attempts were made to persuade the Shah and other OPEC leaders to moderate their demands. But these lucked conviction while Britain was sWI making use of her privileged position with the Shah and flattering him in an effort to outbid commercial competitors.

Thus when the Trade and Industry Secretary visited Iran in November the protocol signed at the end of the investment conference described it as a "significan t and historic step In a substantial and growing partnership". According to the document the minister said that it would be difficult to find another country where the relationship was so close and friendly. Agreements for joint ventures worth an estimated .t256 million were concluded,

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In December the Iranians asked for secure supplies of certain industrial raw materials, offering in return to place substantial oil revenues in Britain, for example by investing in British industry. The initial British reply was forthcoming; a subsequent message welcomed the Shah's "statesmanlike and constructive approach" and described the Shah's idea of investing in Britain as "magnanirnous and imaginative". Meanwhile the Shah was claiming privately in response to Western representatives that he would be a moderating influence at the December OPEC ministerial meeting in Tehran. No doubt calculating that Britain and the West generally had decided that little could be done to prevent another price rise, he behaved quite differently and took the lead at the conference in setting the price at $ll.65 per barrel almost three times the new level of a few weeks before.

In 1974 British policy continued to reflect the FCO's judgement of the previous year that Britain needed Iran more than lran Britain. Since the Shah could have a crucial Influenee on which foreign trading partners were favoured with the big contracts, it was thought wise to pander to his wishes wherever possible. How the Shah ran his country was his own affair and Britain should keep any reservation about the political development of Iran or the economic Implications of massive oil wealth to herself; Britain should make hay while the sun shone and ensure that she did not fall into the shadow of a petulant imperial eclipse.

Jt was only in the early part of the year that the Embassy appeared to have some misgivings about this. When the departing Ambassador, Sir Peter Ramsbotham, saw the Shah in January he decided to hint at personal reservations about the political development of the country by advising the Shah to encourage IT dialogue between alienated youth and the older establishment. The Shah seemed uninterested in discussing this. ln January an Embassy despatch argued that insufficient thought had been given to where the Shah's policy of heavy military expenditure, with the encouragement of the West, might be leading Iran and to what effect it might have on Western interests. They were particularly concerned, as they had been in 1973, that Britain might be blamed by the Shah for any shortcomings that were truly the fault of the Iranian services. The FeO ruled that whether or not it was desirable for Britain to attempt to restrain the Shah's arms purchases, it was not a "realistic" idea. The Ministry of Defence added: "We cannot afford the luxury of being tbe fall guys in our presen t strai tened ci rcums tan ces, "

When the new Ambassador, Anthony Parsons, arrived in Tehran in April he summed up his conception of British policy. Britain should try to show herself as "first friend" to the Shah, and the momentum must be maintained in the face of powerful foreign competition. On Iran's ideas about oil prices and the world financial system, the more Britain could "butter up" the Shah the better. In an October review of British interests in Iran the Embassy argued that Britain could not afford to hedge her bets in any way. Any sign of wavering in the British commitment to lran would be immediately detected by the Iranians, to the benefit of commercial competitors. In contrast to their January doubts, the Embassy argued that there should be no political constraint on participation in the Shah's armament programme; the Shah's strategic policies were in line with Britain's own objectives. The FeO agreed, with the reservation that it was perhaps inappropriate to describe the Shah as "pro WestcrJ1" in the light of his oil pricing policy. In November the Em bassy desert bed Iran as bei n g 0 r critical lm portan ce to Britain '8 efforts to recluce th e

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balance of payments deficit caused by oil price rises. The ReO' approach was summed up in a September brief for the Chancellor of the Exchequer - "It is in our interests to maintain our extremely close and friendly relationship." By the end of the year the Ambassador was seeing the Shah about once a month for a private conversation when the Shah was in Tehran.

One of the most prominent expressions of the state of relations between Britain ami Iran was the continued sale of military equipment. Further negotiations for the sale of a through deck cruiser took place early in the year but were complicated by the decision of the Labour Government which came to power in February to review defence policy. The Embassy argued in April that if the Shah was disappointed by Britain over the cruiser "we must face the fact that we will lose a considerable amount of political stature." In August the Iranians told the head of the Defence Sales organisation that they were interested in 2000 improved Chieftain tanks and possibly a tank factory in lean. The defence sales team repeated that to let the Shah down would have "disastrous consequences for the whole relationship". and the Embassy argued that it was of the greatest importance that Britain should be in a position to give the Shah positive replies as soon as possible. The FCD did not contest the MOD view that a new Chieftain contract would be of "major" importance to Britain's balance of payments and employment prospects. Since this was to be the first time that an important piece of military equipment was to be manufactured to meet the requirements of a foreign customer the Treasury were concerned about risks to the public purse, bu t the Iranians agreed to pay for the necessary work in advance. An agreement was signed in December for the supply of 1800 new gene-ration Chieftains, to be called "Shir Iran". However the same month the Chancellor of the Duchy of Lancaster visited Tehran to brief the Shah on lin: outcome of the defence policy review and told him that despite his interest Britain would be unlikely to want to build through deck cruisers for her own navy.

Efforts were also being made during the year to take advantage of the Shah's willingness to buy British and to pu t Iranian money .into Britain, as some compensation for the rising cost of oil. On his return from a visit to the September Trade Fair in Tehran the Lord Privy Seal minuted to the Prime Minister: "The Shah mayor may not succeed, but in the short term Iran is going to offer colossal opportunities. We must do more and do it quickly." 111 1974 the value of British exports to fran leapt £109.2 million to £278.6 million. Britain responded readily to the Shah's ideas for economic co-operation between governments, but despite the importance of Dot giving him offence the various proposals were treated strictly on their merits. In January the Chancellor of the Exchequer and the Trade and Industry Secretary travelled to the Shah's winter retreat at St Moritz to negotiate the sale of industrial raw materials in return for oil at a fixed price, along the lines of the Shah's December offer. The British press enjoyed themselves portraying the British ministers as paying homage to the Shah's Court, but the deal they made turned out to be beneficial for Britain; world price movements during the currency of the con tract meant that the British materials were eventually sold to the Iranians at advantageous real prices. In July it was decided that if Iran expressed an interest in a Joint commercial venture in Britian it should be encouraged. The same month Britain signed an agreement with Iran for Ute loan of 1.2 billion dollars, to be taken up by British public sector bodies in three separate tranches within three years. The new Labour Chancellor of the Exchequer told his Iranian opposite number that the agreement demonstrated the constructive attitude of his Imperial Majesty the Shah to the world monetary system. However this flattery did not reflect a desperate need in Britain for the loan; the Treasury and Bank of England regarded it as useful but not essential and bargained hard for the tenus they wanted. The first 400 million dollars was drawn in November.

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During the year Brita in fou nd herself in a di lficul t tactical situation over oil prices.

It was important to try to prevent further rues. On the other hand the Shah had to be kept sweet if hopes of compensating for the J 974 increase by British exports to Iran were not to be jeopardised. A compromise emerged of avoiding taking the Shall to task for past decisions, and expressing interest in his various ideas for stabilising and reforming the world monetary system, while trying to impress on him the adverse impact the increase had had on world trade nrul ill parl lcular all lrun's own import {;osts.

In 1975 a determination to derive maximum benefit from the Iranian market continued to be the main driving force of British policy. The Trade Secretary told the House of Commons in January on his return from the third session of the Joint Ministerial Economic Commission in Tehran that he was convinced of the immense economic importance of Iran, and that what was needed was a vigorous response from British industry. The commission meeting identified fields in which the Iranians were keen to co-operate with Britain, holding out the prospect of new contracts worth some £580 milllon, In June, when the Iranian economy was clearly in trouble as a result of excess expenditure, the Embassy advised strongly against lessening the commercial effort or adopting a "wait and see" attitude. In October an Anglo-Iranian financial conference took place in Tehran attended by the Chancellor of the Exchequer and leading British financiers to discuss British help in establishing Tehran as a financial centre. The Embassy commented that for once Britain was first in the field. There was a further spectacular increase in British visible exports to Iran during the year to £494.6 million, up £216.0 million on 1974.

In the interest of avoiding offence to the Iranians the FCO did their best to avoid comment 011 allegations of torture by the Iranian security and Intelligence service (SAVAK). These allegations were becoming more widespread after IJ lull since 1972. Early in the year Middle East Department advised United Nations Department on how to handle the issue if it should be raised at the UN. They insisted that the Jranian delegation in New York would report anything said by the British which could remotely be construed as critical, and that any such report could result ill serious damage to Anglo/Iranian relations. If obliged to comment the British delegation should say that there was no conclusive evidence of torture. In March the Minister of State told the House of Commons that he had no "official information" to confirm torture, though he added that the British government had made clear in the appropriate international bodies its abhorrence of such practices. Later in the year the Embassy, disturbed by the malaise it detected in the country, asked itself the question whether it would be in Britain's interest to attempt to resume her defunct role of offering the Shah advice on Iranian politics. They answered decisively that this would risk a "whole colony of fleas in our ear". If Britain was concerned, the best course was to help in the development of Iran by participating in social projects like hospitals and colleges.

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The need to keep the Shah sweet and to preserve a favourable atmosphere for British commercial activity was an important factor in one notably difficuJ t British government decision during the year. In November the British subsidiary of the Chrysler Corporation, which was supplying a large part of the Iranian market by exporting a saloon car in kit form for assembling locally, was threatened with closure by the American parent company unless the British government injected substantial funds in to the operation. The Embassy were concerned that if Chrysler UK closed the Iranians would conclude that Britain were unreliable partners in joint ventures, and the FCO advice to the responsible ministers was

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that the Iranians must be given some assurances that they would not suffer, perhaps by switching manufacture of the car kits to British Leyland if Chrysler had to close. In December the Iranian Minister for the Economy claimed to the Embassy that the collapse of Chrysler UK would have a shattering effect on Iranian confidence in Britain. After initial disinclination to give in to what they saw as blackmail by the US parent company, the Cabinet decided to agree to contribute funds to keep Chrysler UK in business. The threat of unemployment in Scotland played an important part in the decision, but the Embassy were authorised to tell the Iranians that the wish to continue Chrysler exports to Iran had been a major factor. A further example of the wish not to spoil the atmosphere was the Embassy's attitude to the Iranian failure to honour the payment schedule to a British company for construction of a power station at Ahvaz in south western Iran; they suggested that consideration would have to be given to tolerating this misbehaviour if their British contracts in Iran were to be preserved.

However there were some signs in 1975 that Whitehall departrnents were beginning to examine more critically proposals for co-operation with han. The tone was typified by an April brief for the Chancellor of the Exchequer, which submitted that Britain remained an important partner in the Shah's policy to develop the country's potential, but that there was no need for Britain to be defensive, The Treasury were no doubt more confident about Britain's external financial position than they had been in 1974.lt was also becoming more difficult to argue that British interest in general would be threatened if ways were not found to respond favourably to Iranian wishes. In the autumn of 1974 the Iranians had shown interest in British Leyland, after the British decision that Iranian interest in joint ventures in Britain should be encouraged. The Trade Secretary argued in February 1975 that Iranian investment in BL could be a significant element in maintaining the British position in Iran, and the FeO saw it as their objective to secure sympathetic consideration in Whitehall for any request by the Shall for participation. But the Department of Industry were unenthusiastic about Iranian investment in BL,. and in particular were concerned that whatever the importance of the Iranian factor nothing should be done until. the report on BL commissioned by the government had been finished. The Embassy were instructed to play for time by telling the Iranians that the British were willing in principle to see Iranian investment in BL as long as this complemented BL ventures in Iran. Fortunately the Shah lost interest in the idea and there was never a need to give a definite answer.

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Similarly the pca were prepared to risk Iranian displeasure over Iran's relations with the EEC. For some time the Iranians had been trying to gain preferential access to the BEC for their exports but had come up against important issues of principle for the Community. The Fea aim was to work for an economic co-operation agreement with Iran which would safeguard Anglo/Iranian relations, while in some way not offending the Community's principles. The Communique issued after the Trade Secretary's January visit to Tehran declared that the British were prepared to work for the conclusion of a mutually satisfactory agreement. The pace of negotiation was too slow for the Iranians, and in the late summer they threatened not to pay to Britain the second tranche of the loan due under the July 1974 agreements unless the HEC gave In to their demands .. The Fea were not moved by this threat and instructed the Embassy to tackle the Shah on the subject; they succeeded in persuading him that Britain was not obstructing Iranian ambitions, and the threat was not carried out, though for other reasons the loan was not in the event made until the following year. The year-ended with the Chancellor telling the Shah that what was needed was a relationship between equals.

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Another test case of Wh itehall attitudes was tile Iranian request in February to buy shares in British Petroleum formerly held by Burmah Oil. (The Iranians had been interested in a large shareholding in Burrnah before the company were faced with <I financial crisis in late 1974). No immediate response was necessary ami discussion on how to answer the Iranians continued through the ycur, The Embassy deployed the customary arguments for agreeing to un Iranian request. arguing that acceptance of un Iranian take in BP would delight the Shah and that to refuse would seriously irritate him, jeopardising Britain's wider interests. Arter initial doubts the Feo agreed that it would be a mistake to let the Shah feel sl igh ted. and noted that ex port busi ness 0 r possibly $ 2-3 b illlon wa Slit stuke over the next two years. But the Treasury were opposed, disllking in particular the idea of Iranian participation in BP giving them voting rights in the board, and doubted in any case whether the impact an the Shah of refusal would be as bad as the Embassy had suggested. In the event the governme nt dccid ed not to dispose or tile Burma h shares, and it wu S not necessary to give a definite answer to the Iranians. (Some BP shares were eventually bought by han on a purely commercial basis in June 1977).

