US embassy cable - 90STATE163440

C O N F I D E N T I A L STATE 163440 
 
FOLLOWING ABU DHABI 2793 DTD MAY 17 SENT ACTION SECSTATE 
WASHDC, INFO ANKARA, BAGHDAD, DOHA, ISLAMABAD, LONDON, 
PARIS, RIYADH, FRANKFURT, ISTANBUL, KARACHI, USCENTCOM 
MACDILL AFB FL, DIA WASHDC, AND CJTFMEBEING REPEATED TO 
YOU FOR YOUR INFO 
 
QUOTE: C O N F I D E N T I A L ABU DHABI 02793 
 
FROM AMCONGEN DUBAI 
 
E.O.  12356:  DECL:  OADR 
TAGS:  PGOV, PINS, ECON, IR 
SUBJECT:  IRAN A YEAR AFTER KHOMEINI - LIVING WITH THE LEGACY 
 
REF:  ABU DHABI 2107 
 
1.  CONFIDENTIAL - ENTIRE TEXT. 
- 
2.  SUMMARY:  A YEAR AFTER KHOMEINI'S DEATH, IRAN'S 
LEADERS ARE DIVIDED OVER THE COUNTRY'S FUTURE POLITICAL 
DIRECTION.  THEIR DISAGREEMENTS, ALTHOUGH SOMETIMES 
EXPRESSED IN OBSCURE THEOLOGICAL TERMS, ARE ON DISPLAY 
IN VIGOROUS DEBATES IN THE MEDIA, PARLIAMENT, FRIDAY 
SERMONS, AND OTHER PUBLIC SPEECHES. THIS DEBATE, 
HOWEVER, IS FOR INSIDERS ONLY, AND THE OPINIONS OF 
THOSE OUTSIDE THE RULING ELITE ARE NEITHER SOUGHT NOR 
CONSIDERED.  WHILE THE POLITICIANS ARGUE, THE ECONOMY 
CONTINUES TO STAGNATE.  EFFORTS TO REVIVE DOMESTIC 
PRODUCTION, REBUILD THE OIL INDUSTRY, AND CONTROL 
RUINOUS INFLATION HAVE BEEN COMPLETELY INADEQUATE. 
HAVING MADE A REVOLUTION THAT REJECTED ECONOMICS AS A 
BASIS OF NATIONAL POLICY, THE NEW LEADERS ARE FINDING 
THAT PART OF KHOMEINI'S LEGACY VERY DIFFICULT TO 
CHANGE, NOR IS THERE YET ANY OVERWHELMING PRESSURE ON 
THEM TO DO SO.  APATHY IS MORE PREVALENT THAN 
RESISTANCE AND THERE SEEMS NO SIGNIFICANT ORGANIZED 
OPPOSITION THAT WOULD THREATEN THE REVOLUTION ITSELF. 
END SUMMARY. 
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THE FEW RULE AND ARGUE; THE MANY WATCH 
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3.  THE MASS POLITICS, WHICH CHARACTERIZED THE IRANIAN 
REVOLUTION AND THE EARLY YEARS OF THE ISLAMIC REPUBLIC, 
ARE OVER.  PERHAPS THE LAST MANIFESTATION WAS 
KHOMEINI'S FUNERAL.  GONE ARE THE MILLION-STRONG 
MARCHES AND DEMONSTRATIONS WHICH PROCLAIMED "DEATH TO 
THIS" OR "LONG LIVE THAT".  NOW, ZEALOTS COMPLAIN WHEN 
IRANIAN RADIO TV IGNORES TWO HUNDRED PEOPLE 
DEMONSTRATING AGAINST WOMEN'S IMMORAL DRESS (REFTEL). 
AND A TEHRAN UNIVERSITY PROTEST AGAINST U.S.-IRAN TIES 
IS ALMOST IGNORED. 
 
