Will Iran be ready when its oil runs out?

Press, 1 May 1978, Page 16

Will Iran be ready when its oil runs out?

By T

FRANK GILES,

Deputy Editor of the “Sunday Times”,

London, who has just visited Iran.

"Sorry—run out of money” read the sign on the counter of Teheran airport bank one day last month. For a moment, it seemed as though this could be taken as an epitome of Iran’s plight today: a country which has spent too much too fast and is now beset by political as well as economic ills.

This is altogether too gloomy an interpretation. It is true that the boom which followed the quadrupling of oil prices in 1974 did lead to severe over-heating in the economy. It also led to improvident planning and unbalanced growth, resulting in shortages of essential foodstuffs, lack of water, power failures, and insufficient development of communications and port facilities. But these mistakes have been admitted, and the next five-year plan, now’ in the making, will mark a change to (relative) austerity and a much more modest grow’th and inflation rate. Over-rapid growth has been accompanied by acute labour shortages. Iran now has an imported labour force of both skilled and unskilled people (including Filipinos as domestic servants) of about 1 million. This situation should correct itself as young Iranians—over 50 per cent of the population is under 16— come on to the labour market. But by that time, owing to the slow’ing-dowm in the rate of expansion, there may not be jobs for them all to go to.

Some economists claim that the Shah and his advisers would have done better to invest the bulk of the oil revenues abroad, instead of using them to boil up the internal economy. But though the rate at which the money has been spent, and some of the things it has been spent on, can be criticised, the Iranian planners certainly had the right idea when they calculated that, with the oil reserves running out by the end of the century, it is essential to prepare the country, through internal investment, for that moment. Unlike the Arab oil producing nations, Iran has a population of 35 million (50 to 60 million by 2000) and numerous other potential assets.

These economic troubles—w’oes would be too strong a

word—have coincided with a series of disorders in various cities. The Government, as a matter of policy, has now given orders that every incident, however insignificant, even if it is only the breaking of a few panes of glass, shall be punlicly reported. The intention is presumably to heighten awareness of, and resistance to, the troublemakers. But another consequence is to increase the impression that the regime is in trouble. On the basis of what the most independently minded observers told me in Teheran, I do not believe that this is so. Travellers report that most of the country’ is quiet, the villages comparatively prosperous. The Shah, in spite of the political liberalisation he introduced two years back, which has allowed some of his internal opponents to become vocal and to circulate open letters, would still seem to have the situation well in hand. He himself appears to accept that the price of liberalisation is bound to be dissent. He and his ministers talk of the “black-red” alliance of extremes, meaning on the one hand the Shiite mullahs and the traditional conservatives, and on the other the forces of the extreme Left. It is difficult to prove or disprove this theory. Certainly the Shah’s reforms and modernisations have inevitably struck at the traditional religious and social patterns represented by the “black” elements who have always opposed the Shah's programme.

His autocratic style of government gives them a ready-made platform from which to protest, for it is a fair assumption that many middle-class Iranians, while ready to admit that the Shah has done great things for the country, wish he would play his imperial role a little less imperially. For a shrewd, enlightened and generally level-headed man, who has won for himself a well-deserved world status, the Shah is morbidly sensitive to any suggestions from outside that all is not well in Iran. Yet after 37 years of intensely personal rule, and at a moment when the economic slow-down means that the expectations

of many are going to go unsatisfied, it would be highly unnatural if there was not a groundswell of opposition.

The question is how far it will go and how far the Shah will be tempted to retrace the steps already taken on the route towards political liberalisation. Judging by what he and his ministers told me they will resist such a temptation. As the Shah said: “There must be a transition between, my reign and that of my son.” In the last resort, the real test of the stability of the Iranian regime lies with the armed forces. If they are and remain unswervingly loyal to the throne, then no’ effort to upset the status quo can succeed. No-one, or at least no foreigner, can attempt to answer this question. But it would be surprising if the services were in any way disaffected. They are reasonably well paid and magnificently equipped with the latest products of Western technology. The Shah’s leadership and strength of personality has given them something to look up to; and as someone in Teheran acutely observed: “The Shah’s foreign policy is militant without being dangerous—just right for the army.” The Shah, of course, has critics and enemies abroad as well as at home. They can and do point to various defects and excesses in the way he governs the country 7, particularly the operations of the secret police. Whether this pattern would change under any other system of government is doubtful. Iran has never been, and it is difficult to imagine it ever becoming a Western-type parliamentary democracy with a constitutional monarch.

If the present regime should collapse under the weight of internal pressures —an extremely unlikely prospect at the moment —no-one should be under any illusion as to the consequences. Instead of a strong, intelligently directed, reasonably but not exaggeratedly proWestern country which holds the balance of power in this all-important oil-bearing area, there would be the very real risk of a vacuum, full of nothing but confusion and strife.