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Meanwhile Britain's order book for arms continued to fill up. In February agreement was finally reached for the construction of the military industrial complex (MIC), with work due to begin the next month. Prospects were favourable for the sale of armoured recovery vehicles, a mobile version of the Rapier missile, and more Scorpion armoured reconnaissance vehicles. The Iranians accepted that they could not have a through deck cruiser. and expressed interest in a mini alrcraft carrier instead. But for the first time it began to look as if Britain might have bitten oft' more than she could chew. The Iranians found cause for complaint about the performance or the newly developed more powerful engine they had requested for their Chieftains, and also objected that items being supplied under the M Ie contract were overpriced. During a November visit to Tehran to sort out these problems the Minister of Defence agreed that an Iranian team could visit London to check and approve the obtaining of supplies for the complex, In October the MOD wrote a worrying assessment of the problem of escalating costs of production of the Shir Iran tank.

til the debate with the Iranians over ell production and pricing the British stuck to their policy of trying to respond constructively to tJ1C Shah's ideas while pointing out the damage that further price increases could cause. The Iranians for their part were looking for ways to preserve the purchaslng power of their 011 exports in the face of rising world commodity prices and a decline in world demand for oil. In April the Embassy told the Iranians that there was a clear common interest in the formal dialogue between producers and consumers which tile Iranians hoped might lead to a solution of their problem. But in July the Embassy had to admit that the British government opposed the Shah's idea of linking the price of oil to the price of a basket of Iran's imports, believing that it would build inflation into the world economic system. By December the Iranians felt a sense of crisis .. Iranian oil production had declined, money was going out faster than it was coming in, and there was a prospect or a current account deficit of more than $1.5 billion in the fina nciul year ]975/] 976. Foreign scapegoats were being found for the troubles, includ ing the British company Tate and Lyle. The Shah told the Ambassador that because of his reduced oil revenue he would have to reduce his purchases, and that the sale of the mobile version of the Rapier missile was at risk. The remedy was in the hands of the British government, who should put pressure all BP and Shell to lift more Iranian oil.

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This threat faced the rco with the familiar problem in their dealings with Iran. It might be against their better judgement to agree to the Shah's demands, but there was a chance that he would begin to cancel valuable contracts if he did not get his way. Whitehall departments thought it unrealistic to try to persuade the oil companies to discriminate in Iran's favour at a time of depressed world demand, and It was decided to respond robustly, concentrating on persuading the Shah that [ran was no worse off than other OPEC members. The Trade Secretary told the Iranian Minister of Commerce, in London for the fourth meeting of the Joint Ministerial Economic Commission, that Iran's concern bad been brought to the attention of the oil companies but that it was unlikely that Ilftings from Iran would increase until there was a revival in world demand. The Embassy emphasised to the Iranians in January 1976 that they were not being discriminated against.

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This provoked another blast. The Minister of Economy told the Ambassador that future trading with Iran depended on main taining oil revenues at 'realistic' levels, and stated that in the circumstances Iran would be unable to pay the second tranche of the loan agreed in July 1974. The Iranian Ambassador later added specifically that Important projects might have to be reconsidered. The government stuck to their line, though after a brisk exchange of messages the Chancellor agreed to divide the loan payment into two, due in June and September.

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When the Foreign Secretary visited Iran in March the Shah said that if his country were to perform the full role in the Persian Gulf area which the West had professed to endorse 11e would need to spend on a corresponding scale. Thereafter oil liftings from Iran began to increase and there was no further pressure from Iran. But in July the Shah took a new tack, demanding that Iran should pay in oil for the two Yarrow support ships he had ordered. Meanwhile the British Aircraft Corporation had quietly been negotiating with the Iranians for payment in oil for the mobile Rapier missiles, without consulting the British government. The Embassy were in favour of accepting the Iranian proposal, arguing that it was not worth risking souring relations with [ran for the sake of not taking small amounts of oil. Ministers decided not to oppose the terms of the Rapier deal, but to concede an oil barter deal for the Yarrow ships only if absolutely necessary. At length, after further Iranian pressure and with the principle conceded over the Rapier contract, it was decided to let the Shah have his way. By December it had been agreed with the Iranians that payment for the second delivery of Scorpion armoured reconnaissance vehicles, the armoured recovery vehicles and elements of the military industrial complex also should be made in oil.

At the end of the year Britain also came to the conclusion that, because of the importance of maintaining exports and Iran's inclination to stop payments if there was an excuse, they were badly placed to put pressure on the Shall to take II moderate line at the next OPEC meeting on oil prices. Over the whole complicated field of oil supply and related trading the Shah was still making the running because of the fundamental British interest in retaining a good share of the iranian market.

These negotiations with Iran took place against a backdrop of more frequent public allegations in Britain that the Shah's regime was unjust and oppressive; a stream of letters began to arrive at the FeO critical of British support for the Shall. The FCO department countered with an explanation of the benefits of close co-operation with Iran, pointed out that they had no locus standi to intervene in [ran's domestic affairs, and suggested in one letter to a member of the public that it would be churlish to criticise the Shall.

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In January, after a querulous call from tJ1C Iranian Embassy, they made a valiant attempt to prevent the underground being besmirched with anti Shah graffiti, telling London Transport that they were anxious to do all they could to maintain "very close and frtendly" relations between Britain and Iran. The Political Ad v iser to the Foreign Secretary wrote to another member of the public in July: "What we cannot accept is that the world would be a better place if Britain indulged in a series of moral postures which did not change the real situation." The Embassy reverted to their consideration the previous year of whether it would be worth trying to influence the Shah to modify his domestic policies, but again dismissed this out of hand, suggesting that the only result would be to benefit the material interests of governments with stronger stomachs. However there were signs that ministers in the FeO were beginning to question the nature of Britain's relationship with the Shah's regime, Although the Foreign Secretary said publicly during a visit to Tehran in March that he regarded han as one of Britain's most important partners, public references to the Shall as a close and valued ally were absent during the year. Tn August tile Parliamentary Under Secretary at the FCO stated in a letter that he and his colleagues were very much concerned about the allegations that had been made about the treatment of "political prisoners" in Iran, though he suggested that staying in touch with the regime was probably tile best way of exerting influence. Earlier in the year FeO ministers had not objected to a Home Office decision to confer political refugee status on seven Iranians charged with a breach of the peace after occupying the Iranian Embassy in April 1975 but subsequently acquitted. In December concern in the Labour Party was shown by an article in the New Statesman by an MP not previously known for his opposition to the Shah, who suggested that Britain was putting an enormous investment in one man who was "making an awful lot of enemies."

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The Embassy became concerned during the year that opposition in Britain to the Shah's regime could start to harm the commercial relationship. They continued to see a bright future for British exports despite the Shah's problems, and urged a "maximum and comprehensive market effort", regardless of difficulties. Iran was by then among Britain's ten largest markets taking over 30'% of British defence exports, and the value of total visible exports in 1976, though not rising spectacularly as in the last two years, was a healthy £S 10.9 million. With this in mind the Embassy suggested to the FCa that the public should be made aware in some way of the importance of [ran to Britain. The year ended with the drafting of a paper In the Fea for use with selected contacts which took the line that while the Fea continued to make clear their concern for human rights in appropriate international fora they had to be careful to avoid unilateral gestures whose effect could be to hand business to Britain's competitors.

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In January 1977 the Trade Secretary visited Tehran for the fifth session of the Joint Ministerial Economic Commission, and was told by the Shah that if Iranian oil revenues were Inadequate he would have to alter Iran's development plans, with implication for Iran's regional role as well as Bdtish exports. The Trade Secretary replied that while the British preferred to receive cash for civil exports they were prepared to take oil for these as well as military exports if the terms were right, and mentioned current project proposals where this rnigh t apply. On his return he advised the Prime Minister that the Iranian market still had very valuable prospects for the future, and that Britain could "fairly assert a long term common interest with Iran."

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IIowever Iran's economic difficulties were again demonstrated the next month when the Shah told the Ambassador that the order for the Yarrowships was to be cancelled and the purchase of more Scorpion armoured reconnaissance vehicles postponed, and that a smaller number or armoured recovery vehicles would be required than first thought. The Shah's move appeared to be out of tlnancial necessity rather than an attempt at bargaining over terms or over another issue In Anglo/Iranian relations; there was no parallel demand over Iran's negotiations with the FCO or the iranian loan such as bad been made in similar situations in previous years. But the message was, as ever, that unless Iran's oil revenues showed a real increase, the West stood to lose valuable export markets. Whitehall devised an ingen i ous way 0 f w riggli ng out of this new pro blem; the British 0 ffered to waive their righ t to draw the third tranche of the Iranian loan if an order for the Yarrow ships and a smaller number of Scorpions was revived, The Iranians agreed in May, and the loan was formally waived in July. Meanwhile, although British visible- exports continued to be buoyant at .£.654.7 million in the year, few major new contracts were being signed. The Joint Ministerial Economic Commission and its various sub committees were achieving little. A proposal by the Embassy to inject new life into it by designating the Chancellor as the British representative came to nothing, and the Iranians postponed the sixth meeting due in December; it was never to be revived. Contacts between the city of London and Iranian financial institutions set up at the financial conference in October 1975 had petered out, and the city saw no advantage in a second conference in London. The British cultural festival in Iran in September was the main showpiece of Anglo/Iranian relations during the year, rather than 3. commercial event.

At the same time there were considerable uncertainties over British arms sales, despite the success in reviving the Yarrow and Scorpion contracts. The military industrial complex was plagued with contractual difficulties which the Iranians had first complained of in 1975, leading the FCa to comment: "The lesson to be learned is not to be bullied into similar errors of commercial j udgemen t again." It was no longer ju dge d in Whitehall that the Shah must have everything he wanted for fear of offending him; ideas of selling the Anglo/ French multi role combat aircraft to Iran in place of cancelled American F-18's were abandoned on arms control grounds and because of the possible damage to Anglo/American relations.

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Meanwhile criticism in Britain of the Shalt's regime and British support for it continued to gather strength, fortified by the faltering performance of the Iranian economy and the signs later in the year of the emergence of public opposition in Iran itself. Initially the Embassy, [allowing their policy recommendations of the previous September, gave themselves the job of providing the FeO with material to rebut this criticism and encouraged the Iranians to improve their own image. In January the Ambassador told the Minister of Information that he was distressed by the hostility of British public opinion, and urged him to give better briefing to foreign journalists. TIley later maintained that the Iranians bad "realised the need to demonstrate that the situation is less black than the critics make out", suggested that there were "alternative versions" to some of the stories of torture and detention, and were sceptical about the Amnesty International reportof the previous November. In February they proposed setting up an exchange or state visits as soon as convenient, in order to demonstrate how close the two nations remained.

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By tlris time however the PCO department, taking the lead from ministers, were becoming disinclined to give upport to some of the regime's domestic policies. TIley commented in February that there was a danger of "going overboard in defending Iran", and decided that a paper they had prepared in response to an Embassy suggestion publicising the "better side" of the Shah's regime should not be used. In their brief for a March meeting between the Minister of State and a group of MPs critical of the Shah's regime, they stated that although there was 110 evidence that torture had been used Indiscriminately over the past two or three years reports of torture were too persistent to discount. The Minister told the Mils that the government had no intention of white-washing Iran, but that tile reports had to be seen in perspective.

AWare of this change or heart in London, the Embassy gave the problem careful thought In an April despatch they concluded that it was not in Britain's interest to encourage the undermining of the Shah's t~gime. since there was no effective alternative on offer. But they recommended informal discussion with the Iranians of those policies which had provoked the most criticism. Meanwhile the Shah had launched his policy of "liberalisation", of which an early sign was the first invitation for five years to outside observers to attend the trial of "political prisoners". The same month the Ambassador decided without instructions to speak to the Vice Minister of Court about British concern at allegations that had been mude about the treatment of political prisoners. The FCD subsequently endorsed this action, and in May the Foreign Secretary OIl a visit to Tehran raised the su bject with the Shall. He said that while he did not wish to impose British views on Iran the Shah's move towards liberalisation had been well received in Britain, and that criticism would be less if the Iiving conditions of prisoners were improved and trials opened regularly to the public. The next month 11e wrote to a member of the public that he had left Iranian leaders in no doubt about the strength of his feelings. The Iranians took all this well, and British interests in Iran did not suffer as a result. Through the summer the FeO continued to support the llbcralisation policy, in the hope that it would improve Iran's image.

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By the autumn it had unfortunately become tactically difficult for the FCO to continue to speak more frankly to the Iranian leadership because of the affair of Lt Col Randel. Randel had been arrested in April and charged with "conspiring to receive money in respect of orders for army telecommunications equipment to be placed by Oman and lran", When the trial opened in early November it became clear that Randel's lawyers intended to argue that he had simply been following the usual practice of passing company money to senior Iranians, including the Shall, to secure anTIS contracts. At one stage the Iranian Prime MInister demanded a public statement from Britain that Iranians did not receive such payments, and British commercial interests appeared as so often in the past to be at risk. Although the Prime Minister commented that the FCD should not be alarmed, the Embassy were exerting all their energy trying to limit the damage that Randel's defence lawyers might cause, and felt constrained from any other action that rnlght offend the Shah. Thus the Ambassador made no critical comment to him about the breaking up of the Karaj meeting in November.

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In January 1978 the Embassy reported that Anglo/Iranian relations were going til rough a very bad patch. Randel had been found gu ilty on 16 January, and the Iranian regime were also irritated by the pressure on them to liberalise and by what they regarded as

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a poor British performance over anTIS contracts. Above all Ute Shah had maintained that the BBC had exaggerated tne importance of anti government demonstrations, arid that if this got worse the relationship with Britain would be daruaged ; the Iranian Prime Minister even threatened a trade boycon of Britain. 1 n the face of this the Em bassy deployed the trad itioual urgumen ts; big civil and defence contracts were at slake and a senior British minister should makea public statement in support of the Shah; the BBC should be warned. They had earlier complained that tile BBC' in London were pressing their local correspondent to send more material all political disturbances, "which to most observers here are only a small part a r tile total picture," an d had urged that when tile corresponden t went on holiday he should be replaced by someone "safe",

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By the early part of 1918 however reservations in London about the advisability of support for some or the Shah's policies had hardened further. The Minister of State commented that much as Britain needed Iran for commercial and other reasons it would be wrong to conduct affairs with Iran "on the basis of bout licking". He added that the FeD should take particular care not to nail its colours too firmly to the Shull's mast. The Prime Minister too was reluctant, as he put it, to "kowtow to the Shah", and asked for a further assessment from tile Embassy of how serious the situation was. The Ambassador reported an Iranian remark that at present British enterprises seeking government contracts need not bother, and proposed u visit by a British cabinet minister to dear the air; in these circu ms ta 11 cos the Prim e Minister agreed.

The visit by the Minister of Defence that followed in March turned out to be the final flowering 01' the traditional British policy of fluttering aggrurnlisemcnt of the ShaJ1. At a press conference on 27 Marcil the Minister said that the British government attached great importance to its very close and longstanding relationship with Iran, and that it deeply app reciuted tile con tribu tion of I ra n to regional stu bill ty, l le paid tri bute to the statesmanship of the Shalt und his perceptive leadership, which he described as a great national asset far 1 run. Mean w h ill! tile FCO hall invi ted the BBC to take ex tra care reporting Iran iu 11 u ITa i rs, uud It! ter 110<1 let! wi th til em Lli e idea of ell rtuil i rrg I'crsiun Service com men taries, though the BBC did 110 t themselves believe they had undertaken to do either. These measu res had the desired e Hect a nd the storm blew ove r.

