The Transformation of Diplomacy
How to Save the State Department
Three years ago, the Iranian Government declared that the country would undergo a White Revolution, the purpose of which would be to modernize Iran and render any revolution from below unnecessary. Of the revolutionary measures proclaimed, land reform figured as the most important.
To appreciate the significance of land reform and the circumstances that led to this abrupt change of posture on the part of the régime in Iran, we must look back briefly on the last decade or so. When the Shah decided to participate in the overthrow of the national government of Dr. Mohammed Mosaddeq in 1953, he could hardly have underestimated the risks involved in challenging the most popular government Iran had known in its recent history. The underlying malaise, characteristic of the period of the Shah's personal rule which followed, stems from the difficulty of "normalizing" a political situation which does not originate in the consent of the majority of the governed and whose legitimacy is being continuously challenged by the nationalist forces loyal to Mosaddeq.
The opposition forces so far have been concentrated mainly in cities and towns, which comprise about 30 percent of Iran's 22,000,000 people. A small ruling oligarchy, which had supported the Shah in the overthrow of Mosaddeq, had to rely heavily on the army and the security police (Savak) to control a rapidly increasing middle- and lower-class urban population. Merchants, shopkeepers, civil servants, intellectuals, students and workers comprise the bulk of those who, under the leadership of the National Front,[i] have presented and continue to present a formidable opposition to the régime.
The real significance of land reform in Iran must be appraised as a political measure on the part of the government to gain the allegiance of the "neutral" and still inarticulate peasantry to offset the growing opposition in urban areas. At the time of the reform, Iran was not faced with any particular agricultural difficulties, nor had the inherent peasant problem come into the open. In fact the government's Third Five Year Development Plan, which began in September 1962, had not envisaged a land- reform program even in the remote future, much less allocated any resources for its implementation. The pace of land reform in Iran was dictated mainly by the social and political upheavals following the economic crisis of 1960- 1961, which left the Iranian economy in a depression till the end of 1964.
Between 1953 and 1960, while all political activity by the opposition was being suppressed, the government declared economic development to be the cure-all for every major problem that Iran faced. There was some ground for optimism. Oil revenues were increasing at a rapid rate: from $18.5 million in 1954 to nearly $290 million in 1960. The régime had also received during the same period more than $900 million worth of U. S. military and economic grants. The total outstanding external debt of Iran had also increased from $10 million in 1955 to about $500 million in 1960, with the United States as the major lender (about $250 million). In addition, the banking system had been allowed to expand credit to the public sector at the average rate of 32 percent per annum between 1955 and 1960.
While the short-lived glut of resources lasted, a race to increase all categories of expenditures by various public agencies rapidly gained momentum. The private sector too, taking its lead from the government, increased its investment, especially in construction and industry. Amid a great deal of waste, corruption and mismanagement that is usually associated with such economic bonanzas, the economy grew at a rate of perhaps 5 to 6 percent per annum.
By 1958, however, inflation and balance-of-payments difficulties were beginning to create serious problems. Except for a 40 percent reduction in some of the more essential development programs, no severe measures were taken to check the oncoming crisis. By mid-1960, when it became clear that danger was imminent, the government, rather than check its own spending spree, turned to the U. S. Government, the International Monetary Fund and other international agencies for help. But none of these potential lenders was prepared to assist unless Iran adopted a program of economic stabilization.
The Economic Stabilization Program which went into operation in the fall of 1960 called for drastic reductions in the rate of expansion of internal borrowing, non-essential imports and current government expenditures. The brakes, not having been applied moderately during the previous years, now had to be applied with full force. The effect of the crisis on the growth of the economy during the subsequent three years was considerable: the annual growth rate fell to 2 or 3 percent while the population continued to increase at an estimated rate of 2.6 percent, leaving the average annual per capita income of $180 almost stationary.
The economic crisis of 1961 undermined the external credit-worthiness of the government (the Central Bank of Iran was only two months away from the possibility of default on some of its external obligations), shook the confidence of the régime and increased the doubts of those who were already in opposition or indifferent to it. Unemployment and the higher cost of living were causing discontent in urban centers.
The government's economic setbacks thus helped to bring about a political crisis. The opposition, which had been operating mainly as a semi- underground resistance movement, reorganized the National Front and openly challenged the government's controlled elections of 1960. In 1961 the government of Sharif-Imami was brought down by a teachers' strike for higher salaries, in which the demonstrators and the police clashed, and a secondary school teacher was killed. The Shah then called on Dr. Ali Amini to form a new government.