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4.  IRAN'S LEADERS ARE IN THE BUNKER WHERE THEY 
SQUABBLE LOUDLY AMONG THEMSELVES.  THE SUPERNUMERARIES 
WHO USED TO MARCH AND SHOUT, HOWEVER, NOW ONLY WATCH. 
MOST OF THEM HAVE SHIFTED FROM SUPPORTING THE REGIME TO 
ENDURING IT.  THEY GRASP AT ANY SIGN, SUCH AS ANOTHER 
INCH MORE EXPOSURE OF WOMEN'S HAIR, OR FIVE MINUTES 
MORE MUSIC ON IRAN RADIO, THAT MIGHT INDICATE THINGS 
ARE GETTING BETTER. 
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5.  BASED ON OUR OBSERVATION, WE WOULD ILLUSTRATE THE 
BREAKDOWN OF IRANIAN POPULATION ROUGHLY AS FOLLOWS: 
 
(A) 0.5 PERCENT ARE IN THE REGIME. 
 
(B) 2.5 PERCENT SUPPORT IT. 
 
(C) 2.5 PERCENT OPPOSE IT. 
 
(D) THE REST (94.5 PERCENT) ENDURE IT. 
 
THOSE IN THE REGIME ARE TWO GROUPS:  AN OUTER CIRCLE OF 
THOSE WHO, THROUGH POSITIONS IN THE GUARDS, THE ISLAMIC 
COMMITTEES, ETC. HAVE ACCESS TO SCARCE GOODS AND 
SERVICES SUCH AS SUBSIDIZED CONSUMER GOODS AT 
SUBSIDIZED PRICES, REASONABLE HOUSING, AND UNIVERSITY 
PLACES.  AN INNER CIRCLE OF ABOUT 5,000 SENIOR CLERICS, 
MINISTERS, JUDGES, FRIDAY PREACHERS, PARLIAMENT 
DEPUTIES, AND PROVINCIAL OFFICIALS, ACTUALLY RULE 
IRAN.  WITHIN THIS GROUP. TWENTY-TO-THIRTY VETERANS OF 
REVOLUTIONARY POLITICS MAKE THE DECISIONS.  THIS LAST 
GROUP INCLUDES SUCH SURVIVORS AS AYATOLLAHS ARDABILI, 
YAZDI, MESHKINI, JANNATI, MAHDAVI-KANI, AND REYSHAHRI. 
OTHER MEMBERS ARE PRESIDENT HASHEMI-RAFSANJANI, SUPREME 
LEADER KHAMENE'I, MASHHAD BOSS VA'EZ TABASI, PARLIAMENT 
SPEAKER MAHDI KARROUBI, AND FORMER INTERIOR MINISTER 
MOHTASHEMI-POUR. 
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6.  MEMBERS OF THIS GROUP ARE INTERCHANGEABLE PARTS OF 
A MACHINE.  LONG PERSONAL ASSOCIATIONS AND TIES OF 
MARRIAGE AND BUSINESS GIVE THIS GROUP ITS COHESION. 
WHEN ONE MEMBER IS ELIMINATED BY DEATH, NATURAL OR 
OTHERWISE, ANOTHER REPLACES HIM AND POLICIES CONTINUE. 
DESPITE PERSONAL RIVALRIES, MEMBERS SHARE A LOVE OF 
POWER, A DETERMINATION TO HOLD IT AT ALL COSTS, AND A 
WORLD VIEW SHAPED BY KHOMEINI'S UNCOMPROMISING AND 
IDIOSYNCRATIC VISION OF A UTOPIAN ISLAMIC STATE. 
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7.  WITHIN THE ELITE, THERE IS FREE-WHEELING VIGOROUS 
DEBATE WHICH OFTEN SPILLS INTO PUBLIC VIEW.  BUT THIS 
DEBATE IS BY AND FOR INSIDERS.  OUTSIDERS -- BE THEY 
CLERICS LIKE AYATOLLAH MONTAZERI OR NATIONALISTS LIKE 
MAHDI BAZARGAN -- ARE NOT WELCOME TO PARTICIPATE.  MOST 
IRANIANS ARE OF COURSE FREE TO WATCH AND LISTEN TO 
THEIR BETTERS ARGUE, BUT OUTSIDERS' OPINIONS ARE 
NEITHER SOLICITED NOR CONSIDERED.  THE ELITE HAS SHOWN 
THAT, WHEN THREATENED OR QUESTIONED, IT CAN ACT 
DECISIVELY AND BRUTALLY. 
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------------------- 
GUARDIANS OF PURITY 
------------------- 
 