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111 an April despatch reviewing these events the Embassv complained of the "irrelevant developments" which from time to time caused the Shah to found on the British, giving as examples the Randel affair and the threat by the visiting Prospect Theatre Company at the previous autumn's cultural festival to take up the cause of political prisoners. They argued thut Britain would not develop immunity until the Iranians were as apprehensive of what Britain could do to them as vice versa. Until Britain was confident or 11 er strength to see u con l'rontu I ion til rough to the bi 1 ter end it would remain the Em bassy's task to de fuse a q uurrel before positions became ell trenched. The FCO wondered whether the Embassy did not exaggerate tile crisis, but accepted that constant flattery of the Shalt was u cheap [arm of insurance.

Behind the puhlie facade of' support rOT the Shah and his Iibcrallsaticn policy there was frequent debate ill the FCO into the summer about policy towards Iran, prompted by continued criticism of the regime from outside government. While there was no reason at that stage to suppose thut tile Shah was ill serious trouble, it was becoming I1CCCSSUry to take account of that possibility, and of the existence in Iran of opposition to him. For the first

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time the idea of distancing Britain from the Shah's regime was being considered. In July the Minister of Sture called tor a policy review, !lul:;gc~ting that the FeD ought to begin to find W~IYS o r ilcdgiJlg its bets. The departrnen tcousidercd tilt: possi Ilk alternatives to the 5110111 's regime, and concluded that it" Communists did not seize power a new regime was likely to be a nationalist, socially buck ward looking Islam lc ad III i n istration led by a demagogue. There was little prospect of a liberal pro Western regime and no particularly friendly opposition group to cultivate. The best policy therefore was "support for the Shah warts and all, while occaslonally offering treatment for the warts." Britain should maintain as neutral a position as was consistent with a vested interest in the Shah. If he saw fit to abandon liberalisation and clump down, he should be advised against this. The Minister of State did not dissent from this review.

The view in London was thus that it was not very pleasant having to support tile Shah but that there was no apparent ultcmutivc. The difficulty ill deciding how far to go in nis support was exemplified by the summer debate over tile sale of (,S gas which the Iranians hull requested for riot control. Officials in the FCO, supported by the Embassy, argued that the sale should be allowed, since the survival of the Shah's regime was in Britain's interest and that Britain should not risk shaking the confidence of any friendly state. let 0110 no one as friendly as Iran. The Minister of State believed that the sale orcs gus was goi ng loa far i n the Shuh 's su pport, and wan ted to examine ways of refusing wi thou [ damaging British interests. At length the Foreign Secretary and the Prime Minister ruled in favou r or the sale bceu usc it rcrnai ned in the na tlonul ill terest to su pport the Shall. Meanwhile discussion continued with the Iranians of other arms sales proposals; in July the l lcad of De fence Sales suggested rhut Rolls Royce III igh t luu nch a joi 11 t veil turc with Ir<1Jl to manufacture gus turbine engines.

As has already been shown, the 1'('0 were seriously worried about the stability of the r~gimr by early September lind tile imposition or martial law in Tehran and other major ci tics Oil 8 Septum her rei 11 forced their rears. The Mill istcr of State suggested that the thesis that till! Shah's regime was the best Britain could expect was open to tlllcstioll if that regime WaS I'a iii ng to en su 1'1.1 stablli ty, and wondered whether it was necessary to add gratuitously to Bri la ill'S long stand ing lden tlflca tion with hlm, But he acce pted II re-assessment by the ,1 epurtrncn 1, which argued that "from the point of view 0 r stabili ty and Hberalisatlon" the success or the Shah remained the best outcome. It was not possible to reinsure with the anti Western opposition, neutrality would not endear Britain to them, They commented in parenthesis that if the Shah reverted to repression he would in their view be committing political suicide sooner or later. They later udded that other traditional regimes in tile area would be watching closely to sec whether the Shuh's friends would let him down. Till' Embassy made the further point that if Britain was seen to be re-insuring it could lead others to abandon the Suah.

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The FCO therefore embarked on a pottcy or attempting to bolster Lhe Shah, while continuing to urge Iiberalisation 011 him. This was consistent with their carefully considered policy review of July. though the pressing need to help the Shah us a British vested interest meant that neutrality was now in practice difficult. On 16 September the Ambassador, on his return to Iran, delivered a sympathetic message to the Shah from the Prime Minister

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which at the same time expres ed the hope that it would still be possible to proceed with free elections. On 20 September the department ruled against any contact with Sudeq Qotbzadeli, one of Ayatollah Khonreini's entourage in Paris und Iatcr Iranian Foreign Minister. The Embassy recommended a visit by high level businessmen to help boast tile Shah's morale, and public statements in his support, and that the BBC should be told that their Persian language broadcasts about the Iranian political situation were threatening British interests. On 26 September the Ambassador said publicly at the Tehran international trade fair that Britain was heartened by the determination the Shah's government had shown to maintain stability and progress, and wished tnem well in these tasks. After the speech had been given unfavourable publicity by the Shah's critics in Britain, the Foreign Secretary condoned it but wanted the Ambassador to keep a lower profile in future and to let the ministers "take the flak". FCO ministers decided that an Iranian order for armoured personnel carriers with sub machine guns could be accepted, and also agreed to an Iranian request for a visit by a British expert in riot control.

At the same time Ministers were defending the policy publicly. On 3 October the Minister of State wrote to an MP that the government believed the Shah represented the best prospect for orderly progress, ami that the rupture of diplomatic relations wlth lran he proposed would not necessarily improve Britain's standing if the Shah were to go. On 10 October the Prime Minister wrote to another MJ) that he could 110t see how those like Britain who had urged the Shah to move forward in modernising the political process in Iran could align themselves with those who opposed this. On 23 October an interview with the Foreign Secretary about Iran was broadcast on London Weekend Television, after being postponed a week. I-Ie argued that YOLI could not go on hedging your bets, and that you did not back off when your friends were u nder attack. Against the regional background it would not be ill the interests of Britain for the Shah to be deposed. Human rights in 1ra11 would not be Increased if Britain supported the fanatical Moslem element.

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While Ministers were busy explaining British policy the Ambassador was having regular interviews with the Shah. Before his departure on holiday in May the Ambassador had discussed the February disturbances with the Shah, but without offering advice. Before then he had carefully avoldcd any mention of Iranian politics which might have been construed as British In terference and given the Shah offence. On his return however he spoke frankly to the Shah about the causes of the unrest, while re-affirming British support. On 29 September he began to offer the Shah specific advice, telling him that unless the free and fai r elections that the Shah had been planning be fore th e declaration of martial law took place, there would be no alternative to a military coup or the overthrow of the monarchy. He also urged continued liberalisation, measures to help the 1)00r, and an effort to find accommodation with the mullahs. On 10 October, in an attempt to boost the Shah's morale, he said that he doubted whether the opposition bad the stamina to keep going for long, bu t warned him that Britain would face severe problems i r i 1 was decided that the process or democratisation had to be halted. On 2 J October, when the crisis was deepening, he said that military intervention in the country's affairs would only benefit extremists, having earlier with the US Ambassador warned the urrny commander that this would have a very serious impact on the West. He later encouraged the, Shah not to give in immediately to the demands 0 r the strikers, since there III lgh t be ;1 popular backlash in the Shall'S favour. When Sharif-Emami's government began to lost! its credibility he suggested a national

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Meanwhile the Embassy began to establish Iormal contact with opposition leaders for the first time since the early 1960's, no longer feeling inhibited by the risks to British commercial interests should the Shah disapprove. In late September they sent an emissary to Ayatollah Shariatrnadari in Oom assuring him that whatever might be rumoured Britain continued to support the Shah; the Shah was later told of this. Subsequently contact was established with Shariatmadari's son and Nasser Miriachl, a prominent member of the National Front. By October meetings had taken place with Shall pour Bakhtiar and Mehdi Bazargan, though there was no question of mediating between them and the Shah.

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government ami acceleration of the electoral process us a last resort if the opposition National Front would not form an administration. For the most part the Ambassador was acting without specific instructions, and was telling the Shah that he was giving him personal views. Nevertheless the Shah would have assumed that the British government did not disagree with the Ambassador's advice, and the FCO were h.appy to allow the Ambassador to act as he thought min support of the established policy of supporting the Shah while encou raging liberalisation.

As the Shall's troubles increased in late October there was a significant shift in British policy. The Foreign Secretary wrote on 27 October that it was a time for steady nerves; it would be possible to hasten the arrival of a new regime by moving away from the Shah, but it would probably be an unpleasant military one. Despite this the Prime Minister ruled the Same day that the Shuh was unlikely to be helped by further public expressslons of support from British ministers, which were not in anycase advantageous in domestic poli tical te rrns. When the Shah discussed I he al ternatives with the Am bassador on 4 N ovcrn bcr in an atmosphere of deepen i ng political crisis) th e latter said that Britain "WOUld respect" whatever decision tile Shah finally made about his government but did not give specific backing fOT military rule. Replying to questions in the House of Commons 011 6 Novem ber after the attack on the Em bassy the previous day and su bsequent installation of General Azh ari 's govern men t, tile Foreign Secretary uvoided giving public British support for the Shall. saying that it was for the lranian people to decide who their rulers should be. However, the FCO department noted on 8 November that although the time for public messages of support for the Shah had passed, British interests were still bound up with hls surviva I.

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Over the next few weeks the pea was under great pressure arid the public line taken by Ministers was not always consistent, but the Foreign Secretary's line in the House of Commons became the one to follow. On 13 November the Minister of State wrote to an MP that a return to stable government 'under the constitution' represented the best prospect for orderly progress, and that whether these purposes would be best served with or without the Shah wasa matter for speculation, On 12 December Ute Prime Minister told tl~e House of Commons in answer to a suggestion that The Queen's visit to Iran on Her Persian Gulf tour sh au I d be can celled, that su ell vis! ts were "n ot regard ed as sup portin gap articular regime. ,. A number of British decisions also showed the way which the tide was beginning to turn. The Embassy rapidly revamped the warden system for the British community in Iran, a step they had earlier been reluctant to take because it might have implied pessimism about the future. After 6 November it was decided that each new lranian request for arms would be considered us it arose, Irrespective of earlier decisions, It was agreed that more CS gas and "defensive" armoured personnel carriers could be sent to Iran, but not crowd control "shock sticks", nor "offensive" Fox vehicles. Meanwhile the Iranians hadstopped making

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the agreed regular payments to tile MOD Linder the Military Industrial Complex and Shir Iran con tracts, bu t on 13 December the FCO vetoed <In idea that the Prime Minister should write In lIis lranlun opposite number to urge Ihlymen( suyiug thut ministers would not wu n t thcl r eolou rs (0 be nulled to the rGgillll: \ Illj~l in til is way. (A 111 i n lstc rial committee had earlier concluded that there was little thut could be done to limit the damage to British commercial interests.) After an Iranian threat in late November [0 expel the BBC correspondent and start a campaign against Britain because of the BBC's allegedly biased output. the Foreign Secretary wrote to tile bead or the BBC, but only to draw his attention to the possible danger to the British subjects in Iran. The Foreign Secretary told the American Secretary or State 011 9 December that if the Shall'S presence became the only sticking poin t, the West rnigh t have to tell him so.

The Ambassador continued to see the Shah regularly after the Jnstallatlon of Azhari's government, often in the company of tilt: American Ambassador. The main themes of his advice were that military repression by Azhari's government or other military officers in his place would solve nothing, that jJ the Shah were to abdicate there would probably be chaos, and that Iibcralisation should continue despite the difficulties, On 7 November he told the Shah that the regime's credibility could only be restored by being honest with the people. 011 11 November he said that in his view if the Shah gave in to opposition demands and left the country there would probably be a series or military coups. He told the Shah that he was in touch wit h some opposition Iigu res, bu t dccl ined to act as ani 11 term ed iary. On IS Novcm her he an d the A mcrlcan Alii bussudor confirmed to the Shall that they Iavou red nci ther a rnlli tary c rack d own nor a hd lea t ion ~ the Shall sh auld contl 11 UL' to try tor a political solution. On 19 December, when Azhuri's government like its predecessor was beginning to run into trouble, he advised that the possible new Prime Minister should try to secure support from religious leaders. lie diu not suggest that the Shah should give in.

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On 20 December the Ftll'ei~n Secretary conducted a further review of British policy, He concluded that it would be bust to follow the old naval max irn: "In a fog slow down but do not change course," Britain could not change allegiance without knowing more about the alternatives to the Shah, anti a real effort should be made to find out marc about them. But while the F(,O should continue to think about possible solutions to the crisis, they should not advocate any or be involved in advising the Shalt. From that point Britain began to move into a position of neutrality. On 22 December the Ambassador saw the Shah forrnally Ior the last time, repeating his curlier advice that a military crack down would not work. On 17 December the FeD debated whether it was not time to ease the Shah out of Iran, since nothing would be worse than the chaos then prevailing, but decided that this would have too serious implications for Britain's relations with other traditional rulers in the area. On 2 January the Ambassador saw the Prime Minister designate Shahpour Bakhtiar, but did 110t relay the conversation to uic Shuh since he thought that i l' asked he would have been obliged to advise tile Shah to leave, From this point Britain withdrew from involvement in the crisis, judging that il would be better 110t to become identified with any particular party until it was clearer who would come out on top. Unlike the United States Britain did not offer public support to the Bakhtiar government, or take sides between Bakhtiar and the alternative Bazargan government nominated by Khorneini. Arter the resignation of Bakhtiur on 11 February 1979 and Khorneini's triumph, Britain speedily recognised Bazargan's govemmenl in the company of other EEC members 011 13 February,

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It may now be helpful to attempt a summary of this review of British policy in Iran.

The British came to the 1960's with one major advantage, a close traditional relationship with Iran and its ruling regime, and one major disadvantage, a reputation for meddling in the country's affairs. In an effort to shed this reputation contact with political brokers was avoided troru t 954, and formal contact with opposition leaders eschewed from the mid 1960's.

In 1971 the solution of Iran's claim to the Persian Gulf Islands gave Britain a fine opportunity to profit from the traditional links with the Shah's regime without the encumbrance of a bilateral dispute. Every effort was made to please the Shah and to avoid giving him offence, and the commercial dividend was handsome. After the oil price rises in 1973 the need to maintain a good position in the lucrative Iranian market became so important that Britain could not afford to change course even if some of the Shah's policies might be distasteful,

However by 1975, as the Iranian economy begun to falter and criticism of the Shah's domestic policies to grow, Wh itehall departments were beginning to examine proposals for co-operation with Iran more closely. By 1977 Iran's economic position was such that major contracts were having to be renegotiated to allow for payment in oil, and the Shah was beginning to look less formidable. The British decided that they could afford to express reservations to the Shah about human rights in Iran. But Britain's commercial stake remained very important, and it was still thought necessary in Marcil 1978 to Jlatter the Shall in order to avert the threat or n trade boycott.