Dr. Amini came to power with all the appearances of determination to effect reforms. He made immediate concessions to popular demands. Parliament was dissolved, the Economic Stabilization Program was vigorously implemented, a number of corrupt government officials and military officers were prosecuted and a land reform was promised. Thus the government seemed to be concerned not only with the economic crisis, but also with the basic social and political problems threatening the country. In fact, many people believed that Amini could bring the opposition forces into a coalition government and pave the way for a return to constitutional and democratic rule in Iran. However, with Amini's increasing reluctance to hold elections, it soon became apparent that, caught between the National Front and the Shah, and unable to bring the two together in a compromise solution, he had chosen to side with the Shah, whose control of the armed forces was essential to the survival of his government. Thus, virtually barred from short-run activity in the political arena, Amini could only concentrate on the social and economic spheres.
Land reform to him as well as the Shah was of special significance. Not only could some of the opposition's thunder thus be stolen, but it also provided an ingenious argument for not holding elections. The National Front had chosen as its slogans, "The Establishment of Constitutional Government" and "Free Elections." Amini and the Shah now maintained that free elections would only result in the election to parliament of landlords who would oppose land reform. The argument was basically fallacious, for elections had always been carefully controlled by the régime itself. However, to those not aware of Iranian political conditions, the argument seemed attractive. Thus land reform became the central program of Amini's government; indeed, he considered land reform as that "injection" which might finally save the régime from total collapse.
Land reform was also desired as a means of gaining prestige abroad. Most of Iran's neighbors had carried out land reform, and the absence of any such measures in Iran seemed only too conspicuous. The need for conformity was strengthened by the need for foreign assistance. The chances of obtaining loans and grants were greater with a dramatic reform program-especially from the United States where the Kennedy Administration was insisting on self-help as a precondition of U.S. financial assistance. In this way, it was hoped that land reform would regain for the régime much of the confidence lost during the crisis of 1960-61 and perhaps also solve some of Iran's basic social and political problems.
Iran's land reform program was conceived as a two-stage operation. During the first stage (1962-64) all landholdings of over "one village" were to be transferred to the government for resale to the peasants. In the remaining villages, the peasants were to have security of tenure and the landlord's share of the crop was to be reduced by 10 percent in dry-farmed land, 5 percent in irrigated areas.
The second stage, which started in mid-1964, was to deal with those landowners who own less than one village. Landlords may retain a maximum of 30 to 150 hectares of land (depending on the region) and must dispose of the rest of their land in any number of ways described in the law. The choice of the "village" as a standard of maximum landholding was dictated by the administrative difficulty of applying other criteria which might have involved extensive cadastral surveys and/or land evaluations for which the government was not equipped.
Out of 48,592 villages in Iran, 13,904 were estimated to be partially or totally affected by the first stage of the land distribution program. Originally, only the head of a family was allowed to keep a village. However, political pressure from landlords forced the government to allow wives and children of the landlords also to keep one village each, provided they owned the villages before the law went into effect. If the original version of the law had been carried out, the effect would have been considerably more stringent.
Of the 13,904 villages affected by the land distribution program, less than 9,000, as of summer 1964, had actually been bought by the government and resold to the peasants. Since the majority of the villages affected by the law are only partly distributed, the total number of villages sold to the peasants can safely be estimated to be equivalent to about five thousand complete villages, or 10 percent of the total number of villages in Iran. After making allowance for later distributions, the first stage of land reform will still leave undistributed over three-quarters of the villages controlled by the landlords.
The land is bought from the landlords at a price between 100 to 180 times the annual taxes paid to the government. Since landlords often underpaid their taxes, the prices they received for their land were generally well below the grossly inflated market prices. The land distribution program itself does not impose a heavy financial burden on the government, for the peasants have to bear the full load of the 15-year redemption payments, which begin one year after the land is distributed.
The overall objective of the second stage, which got off the ground only recently after a number of postponements, seems to be the difficult task of "regulating" the present explosive peasant-landlord relationship brought about by the intensive propaganda campaigns of the first stage. The problem consists of satisfying an angry mass of peasantry, spread over some 40,000 villages, who demand immediate and total land distribution, and a few thousand landowners whose political support the régime cannot afford to lose. The solution, which has been termed "mild" and "reasonable," favors the landlords.[ii]
To begin with, the landlords may opt to sell their land to the government under the procedures of the first stage. They then have the advantage of receiving a lump sum and the highest possible price. If they do not wish to sell, they are allowed to rent their villages to the peasants on the basis of the net income of their villages during the preceding three years. The lease is for 30 years and the amount of rent is subject to revision every five years.
