The Shah's Fight for Survival

The tone was contrite. The words were conciliatory. The old imperial arrogance was gone. "Your revolutionary message has been heard," said Shah Mohammed Reza Pahlavi. "I am aware of everything you have given your lives for. I commit myself to make up for past mistakes, to fight corruption and injustice, and to form a national government to carry out free elections."

The speech was unprecedented for Iran's proud autocrat. It reminded some history-conscious observers of the last days of Imperial Russia's Czar Nicholas II in 1917, or France's King Louis XVI trying to stem the revolutionary fervor that was eventually to sweep him from his throne in 1792. In a televised address to his rebellious country, the Shah announced that he was placing strife-and strike-torn Iran under temporary military rule. Simultaneously, however, he pledged to meet virtually all the demands of his regime's opposition--all, that is, except for his own abdication from the Peacock Throne.

The Shah's decision to call in the military came after a weekend of savage rioting in the capital, Tehran. The violence followed a period of frantic but unsuccessful efforts by the Shah to put together a coalition government that would include members of the opposition National Front, an alignment of moderate political groups as well as the two leading Muslim religious leaders, the Ayatullahs Khomeini and Sharietmadari (see box). On Saturday night, students at the University of Tehran tore down a statue of the Shah that stood at the entrance to their campus. Iranian soldiers, who had been under orders to use restraint since the "Black Friday" demonstrations on Sept. 8 that left hundreds dead, suddenly turned tough and fired into the crowd, killing eight and wounding 82.

Next day thousands of students who had gathered at the university to mourn the dead surged through its gates into downtown Tehran. They burned buildings, sacked hotels, trashed cinemas, bars, liquor stores and airline offices, which have come to be reviled by both leftists and religious rightists as detested symbols of Western economic domination. This time the troops did nothing. The Shah decided it was time to act. He asked for the resignation of Premier Jaafar Sharif-Emami and his ten-week-old government. On Sunday evening, the Shah named General Gholam Reza Azhari, 61, a career officer who has been Chief of Staff of the armed forces since 1971, as Premier and head of a new Cabinet composed of nine military leaders and twelve civilians.

The new Premier declared that "the main program of my government is to reestablish an all-embracing peace and security through a campaign against financial and social corruption to an extent that will convince all honest Iranians." Corruption has emerged as one of the most inflammatory issues of the crisis, and the general wasted no time. More than 35 prominent Iranian officials, including Amir Abbas Hoveida, 59, the Shah's Premier from 1965 to 1977, and General Nematullah Nasiri, 71, former head of SAVAK, Iran's dreaded secret police, were arrested and held for trial on charges of corruption and abuse of power. At week's end the government also arrested Karim Sanjabi, leader of the opposition's National Front, and ordered troops to help man the strikebound oilfields.

The Shah announced that a special commission would investigate charges of financial manipulations that have enriched the royal family. Earlier this fall, he ordered his relatives to divest themselves of any financial interest in government enterprises. Since then, 64 members of the royal family--all except the Shah, Empress Farah and their three youngest children--have left the country, presumably taking their riches with them. The Shah said that a second commission would look into the Pahlavi Foundation, a tax-free charitable organization with annual revenues estimated at $500 million, which controls vast industrial and business holdings in the country.

For opponents of the Shah, the political moves were a case of too little and too late--and may well have reinforced their feeling that the monarch was on the ropes. As a high-ranking Iranian officer said, "The more you feed an alligator, the bigger and hungrier it becomes." From his home in exile outside Paris, Ayatullah Khomeini castigated the imposition of military Tule as a "plot that will not work." Said Khomeini: "In one hand, the Shah held a letter of repentance for his crimes, but in the other hand he held a bayonet and a machine gun." National Front Leader Sanjabi had returned from Paris adamantly opposed to any compromise with the Shah. Before his arrest, Sanjabi reiterated the National Front's call for a referendum on the monarchy.

After the military government was installed, the number of violent incidents dropped notably. Army reinforcements moved into Tehran. There are now 100,000 soldiers in the capital alone, supported by more than 200 tanks. Many youthful agitators went underground. With all schools and universities closed and the country's 400,000 teachers still on strike, there was no place for student protesters to congregate. But they remained adamant that the Shah must go, although for widely differing reasons. While many were outspokenly leftist, others adhered to the religious conservatism of their village upbringing; like their Islamic elders, they see their battle against the Shah as the opening round in a jihad (holy war). Asked why his son was not in school, one street-corner peddler retorted: "Why should he be in school instead of fighting for his religion? I would be happy for him to be a martyr for Islam."

Fearing more bloodshed, an estimated 1 million of Tehran's 4.5 million population fled the city to the safety of the provinces. Strikes continued to cripple the economy. Many shops stayed closed, even in areas of Tehran where there was no fighting. Thousands of banks throughout the country have been destroyed by anti-Shah rioters, who attacked the institutions as symbols of an alien economic presence in Iran. Most banks assured people with savings accounts that records had been made on computer tape and that they would not lose their money. With bus drivers on strike, taxi drivers doubled and tripled their fares, but driving was hardly easy. Though there were no traffic jams for a change, gasoline shortages caused long queues at service stations. After a brief hiatus of total freedom the week before, Tehran's seven daily newspapers stopped publishing rather than submit to censorship reimposed by the military regime.

The new government failed to lure the country's 67,000 petroleum workers back to the oilfields and refineries. The oilworkers, who are envied by many Iranians as the coddled elite of the country's labor force, spurned a 40% wage boost. They stayed out on strike, demanding such reforms as an end to martial law, the release of all political prisoners, replacement of foreign workers holding jobs that could be done by Iranians, and expulsion of the American and European consortium that helps run the National Iranian Oil Co. Boasted a militant student leader last week: "With the oilworkers on our side, we found new confidence. Nothing could better illustrate how much the Shah's position has been weakened."