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By J lily 1978 there was xmsideruble speculation about the Shah's future and consideration was given for tile Ilrst time to ultcmativcs 10 u dose relationship with him. The conclusion was that there was no friendly opposition group which could be cultivated, and that the po!iuy should he to stick to the Shah "warts and all, while offering occasional treatrncn t for the warts." Although the FeO had become pessimistic by October abou t the Shah's chances of survival, they continued to believe that there was no realistic alternative to supporting him. The Ambassador urged the Shah not to attempt a military crack down, judging that this wouLd in any case be very hard to support, and encouraged him to continue to move towards a liberal democracy. Formal contact was established with opposition figures but Britain did not act as an intermediary between them and the Shah. As the Shall'S position deteriorated in lute October, Ministers stopped backing him personally in public and started to speak of progress under the constitution. In late December, when the Shah's position was even graver, Britain withdrew from an active role, in preparation for an attempt to establish a working relationship with whatever authority might emerge from the chaos.

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CHAPTER VIII

Policy of other Western governments

United States

TIle United States was the only other Western country whose position in the Shah's Iran compared with Britain's. Although the historical connections were not so longstanding, the relationship between the United States and Iran was very close throughout the period under review. What was to develop into a massive, programme of arms sales and military cooperation had its origins in lend-lease assistance during the Second World War and the establishment of the Military Advisory Group in 1950 to implement a Mutual Defence Assistance Agreement. United States support for the Shah at the culmination of his conflict with Mossadeq in 1953 helped to cement the relationship, and the Americans enjoyed even more frequent high level contact with the Iranians than the British in the decades that followed. The Shah occasionally felt the need to demonstrate his independence, for example by signing an agreement with the Soviet Union in J 965 for the construction of a steel mill, but there was no real doubt in the minus of the two governments that their interests lay in keeping close to each other.

In 1972 the relationship received a new boost when President Nixon on a visit to Tehran told the Shah that he could have any weapon that he wanted to buy. For the next four years the Shah was viewed uncritically in Washington as a staunch ally who deserved support. The reservations the British had at the time were largely absent, 110t least because of Ambassador Helms' policy or not reporting news which might reflect badly on the Shah. The US administration were also less inclined than other Western countries to tangle with the Shah over oil pricing po Jj!,."Y. For example a draft message to him at the time of his confrontation with the oil consortium in early 1973 was watered down on the insistence of Dr Kissinger,

In the later years of the Republican presidency some misgivings were beginning to be raised in Washington about the relationship, but it was not until 1976 that there was a review of policy, with particular reference to arms sales. By then, as the report put it, the US was committed to an "exposed profile", with large number of Americans in Iran to provide the necessary skilled manpower to operate advanced military equipment. With the election of President Carter in November, the US administration began to look more critically at their position in Iran, The Shah was no longer allowed to have all that he wanted, and the FIB aircraft was one casualty. In May 1977 the US Secretary of State expressed his concern to the Shah about human rights in Iran, shortly before the Foreign Secretary did the same. However the US remained heavily committed in Iran, and old habits died hard.

The President received the Shah warmly In Washington in November, amidst active protest by Iranian students, and salt! that 11e looked upon [ran's strength as an extension of US strength.

It has been shown that the United States felt no great sense of crisis as the Shall'S troubles grew in 1978, and that they saw no need for a review of policy provided that the Shah remained aware of US sensitivities over human rights. However US Embassy officers

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were in formal contact by the summer with opposition figures like Nasser Minachi, some time before the British. After the declaration or martial law in early September the US Government were less alarmed thun the Foreign and Commonwealth Office about the Shah's lu tu re, btl t their policy was essen tially the same: to bolster the Shah, encou rage I iberalisation. and argue against a military crackdown. The US Ambassador and British Ambassador often went together to audiences with the Shah. If anything, the US Government were less keen than the British to offer advice to the Shall: the State Department said that they were anxious to avoid the appearance of interference. On 10 September the President telephoned the Shah; accord ing to the press release he reaffirmed the close and friendly relationship between Iran and the United States and expressed the hope that the movement towards liberalisation would con tin lie.

When it became clear in late October that the trouble was more serious than they had earlier supposed, and that the Sharif Emami administration was likely to fall, the US Government reviewed their options. Britain at this stage was urging the Shah to contrive another civilian government and avoid a military crackdown. State Department officials were thinking the same way, believing that military government would not work and favouring a bolder attempt to find a caretaker coalition government with the Shah in the back seat. But the US eventually decided to give the Shah carte blanche to proceed as 11e wished. with .1 strong hint that military government would not be unacceptable. On 4 November Dr Brzezinski, the US National Security Adviser, telephoned the Shah and told him that he did not know of a military government which had failed. Two days later General Azhari's government was installed.

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It seems likely that Btezezinski if not other members of the administration believed that this would put an end to the trouble. The US decided to step back for a while and see what happened. The State Department said privately that they were in no position to substitute their judgement for the Shah's. and the US Ambassador apparently did not see the Shah for about two weeks. The. British for their part continued to argue to the Shah that harsh mili ary government would not work. Towards the end or the month it became plain that Azhari's government WI-lS not doing the trick, and the Americans initiated another policy review, 10 be supervised by Mr George Bull. Meanwhile the President continued publicly to

upport the Shuh in the absence or any alternative policy, expressing confidence in him on 30 November. After a Soviet warning against US 'interference" in Iran, he also emphasised frequently that he had no thought of this. The US Secretary of State told the Foreign Secretary on 9 December that they would stick with the Shah and help him to think straight.

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George Ball's policy review was produced in mid-December and has not been made public. According to an authoritative US account it recommended watching events closely, but advised against trying to tak a hand in shaping them. The argument is alleged to have been th at the US did not u nderstand what was happen ing in I ran a nd therefore could not control the situation, and that an active US role would do more harm than good. It may also have suggested asking others for thoughts; the US Ambassador in London called on the Permanent Under Secretary on 19 December to ask for ideas on how to resolve the deadlock. Whatever tile recomrnendations of the review it provoked u lively debate in Washington between the "activists" and the "non-interventionists". The State Department view is not clear. hut Dr Brzezinski was apparently on the side of the "activists", commenting on 22 December to the British Ambassador in Washington that the point was close when the Shah should go for "military government with the wraps orr'.

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The outcome of this debate was the despatch to Tehran at the turn of the year of General Huyser, the American deputy to the Supreme Allied Commander in Europe. By this time the country was in turmoil. with no effective government, and the British had withdrawn from involvement. The United States remain reluctant to discuss the exact nature of Huyser's brief. But it seems probable from tile evidence available that his principal task was to restrain senior Iranian officers from precipitate action, and to help them to negotiate a SOILJtion to the crisis with the civilian politicians and later Ayatollah Khorneini himself. In contrast to their encouragement of military government in November. the US were at this stage attempting to prevent a military coup d'etat. There is no evidence that Huyser and the US Ambassador were instructed to tell the Shah that he should abdicate. but according to one CLA source they suggested he should take a holiday. Meanwhile unlike Britain the US gave public backing to Bakhtiar, presumably in the hope that he would remain on the scene. By late January the Americans were trying to impress religious leaders with the threat of a communist takeover if the crisis continued, and to persuade the generals not to oppose Khomeini outright. According to the CIA the strategy nearly succeeded; they have hinted that the army cornrnnnder reached an agreement with Khorneini in early February, but that this was scuppercd by the street battles from 9 to II February and the abject surrender or the army garrisons in Tehran to irregular forces. which Khorneini himself neither anticipated nor wanted.

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It can thus be seen that US policy was less critical than British policy for much of' the period under review, and that the Shah remained <I close US ally despite the reservations of the Democratic administration elected in Novcl11berl976. When tile US became aware of how serious the Shah's troubles had become, they encouraged the formation of a military government. When the Shah's position was desperate they concentrated 011 trying to promote 11 compromise between the military and civilians. But they dill little if anything to hasten the Shah's departure, and contln ued to support him publicly un til he left Tehran.

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Neither France nor Germany enjoyed the privileged position of Britain and the United States in Iran, but both shared in the general Western approval of tJ1C Shah's role as policeman of the area and the Western urgency to maximise exports to Iran, The French did what they could to butter up the Shall, being us free as the British with high level visit to Tehran, and apparently came to the same conclusion as the British that attempts to cultivate the opposition would he too risky. lt is not known why Ayatollah Khorneini chose tu go to Paris when exiled from lruq in early October 1978, and there is no evidence that this was the result of a French initiative. However it sel'I11S likely thut at least one arm of the French administration judged that Khorneini's presence in France might help to guard French interests in the event or the Shah's demise, and ensured that he was aware that he would be allowed to enter France. Incidentally the French have not apparently profited politically since the Shah's rail from Khomeini's sojourn in Paris, though they have managed to avoid attacks on their Embassy.

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or the three Western pow rs di cus: ed, the Federal Republic's political links with the Shah were the leust close. A shadow W<lS cast over the relationship by the serious student riots during the Shah's visit to West Berlin in 1967, and there continued to be a public distaste for SAY A K1s activities in the Republic, None or this though affected German cornrnerciul interests, and German businessmen regarded fran as one of the most stable areas

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outside Western industrialised countries. Because of their good industrial reputation, they had less need than the British to fortify their commercial activities with political influence. A symbol or the close commercial relationship was the Iranian stake in the steel manfacturlng giant Krupp.

It seems likely however that the Republic were more restrictive in their arms sales policy towards Iran than their Western allies, In genera] they are less inclined to sell advanced weapons to developing countries, and in 1976 the Federal Security Council chaired by the Chancellor decided that the sale of Leopard tanks, a possible competition for Shir Iran, could not be authorised. The Shah later claimed publicly that an offer of sale had in fact been made which was financially unacceptable, implying that a decision not to authorise a sale had been taken later without commercial penalty to please the arms control Lobby. Certainly the British regarded the Leopard tank as a serious riyal Whatever the truth may be, the Germans would have been incurring less damage to their economy than the British if they refused a sale; German arms exports accounted for only 0.3% of total visible exports in 1975.

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CHAPTER IX

Losses to Britain rrom the fall of the Shah

What are the principal British and Western losses from the fall of the Shah? Iran is no longer an ally of Britain favouring close political and military co-operation with the West; instead it is at best distrustful of and at worst highly hostile towards the West and leans to radical Islamic states for friendship. The taking of hostages at the United States Embassy has been a stark illustration of this. Lran cannot now be expected to help protect Western strategic interests in the area, for example by allowing the presence of important defence facilities, by giving military assistance to Oman, and by a friendly naval presence In the Persian Gulf and Indian Ocean. Instead the regime threatens to export revolution to neighbouring pro Western states, and the fall of the Shah has introduced instability and uncertainty into the area.

T11e revolu lion has also removed [ran from the list of Britain's most important customers for civil and military exports, though some trade continues. Britain's arms manufacturers were particularly dependent on the Iranian market, and the collapse of the Slur Iran tank contracts has given rise to problems over Britain's future tank production. British invisible exports have also suffered.

The revolution in Iran has also had an adverse effect on the world oil market.

Although the Shah's oil pricing policy was often damaging to Western interests, his policy of maximum production helped to prevent shortages developing in the industrialised world. The revolution, with its intermittent periods of limited oil production, created general uncertainty in the delicately balanced market and Iran has since both cut production and pushed for higher prices .. TIle privileged access of Western oLi companies to Iranian oil has also been further eroded. These policies in the aftermath of the revolution have contributed significantly to the shortages and upward pressure on prices of recent months ..

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Finally the fall of an ally of the West whose position had appeared impregnable was a blow to Western prestige. This has given the Soviet Union the opportunity to argue in developing countries that reliance on the West stores up trouble for the future, and that the West cannot In any case be relied upon to rescue its friends when they are in trouble, The demise of CENTO presented the Soviet Union with another propaganda point, although the alliance was little more than a syrn bol of friendship and a convenient framework for bilateral military and technical co-operation.

Although there is no effective challenge at present to Khorneini the country remains unstable and fortunes could change rapidly again at any time. It is therefore too early to form flrm judgements on what Britain and the West generally havelost from the fall of the Shah. The continued absence of an authoritative administration in Iran is perhaps in itself the most damaging consequence of the revolution, since there is little scope for working to recapture lost ground, Any effective and stable government in the Iran of the future should have an interest in resuming many lost commercial und even military ties, whatever its apparent political complexion. So far the Soviet Union has yet to make positive gains from the Shah's fall to add to the West's losses. But even taking the most optimimistic forecast of the fu ture it is hard ly conceivable that the position enjoyed by Britain in the Shah's Iran will be regained. The following chapters will consider whether this serious setback for British interests could nave been averted or mitigated.

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CHAPTER X

Could the losses have been avoided?

0) the analysis

This Section will consider whether the shortcomings of analysls described in Chapter IV were avoidable and whether the sins of omission and misjudgernent could have been eliminated. Any political forecasting is fraught with uncertainty. and the Embassy did well to recognise most of the sympotorns of sickness in the Pahluvi regime which other prominent observers like the United Stales tended to overlook. It has already been shown that no-cno outside the FCD with the possible exception of the Israeli government was a better forecaster than the FCD. It would be very hard to convict the Em bassy and FCa of incompetent political forecasting when other experts were RI 0 caught unawares. However the FCO should ideally aspire to excel in political analysis, and would presumably not be content to be no better and no worse than the rest of the field. In retrospect it is possible to see that if the approach both or tho Embassy and the FCD had been different ln some respects there would have been a better chance or avoiding the mistakes and rnisjudgernents.