There are also some provisions in the second stage which allow the landlords, with the consent of the peasants, either to sell to the tenants or to partition the land with them, or to form a joint stock company with them for the exploitation of the village lands. Of the five courses of action open to the landlords, the majority of landlords are most likely to lease out their villages rather than sell or distribute the land. In the regulations governing the second stage, extensive protection is given to landlords who wish to engage in mechanized farming. Apart from the maximum landholding, they can keep up to 500 hectares of mechanized land.
The vagf, or religious endowment lands, are to be rented on 99-year leases to the peasants who work them, with rentals again subject to revision every five years. State-owned lands have already been transferred to the Land Reform Agency for distribution, while crown lands, which were supposed to have been transferred during the first stage, remain largely undistributed.
The government's sharp policy reversal, from the glowing "revolutionary" promises of the first stage to the almost counterrevolutionary solutions of the second stage, leaves somewhat hazy the picture of the agrarian system which is likely to emerge from land reform. At the end of the second stage, about 60 percent of the Iranian villages will still be owned by the so- called small landlords. As one peasant in Kurdestan pointed out to the author, it makes no difference to the peasant whether his landlord owns one village or 600 villages; he will still have to pay rent and be at the landlord's mercy as before.
Nor is the land-distribution program less fraught with problems when it concerns the various sub-classes of the peasantry. According to the law, the pattern of land allotment in any distributed or undistributed village must not change: the peasants can only own or farm the same plots they cultivated before. Since a richer minority who had the favor of the landlords usually had better and larger plots of land, they benefited most from this arrangement. These groups belong to village bourgeoisie and are likely to gain most from land reform. The choice of this form of land distribution, which endorses the status quo, was again dictated by administrative considerations. The legalization of the existing tenures has naturally solidified the traditional and inefficient system of landholding.
Nor does the Iranian program recognize the status of the agricultural laborer or sharecropper who does not own any oxen. Consequently, not all peasants living in the distributed villages have received land. These people are generally the poorest of all. Their number is also considerable. In fact, nearly two-thirds of the rural population belong to those classes that either have no land at their disposal or have less than four hectares to cultivate. This is at the root of Iran's agrarian problem, irrespective of the system of land ownership. The land-reform program has left this basic problem untouched.
It was hoped that the land hunger of the Iranian peasantry would be at least partly satiated by the distribution of virgin lands. New land that might be brought under cultivation without large-scale investment is limited to 4.1 million hectares. This is 36 percent of the total area under cultivation in 1960, and less than the area left fallow each year. It is not clear whether the use of more capital on the existing lands may not, in the long run, offer higher yields than the use of marginal lands. And in any case, it is now certain that these lands will be given mainly to large farmer-investors who are willing and able to use some degree of mechanization.
Perhaps the weakest part of land reform in Iran has been its failure to change technological and organizational aspects of agricultural production. In 1960, on 83.2 percent of the area under cultivation of annual crops, no fertilizer of any kind was used. Double cropping was practiced on only 0.4 percent of the cultivated land. Cultivation of grass and clover for feeding livestock was not generally practiced, with the doubly negative result for the peasants of weaker draught animals and heavy livestock losses during winter months. Only 3.8 percent of farm units regularly used a tractor for plowing.
The land-reform program at first toyed with the idea of helping the peasants to overcome their technological backwardness. Some steps in this direction were taken, but the magnitude of the task and the stagnation of agricultural production during the past few years seem to have strengthened the government's conviction that it must rely on the growth of modern capitalist farming to carry through Iran's agricultural revolution.
Thus the government's supporting programs for land reform are as yet insignificant. By September 1963, there were only 927 coöperatives working in some 2 percent of Iranian villages. These coöperatives were only credit coöperatives; their loans were not supervised and the peasants generally used the funds for consumption purposes. By mid-1964, of the 640 extension agents at work in all Iran, 44 percent were transferred to the Land Reform Agency for clerical work and thus the extension service, most needed for any serious reform, was reduced to almost complete inaction. Only the Literacy Corps has so far made real progress: 9,000 to 10,000 teachers have been provided for the rural areas, but some 40,000 more are required if the 65 percent of the rural children not attending school are to receive some form of education.
From a social point of view, land reform has had the effect of shaking the foundations of feudalism in Iran. This was particularly so during the first year, when the peasants literally took events into their own hands. For the past year or so, however, the sharp reversal of government policy in favor of the landlords has changed the picture. With their influence still untouched in the towns and within the government, the landlords are hopeful that the "return to the villages" may be much nearer than they had ever hoped.