Settling that strike is the Shah's most crucial challenge. Without the oil revenues that bring in at least $20 billion a year, Iran's economy will surely collapse. A skeleton force of 5,500 executives and technicians last week managed to keep the oil flowing at around 1.5 million bbl. per day, enough for the country's internal consumption. But that was far short of Iran's export level of 6 million bbl. per day. The pinch has not yet been felt abroad because of shipments already at sea. Then, too, countries like Israel and South Africa, which depend heavily on Iranian crude, have long since anticipated this kind of emergency by stockpiling up to a year's supply of oil.

Part of Iran's reduced supplies could also be offset by tapping fields in Saudi Arabia, Kuwait and Abu Dhabi, which have reduced their output over the past two years because of a worldwide production surplus. But the Iranian slowdown, if it continues for long, will almost certainly mean higher oil prices for the U.S. and Europe.

Iran's economy was already beginning to show signs of deterioration. Construction work had come to a standstill, real estate prices had fallen, all credit had been stopped. There was a rush to buy foreign exchange. Since September, an estimated $3 billion in bank deposits has been transferred by wealthy Iranians to accounts abroad. Rumors that the government will limit the flow of money--a move that it probably should have taken months ago--only served to spur the panic flight of capital, which last week was said to be running at the rate of $50 million a day. Meanwhile, inflation, already one of the major sources of discontent, is expected to spiral upward another 10% to 20% in the next six months as a result of wage increases and mounting production costs.

The primary concern in the West about the Shah's newest crisis was the potential threat to Iran's control over the Persian Gulf, the funnel for much of the oil destined for Japan, Europe, Israel and the U.S. Iraq, which got the Shah to stop Iranian support for a rebellion of its Kurdish separatists in 1975, feared the revival of ethnic and tribal tensions in the region. Fearful that a successful move to topple the Shah would unsettle other monarchies in the area, Saudi Arabia's King Khalid called on Arab nations to give the Shah all possible support.

Were the Russians behind it all? Some observers in Tehran thought so, citing the fact that the Soviets have made contact with radical Shi'ite mullahs. Peking, predictably, blamed Moscow's "hegemony," a code word for expansionism, in its comments on the crisis.

In turn, the Russian news agency Tass lashed out at the U.S. after CIA Director Stansfield Turner remarked that though events in Iran stemmed from "genuine dissent," he was "sure there is some Soviet influence" at work in the country. Retorted Tass: "A downright lie. It is the U.S. that has inundated Iran with military experts, advisers and consultants, whose subversive activities were until recently guided by [Richard] Helms, one of Turner's predecessors in the post of CIA director."

In fact, Western analysts in Moscow believe that Soviet leaders probably prefer the Shah to any Iranian government that would be likely to follow him. The Kremlin, they point out, would hardly benefit from a military dictatorship, a right-wing Islamic government or a prolonged period of instability. Moreover, the Shah has developed a good working relationship with Moscow over the years, including a large number of joint economic projects and the sale of Iranian natural gas to the Soviets. One of the opposition's complaints is that Tehran's sale of gas to Moscow enables the Soviets to sell their own natural gas to Europe at premium prices.

Nowhere was concern greater than in Washington. Zbigniew Brzezinski, President Carter's National Security Adviser, telephoned the Shah and told him that he had U.S. backing for whatever he did--in effect, giving him the go-ahead to call in the army. The Administration believes that the military government has given the Shah a temporary reprieve. General Azhari is regarded as an intelligent, sensible administrator and unquestionably loyal to the Shah. "This is not an independent military government," stressed one Administration aide. "It's the Shah's government."

Washington's hope is that if the Shah works skillfully, he can still press ahead with his liberalization program, broaden the base of political participation, root out corruption and ease the social and economic dislocations that plague the country. Said one high-level U.S. official: "The Shah has to persuade the country that he is sincere in his reforms and that however much Khomeini may be respected, the Ayatullah's way would destroy the country. The Shah has got a tremendously long distance to go. He has never had to build support for himself before."

To be effective, Washington believes, the military government will have to remain in control for at least four months. The likelihood of a coalition government after that would depend on whether moderates concede that cooperation with the Shah is better than the risk of an entrenched military regime--or of chaos.

In the end, say Western observers, whether the Shah stays or goes will probably depend on himself. A complex man of deep and varying moods, he could in a streak of despondency suddenly decide to give up, leaving a divided Iran that might well face civil war. Diplomats who saw him last week found him in better spirits than before the military changeover; fatigue and strain showed in ( his face, but he was not cracking. Indeed, he appeared to be spurred on by anger over what he feels was the deception and gross negligence of former friends and officials, like Hoveida, on whom he counted to help build his dream of a modern nation. These men should not languish in comfort and luxury, supporters say, while he lives through the most perilous time of his reign.

The Shah's ambitious modernizing programs created a new-rich class in Iran; many of these people have left with their money. Now he must make himself credible to millions of Iranians who did not share in the country's petroleum-fueled prosperity. At the moment it is doubtful whether in a free referendum he could win a majority to remain as monarch. Still, few can envision Iran without a Shah of some kind or other. "If this one should go," says an Iranian intellectual, "there will soon be another to take his place."

At week's end it looked as though the Shah had a fighting chance to survive. But as one Western diplomat observed: "If the Shah with the help of the military still fails to implement reforms, he's finished. It's not an exaggeration to say that he's now right on the edge of the precipice, with one false step sending him hurtling to the bottom."

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