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in the first place it now seems questionable whether it was right in the early 1960's to decide that contact with opponents of tile regime should be avoided. Until that time the principal reason for taking an interest in the opposition was that it presented a threat to the Shah's regime, and much of the Embassy's activity in this field was known to the Shah. After 1963 the Shah's position appeared much stronger, and the opposition less relevant. British policy continued to be the cultivation of a close relationship with the Shah. and it was thought that continued contact with a discredited opposition would be misunderstood by him and not in any case yield much useful information. Many of the contacts therefore lapsed. After a number of years it became dear to the Embassy that if they wished to renew contact with opposition ligures still regarded as dangerous by the regime they would risk incurring the Shah's odium and prejudicing Britain's close links with the regime. As Britain's interests in Iran increased in lrnportance in the early ] 970's this became an even stronger constraint on the Embassy's activity. For the same reason little attempt was made to lise British military advisers in Iran to gain information about the armed forces. (The Americans banned all such ilctivity until Junuury 1977.) As the Shah's troubles built up in 1975 and I 97() the Em h assy wo uld have J I ked 1110 re in ton 11 u tion on I he po 1"Cl'1l I ions of old NtH lonal Front politicians and religious leaders, but they felt they would be running too great a risk if they revived the contacts who might have given them thi . 1f the Embassy had had more information coming to them from the National Front and the mosques in 1977 and 1978 it might have alerted them more to tlte continuing importance of Shl'a Islam as an opposition force all d to th e attitudes a r the trad itionul merchant classes, thus en hancing their chances of predicting trouble earlier.

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It is understandable that the Embassy should have felt in the 1970's that the risk of renewing contacts with the opposition would be too great. By then the Shah had become thoroughly accustomed to the ostracislng ofhls political opponents by the British Embassy, and any change in this policy would almost certainly have been seen as a sign of lack of confidence or even hostility towards him. The memories of British intrigue in the past would have added to his suspicions, British interests might well have suffered damage. But If contacts had never been allowed La lapse in the I1r1't place it would have been more difficult for tile Shah to complain. A feasible alternative policy would have been Co tell the Shah

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after 1963 t h ut Lhe Bri I ish were pleased with till' SUCCl~S~ of' the Wh ilL' Rc volu tlon, t hal they supported him wholeheartedly, und thal IlIl'Y would con lin ue 10 keep in touch with his political opponents in case or :1 renewed threat to him, This w01l11l huve been consistent with past British policy and the Shull would have had no clear cut ground ror politlcal complaint. II' the contacts ltad heen muintamcd with the Shuh's opponents. even if only period ically, throughout the late I %Os unci curly 1970's there would have been little d i Ificul tv i 11 i ncrcaslng til e now of in l'orma Lion l'rom them us th c need u rose from J 975.

One consequence of 111 i 111111<1 I contact with the SIHll1's opponents was that the Embassy hecn me depend cnt on S A V A K for ill 1'0 rill u t ion a ho lit i nl crnal sccuri ty problems. SAVAK themselves clearly under-estimated the threat to the Shah from mosque and bazuur and il would have hccn natural for this tendency to be reflected in Embassy reporting. II is now clear that the Shah himscll was the victiru of over-optimistic SAYAK reporting. 011(;(' the Embassy had shut themselves off the opposil ion the only sources of iuforrnution were SAVAK, rurnour lind the controlled press: or U1L'SC SAVAK seemed the most reliable and their hril'l'ings ll'ndc,d to he laken al race value, II would have been much easier for till' Embassy 10 arrive ul bulunccd judgements if lht:y had had more information irom opposition element: La set against t Ire SA YAK account.

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Secondly it would have helped till' work or tile lsrnbussv und Foreign and Commonwealth orner II' their collective knowledge o l' lrun's past history had been greater. For c xarn pic a grcu lcr undc rst lind i ng o r th c cons: il u I ionul rcvolu lion 111 igh! have alerted them mort' to tile dangers 0(' all allluncc between 11111~qtle and bazaar: the SlHll1'S behaviour earlier in his reign might have led them 10 cast more doubt on whether I he regime would crack down all uny lrouhlcmukers. In this bulh the lunhussy and (he Foreign and Cornmonweult h Office III igh I huvc been hcl pcd hy k l'~pi Ilg in dose touch wi t11 aC:HJ emir work on Iran: it has already been suggested Ihat various experts outside government attached more importuncu to religion as .1 pollticul rrm:ll. to Ihc Shull's abuses or his power, and La the intellectual climutc or lran. Closer contact wilh tile lsruclis might also have been beneficial, though it has been SCl'1l that discussion with oilier govcrruncnls would have been unlikely to improve the Foreign und Cornmonwcnlth Otflcc's performance. It is difficult for a Chancery or F01'l'igl1 and Cemmonwealth Ol'l'lcc dcpurtrncnt busy with day to day work to find time for background reading und discussions, but the experience in Iran strongly suggC!iI~ thai il is worthwhile. Ways in which Ilri~ might be achieved nrc considered in Chaptur Xl.

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Thirdly the review ul' unulysis !t'UVl1S till' suspicion that till' Ernhussy and (he F 0 de partrne nt w ere often 110 ( 011 LIl" surnc W:IVI.! length. III I 971 aml 1972 tile Em hassy's concern anOL!L the future in Iran, notably tI1l ... ucsputchcs in curly 1971 and the report in 1972 about the groundswcll or discontent urul unhappiness, never appeared to be reflected in London, and tile FeO d cpnrt me III dill not 111 ink it worth q 1I estion ing til c Ern bassy further about these mutters. By 197 J views were more in line. In 1974 and 1975 the roles reversed, with till' Embassy becoming more optimistrc on balance than the Foreign und Commonwealth Office dcpurtrncn l. In I mn s(llncl hing close to equilibrium was achieved. In April 1977 the Foreign und Commonwealth Office department appeared concerned about the Shah's future when lhc limhussy were still referring to .1 problem of national morale, und re mained 111 ore ncssim istic for (he I'l'S( 0 r I he year. They were u ncasy abou 1 the Embassy's despatch ill January 1978 but as in previous years they did not press tilt! Embassy to justify their view in [ill' IighL 01 their own doubts, and were themselves lulled into a false

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sense of security in the summer of 1978. It is 110t surprising that there were differences of view and emphasis among those concerned with the Iranian political scene. But it might have helped to sharpen appreciation of political events if both the Embassy and the department <It various times had made more effort to consider what lay behind differences of opinion, and to stimulate each other into justifying their judgements. Apart [rom ritual acknowledgements of despatches by the department, there is little sign for much of the period under review of a thoughtful dialogue between the Foreign ami Commonwealth Office and Tehran.

It also appears that from [976 the personal views of the experts on Iranian politics in the Embassy Chancery were morc pessimistic than those of the Embassy collectively as expressed in telegrams and despatches. TIle review by the departing Head of Chancery in June 1977 has been quoted; he concluded that discontent could coalesce more rapidly than at any time since the early 1960's, yet despatches of the time were not so pessimistic. The member of Chancery who had been responsible for lranian internal affairs since November 1974 wrote on departure in April 1978 that the intensity of opposition activity might increase, yet the Embassy did not appear alarmed during the summer. It seems reasonable to conclude that for some reason the right message was not communicated up the chain of command in the rnbassy.

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Lastly the Embassy appears to hove been reluctant at the crucial stages to convey bad news to the FeO about the polltlcal situation. In the mid 1970's there was a tendency in Annual Reviews to qualify or even refute what had been written earlier in the year. For example in 1975 the Embassy WiHIlCU in August or a malaise in Iran unu gave a long description of lrau's problems, but the Annual Review in December concluded that Iran's economic position was still very strong ami her stability unshaken. The two arc not necessarily incompatible, but the tone had changed from qualified pessimism to qualifled optimism without any apparent commensurate change in Lran. Similarly in 1976 a December despatch wrote of the strains ill the political system, and the conclusion that Iran was not in a revolutionary situation was hardly a ringing vote of confidence in the Shah. Yet the Annual Review the same month suggested that the internal political situation was perhaps marginally healthier than a year before and that Iran was still politically stable.

The important despatch in January 1978 recited a whole catalogue or problems Ior the regime. Three quarters of the way through it seemed inevitable that the Embassy would warn at the end that the Shah was in deep trouble, yet somehow it concluded with the reassuring thought that there was no question of a united opposition posing a significant threat. The member of Chancery who wrote shortly before he left in the spring of 1978 that the intensity of opposition might increase added almost apologetically that he did not want to be alarmist, In early September as the end of Rarnadhan approached the Embassy reported an air of considerable apprehension in Tehran, but were reluctant to commit themselves 10 a message thu; the situation was deterioruting: they wrote only that 'people were saying' that the change of government hall not defused tho situation.

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seems likely to have contributed to making them mom optimistic than a wholly objective analysis would have allowed. It is natural for a government with heavy commitments in a third world country to look on the bright side and to hope that the worst will not happen, but it can also be dangerous. The British performance over Iran clearly demonstrates the importance of separating in the mind an assessment of what it is hoped wlll happen to maximise the benefit to Britain. and what it is objectively believed will happen In the light of a dispassionate examination of the evidence.

If the Embassy performance had been faultless and all these pitfalls had been avoided, would they have been able to warn that the Shah's regime was at serious risk? There is no reason to suppose thai they could have done so before public opposition began to develop in mid-I 977. Even by the end of 1977 it is hart! to imagine the Embassy being at all confident that the Shall was tit risk, whatever the quality of analysis might have been. But by 1978, if the mistakes had been avoided, they would probably have been more alert to the potential dangers and more prepared to take obvious signs of trouble seriously when they came ill the New Year. Thus the Qom and Tabriz riots might have been regarded as the first signs that the Shah's regime was at serious risk, and the Embassy and the Foreign and Commonwealth Office might have been on a higher stale of alert during the summer.

In these circum tances policy options could have been considered earlier by the Foreign and Commonwealth Office from a better informed position; although the Foreign and Commonwealth Office considered for the first time in July the possibility of disentangling Britain from the Shah's regime this wus because of uncertainty at most about the future and hostility towards the Shah in Britain, not through any concern that the Shah was in serious trouble. If the Embassy and Foreign and Commonwealth Office had been at a higher state of alert and marc fully informed it seems Hkely that the Rarnadhan demonstrations and the declaration or martial law in September would have been received differently .. They would have beCJ1 in a position to conclude then with a fair degree of certainty that if the Shah did not stave off the opposition by repression he would have to yield absolute power quickly or be forced to leave the country.

(ii) 13 ritish policy before thc crisis

Before examining whether it would have been possible for Britain and the West to avert the coJlapsc of the Shah's regime in 1977/8, particularly if the political analysis had been better, it is worth considering whether earlier British policies contributed to the Shah's troubles and whether different decisions would have helped him to keep his throne.

Firstly it has been suggested that if the West had sold Iran fewer expensive weapons it might have benefited the Shah in several respects. The argument is that there would have been more cash available for ClViJ development schemes or political benefit to him, that he would have been less open to charges of personal uggrandisernent at the expense of the people, that there would have been less need lor the foreign military advisers who often became the butt of xenophobic political resentment particularly in towns Like Isfahan where there were large numbers, and that pandering to tile Shall'S vision of a powerful and effective defence force discouraged him from a realistic appraisal of the country's strengths and weaknesses. As has been seen some of these reservations were reflected in the Embassy and the Foreign and Commonwealth Office from lime to time, particularly in tile early 1970's. Many of them are no doubt valid; if 'British policy-makers had been able 10 foresee

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in the early 1970's that the Shah's regime would soon be threatened they would probably have concluded that sales of expensive weapons by the West were contributing to the threat and thai restraint would be wise. But most of the major British arms ticals with fran like the sale of tanks were in train by 1974, at which stage even with the best possible political analysis no one would have concluded that there was a threat to the regime. The argument that there might conceivably be rlsks in the future W:'lS therefore competing; with Britain's pressing immediate needs to export, and there is no doubt that it was right in the light of tile circumstances of tile time to exploit I he [ran ian III arket as energetically as possible.

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It is questionable though whether su fflcient though t was always given to all the implications of various arms sales. As has been shown there was a tendency for the Mi nistry of Defence to seize on any opportunity they saw to interest the Iranians in a sale without consulting the. Foreign and Commonwealth Office in advance. Once the lranians had entered into preliminary negotiations with the Ministry of Defence on a particular sale it became difficult for the Foreign und Commonwealth Oft1ce to oppose it without giving offence to the Shah; the need to avoid offending the Shall was in itself advanced on occasions as a reason for allowing a transaction. It is unsatisfactory for example that the important decision to approve the sale of the first batch of" tanks to Iran in 1970 was taken by the Foreign and Commonwealth Office Minister of State over a weekend without a proper written submission, largely because the Ministry of Defence negotiators preferred a fast pace. It is natural. that with competitors breathing down their necks the Ministry of Defence should have w ished to cond uct business quickly, and any rail ure to keep other Whitehall departrnents fully informed W<.JS no doubt a result of excess enthusiasm rather than a deliberate determination to run the show 011 their own. Nevertheless the hasty negotiation of arms sales led to some fairly serious miscalculations .. Firsl , insufficient consideration appears to have been given in February 1975 to tho possibility that the Blindlire system would fall in to the w rang ha nd s, Second ly the M i litary Ind ustrial Complex contract signed in February 1 976 began to C::J usc d i Ific ul ties sh o rtl y a ftcrw a rd s be ca use 0 f i nad eq u ate preparation ami administration causing the Foreign and Commonwealth Office to make the comment in 1977 that London shouldn't be bullied into similar errors of commercial j udgernen t aga in. Thirdly, the Sh ir Ira n contract signed in 1975 effectively meant that plans for future tank production for the British army had become dependent on the successful Iulfilmsn t of the order for Iran. This is not to say t hut if more though t had been given to the implications of these sales to Iran they might have been vetoed by the Foreign and Commonwealth Office, thus helping to curb extravagant expenditure by tho Shah and enhancing his political position. It is much more ltkeJy that 1110st of the sales would have still been concluded, if perhaps on u rather less arubltious scale, Even so a more careful consideration by the Foreign and Commonwealth Groce of all aspects of arms sales to Iran would have been better than a halter skelter rush to sell as much as possible. It is preferable to take any important decision with your eyes open.

It must be added that even if Britain had decided to curb arms sales to Lran on the grounds that heavy military expenditure threatened the Shah's position it is very doubtful whether her competitors would have followed suit. Britain would therefore have been seriously handicapping herself. The conclusion is that Western arms sales policies may well have contributed to the Shah's dow 11 fall, bu t that there was nogrou nd a t the time the key decisions were taken to pursue d ifferen t policies.