8.  THE CURRENT LEADERS ARE DIVIDED OVER WHETHER IRAN 
MUST CHANGE ITS MILITANT, REJECTIONIST POLICIES IN 
ORDER TO ESTABLISH NORMAL RELATIONS WITH THE OUTSIDE 
WORLD AND REBUILD HER ECONOMY.  ON ONE SIDE ARE THOSE 
WHO PUSH ECONOMIC RECONSTRUCTION AND ARGUE THAT UNDER 
PRESENT CONDITIONS A POLICY OF CONFRONTATION, SLOGANS 
AND HARSH SOCIAL RESTRICTIONS HAS ALIENATED BOTH 
IRANIANS AND FOREIGNERS FROM KHOMEINI'S ISLAMIC 
UTOPIA.  THEY SAY THAT IRAN, WITH HER MATURE 
REVOLUTION, NO LONGER HAS ANYTHING TO FEAR FROM STABLE, 
PREDICTABLE RELATIONS WITH OTHER STATES AND SYSTEMS. 
SUCH RELATIONS MAY EVEN BRING IRAN ECONOMIC AND 
POLITICAL BENEFITS. 
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9.  ON THE OTHER SIDE ARE THOSE WHO, WHILE NOT 
EXPLICITLY OPPOSED TO RECONSTRUCTION OR IMPROVED LIVING 
CONDITIONS, RESIST THE POLITICAL AND SOCIAL CHANGES 
SUCH STEPS WOULD REQUIRE.  FOR THEM, GUARDING THE 
PURITY OF KHOMEINI'S VISION COMES BEFORE ALL THINGS. 
THEIR BANNER IS THE "IMAM'S LINE", A SHORTHAND FOR 
NEGATIVE AND SIMPLISTIC THINKING THAT HAS LED TO THE 
ISLAMIC REPUBLIC'S EXCESSES AND SELF-DESTRUCTIVE 
POLICIES.  IF GUARDING THAT VISION MEANS IRAN'S 
CURRENCY IS WORTHLESS, THAT HER FACTORIES PRODUCE 
NOTHING, AND THAT HER OIL INDUSTRY CONTINUES TO 
DETERIORATE, THEN SO BE IT.  SUCH THINGS WERE NEVER 
IMPORTANT TO THE IMAM AND WHY SHOULD THE GUARDIANS OF 
HIS LEGACY CONSIDER SUCH THINGS? 
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------------------------- 
NOW FOR THE VERY BAD NEWS 
------------------------- 
 