If the present trend in government policy continues, it can be safely predicted that small landlordism will take the place of big, feudal landlordism, without substantially changing the fate of the mass of the peasantry. The shift from big landlordism to small landlordism has already had one major effect: it has extended the power and influence of government and petty officials in the rural areas. This suggests that, although the peasants may not be ruled directly by the new class of landlords, they will be just as powerless vis-à-vis the government officials, who do not owe their office to the peasants' votes. The manner in which the peasants were forced to vote for government candidates during the elections of 1963 left no doubt that the peasants are not to be masters of their own villages.
The removal of the feudal landlord as a buffer between the government and the peasantry is also likely to intensify the peasant's hatred of the government. Now there will be no one except the government to blame for the mismanagement of rural affairs. This alone could change the land-reform program from an essentially technical or economic matter to a highly political concern of both the government and the opposition.
Land reform, by virtue of the changes, dislocations, hopes and fears that it causes in almost every sector of society, may create such problems, release such energies and generate such forces as to set in motion movements far more powerful than were anticipated by its initiators. In Iran, although the more basic shortcomings of the reform are likely to have costly and long-lasting effects, the social and political results of the program are already causing basic structural changes in Iranian society.
For one thing, the composition and the loyalty of the forces lending support to the régime will never be the same. Land reform has weakened and alienated a considerable part of the Shah's traditional allies: the landlords. The régime has also lost the confidence of the industrialists, mainly through an over-publicized profit-sharing "reform" measure which has remained almost a dead letter. The religious leaders were also forced into active opposition when their protests against the Shah's government-by- decree-in such matters as granting women the right to vote, albeit without holding free elections-were branded as "Black Reaction" and brutally suppressed.
Changing the image of a traditional Middle Eastern despotism into that of a modern reformist dictatorship has thus cost the régime dearly in the short run. The long-run costs do not appear less awesome. The administrative and financial resources of the government have already been spread thin, with decreasing returns. The disillusioned peasants will probably continue to put the government's security apparatus to severe tests. Although the government is trying hard to make the peasants accept the provisions of the second stage as the "final" settlement of Iran's agrarian problems, it would be naïve to think that the end of this story has been heard. Land hunger is hard to quell, and underlying economic problems plus the growing rural population are likely to intensify it. The landless and the agricultural workers have yet to be heard from.
The lingering economic crisis is also likely to lead to an increase in urban unemployment, as the poorer classes of peasantry, facing the problem of sheer subsistence, move off the land. When the inevitable exodus to the towns gains greater momentum, these masses could constitute a revolutionary force of some consequence. Lack of employment opportunities in towns, owing to the effects of the economic crisis of the past four years and the low priority given to industrialization in the Third Plan, makes the solution of the rural problems all the more difficult.
The economic crisis, which during the past year has shown signs of shifting from a deflationary to an inflationary situation, stems more from a crisis of confidence on the part of the owners of capital than from lack of financial resources on the part of the government. In fact, oil revenues, which now account for over 50 percent of the development and non- development budgets of the government, have increased from $290 million in 1961-62 to $550 million in the current year. During the last few months, the government has also received a bonus payment of about $230 million for new offshore oil concessions in the Persian Gulf. Thus the government's oil revenues for 1965-66 should amount to $780 million, or about 18 percent of Iran's national income.
The rapid increase in oil revenues has enabled the government to finance its way out of such immediate difficulties as the crop failure of 1963. The ordinary budget of the government has increased, from $573 million in 1962- 63 to $793 million in 1965-66. The development expenditure (mainly for infrastructural and not directly productive purposes) has shown an even more remarkable rise: from $246 million in 1963-64 to $600 million in 1965- 66. This 143 percent increase in development expenditure over a two-year period is bound to generate price increases and balance-of-payments problems. Retail prices went up by about 4.3 percent from early 1964 to 1965 and the balance-of-payments deficit in 1964-65, without the bonus payments from the new oil agreements, would have been near $100 million- about a third of Iran's foreign-exchange reserves.
Should another economic crisis develop in Iran during the coming months, the repercussions and disturbances are not likely to be limited to the urban areas; an awakened and dissatisfied peasantry will be part of the picture. The future politicalization of the peasantry and an end to the traditional insulation of this class from involvement in economic and political disturbances seem inevitable. Not only is the extension of educational facilities and a network of feeder roads bringing the rural population into closer contact with the townspeople, but the spread of rural disorders and the massive purchase of transistor radio sets have also created considerable class consciousness among the peasantry. The transistor radio may finally bring to the Iranian village the badly needed political education which the existing parties have been unable to provide through other channels. However, this gives a powerful weapon to the Communists, who alone have broadcasting facilities (in East Germany, the Soviet Union and China). By suppressing all political parties within Iran while this important channel is unavoidably open to the Communists, the régime is, ironically enough, playing into the hands of those whom it fears most.