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Secondly the suggestion has been made that Britain and the West did too little to dissuade Iran and the other oil prod ucers from (J uadru pling the price of oil late in 1973, and further that the willingness of the West to supply [ran with expensive weapons in [he

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early part of the decade went some way to creating a demand for increased oil revenue. It is argued that if the West had been less keen to sell Iran weapons it could barely afford, and had put up a stiffer resistance to oil price rises, the Shah might never have been able to embark on the over ambitious expansion of the economy in 1974 which was a principal cause of his eventual downfall. The preceding paragraphs argue that for Britain arms restraint would not have been practical politics, whatever the impact or arms sales on the Iranian treasury may have been. Moreover it is now the view of most experts on the world oil market that by 1973 it wa inevitable that oil prices would rise sharply since prices had been depressed for some years by comparison with other principal commodities in world trade. Even if Whitehall had foreseen the possibility earlier of a rapid rise in prices, they would have wanted to avoid a quarrel with the Shah. They had already come to the conclusion earlier in the year that at that stage Britain needed han more than Iran Britain. Even if they had been spoiling for a Fight it is improbable that they would have been able to marshal the developed world into concerted [lid effect ivc opposition to lran and OPEC generally. The United SLates government was inclined to let prices find a natural level, though they apparently did not anticipute that the] 973 increases would be so large. Faced with the choice, oil companies tended to prefer stable supplies to continued low prices, and would have been reluctant to see major rows with Iran and the other more radical producers leading the OPEC pack.

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It was galling for the British gave rnment to be told by the Shah in late 1973 that he would act as a moderating in l'lucncc aud then sec hi 111 behave q LI i to d iflcren tly, and the British may have been too Inclined because or their dose relationship with the Shah to take what he said at face value, But in all the circumstances il is hard 10 sec what more Britain could have tI one to try to prcve n t t he oil price rises. The Shah must be held responsible for his own decision and for the consequences,

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The third area of interest in Britain's relations with Iran before 1977 is the relationship with the Shah himself. LIl the early years of his reign until the defeat of Mossadeq the British regarded the Shah as weak and had no reason to anticipate difficulty from h.iTTL From 1959 the Shah's political stature and power gradually increased, but the British saw no need to be fearful of him. After 1963, as has been seen, British contacts with the opposition to the Shall lapsed and British policy increasingly focussed on keeping the Shah happy. The iranian threat to Bahrain and In ter to Abu M usa and Turn bs islands was seen by the Foreign and Commonwc .. rlth Office to add to the need not to offend the Shah if British interests were to be protected. The deliberate British policy after 1971 of avoiding any action which might offend the Shah has been described in Chapter VII; thus for example efforts were made to discourage criticism or his regime hy the British media. requests by tho lranian authorities for commercial or military co-operation were granted whenever possible, and discussion with the Shah about the political development of Iran was considered too risky. In 1972 the SI1<111 was shown a draft text of a reply to a parliamentary question on torture in Iran in case he should object to it. In 1973 a flattering letter was placed in "The Times" to placate him after he had objected to a BBC Panorama programme, and he was led to believe that the journalists concerned had been remonstrated with. In 1974 it was argued by the Embassy that if the Shah was 110t obliged over his interest in new generation Chieftain tanks Britain's relations with Iran would suffer. By 1975 Whitehal1 had become rather less inclined to flatter the Shah and accede to his requests, but it was not until May 1977, when the Foreign Secretary spoke to him about human rights, that it was decided after a gap of some years to broach again with the Shah the subject of Iran's political development.

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The rationale 0 f this policy is easy to understa nd. By the end of the \960's the Shah was the und isputcd leader 0 I his country, oconomic and pol i tical u Ifairs were st ill sufficiently uncomplicated for him to be able to exercise direct personal control, and his word WMS law. If he could bc persuaded to supporta British cause, that cause apparently prospered. Flattery and careful massage of the Iranian ego was a well tested means of achieving results, and Britain could capitalise on her traditionally close relationship with the Iranian Court. By keeping the Shah sweet Britain uvoklcd serious difficulty over Bahrain and Abu Musa and tho Tumbs, and it SCCIllCd the obvious course La continue ln the same vein after British military withdrawal from the Culf in December 1971. Many of Britain's commercial successes appeared to derive from this policy.

ln pursuit of this policy Britain took steps to defuse any potential quarrel with the Shah before it became serious; thus in the early 1970's there were few lasting disagreements or clashes with the Shah. It was assumed that if the Shah viewed any British action u nfavourably he would react very bad ly ami see that British interests su ffered, However this assumption was never seriously put to the test; the Foreign and Commonwealth Office apparently considered that the risks of calling the Shah's bluff were loa great. They persisted with this view as late us March 1978, when the Defence Secretary was sent to butter up the Shah after a series or problems in Anglo/Iranian relations had led to a threat to damage British commercial Interests,

In fact the Shah's behaviour during the 1970's suggests that his bark was probably worse than his bite, When Whitehall became more sceptical ill 1975 about the need to flatter the Shah if British interests were to be safeguarded, the Shah accepted a number of British decisions withcquanlrnlty which it was supposed might offend him. The Iranian threat to make trouble for Britain if Iran was not granted a special relationship with the HEe came to nothing, Despite the Embassy's fears, tile Iranians made no dIfficulty when opportunities to purchase shares in British Leyland find Burrnah Oil did not materialise, The British decision in late 1974 n at to proceed with co nstru ct ion 0 f the t h ro ugh deck c ru ise r which the Sh all had wan I ed was read ily accepted, the Em b assy ha vi ng i.I rgued in April 0" th a t year tha t i r the Shah was disappointed Britain would lose a considerable amount of political stature. When the Foreign Secretary spoke- to tho Shah about human rights in May '[977 the Shah was prepared to listen and did not retaliate against Britain. By 1975 the Shah had begun to realise that Iran was raced with economic difficulties, and may have been less in a mood than in the optimistic years of 1973 and 1974 to confront Britain. By 1977 his liberalisation policy had begun, and there was no doubt less risk than in earlier years in talking to him about Iraniun politics. Nevertheless there is no example from 1972 onwards of the Shah taking serious action against British interests in retaliation for acts for which he may have held the British government responsible, and there must be doubt whether he would have been prepared to go beyond threats.

On the face of it the fact that the Shah took no serious action against Britain is a credit to British diplomacy. Unfortunately the policy of flattering the Shah and acceding to his requests in order not to take. the risk of conlrontation and possible damage to British interests entailed cost as well as benefit. The pol icy meant that from the mid 1960'5 onwards the Shah was no longer able to benefit from frank discussion of all Iran's problems with his closest allies, Britain and the United States. In earlier years members of the British and Un ited States gcvernmcnts and I hclr representa rives ln Tehran had regularly discussed local politics with the Shah; this petered out as the Shah became stronger and the risk of offending him wus perceived to be greater. By the 1970's such discussion was taboo, and

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most important meetings with lite Shah were concerned only with foreign affairs and commercial anti defence qUL:S1 oris, At the same time, and partly us a result, the Shah behaved in an increasingly haughty fashion and CUlm' to regard himself HS immune from criticism. It was never easy for Iranians to speak frankly to him, and those who were prepared to, including the Minister of Court Asadollah Alum, dwindled to a very small number. In these circumstances the Shah became increasingly detached from real lire in Iran. This contributed to his over-ambitious plans for his country in J 972, in which he underestimated the capacity of the country to undertake rapid economic development, and to his failure to take opposition, particularly from the religious establishment and the bazaar. sufficiently seriously.

It has already been suggested in Chapter IV [hut if Embassy contacts with lhc op position had not been allowed to lapse in the mid 1960's it wou ld IUlVe been difficult for the Shah to complain about 1i1L'I11. By the sumo token it would have been possible to continue to discuss Iran's politica! alfuirs [runkly Willi till' Shah. This would have been natural for allies in CBNTO with closely related regional interests, and the British and the Americans could have portrayed themselves quite sincerely as wanting to do all they could to safeguard the Shah's position. No doubt the Shah would often not have listened to British views, but the British could still have ITI:.lUC all important contribution to the Shah's thinking about the political development or his country, It is not possible to assess with any accuracy what contribution this might have made to preventing the regime's collapse but at least the British might have been able to warn the Shah earlier that he was raced with scrio LIS pro h10m8. Once the Sh all h ud become accustomed 10 de lercrrcc and <.;3 reful avoidance or dllFicult subjects, il was very difficult for the British or Americans to change tuck. The attempt by the departing British Amhussador in curly 1974 10 talk about the generation g:IP was ignored by the Shull. As the Embassy pointed out in 1974 there was a real risk tluu uny attempt once again 10 broach the subject or lraniun politics and tile style or the regime, alter u gup or runny years, would be wrongly laken to imply reluctance to support the regime. It was not until after the declaration or martial law in Tehran in September 1978 that the Ambassador spoke openly to 1 he Shah about the country's problems, ami by then most or the damage had been done.

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(iii)

British policy during the crisis

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ThL: paper concluded in section (l) of this chapter that even j f the pil fulls of political analysis hall been avoided the Foreign anti Commonwealth Office would have no reason to be confident 31 the end or 1977 that the Shah's regime was tit risk. It would not therefore have been able to make policy on this assumption. The section continued that with better analysis the Embassy and Foreign and Commonwealth Office would have hecn more alert to the dangers in the surnrucr of 1978 and considering policy options from a better in formed position; it can eluded tha t after tJ,C declaration 0 r martial law in Tell ran in September 1978 they would have been able to decidu with a firm degree or certainty that if the Shah did not slave off (he opposition by resorting to oppression he would have had to yield power quickly or be forced to leave the COlIIl try.

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Western policy towards Iran in 1977 lind 197~ could have taken any number or different forms, and it is not practicable to consider all the options in detail. But it is possible to divide them into three broad categories. Pirst Western governments, in particular

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Britain and the United States, could have advised the Shah to continue with his policy of liberalisation while favouring the maintenance of an important role for him in the nation's affairs. Secondly UU!y could have advised the Shah to abandon llberallsation and crack down on the opposition using the amy as necessary or at least 110t oppose this, and continue La support him whatever the public reaction in the Wesl might have been. Thirdly they could have advised the Shah that he would not he able to stand for long against the opposition and that he should surrender his powers immediatelyto an elected government while remaining in Iran perhaps ;.IS Head of State with ceremonial responsibilities.

Th e first a pt ion was j n a ny case Britain '5 pre fe rrcd poli cy th TO ugh 0 ut ! 977 u nd 1978. As has been shown, the decision was taken to continue to support the Shah in the absence of any acceptable alternative, anti Iiberallsation was seen as the befit way for him to safeguard his position .. The British advised the Shah not to attempt a crack down, in the belief that it would not work.

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I f Britain's political analysis had been better ~ would the Foreign and Commonwealth Office have been more likely to adopt either of the ather two brand policy options, and if so would they have been more likely to preserve the 81.13h's regime'? It is conceivable that the Shah could have averted the revolution of late 1978 or at least postponed the crisis for an indefinite period if he had made a determined decision to abandon Iiberalisatlon in the autumn of 1977. At thai time he was undecided whether repression or liberallsatlon was the best option. intimidating the opposition but at the same time continuing to promise reform. His best course might have been to revert to strict rule, and at tile same timo to adopt a realistic and socially responsible economic policy designed to spread wealth more widely. Whether this is so or not. Britain and the United States would not have been concluding even with the best possible analysis, that the Shah's position at this time was seriously at risk. If therefore the Shah had taken tho decision to crack down both governments would have been more likely to express reservations than toencourage or condone his reaction. By September 1978 Britain and the Un ited States could have been working on the assurn ption that the Shah was faced with a choice of repression or giving up power if he was to save himsel r: It is arguable that t he Shah could still have saved him sell' a t that stage by determined repression, Of at least staved off defeat; Khomcini was still in Baghdad and the strike weapon had not been discovered. Some United States officials believe that at that stage his cause was not lost. But even if Britain and the United States had been confident that mill tary repression was req uired to save the Shah it is. doubtful whether the Shah would h ave agreed: it has 81 read y been suggested that he had a nat u ral ave rsio n to the use 0 r military force for politicul purposes. The West might have bern faced with having f o contrive the removal or the Sh all and II is replacement hy !1 III iIi tary govemmen t to preserve the character of the regime: quite apart from the fad that this would have been contrary to the West's objective or keeping the Shall in power it would have required a dramatic policy initiative with dangerous implications for regional stahllity and for East/West relations. In any case, even armed with their best political analysis the West could not. have been sure that repression would succeed: among many uncertainties it was doubtful whether the security forces would remain united in the face of persistent challenges on the streets.

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There is little doubt that by October it was too late for military repression, and that the British were right to advise the Shull at..:cordlngly. The military had no means olbreaking strikes, and Khomeini was by then in full cry. The Americans evidently hoped that General Azhari's government which came to power in early November would do the trick, but even if the Shah and Amari had favoured military repression it is very unlikely that the opposition would have united. By then till;' momentum was too great.

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The third broad policy option - advising the Shah that he should surrender his powers - bears close examination, There is no reason why the West should have thought it necessary before September 1978 to take such a drastic step. Even if they had the Shah would not have agreed. However by September, with the benefit of the best possible political analysis, the West could have concluded that the Shah could only be savedand a stable broadly pro-Western regime preserved if he gave up his power to an elected government, The Sha h himsel r would have had to he persuad ed that til is was his best cou rse, He would have been highly suspicious of the West's motives and assumed a plot against hlm. On the other hand he was weakened and demoralised by the display of opposition to him, looking for a lead lroru any friend who wOLlIJ give it. ami already committed to libcralisation, I. t wo uld have been :111 easier task to persuade hi III .i f the West had maintained a frank relationship with him over the years. Opposition politicians like Bakhtiar, Bazargan and Sanjahi W01..1ld probably nave regarded irnrned late velectlons lind a promise of constitutional government as 11 victory, and at that stage were willing to countenance a role for the Shan. If the British and United States Embassies had remained in touch with such men over the years they would have been able to help smooth any transition of power. The other major problem would have been to persuade the military that such rapid change would be in their interests. It scams likely that military commanders would have been prepared to take their lead from the Shah and that provided that some role was reserved for him they would have accepted his judgement. The West could probably have kept attempts to influence the Shah private, and in any case it would not have been too hard to defend the promotion of democracy; the risk of damage to East/West relations would not necessarily have been great.

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Britain acting alone could not have contemplated such a policy and it would have been essential to persuade the United States to co-operate and take the lead. This would have been out of tile question unless both Britain and United Stutes analysis had been exceptionally good, Hod both governments had come to similar conclusions in September. Even then it would have required great politlcal resolution hy both governments to take such a prominent part in the determining of a third country's future in order to protect Western interests. The temptation would always have been LO sit back and hope for the best, and not to risk allegations or unj ustifiable interference in the affai rs of another cou ntry. In practice the uncertainties would probably have been too great in September even with the best political analysis for Western leaders to be persuaded that intervention of this nature was Iu s ti fled, But in t heory it could 11 ave work ed.