10.  THE IRANIAN ECONOMY IS A DISASTER.  EVEN THOSE WHO 
BENEFIT BY SPECULATIONS IN CURRENCIES AND SCARCE 
COMMODITIES ADMIT THAT SOMETHING NEEDS TO BE DONE TO 
RESTART ECONOMIC ENGINES THAT HAVE BEEN SHUT DOWN SINCE 
1979.  THE IRANIAN RIAL IS ALMOST WORTHLESS (NOW 
TRADING AT ABOUT 1350 TO THE U.S. DOLLAR) AND THE 
RESULTING INFLATION HAS DESTROYED THE PURCHASING POWER 
OF WAGE AND SALARY EARNERS AND OF PENSIONERS.  TOP 
GOVERNMENT SALARIES ARE EQUIVALENT TO USD 150 PER 
MONTH, AND MOST EMPLOYEES MUST HAVE SECOND JOBS. 
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11.  IRANIAN INDUSTRY IS PRODUCING AT ABOUT THIRTY 
PERCENT OF CAPACITY.  MUCH OF IRAN'S FOREIGN CURRENCY 
EARNINGS GO FOR IMPORTS OF FOOD AND CONSUMER GOODS - 
REFRIGERATORS, TELEVISIONS, CAR BATTERIES, TIRES, ETC. 
-- WHICH HAVE NO DIRECT AFFECT ON PRODUCTIVITY. 
OVER-REGULATION OF IMPORTS HAS LED TO CORRUPTION AND 
PROFITEERING AS SUBSIDIZED GOODS IMPORTED UNDER STATE 
LICENSES ARE DIVERTED TO THE FREE MARKET FOR LARGE 
PROFITS.  MANY ENTERPRISES ARE UNDER CONTROL OF THE 
LARGE "FOUNDATIONS" WHICH HAVE STRANGLED PRODUCTIVITY 
AND PROFITS IN THE NAME OF ISLAMIC SOCIAL JUSTICE. 
- 
12.  IRAN HAS AN ENORMOUS HIDDEN DEBT WHICH SOME 
ESTIMATE AT USD 200-300 BILLION.  THIS DEBT IS WHAT 
IRAN DID NOT SPEND IN THE LAST TEN YEARS ON THE OIL 
INDUSTRY, ROADS, POWER STATIONS, PORTS, SCHOOLS AND 
HOSPITALS.  IT IS ALSO WHAT SHE DID NOT EARN FROM 
NEGLECTED OR RUINED INVESTMENTS.  INSTEAD, IRAN FOR TEN 
YEARS PUMPED AND SOLD CRUDE OIL TO BUY FOOD AND 
WEAPONS, AND INVESTED ALMOST NOTHING IN HER ECONOMY. 
FROM 1978, HUNDREDS OF PROJECTS -- FROM THOSE STILL ON 
PAPER TO THOSE NEEDING ONLY THREE BOLTS TO FINISH -- 
WERE ABANDONED AND LEFT FOR RUST AND VANDALS TO DESTROY. 
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13.  AS A DELIBERATE POLICY, THE AUTHORITIES ENCOURAGED 
THOUSANDS OF IRANIANS, WHO COULD NOT ADJUST TO THE 
RESTRICTIONS OF LIFE IN AN ISLAMIC REPUBLIC, TO LEAVE 
THE COUNTRY.  ALTHOUGH OFFICIALS TALK ABOUT THEIR 
RETURN, THERE ARE FEW SIGNS THAT THE ORIGINAL POLICIES 
THAT DROVE THEM OUT ARE CHANGING.  MANY TRAINED AND 
WELL-EDUCATED IRANIANS WHO HAVE NOT LEFT HAVE, FOR BOTH 
ECONOMIC AND POLITICAL REASONS, GIVEN UP WORKING IN 
THEIR SPECIALTIES AND EARN A LIVING IN THE FLOURISHING 
BLACK MARKET.  OTHERS, WHO HAVE STUCK IT OUT FOR TEN 
YEARS IN THE HOPE OF BETTER TIMES, ARE GIVING UP AND 
LOOKING FOR ESCAPE ROUTES. 
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14.  THE ECONOMIC AGREEMENTS WITH THE SOVIET UNION WERE 
FOR SHOW ONLY.  GIVEN IRAN'S ENORMOUS ECONOMIC NEEDS, 
THE AMOUNTS INVOLVED ARE INSIGNIFICANT.  THE 
GOVERNMENT'S MAIN PURPOSES WERE POLITICAL:  TO SHOW 
THAT IRAN HAD FRIENDS IN THE OUTSIDE WORLD AND TO SHOW 
THE PEOPLE THAT THE GOVERNMENT WAS "DOING SOMETHING" IN 
THE ECONOMIC SPHERE. 
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-------------- 
POOR PROSPECTS 
-------------- 
 