The régime is not altogether unaware of the dangers, but is relying on the efficiency of its security forces rather than any political process to check the threat. This policy was demonstrated during the June uprising of 1963 when the "shoot-to-kill" order was issued by the Shah to the armed forces and some 3,000 persons were estimated to have been killed or wounded in various cities in Iran. The government quells such revolts in the name of the peasantry and the "people's revolution." But it has shrewdly avoided free elections to test its real strength. During the elections of 1963, not a single member of the National Front was allowed to stand as a candidate, let alone be elected.
The opposition forces, faced with the régime's new mixed policy of carrots and sticks, reforms and intensified suppression, are undertaking a thorough reappraisal of their policies, organization and non-violent tactics of demonstrating in the streets, where the masses are made easy targets for the régime's well-equipped security forces. On the political level, the slogan "Land Reform Yes, Dictatorship No," coined by Tehran University students at the time of the Shah's "referendum," has been widely adopted, though some intellectuals are reluctant to admit that any reform has taken place. The organizational and tactical problems are posing more serious dilemmas for the opposition. The futility of open political demonstration against a régime determined to suppress any opposition by force has been amply shown. The alternative, however, is fraught with uncertainties and entails drastic changes in the nature of the present opposition forces.
The National Front so far has resisted the temptation of advocating violence or accepting the invitation of the Communists to form a unified National Liberation Movement. But the assassination of Premier Mansour in early 1965, followed soon afterward by an attempt on the Shah's life by a member of his own select Imperial Guard, may indicate the form of resistance to the régime that is developing, irrespective of the National Front's approval. Should the Communists decide-as indeed they seem to have already decided-to launch a campaign of subversion, even unilaterally, in support of the nationalist forces, the situation in Iran could become much like that in Iraq after 1958 or in South Viet Nam today. The dilemma facing the National Front is to determine how far it can follow its present tactics without losing to the Communists the leadership of the masses.
The identification of the régime with the West, and especially with the United States, has helped to make the concept of a war of national liberation more appealing. Professor T. Cuyler Young wrote in Foreign Affairs (January 1962): "During the last decade, . . . the United States has furnished Iran more than a billion dollars in economic and military aid. Like it or not, justly or unjustly, this has served to identify the United States with the Shah's régime, together with responsibility for what that régime has done, or failed to do. . . . For this reason the United States is distrusted, if not indeed thoroughly disliked, by all those who have come to distrust the Shah and oppose his policies." Since then, this distrust has been intensified, especially after the United States applied pressure and obtained from the régime in 1964 a status-of-forces agreement granting American military personnel in Iran diplomatic immunity. Not only all Iranian nationalists vehemently opposed this measure, but when Ayatollah Khomeini, Iran's most prominent religious leader, voiced concern and was summarily exiled to Turkey, the sentiments of the religious masses also turned sharply against the United States. It is probable that the American position in Iran will continue to deteriorate along with the growing unpopularity of the Shah's régime and that the United States will replace Britain as the prime target of nationalist attacks. The urge for political freedom, which has already proved stronger than the attraction of recent social and economic reforms, is likely to be reinforced by an attempt to free Iran from all foreign domination.
Theoretically, it is not inconceivable that a peaceful political settlement could be arrived at to check the present trends and lead Iran to the path of constitutional government and self-determination. In fact, Dr. Amini is presently believed to be engaged in an attempt to form a national coalition government along these lines. However, given the present course of policy and the pattern of the régime's international commitments, success is unlikely. Opposition forces are moving toward accepting violence as the only way to bring about a solution to Iran's ills; hope for a peaceful political solution has been all but abandoned. While domestic political forces are moving in the direction of violent means, external forces still continue to play an important role. Contending United States, Soviet and now Chinese Communist foreign policies are factors that could either intensify the processes already under way, or modify them.
[i] The National Front is not a unified political party, but an alliance of a number of political parties and groups with separate organizations and platforms. The eclectic and complex nature of this vast but often suppressed political movement has sometimes led foreign observers to believe that the Front itself is an independent political party which is poorly organized and lacks social and economic doctrines.
[ii] Dr. Hassan Arsanjani, the Minister of Agriculture in the successive governments of Amini and Alam and the main architect of the land-reform program, resigned in 1963, leaving the impresssion that he may have favored a more vigorous second stage. Dr. Amini himself had already resigned in mid- 1962 over the control of the armed-forces budget.