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It remuins to consider whether the British could have taken better pollcv decisions in the light of the political analysis that was in fact available to them during the crisis in 1978/79 and the circumstances of their involvement in Iran. The decision to continue to favour the Shah's survival in power in the autumn of 1978 when his difficulties were obvtously stemmed from three broad factors. As has been shown the Foreign and Commonwealth Office saw no prospect or the opposition LO the Shah protecting Westem interests and in any case had no a ppa rcn t means of w innlng their can [ldence. Ln the second place they feared a military coup and possible civil war if they were thought to be abandoning the Shah to his fate, Thirdly they were reluctant to be thought to be interfering In Iranian politics because of the dangers of II hostile reaction within [ran and of difficulties in East/West relations.

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The possible permutations of British policy in the light of the political analysis actually available arc also numerous, but there are three which have been the subject of some speculation and are worth consideration. First, should Britain have tacitly accepted a

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military coup rather than udv sed against it? Second, could Britain have Jane more to mediate between the opposition and the Shah rather than leaving the bargaining for the Iranians to conduct themselves? And thirdly would it IHlVc been better to dissociate Britain from the regi me til some ell rly pain t like 111 id October :.II1d let eve Ills take their course'?

The idea of a harsh military government acting in the Shah's name may have had superficial attractions to some. But it has already been suggested that by late October when the Foreign and Commonwealth Office were fairly confident that the Shall was on the way out it was too late for military government to succeed. If tJH! promotion of military government was to be the West's policy it would have to have been tried earlier.

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British mediation in the crisis might well have been a possibility if the Embassy had remained in touch over the years with opposition figures and had their confidence. But to have been effective it would have had to take place earlier than the stage at which the Foreign and Commonwealth Office felt confident that the Shah was to fall. By late October opposition figures who might conceivably a month or so before have successfully taken over power in the country as Prime Minister were almost eclipsed by Khomeini. Mediation with Khomeini himself would undoubtedly have been fruitless because or his deep seated distrust of the British and his unwillingness to contemplate compromise. Britain's decision to withdraw from an active role in late December 1978 was also a realistic one. There seemed to be no question at that stage that Khomeini would be the dominant figure in Iran after tile Shah, and to support Bakhtlar publicly would only have been to court hostility with little chance or comruensura tc gu i 11. The Un ited Sta tell were in .1 111 U ch better position to influence the armed forces ami were busy doing so. The British performed a more useful role as second Western string by keeping apart from this activity.

If the British had broken off contact with the regime at an earlier stage there would have been a number of penalties and probably no benefit, Their ability to protect the large British community in Iran. which depended on continuing co-operation with the authorities loyal to the Shah, would have been greatly reduced. The Embassy would also no longer have been able to advise the Shah against harsh military government, and to maintain the contacts wh ieh allowed them to be well in formed about pol itical manoeuvres by the regime. I t seems very doub tful that they would have gained any cred it from the opposition: by the time the revolution had begun in earnest the British were far loa thickly tarred with the Shah's brush to be able to redeem themselves. They might even have earned themselves some contempt by seeming to change sides when the going was laugh.

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Looking back over the autumn of 1978 Foreign and Commonwealth Office Ministers concerned with Iran would probably not award themselves full marks for their policy and the way In which they implemented it. For example the Foreign Secretary's 12 October interview with London Weekend Television perhaps went too far in justifying British support for the Shah at a time when the Shall's Future was seriously in doubt; it was unfortunate that transmission was postponed for a week and that during that time the Shah's problems had begun to look even more serious. But in the circumstances in which they found themselves in late 1978, and given the political analysis which was available to them during the crucial period, the course which they followed still seems right.

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CHAPTER Xl

Conclusion: Lessons for the FeO

The paper has so far suggested that judging by the highest standards there were same failings in the conduct of British policy towards Iran. In conclusion it seems appropriate to consider whether there are ways ill which these failings might be avoided in future.

(i) Analysis

With hindsight It is easy to see that Insufficient time was devoted to analysis of political developments in Iran. Yet pressure on resources will always mean tint there are fewer officers well qualified for political reporting than posts for which there are goad grounds, and some way has to be found to set priorities, By any standard Tran from 1974 was a country of major importance to British interests. This was well recognised by both the Embassy and FCD. But the response by the FeO to this new situation was to concentrate resources, including Persian linguists, on the commercial department of the Embassy. Although the post of Head of Chancery was in due course upgraded, and an officer allocated to economic reporting, political reporting to the PCO department remained the responsiblilty of only one Chancery officer who also had many other routine Chancery duties to undertake. If political reporting had been given (I higher priority at the same time as the resources of the commercial department were increased, it would have been possible for the Chancery to acquire a more detailed and profound knowledge of tJ16 country.

The lesson to be drawn from this is that even if reo departments recognise that a country has become increasingly important for British interests, they do not necessarily arrange for extra resources to be devoted to political work in that country. One way of avoiding this mistake in future might be to institute an annual exercise in which heads of departments or supervising under secretaries were asked to nominate countries where they believed important British interests to be at risk in the event of political upheaval, particularly if they were newcomers to this category. It might he possible to exclude the developed world, where such criteria would normally always apply. In the developing world it would be feasible to whittle an inltial list down to half a dozen or 0 countries, which could be designated for example as political risk countries. It would then be for the responsible geographical departments and the personnel departments to ensure that appropria te measures were taken. These might include some of the following.

(8) stalling or posts in political risk countries.

The first step would be to ensure that the staffing of the Embassy Chancery was adequate to meet extra demands that would be placed upon it. There would ideally be at least one officer working full time on internal political affairs, without other distractions like the arranging or visits. These officers should have ample opportunity for touring the country; as has been seen in chapter III it was noticeable in the case or Iran that officers' lour reports often reflected more accurately the political mood of the country than reports to the FeO from Tehran. They should speak the local language. They should remain at the post for a full tour, and could perhaps be encouraged to stay longer provided that their career development wOLLId not be impaired. In earlier years Oriental Secretaries fulfilled this

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role in some Embassies, but the modem career structure presumable prohibits reverting to appointments of that kind. In general, it would be wise to make every effort to post to political risk countries officers who have previous experience there, thus adding to the sum of the Embassy's knowledge. This is of course a counsel of perfection, but provided that the system was applied only to a small number of posts it mlght be possible to go some way towards achieving it.

(b) retention of papers at post

in political risk countries it would be important for officers to be conversant with the work of their colleagues in the past, so that they were better able to bring the present into perspective, All too often an Embassy's store of files is very small, and it is not even possible to consult Annual Reviews more than a few years old. In many posts it is difficult for security reasons to retain papers, particularly the more sensitive and therefore often the more interesting ones. Nevertheless it should be of overriding importance for copies of notable work, particularly despatches, to be available.

ee) officers in the FCO

It is not reasonable to expect officers in till' FeO dealing with the affairs of a particular country to have the detailed knowledge or the Embassy. But in the case of political risk countries it would be wise for at least one out of the three relevant officers, head of department, assistant head of department and desk officer, to have been posted there. Desk 0 fficers in particu lar should ideally be given some tl me to read and think about the COLin try in which they are to work, both before und during their time in the department, rather thun be concerned lull lime with day 10 duy chores. In u dcpurtmcntul history or British policy in the relinquishment of Abadan Rohan Butler wrote: "lt was something or a feat for an official to hold his own efficiently from day to day in a tossing sea of files, let alone to look back to historical precedents and warnings or forward to the remoter but in the long run possibly more important implications". Little progress has been made since.

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(d) the Embassy and the rca department

[n the case 0 f political risk countries it is Im portan t that there should be a lively exchange of views between the Embassy and the FCO, and that differences of opinion should be explored. Despatches, which are usually an Embassy's most carefuUy considered work, deserve equally careful consideration by departments and for high risk countries it would be wise always to submit despatches on political developments at least to under secretaries.

(e) experts outside government.

It is important For rca departments dealing with political risk countries to be in regular contact with academics and journalists also working on those countries; at worst this gives them an opportunity to test their views on other interested parties and at best they may gain access to additional knowledge and new theories. One way could be for the FCO to sponsor seminars on political risk countries, to which experts would be invited and at which the proceedings would be private, Not all the qualified academics and journalists Would necessarily wish to attend such seminars, but they could be useful for FCO departments even without II full attendance, ln any case departments should ensure that the rCa is represented when possible at seminars, dtscussions and lectures on poUtical risk countries organised by other bodies.

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(f) Research Department

Research Department would have a particular importance in the work on politicaJ risk countries, as the repository or relevant background knowledge. It would be wise for the Director of Research to ensure that there was an officer with a thorough knowledge of each political risk country on his stuff; ideally a political risk country should be covered by one officer only, Research Department would also need to take care to maintain their relevant contacts with the academic community.

(g) The Planning Staff

In the normal course of events the Illanning Sluff would aim to pay careful attention to political risk countriesand offer to undertake additional work on them as necessary. It might be useful to ask them regularly to postulate improbable scenarios and to challenge the department and Embassy to refute them. This might be seen by them as a thankless task, but it could well result in the development of new and useful perspectives even if it did not alter established Views.

(ii)

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There are three principal conclusions which may be drawn from the study.

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(a)

hopes and expectations

A contribu tion to the journal "World Poll tics '1 in October 1978 remarked that polley premises constrict perception as adminlstrutive workloads constrain reflection. It is only too easy to allow hopes fOT the future to affect perceptions of it, with the result that analysis is not wholly objective. In the cas!') of political risk countries it is particularly important that because the FeD fervently hopes that there will not be a threat to British interests it is not reluctant to sec signs of trouble when they emerge.

(b) opposition to thegovemmcnt in power

The experience of Irun suggests that in two respects it was a mistake to allow contact with opposition figur-es to lapse. This deprived the Embassy of sources of information which could have made an important contribution to political analysis, it also meant that at a stage when tile British might have wished in certain circumstances to provide B transition of power from the Shah to an elected government they were handicapped by lack of familiarity with the opposition. This handicap could have been avoided.

(c) autocrats

The Shah was always u difficult man to deal with, and flattery often appeared to be the best weapon to deploy to avoid losing his favour. But the last lesson of this study is that the West took him too seriously. It tended to be assumed that he was ready and willing [0 damage Western interests if offended, whereas in practice he rarely behaved in this way, The experience of lran suggests that in dealing with .an autocratic government of broadly pro WesternaUgnment the West will secure her interests better with an honest and frank relationship with that government maintained over a period of years ..

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ANNEX A

Extracts

1 August 1961:

Sir Geoffrey Harrison (Tehran) Despatch No 105

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'Some Causes ofInstability in Iran'

EP 1015/229

"Whether at any given time the degree and extent or popular discontent in Iran are such as to be likely to compel some major upheaval is a question which constantly exercises observers, and is of course a matter of political judgment. But whatever the answer may be it is a luct that disaffection is widespread and intense, and that the

regime is in consequence fundamentally unstable One abiding cause

is doubtless poverty and the resultant sense of insecurity."

"Today, however, instability is such that some observers believe that the last days (or the last years) ofthc Empire of Iran arc at hand, for the reason that the causes of instability seem to be more acute now than they have ever been before. The collapse of the regime mayor may not be imminent: but certain particular conditions prevailing in han today undoubtedly aggravate the endemic causes of instability, and some of these I have the honour to examine in the present despatch. "

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"Perhaps the most important feature of the present situation in this connexion is that an old-fashioned society has, in a relatively brief spell of time, been invaded from outside by new ideas. and Iranian isolation has been abruptly brought to an end. "

"On to the simple economy supporting the langu id society 0 f Qaja r Persia there has been superimposed in 50 years a petroleum industry which yielded last year more than £100 million as the State's share of profit. And in the last 10 years more than $ 1 billion of American assistance. in the form of development loans. budgetary aid and military aid, has been injected into an economy based on a budget of less than £.50 million in 1953 and even today of no more than £400 million.'

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"All this is profoundly disturbing to traditional ways of life in Iran."

"The fact is that, as the world becomes one world, an international cosmopolitan standard of living becomes the universal object of desire without regard to national possibilities. Although it is therefore true that the standard has been substantially raised in [ran in recent years, it has not been raised fast enough to keep pace with awakened demand and has increased too unevenly to give social or political satisfaction to an alert public opinion. On the other hand, it has risen too fast and too ani flclally to a void severo d lslocation 0 r the national economy and painful disturbance of the social order".

"One is tempted to Forecast the collapse of this country under the burden of its troubles. But there is, as Adam Smith once pointed out, "a great deal of ruin in a nation", and Iran has hitherto proved itself a singularly unprofitable field for the prophets of doom".

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"When, in 1963, the. present Shah embarked on his own sweeping and radical programme of reform, including the break-up of the large estates and the emancipation of women, he consciously knocked away two of the traditional monarchical props, namely the landowners, who could command support from those working or living on their estates, and the mullahs, whose political power lay mainly in their appeal to the ignorant masses and their capacity to drum up mob violence in the bazaars, The Shah emerged triumphant over these same forces after the suppression of the mullah-inspired riots of June 1963. But he has not yet acquired lor himself any compensating new sources of organised poLiLical support. True that his reforms have brought him increased prestige and popularity with the peasant masses, traditional supporters of the monarchy, and with a growing section of the women of Iran. But peasants and women are still disorganised and far removed from the centres of power."

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II 13 February 1963: Sir Geoffrey Harrison's Valedictory Despatch

EP 1015/38

"Iran's problem is how to conduct this social and economic revolution without slipping into a political revolution,"

"The irony of the situation lies in the fact that sometimes the measures taken within the narrow limits of the present social and constitutional framework actually reinforce internal pressures until they threaten to pull the framework apart altogether. On one hand there is an angry impatience, chiefly amongst the professional classes and the bourgoisie for reform and progress, on the other there are the vested interests concerned to preserve the status quo, the landowners, the Mullahs, the political timekeepers and the traditionalists. In neighbouring countries this Gordian knot has been cut by revolutionary action. ln Iran the Shall still hopes to untie it by peaceful evolution,"

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18 August 1966: Sir Denis Wright (Tehran) Despatch No 33

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EP 1015/36 'Prospects for tho Shah's Regime and Possible

Repercussions of his Demise'

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"Moreover. the Shah's reform programme has so far been basically economic and social in conten t. Probably righ tly, he seems to have decided tJ13t he could only carry his reforms through if simultaneously he tightened his political grip on the country".