15.  POLITICAL AND ECONOMIC PROSPECTS ARE POOR. 
ALTHOUGH SOME INDIVIDUALS WITHIN THE LEADERSHIP SAY 
IRAN MUST GIVE UP BANKRUPT SLOGANS AND STOP MAKING 
NEEDLESS ENEMIES, THEIR VIEWS HAVE NOT LED TO ANY 
CONSISTENT NEW POLICY.  ONE DAY LEADERS SPEAK OF 
TOLERANCE, THE NEXT DAY THEY LAUNCH A NEW CAMPAIGN 
AGAINST UNISLAMIC DRESS AND BEHAVIOR.  TALK OF CHANGE 
HAS REMAINED TALK, APPARENTLY MUCH OF IT AIMED AT 
CONVINCING FOREIGNERS TO EXTEND CREDITS AND MAKE 
INVESTMENTS.  SLOGANEERING AND IDEOLOGY MAY NO LONGER 
HAVE THE MASS APPEAL OF TEN YEARS AGO, BUT THEY ARE 
STILL POWERFUL WEAPONS IN TEHRAN'S POWER STRUGGLES. 
MANY OF TODAY'S LEADERS CAME TO POWER BY IMITATING 
KHOMEINI'S OBSTINATE REFUSAL TO COMPROMISE, AND THEY 
WILL NOT EASILY ABANDON THIS FORMULA. 
 
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16.  IRAN'S POPULATION GROWTH IS OUT OF CONTROL, 
GROWING AT MORE THAN THREE PERCENT PER YEAR.  THE 
COMBINATION OF POPULATION GROWTH AND NO INVESTMENT 
MEANS THAT SERVICES -- SCHOOLS, WATER, TRANSPORT, AND 
ELECTRICITY -- ARE BREAKING DOWN UNDER THE PRESSURE. 
AFTER LIVING OFF THE STORED FAT FROM THE PREVIOUS 
REGIME FOR TEN YEARS, IRAN WILL EITHER HAVE TO MAKE 
RADICAL POLITICAL CHANGES TO REBUILD OR RESIGN ITSELF 
TO PERMANENT THIRD-WORLD POVERTY. 
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------------------------------- 
POLITICAL BACKSWING NOT EVIDENT 
------------------------------- 
 
17.  DETERIORATING LIVING STANDARDS AND THE LACK OF 
CHARISMATIC LEADERSHIP HAS, AND WILL, LEAD TO OUTBURSTS 
OF FRUSTRATION.  BUT THESE SHOW NO SIGN OF 
TRANSFORMATION INTO SIGNIFICANT POLITICAL PROBLEMS FOR 
THE REVOLUTION AS A WHOLE.  THERE IS NO ORGANIZED 
OPPOSITION WITH STRENGTH CAPABLE OF THREATENING THE 
REGIME'S GRIP ON POWER.  THE DISPUTES MANIFEST IN THE 
SPEECHES AND THE PRESS ARE WITHIN THE RANKS OF THE 
REVOLUTION ITSELF.  THERE IS LITTLE HAPPENING IN  THE 
STREETS AND IT IS NO THREAT.  APATHY AND WAR WEARINESS 
PROVIDE A KIND OF SUPPORT THROUGH INERTIA.  MOST 
IRANIANS WE SPEAK TO PREFER THIS REGIME -- IT IS THE 
DEVIL THEY KNOW -- TO THE IDEOLOGY OF MOHAHEDIN AL 
KHALQ OR A RETURN TO A DISCREDITED MONARCHY.  AND WHILE 
TODAY'S LEADERS FEUD OVER MANY ISSUES, THEY REMAIN 
HIGHLY AWARE OF THEIR COLLECTIVE POSITION AND POWER. 
THEY RARELY THREATEN EACH OTHER PERSONALLY.  THERE IS 
NO APPARENT LESSENING OF THEIR ABILITY TO DEAL 
RUTHLESSLY AND EFFECTIVELY WITH THEIR OPPONENTS OR 
THOSE WHO QUESTION THEIR RIGHT TO RULE.  SO FAR, 
DESPITE THEIR INEPTNESS IN MANY AREAS, THE REVOLUTION'S 
INNER CIRCLE LOOKS CAPABLE OF SURVIVING.  WALKER 
UNQUOTE BAKER 
 
CONFIDENTIAL