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Extracts from Iran Faces the Seventies, edited by Ehsan Yur-Shuter (New York, 1971). Extracts selected from Chapter 8, 'The Bazaar as a case study of religion and social change', h y GlIst'IV Thaiss, pp. 189 2 16

pp. 190-1

p.192

p. 193

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pp. 193-4

The Shi'a 'ulerna in Iran were, during the L 960s at least, for the most part not in opposition to modern science or technology, and were among the most nationalistic proponents of a strong. independent, and economically viable "modern" [ran. Although there is little, if any, real opposition to modern science and technology among the 'ulema, this does not mean that the social, ethical, and moral accompaniments 0 r Western civilisation do not meet with opposition. The 'ulema, however, are not alone in voicing concern over the rapid pace of social change and modernisation in Iran today. One modern writer who Is perhaps also representative of this concern is Jalal AI-e Ahmad. In his work Gharbzadegi (Wcsternisation) he is indignant about the pace of modernisation and the deviation from the moral and ethical values of Iran's national tracl itions and patterns of behaviour. He is also, it should be noted, very much against a "superstitious and hypocritical clergy" while he himself LS from a clerical family. One who has lived in Iran during the 1960s cannot help but feel that such views are not isolated or unique. Nevertheless, the 'ulema, partly because they are more organised and articulate than many other segments of Iranian society that argue a similar viewpoint, are in the forefront of the conflict. As E Sunderland phrased it, in speaking of situations that evoke opposition to Western influences, "a religious stance is often only symbolic of a perception of threat to the total cultural configuration of which religion is but a part."

In the words of one of my bazaar in formants, "The rowhaniyun, because they have the kalemat, rax~yat, anti Qor'an-c Mohammad in their hands, have complete influence over Muslim people, especially the Shi'a, and people will respect them .... because they are rowhaniyun and .... will obey what they ask them to do."

despite some differences in the interpretation of religious matters, there has always been a constant dialogue and interaction between the 'ulema and the bazaaris.

the sociocultural milieu of the bazaar and its immediate environs provide most of the flnancial and moral support for the rowhaniyun of Tehran, and elsewhere as well. Most of the influential and highly respected members of the 'ulema in Tehran use the bazaar and its mosques as their center of operation. As a consequence, much of the future of the 'ulema in Its present form is intimately linked with the future of the bazaar.

While it is obvious that the commercial idiom provides the raison d'Stre for the existence of the bazaar, it is not so obvious that religion is the cement that binds the structure together. The religious idiom is the basic common denominator in the bazaar and functions to create crosscutting ties and bonds among bazaaris of different guilds and professions.

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pp, 204-5

pp.206-7

p. 108

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In lran <I good deal or the opposition to tho government. especially in the bazaar, takes a religious guise. Great pleasure is taken by many of the younger generation in composing poems, ostensibly about various or the Imams and their persecutors, especially the events at Karbula, but recited wi th SlI btle implicatlons and d cub lc moan i ngs, In 1963 1 he government suppressed a resistance movement that opposed the progressive White Revolution, and which was led by Ayattollah Khornuynl. Ile continues to have some influence over the young tollab (students or religion) and religiously oriented youth in the bazaar. His views that Islam and politics ate OIlC 11m] the same and that it is tile d 11 ty of every M usl i rn to act ivcly participate in politics IUIV(' been very effective. Although it is difficult to be certain, the trend seems to be away from physical resistance movements such as that of 1963 and mort! toward ideological resistance through involvement and participation in the deciaion-rnuking apparatus of tho government. Religiously oriented individuals who may oppose the government nevertheless join Its ranks in the hope that they will have the opportunity to implement policies that will be more in accord with their view that Islam is an allencompassing system of beliefs.

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During the J 960s ... The rowhaniyun, at least many of them, finally began to realise that they were not reaching the youth of the country. 111ey therefore made a concerted attempt, within their present capabilities, to communicate their views to a new generation of Iranians ...

Tile lessons attempt to incorporate modern scientific principles as a way of bridging the gap between the traditional method of leaching Islam ami modern life ... Ilossciniyych Ershad u11l1 Tallar-e-Tabligh are also interesting examples of outward changes that have taken place in the teaching of Islam. They are not mosques, but meeting or conference halls, although a mosque and ,~ library arc associated with the former. Presentations are given by young university professors, engineers, uno other professional people, as well as by religious leaders who are interested in communicating the teachings of Islam in a new manner.

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While change is occurring in the outward manifestations or Islam, especially in the lise of modern facilities to teach religious doctrine, the interpretations of those doctrines remain, for the most part, the same as they have been for centuries. At Itossciniyyeh Ershud, for example, the sexes are still segregated, wi til the women weari 11g. tile chador. One gets the irn pression that the meeting place represents not only un experiment in teaching methods but also a symbol, for those who attend, or their own ambivalent feelings toward change.

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While the 'ulcrna have undergone a change in the perception of their role and have recently become more active members of society. so too has the perception of' the role of the 'ulcmu undergone a change in the minds of many intellectuals, advocates of liberalism and change, and other members or the present generation of Iranian Muslims. They arc beginning to think for themselves, read 111e Qor'an in Persian, and interpret lor themselves. In other words, the elements of a genuine' Protestant Reformation" seem to be developing within islam in [ran. It is a movement that began prior to the 1960s, gained increasing momentum during that decade, und seems destined for culmination at some future date.

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ANNEX B

Comment by Sir A J) Parsons, 11M Ambassador, Tehran: 1974 - 1979

1. In general, I think that Nick Browne's report is very fair. There is a great deal in it with which I agree, particularly the COIlChISioIlS. I made rnurry of the same points in the series of talks I gave to members of the Office after I returned from Tehran ill April 1979. However I have a number of comments to make.

The Political Analysis

2. The report does 110t emphasise adequately the constraints under which we were acting. Even with full hindsight, I still believe that we would huve been wrong to have broken these constrain ts. A fter I 50 years of gross British i nterference i 11 Ira n 's internal affal rs, all Persians. Including the Shah, were obsessive about the hidden hand of the British. Our only hope of establishing a profitable working relationship with the Shah was to do everything possible to allay these suspicions a11(.1 nothing to feed them, lienee the delibera te policy carried out by myself and my two predecessors of avoiding all contacts with the Mullahs and the old politicians, the two clements where our hidden hand had been most active in the past. ] take Nick Browne's point that, having dropped these contacts, it was extremely difficult to resume them. But the truth is that, if we had not dropped them, we would never have achieved the relationship with the Shah which we needed in order to, further our in te rests - n at onl y commercia I co It true ts bu t S LIe h v i till q uestiens as co-ope ratl on over our withdrawal from the Gulf anti overall areas when: our foreign policies overlapped. It was not just thar the Shah's own suspicions would have been fuelled by the continuation of such contacts. The contacts themselves would have taken our active interest in them as evidence of support and would have used this as a weapon in their carnpalgning against the Shah, In the circumstances of Persia it would have been inconceivable tor us to have been able to use contacts with Mullahs etc simply as innocent means of gathering intelligence on the lnternal situation: our contacts would have interpreted our interest quite di lferently, During my I1r5t four years in Tehran, I agonised endlessly over this problem and you must have been present a t some of the discussions we had a bout whether we should be hold er in re-establishing such call tacts, We al ways decided that the game would not huvc been worth the candle, We would have antagonised the Shah without sufficient compensation gain to our political analysis. I still stand by that view,

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3. Again with full hindsight, my judgment is that our failure was not so much one of information but one of imagination. We were always conscious of the implacable opposition of the MUllahs, of the total alienation of the students, of the unshakeable hostility of tin: remnants of the National Front. of" the unease in the bazaar. We never underestimated the vileness of SAVAR, although the failure of the revolutionaries to produce the kind of massive gory details which might have been anticipated from the reports or Amnesty International suggests that we were right not to paint SAVAK in much blacker colours than any other Middle Eastern secret police force. Nick Browne uses words like 'stability' and 'popularity' in speaking or the regime. I never thought in these terms, No third world regime is stable in our sense of the word. It only maintains a greater or lesser degree of tranquillity. Almost all third world regimes rest on the loyalty or their Armed Forces, not on their popularity,

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4. Where we went wrong was in underestimating the capacity of the various strands of opposition in Iran to combine and their tenacity in working for the objective of the overthrow of the Shah. Most important, we did not see until the autumn of 1978 what the ultimate modus operandi would be, the national strike. It was this which brought the Shah down, not the rioting and demonstrating.

5. My trouble was that I thought ill terms of conventional Middle Eastern wisdom ie that any regime, however unpopular. could survive so long as it could command the support of the bulk of the leadership of the Armed Forces it: the offieer corps from field rank upwards. I always thought that, if the Shah was toppled, it would be by a military coup, not by mass popular action. I though - rightly - that he had safeguarded himself against such a coup and - wrongly - that the chances were that he and the Army would outlast successive waves of opposition ..

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6. 1t is not much consolation to think that even such implacable opponents of the Shah as Fred Halliday were wrong for the same reasons. Could we have got it right? Here 1 believe taht our approach was too operational and not academic enough. We had an read Persian history but failed to apply the lessons of it. Twice or three times in the 19th century and once in the early 20tll centu ry, sim ilar faces combin ed -intellectuals, bazaaris and 111 II llahs - to bring the Qajar Shahs to their knees, Admittedly in more primitive circumstances and against a less powerful array of Armed Forces. these elements showed the same tenacity as the revolutionaries did in 1978. On each occasion it was the Shah who gave way, either through surrender or abdication. Perhaps we should have applied these lessons of hlstory to our thinking on the situation as it began to deteriorate from say, miu-1976.

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7. I do not believe that a greater number of political officers in the Chancery would necessarily have filled this gap. I am more disposed to go for(e). (f) and (g) in Nick Browne's conclusions. If there had been regular meetings in London between the Department, leading academics. well informed political journalists etc on Iran with a subsequent active dialogue between the Department/Planning Staff and the Embassy, we might have all been more conscious of the relevance of the lessons of history. Maybe this is something we should think of in regard to whatever remaining countries there may be where major British interests would be put at risk by a sudden reversal in the internal situation.

British Policy

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8. First, I hotly deny Nick Browne's suggestion that some or the conclusions which [ drew in despatches and telegrams, which appeared more optimistic than the facts suggested, were motivated by a desire not to alarm. London, not to deter businessmen, ECCO etc. J have never gone in for that kind of thing. At risk of sounding pompous, I have always had a hearty contempt for th ose who hedge their bets. I believe that it is the du ty of an Am bassador to come to a finn conclusion on whatever subject he is addressing. My firm conclusions ie that I thought that the Pahluvis were likely to survive, were based on my political judgment, not on any more devious premises. ln the end, I was proved wrong, but I do not regret having kept off the fence.

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9. Secondly. we must never forget how well we did out of the Shah's regime for a number of years. British business and industry made un enormous arnoun t of money out of [ran before and during the boom. The Gulf withdrawal would huve been a different matter altogether had it not been for our relationship with the Shall. His policies were valuable to us in a number or areas and we would have been unable to secure these advantages without the closeness of our relationship with him, although we knew that this clo eness involved penalties in terms of our freedom of action within [ran.

10. Also, even if we had made a gloomier analysis of the political situation, I doubt whether our advice to British business and industry would have been much different. From 1974 onwards. my advice never varied. I told my visitors that there wa no such thing as a stable third world country. Any third world regime could change overnight. They must think in terms 0(' tranquillity not stability. They must sell rather than invest. If they could not sell without investing, they must invest as little us possible. If they had to invest they should do so in as ernbly plants where the profits would come from the UK not from iran. Only in the last resort should they pur their money in to a venture which was wholly selfgenerating in Iran. With these considerations in mind. I said that Iran was us good a bet as any in the third world. If I had known better; I might hove modified the last sentence slightly, but oat the earlier ones.

II. The one aruu in Which I think we must reprove ourselvc is defence sales. Nick Browne brings this out well. I always fell that the highly commercially directed Defence Sales Organisation, first under Lester Suffield and then under Ron Ellis, was not adequately controlled by the PCO. By the time we entered the act, it was too late to put anything in reverse without creating the most appalling political uphcuvnls WWl the Shah and commercial upheavals with our industrialists. I am not sure thut we would necessarily have made different decisions. But we should huve looked much harder for example at the Shir [ran proposal which gave the Shah a major stake in British tank production over a decade or more and ut releasing highly confidential equipment to H third country like Iran, however friendly and apparently tranquil.

12. Finally, Nick Browne 111.1 kes the point that we took the Shu h too seriously, ie that his bark was worse than his bite. I disagree. To start with, it is illusory to talk of maintaining an honest ami frank relationship over a period of years with a government like the Shah's, given all the weight of history we were carrying on our shoulders, unless we were particularly sensitive to his obsessive susocptibllities. Equally. Nick Browne gives rather trivial examples of points wh ere the Shah looked like biting bu tin the end scarcely barked. The Sha 11 was never personally interested in tile EEC/lran agreement. Thls was something he left to Ansari to get what he could out or it. llc, the Shall, watched the proceedings with some amusement and did not much care ubout the outcome. Equally, he was never particularly set on acquiring the Burmah Oil shares. He would have Liked them, but it was not a vital mutter to him such as the survival of Chrysler UK. As regards David Owen getting away with tackling the Shah on human rights, the truth is that Owen spoke one very mildly worded sentence and then changed the subject. All this I know from personal experience.

13. On the other hand, I saw some of the Shah's violent capacity for biting -Dutch imports banned over a period of months, temporary stoppuges of trade with Sweden, Norway, Belgium and Italy, all over real, funded or trivial slights, The Shah may now appear to us as it rather pathetic and indecisive llgure. But, in his heyday. he was not afriad to make up his mind and he had a strong vind ictive streak in 11 is character.

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14. My very last point. Should we have advised him about his internal affairs when we saw that things were going wrong, ie around the time when it was clear to us that the regime had lost the initiative, say, in early 19771 On our own we could not have done so with any hope of success. We would only have succeeded in arousing those. suspicions which are now appearing in his various writings and those of Princess Ashraf. Nor could we have done it with the Americans. He was almost as suspicious of them (in the Carter era) as be was of us and 1 doubt if we would have agreed on a firm joint approach or even on What advice to offer. The only possible solution would have been a joint demarche by the Americans, the Japanese, and the leading members of the EEC - Britain, France, the FRG and Italy. If we had all pooled our knowledge and come to some joint conclusions as to how the Shah had better conduct his affairs in order to pre-empt an internal crisis, we could have formed up to him en masse and forced rum to listen. This would have made it difficult for him to identify an individual conspiracy against him and he would have been shaken by such an assault. It would also have meant that no single one of us could have taken commerciaJ advantage of the unpopularity with the Shah which would have derived from any such individual criticism of his internal methods. It would have been a very tall order to mount such an operation, but, again, it might be something worth thinking about for analagous cases in the future ~ particularly as HEC political co-ordination develops.

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CONFIDENTIAL COVERING SECRET

CONFIDENTIAL COVERING SECRET

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